Free Markets, Free People

Daily Archives: April 23, 2012

Medicare Advantage: October surprise?

You remember the $500 billion Obama claimed would be “saved” from Medicare to help “pay for” the ObamaCare law?

Well, what that amounted to was slashing subsidies (i.e. reimbursement rates) for a popular supplementary program known as Medicare Advantage.

Problem: doing so will effect 12 million seniors.  Problem exacerbated: Seniors, who resist change especially to their health care coverage, are not likely to be happy.  Problem squared: Seniors will have to select a new program beginning October 15th, a few weeks before the election.

And both political parties know that seniors vote.  You can imagine the negativity of these cuts spreading like wildfire among senior communities in key states.

But, not to worry, our current most ethical and transparent administration in history has a solution:

Call it President Obama’s Committee for the Re-Election of the President — a political slush fund at the Health and Human Services Department.

Only this isn’t some little fund from shadowy private sources; this is taxpayer money, redirected to help Obama win another term. A massive amount of it, too — $8.3 billion. Yes, that’s billion, with a B.

And how will they deploy this money?

Benjamin Sasse and Charles Hurt explain:

But the administration’s devised a way to postpone the pain one more year, getting Obama past his last election; it plans to spend $8 billion to temporarily restore Medicare Advantage funds so that seniors in key markets don’t lose their trusted insurance program in the middle of Obama’s re-election bid.

The money is to come from funds that Health and Human Services is allowed to use for “demonstration projects.” But to make it legal, HHS has to pretend that it’s doing an “experiment” to study the effect of this money on the insurance market.

That is, to “study” what happens when the government doesn’t change anything but merely continues a program that’s been going on for years.

Obama can temporarily prop up Medicare Advantage long enough to get re-elected by exploiting an obscure bit of federal law. Under a 1967 statute, the HHS secretary can spend money without specific approval by Congress on “experiments” directly aimed at “increasing the efficiency and economy of health services.”

Past demonstration projects have studied new medical techniques or strategies aimed at improving care or reducing costs. The point is to find ways to lower the costs of Medicare by allowing medical technocrats to make efficient decisions without interference from vested interests.

Now Obama means to turn it on its head — diverting the money to a blatantly nonexperimental purpose to serve his political needs.

In an era of austerity, an executive department has what amounts to an 8 billion dollar taxpayer funded slush fund and has apparently chosen to use to help re-elect the president?

Really?

The good news is because of the attention brought to this ploy, just a couple of hours ago, the GAO spoke out about the planned use of the 8 billion dollars:

In a blow to the Obama administration on Medicare, government auditors Monday called for the cancellation of a costly bonus program for private health plans that congressional Republicans have criticized as a wasteful political ploy.

The nonpartisan Government Accountability Office said it’s not clear that the $8.3 billion Medicare Advantage bonus program will improve quality because most of the money is going to plans just rated average. The auditors did find, however, that the bonuses would temporarily ease the pain of unpopular cuts to insurance plans under President Barack Obama’s health care overhaul law.

The point of course, is it is a deferral of “pain” not any sort of look at an “experimental” means of improving health care.  It is election year politics with an 8 billion dollar price tag.

After all, the plan for ObamaCare was to have all the unpopular aspects of it kick in during 2013, after the election, after the President was unanswerable to the American people anymore and after he was provided with more “flexibility”.

The GAO is careful in its wording but read between the lines here:

GAO, the investigative agency of Congress, did not address GOP allegations that the bonuses are politically motivated. But, its report found the program highly unusual. It “dwarfs” all other Medicare pilots undertaken in nearly 20 years, the GAO said.

Most of the bonus money is going to plans that receive three to three-and-half stars out of a possible five stars on Medicare’s quality rating scale, the report said.

Available through 2014, the bonuses will soften much of the initial impact of the Medicare Advantage cuts, acting like a temporary reprieve.

This year, for example, the bonus program offset about 70 percent of the cuts in the health care law. Indeed, Medicare Advantage enrollment is up by 10 percent and premiums have gone down on average.

Or “Buying Seniors Off Until 2014”.  And yeah, if you’re still wondering, that’s politics.  The emphasized portions of both quotes are all you need to know to understand the “why” of my claim.  That reprieve would keep seniors from taking their angst and anger to the polls in November and the administration is eager to avoid that.

So, in the Chicago way, the Obama administration has figured out how to use tax money to help buy the next election.

Will the administration heed the GAO?  Will it cancel the program?

My guess is no – they’ll delay and prevaricate and do anything and everything they can to avoid killing the program.

At least until after the election.  Then?  Who cares.

Certainly not them.

Seniors, you’re being played for suckers.  You need to realize that.  And vote accordingly.

~McQ

Twitter: @McQandO

Economic reality welcomes new college grads

And it isn’t what they expected or hoped it would be:

A weak labor market already has left half of young college graduates either jobless or underemployed in positions that don’t fully use their skills and knowledge.

