Political & actuarial musings and assorted roadgeek trivia

Earlier this week, word came that an FDA committee, concerned about overuse of acetaminophen leading to too much liver damage, is seeking a ban on Percocet and Vicodin, and a shift of Extra Strength Tylenol to prescription status.

Jeralyn, at TalkLeft, concerned about the potential banning of two common potent-but-not-too-potent painkillers remarked:

The Government needs to keep its hands off our bodies. If my doctor wants me to have Percodan and he and I are aware of the risk yet believe it’s necessary after a painful medical or dental procedure, I should be allowed to use it. It’s between me and my doctor.

It’s a very understandable sentiment.

Of course, it’s a somewhat ironic sentiment to be found at a site like TalkLeft.  If I’m not mistaken, most of the folks there are in favor of the feds promulgating some form of health care reform, preferably with a “public option”, where the federal government acts as an insurer.

And if the government is acting as an insurer, the need to find ways to affordably provide coverage will lead to certain restrictions being imposed on the nature of treatments or prescriptions permitted.

Perhaps the strings attached are worth the benefit of ensuring everyone has the ability to access some level of health care.  But it will be important to remember that you can’t have your cake and eat it too.

It only took almost 8 months, but Minnesota finally knows who its junior Senator will be.  Seen on the newswires:

Coleman conceded the election hours after a unanimous state Supreme Court ruled Tuesday that Franken — who moved into politics with books poking fun at conservative radio host Rush Limbaugh — should be certified the winner. In doing so, Coleman pulled the plug on a bitter election that was decided by 312 votes out of almost 2.9 million cast.

Congratulations Al!

(Now, think about how much we can learn from the Iranians.  Why they apparently can identify the winner of an election by divine inspiration, before the votes are even counted.)

Some of you may be familiar with the mess facing the California state legislature.  Thanks to years of ballot initiatives, the state faces certain spending mandates.  The state is also limited in its ability to increase revenue, thanks to another ballot initiative requiring a supermajority for such votes and partisan politicians’ inability to play well together.

Combine that with the political power of special interests, lack of foresight, general bureaucratic inefficiencies, and an economic downturn which is hitting California particularly hard…and you have an imminent train wreck.

So, it seems that the Governator has threatened to start paying bills with IOU’s rather than money, starting Wednesday, assuming that the legislature can’t get its act together.

Although I am not a Californian, the sheer…idiocy of the situation is such that I can’t help but feel a bit of frustration from afar.   And it is within that frustration that I find the following comments from a post at The Moderate Voice somewhat attractive:

“Why would we bail out the state when it’s like giving drugs to a drug addict?” said Rep. Devin Nunes, a Republican who represents parts of California’s San Joaquin Valley. Asked if the federal government should be helping California with its budget crisis, Democratic Sen. Dianne Feinstein — the state’s senior senator — shot back: “Do you know what the state is getting in stimulus money? $50 billion.” […]

Rep. Zoe Lofgren, the chairwoman of the state’s 33-member Democratic delegation, said California’s budget quagmire is largely a result of structural process which requires any budget or tax increase pass by a two-thirds majority and as a result nothing gets done. “If we [in Congress] had to do what the California legislature does, we would never send a bill to the president of the United States,” she said. “That’s a problem. But I can’t solve that problem. . . . Ultimately the voters of California are going to have to confront what’s happening in their state and figure out what to do about it.”

While I appreciate the appeal of California’s unique mix of activism and democracy…well, there’s a reason why the founding fathers opted to set the national government up as a republic, trusting that enough of the public would choose sufficiently wise leaders to limit calamities such as California’s.

Who says that Sundays can’t be big news days for actuaries?

From a Towers Perrin and Watson Wyatt joint press release:

Towers, Perrin, Forster & Crosby, Inc. and Watson Wyatt Worldwide, Inc. today announced that their respective Boards of Directors have unanimously approved a definitive agreement under which Towers Perrin and Watson Wyatt will combine in a merger of equals to form a new, publicly listed company called Towers Watson & Co. Based on the closing price of Watson Wyatt common stock on June 26, 2009, the implied equity value of the transaction is approximately $3.5 billion. Watson Wyatt Chief Executive Officer John Haley will serve the combined company as Chief Executive Officer; Towers Perrin Chief Executive Officer Mark Mactas will serve as President.

