Published on 19 Nov 2015
12 war zones were not enough for this global war and this week an often forgotten theatre of war opens in Libya. Local Arab tribesmen fight against the British in guerrilla war. As if the Italians did not have enough problems at the Isonzo Front where Luigi Cardona is still sending his men into certain death against the Austrian defences. The situation for the Serbs is grim too and on the Western Front the carnage continues unchanged.
November 20, 2015
The Forgotten Front – World War 1 in Libya I THE GREAT WAR – Week 69
Comments Off on The Forgotten Front – World War 1 in Libya I THE GREAT WAR – Week 69
We’re in “a terrible, horrible, no good, very bad news cycle for Obamacare”
Megan McArdle on the plight of some health insurance companies as they try to offer healthcare policies and still make some sort of profit in the current American market:
… UnitedHealth abruptly said it expected to lose hundreds of millions of dollars on its exchange policies in 2015 and 2016, and would be assessing whether to pull out of the market altogether in the first half of next year.
This was part of a terrible, horrible, no good, very bad news cycle for Obamacare; as ProPublica journalist Charles Ornstein said on Twitter, “Not since 2013 have I seen such a disastrous stream of bad news headlines for Obamacare in one 24-hour stretch.” Stories included not just UnitedHealth’s dire warnings, but also updates in the ongoing saga of higher premiums, higher deductibles and smaller provider networks that have been coming out since open enrollment began.
It now looks pretty clear that insurers are having a very bad experience in these markets. The sizeable premium increases would have been even higher if insurers had not stepped up the deductibles and clamped down on provider networks. The future of Obamacare now looks like more money for less generous coverage than its architects had hoped in the first few years.
But of course, that doesn’t mean insurers need to leave the market. Insurance is priced based on expectations; if you expect to pay out more, you just raise the price. After all, people are required to buy the stuff, on pain of a hefty penalty. How hard can it be to make money in this market?
What UnitedHealth’s action suggests is that the company is not sure it can make money in this market at any price. Executives seem to be worried about our old enemy, the adverse selection death spiral, where prices go up and healthier customers drop out, which pushes insurers’ costs and customers’ prices up further, until all you’ve got is a handful of very sick people and a huge number of very expensive claims.
Some commentators, including me, worried a lot about death spirals in the early days of the disastrous exchange rollout. Some commentators, also including me, have eased off on those fears in recent years. Why the change? Because when the law was passed, I was mostly focused on whether the mandate penalty would be enough to encourage people to buy insurance. Over time, as the exchanges evolved, the subsidies, and the open enrollment limitations, started to look a lot more important than the penalty.
[…]
An earnings call like today’s can also be a bargaining tactic. Health insurers are engaged in a sort of perpetual negotiation with regulators over how much they’ll be allowed to charge, what sort of help they’ll get from the government if they lose money, and a thousand other things. Signaling that you’re willing to pull out of the market if you don’t get a better deal is a great way to improve your bargaining position with legislators and regulatory agencies.
That said, strategic positioning is obviously far from the whole story, or even the majority of it. UnitedHealth really is losing money on these policies right now. It really is seeing something that looks dangerously like adverse selection. And frankly, there’s not that much the company can get out of regulators at this point, because the Congressional Republicans have cut off the flow of funds. So while Obamacare certainly isn’t dead, or certain to spiral to its death, it’s got some very worrying symptoms.
Comments Off on We’re in “a terrible, horrible, no good, very bad news cycle for Obamacare”
Here’s a very disturbing economic issue
At Coyote Blog, Warren Meyer shares his concerns about the constantly increasing regulatory burden of American business:
5-10 years ago, in my small business, I spent my free time, and most of our organization’s training time, on new business initiatives (e.g. growth into new businesses, new out-warding-facing technologies for customers, etc). Over the last five years, all of my time and the organization’s free bandwidth has been spent on regulatory compliance. Obamacare alone has sucked up endless hours and hassles — and continues to do so as we work through arcane reporting requirements. But changing Federal and state OSHA requirements, changing minimum wage and other labor regulations, and numerous changes to state and local legislation have also consumed an inordinate amount of our time. We spent over a year in trial and error just trying to work out how to comply with California meal break law, with each successive approach we took challenged in some court case, forcing us to start over. For next year, we are working to figure out how to comply with the 2015 Obama mandate that all of our salaried managers now have to punch a time clock and get paid hourly.
Greg Mankiw points to a nice talk on this topic by Steven Davis. For years I have been saying that one effect of all this regulation is to essentially increase the minimum viable size of any business, because of the fixed compliance costs. A corollary to this rising minimum size hypothesis is that the rate of new business formation is likely dropping, since more and more capital is needed just to overcome the compliance costs before one reaches this rising minimum viable size. The author has a nice chart on this point, which is actually pretty scary. This is probably the best single chart I have seen to illustrate the rise of the corporate state:
Comments Off on Here’s a very disturbing economic issue
Canada’s dubious gains from the TPP
Michael Geist gives an overview of the pretty much complete failure of Canadian negotiators to salvage anything from the Trans-Pacific Partnership agreement:
The official release of the Trans Pacific Partnership (TPP), a global trade agreement between 12 countries including Canada, the United States, and Japan, has sparked a heated public debate over the merits of the deal. Leading the opposition is Research in Motion founder Jim Balsillie, who has described the TPP as one of Canada’s worst-ever policy moves that could cost the country billions of dollars.
My weekly technology law column […] notes that as Canadians assess the 6,000 page agreement, the implications for digital policies such as copyright and privacy should command considerable attention. On those fronts, the agreement appears to be a major failure. Canadian negotiators adopted a defensive strategy by seeking to maintain existing national laws and doing little to extend Canadian policies to other countries. The result is a deal that the U.S. has rightly promoted as “Made in America.” [a video of my recent talk on this issue can be found here].
In fact, even the attempts to preserve Canadian law were unsuccessful. The TPP will require several important changes to domestic copyright rules including an extension in the term of copyright that will keep works out of the public domain for an additional 20 years. New Zealand, which faces a similar requirement, has estimated that the extension alone will cost its economy NZ$55 million per year. The Canadian cost is undoubtedly far higher.
In addition to term extension, Canada is required to add new criminal provisions to its digital lock rules and to provide the U.S. with confidential reports every six months on efforts to stop the entry of counterfeit products into the country.
Comments Off on Canada’s dubious gains from the TPP
QotD: Rolling Stone
… Rolling Stone morphed into AARP Magazine so slowly, I hardly even noticed.
Ed Driscoll, “Plutocrat Millionaires Insult Military Veterans”, PJ Media, 2014-11-14.
Comments Off on QotD: Rolling Stone