Young adults with bachelor’s degrees are increasingly scraping by in lower-wage jobs — waiter or waitress, bartender, retail clerk or receptionist, for example — and that’s confounding their hopes a degree would pay off despite higher tuition and mounting student loans.

An analysis of government data conducted for The Associated Press lays bare the highly uneven prospects for holders of bachelor’s degrees.

We continue to hear that we’re in a recovery, that we’re seeing better times, that all is now well.

Of course, it’s not.  In fact, as we mentioned in the podcast last night, we’re not seeing anywhere near the growth necessary to shake this recession.  Instead, we’ve found and are bouncing along the bottom (or at least what is the bottom for now – believe it or not, it could again get worse).

Unemployment numbers for the last two months have “unexpectedly” worse.  And while the official rate is 8.2%, most realize the real unemployment rate is much higher and in double digits.

That is the world today’s college grads are facing.  It is a buyers market, for those that are actually hiring college grads and so they are able to select among the best.  Guess what majors are faring best?

While there’s strong demand in science, education and health fields, arts and humanities flounder.

Majors with immediate applicability in still growing fields of course.  Meanwhile, there’s not much demand for the softer and less applicable fields.   And even in the majors where demand is still high, entry level jobs are of a lower type:

Median wages for those with bachelor’s degrees are down from 2000, hit by technological changes that are eliminating midlevel jobs such as bank tellers. Most future job openings are projected to be in lower-skilled positions such as home health aides, who can provide personalized attention as the U.S. population ages.

This is one of those teachable moments.  A sheepskin is no longer a guarantee to a high paying job.  And that’s certainly true of those who indulge themselves in a humanities or art degree, etc. 

College graduates who majored in zoology, anthropology, philosophy, art history and humanities were among the least likely to find jobs appropriate to their education level; those with nursing, teaching, accounting or computer science degrees were among the most likely.

While perhaps the brightest and best in those areas will indeed find good paying jobs coming out of the chute, the vast majority are going to be taking jobs, if they can find them, well outside their major field of study.

By the way, I use the term “indulge” above purposefully.  It would be nice to indulge yourself in something you might enjoy in college and major in it.  But then don’t whine when you find out that all of the companies you feel should have the benefit of your august presence aren’t as excited about your degree in gender studies as you are.

That gets down to the purpose of college to each person.  Is it a means of achieving a job and a life style to which one aspires and a willingness to do what is necessary to accomplish that?  Or is it a place one indulges themselves giving little or no thought to the reality that awaits them at graduation?

What we are seeing is the market for college grads making a very definitive statement.  It is sending signals.  It is telling everyone what type of degrees are being sought and which aren’t.  And because of the tightness of the market, it is making decisions on merit, with the brightest and best capturing jobs and the also ran’s waiting tables.

"I don’t even know what I’m looking for," says Michael Bledsoe, who described months of fruitless job searches as he served customers at a Seattle coffeehouse. The 23-year-old graduated in 2010 with a creative writing degree.

Imagine that … creative writing degree.  Wonderful stuff, but not to the market for those with college degrees.  One would think that a person pursuing that sort of degree would have probably researched that and have a plan which might not include someone else hiring them first (i.e. selling their work on a freelance basis, etc. and knowing how to do that).

Had Mr. Bldsoe had a degree in physics or accounting or engineering, he’d stand a much better chance of being employed in his field of study.  Then he could indulge himself in his creative writing passion.  In fact, it would likely give him the means to do that.

Instead … “you want a tall or a grande?”

I still haven’t yet figured out why supposedly bright people can’t figure that little thing out.  Markets are talking.  Markets are sending signals.  When you choose something as your major that these markets have no interest in, what do you suppose is going to happen unless you have a plan to go out on your own immediately?

They’re not going to hire you just because you feel your major is important.  You’re going to hire someone if they feel the major is important and  you have demonstrated competence in that field at a level they require.

This is the reality that, for the first time, many recent college grads are coming to grips with.

One thing this recession may finally do is drive home the idea that indulging yourself is a useless degree is not very bright or productive.

Want to study creative writing?  Fine.  They have minors as well in colleges.  Make it your minor.  But for heaven sake, take a clue and look at what is being demanded out there before declaring a major.  Certainly it may not be your passion, but then unless you want to spend your days immediately after college waiting tables or hoping for a labor sellers market, where jobs are plentiful, you had better commit to a useful major.

I know, I know, that supply and demand thingy again.  Gender studies majors aren’t into “markets” and “supply and demand” stuff. What’s wrong with me?  They have a college degree, the world should be beating a pathway to their door, no?

No.

Welcome to reality … and reality includes the immutable laws of economics whether one likes them or not.  And right now, those with useless degrees find themselves on the wrong side of the demand curve.

Don’t like economics?

Then content yourself with making frappes.

Otherwise, it’s time to wise up, use that superior brain for what it was designed and “indulge” yourself in something the job market finds useful and valuable.  Refusal to do that means a guaranteed rough transition into the real world, especially now.

~McQ

Twitter: @McQandO