No word yet on what this means in terms of actuarial staffing.  Both companies’ consulting practices employ hordes of actuaries and actuarial staff.

I’m not really into the celebrity culture thing, but I couldn’t help but notice this insurance related item in a Guardian article on the financial side of MJ’s passing:

Jackson was said to have still been making an annual income of $19m. But the singer had not released any new material since the album Invincible in 1991, which had not been a success, and had not performed live for over a decade and there were hopes that the comeback tour might solve his financial crisis for good. It was estimated that he could have made up to $500m if he had taken the show around the world.

Ultimately though he has left another financial mess at AEG, the owner of the O2 arena, formerly known as the Millennium Dome. According to Billboard magazine, more than $85m worth of tickets have been sold and AEG has already spent $30m on the production.

Reports are also suggesting that the firm was only insured for the first 10 nights of the residence, as insurers were wary of the singer being fit enough to play all 50 nights, leaving AEG with an potential insurance liability of up to £300m.

The Guardian also has a separate story discussing how ticket refunds my be effected.

Charlie Baker with Harvard Pilgrim Health Care recently posted an interesting observation from Massachusetts’ experiment in requiring everyone to purchase health insurance:

A few months ago, brokers started posting comments on this blog site that implied that people – and some brokers and employers – were gaming that wide open front door – purchasing health insurance for a few months at a time, using a lot of services, and then dropping their coverage.  The penalty for not having coverage isn’t all that steep – about $900 – and while a few months of coverage might cost $2-3,000 in premiums – that’s peanuts compared to the cost of many medical services, which can run into thousands of dollars in a matter of days.

After about the fifth broker comment, I asked our finance people to check and see if individuals purchasing insurance from us either directly or through the state’s Connector web site were buying for a few months at a time, and using a lot of services.  The results were astonishing.  Between April of 2008 and March of 2009, about 40% of the people who purchased individual insurance from Harvard Pilgrim stayed covered by us for less than 5 months.  Even more amazing, they incurred, on average, about $2,400 per person in monthly medical expenses – roughly 600% higher than what we would have expected.  It wouldn’t surprise me if other health plans have the same problem.

This is a problem.  It is raising the prices paid by individuals and small businesses who are doing the right thing by purchasing twelve months of health insurance, and it’s turning the whole notion of shared responsibility on its ear.  It’s also created a new way for people who don’t want to play by the rules to avoid them.  The state needs to reconsider its policy to eliminate waiting periods and/or pre-ex exemptions for individuals purchasing health insurance in the merged market.  That would be the simplest and easiest way to protect individuals and small businesses who are playing by the rules – and limit the very costly impact of this wrinkle in health care reform.

It is perfectly natural that consumers find preexisting condition exclusions or waiting periods for eligibility in health insurance troubling.  However, those provisions exist for a reason.

Perhaps this cautionary tale from Massachusetts can serve as an example of why, if federal health care reform includes some form of universal availability, participation must be made mandatory (with the exception of those religious groups where conscience prohibits insurance), and the penalties for nonparticipation must have teeth.

Otherwise, considering the costs involved, people will game the system, and honest taxpayers will pick up the bill.

Similarly, while it’s appropriate to temporarily suspend preexisting condition clauses and waiting periods to permit people to buy into a mandatory coverage system… those provisions probably ought to exist after the phase-in, at least as regards to people who should have coverage under the mandatory system.

Well, this week was rather eventful, with quite a bit of media play for a pair of topics I’m frequently interested in.   Of course, I’ve been pulling 12-14 hour days as a couple of projects I’ve been working on blossomed.

First, there was quite a bit of fuss over the administration finally releasing its plans for an overhaul of financial services regulation at the federal level.  Atlhough Obama has been mentioned as being neutral on the topic of fully federalizing insurance regulation or the “optional federal charter” concept, there is a little insurance-related blurb in the financial services proposal.  Via Business Insurance: 

The Office of National Insurance, as proposed, would monitor all aspects of the industry and flag any risks that could contribute to a future financial crisis, according to a document obtained by Reuters.

It could recommend to the Federal Reserve that large insurers be subjected to strict capital and risk rules that would apply to large financial holding companies under other aspects of the Obama plan.

And it would attempt to coordinate industry policy, but it would stop short of being a direct regulator, according to the document.

Given the complexity of financial risk oversight, I can believe that it’s appropriate to shift some of the burden to a common, federal level entity.  I just wish that we weren’t adding yet another regulatory body to the alphabet soup we already have to deal with.

While the potential of any federal regulation or oversight is significant news within the insurance industry, probably the bigger item in the minds of most Americans was the release of details of proposed health care “reform”.  The New York Times ran this graphic to summarize the high points:

Folks on the left are upset that the “public option” (federal/state-run health insurance) has taken so long to make an appearance in the proposals.  Folks in the center and on the right are concerned by the lack of a pricetag, or discussion of funding sources.

I will admit that I’m leery of government run health care (imagine if going to the doctor’s office was like going to the DMV…), and the lack of serious discussion about the cost is symptomatic of the fiscal irresponsibility permeating through government.

However, the things that really disturb me is the lack of serious consideration being given to the other shortcomings with the system.  Yes, there are some token generalities regarding paperwork, waste, and inefficiencies; but shouldn’t a serious look be taken to how medical professionals are compensated – perhaps paying for results, rather than for procedures (preferably in such a way as to not disincent professionals from the challenge of a difficult case)?

We talk about expanding the availability of health care, but there hasn’t been much discussion about exactly what that means.  Does this mean that everyone should have access to the latest, greatest, and sexiest treatments…perhaps even experimental therapies…on demand?  Should resources be consolidated and allocated by wait-list?  Or, does “universal healthcare” imply only a certain level of services?  What are the differences in cost of these options, and what do we as a society think about that?

Where is the discussion about how we educate medical professionals?  We have a medical education system which is seemingly prohibitively expensive, creating a disincentive for new doctors to go into family practice, instead pushing them towards more lucrative specialties, despite what the current or future needs of the profession might be.  Also, we are a nation that loves its specialists, where people demand personalized attention from doctors.  Do we really need MD’s to treat most day-to-day conditions, when practitioners probably would suffice?

There is a general assumption that one aspect of expanding health care will involve some element of subsidization.  If taxpayers are expected to pick up the tab, there will necessarily be some pressure for the state to get citizens to engage in behavior that reduces cost.  Taken to an extreme, that could mean laws requiring everyone to undergo physicals.  Stick to a diet or get stuck in jail!  Such measures are perfectly logical, at least from a financial perspective…but where’s the public discourse on just how far down that path we should go?

I realize that politicians are doing the best they can to improve the chaos of the American healthcare system, and I am definitely not opposed to making improvements to our system, including making sure that everyone has access to a reasonable level of health care.

However, not many folks are considering the potential unintended consequences of the changes being discussed.  Unless we do so…unless we address the fiscal realities and structural issues with the system as part of their reform, I think there is a real risk of leaving the public with something worse than what we have today.

Something’s been bothering me.  In my reading pile over the past few days, a common meme has been that social media, such as Twitter, has become the new news media, and that this weekend’s events have marked the death knell of traditional media outlets.

Now, I agree that it has been absolutely fascinating to watch events unfold in near-real-time via Twitter and YouTube.  Perhaps such informal outlets will be on the bleeding edge of breaking news in the future.

Also, I agree that the story unfolding is fascinating and compelling.  What non-totalitarian individual can but cheer on the image of the masses, inflamed by blatant election fraud, rising up to demand satisfaction from the iron-fisted ruling class, despite the threat of violence and attempts at censorship?

Similarly, it’s all too easy for me to imagine that the current regime in Iran would do what it needed to remain in power, no matter the cost, and that much of its public defense would come in the form of propaganda, and message-managing.

However, I know that I tend to be biased.  Both are reflections of a story I want to hear, something that I would be interested to witness.

However, almost absent from this story is a bit of objectivity and a better level of independent confirmation.  True, the major news networks are starting to relay and confirm some of what’s been related in the Twittasphere, but I would appreciate hearing an objective assessment about the extent to which the Iranian public support, oppose, or just don’t care about the pro-Mousavi / anti-Ahmadinejad protesters’ message.

Heck, Mousavi clearly believed that he should have won…but was that a reasonable expectation, or is it possible that supporters’ believed their own hype a bit too much?

New media may be a wonderful way to tell one version of events as they happen, but being too close to the action presumably makes objectivity too difficult.  “Old media” have the potential to capitalize on the need for balance, realism, and fact-checking.

Of course, mainstream media have often disappointed recently when it comes to balance, realism, and fact-checking; if their demise is imminent for those reasons, it’s their own fault, or perhaps the fault of the masses’ myopia, rather than Twitter.

And if the current challenges of traditional press do mean that we’ll have less good reporting in the future…well, that’s everyone’s loss, I think.

A few assorted thoughts of the day:

• Over the weekend, I was interested to follow the post-election ruckus in Iran.  Part of that interest arises from just the way the energy feels kind of like the end of the Soviet empire…or potentially like Tiananmen Square.  And part of that interest arises from the emergence of Twitter as a means to keep up with breaking news (#iran), as well as Twitter’s ability to do so given a lack of interest from major media (#cnnfail).
   
• At the end of last week, it looks like Congress’ War on Smoking blossomed, with the FDA being given the authority to regulate (but not ban) tobacco products.

  Considering the tone of some of the new restrictions coming (no advertising within 1000 feet of schools/playgrounds, carding everybody, new graphic warnings)… perhaps the politicians and bureaucrats should consider starting a gradual increase in the minimum age to purchase cigarettes, or even requiring prescriptions for addicts to purchase cigarettes, as a means of starting to reduce smoking in the country for public health reasons.

  Of course, either of those would deprive the feds and states of future sin tax revenue.  That, and other past regulatory behavior, makes you wonder what government’s real interest is when it comes to smoking.
   

• And, a tip-of-the-hat goes to Salon.com’s Joan Walsh, who went on the O’Reilly Factor after being invited to discuss her criticisms of Bill O’Reilly’s war on the Pro-Choice crowd, including the late Doctor Tiller.  Her write-up of her experience can be found at Salon.

Unless you’re one of the <1% of the U.S. population who were completely oblivious, you know that yesterday was DTV transition day.  By midnight local time Friday, most analog television signals had to be turned off, and the age of digital television broadcasting would be upon us.

A lesser-known aspect of the transition was that some TV stations had been broadcasting their digital signal on a temporary channel, and at different power levels, to reduce interference with other analog or digital stations in the cluttered RF spectrum.

As analog stations went dark Friday night, DTV transmissions were to move to new, permanent frequencies, and stations were authorized to go to full licensed power.

So, what does this mean to you?

Well, if you are among those who still get TV over the air, on some or all of your televisions, you might notice that a digital station or two has gone dark.  If that’s the case, you’ll want to have your TV or converter box scan for channels again. 

Also, now that DTV stations are broadcasting at different power levels, rescanning might turn up an extra channel or two in your area.

On my converter, rescanning is selected as “Menu >> Find Channels”, but your mileage may vary.  Your TV/converter might even be smart enough to rescan on their own.

In my case, rescanning showed my converter box where WGGB-DT (ABC/Fox Springfield, MA) had moved to (with a stronger signal, too), and it revealed that WTXX-DT (CW/think, Waterbury, CT) was now watchable.

So, if you are still among the over-the-air crowd, rescan when you have a chance.