Tuesday, February 25, 2014

Michigan test concerns superintendents

A new statewide testing system for Michigan’s public school students appears to be in the works, but superintendents are expressing some concern.

The system would be aligned with the Common Core standards for math and reading that the legislature approved last year.

The state Department of Education has contracts ready to implement something called the Smarter Balanced assessment system, but the fact that it would be new to students is worrying some school officials.

Among companies that have testing materials available, Smarter Balanced has been endorsed by the Michigan Assessment Consortium as most appropriate for the state. The Education Trust-Midwest, a statewide education research, information and advocacy organization also has endorsed Smarter Balanced.

A statement issued by superintendents from Macomb, Oakland and Wayne counties said that while Smarter Balanced meets a number of desirable criteria, “it is unclear whether or not Michigan has done sufficient field testing to assure accurate and adequate implementation of this new assessment system. Also, there are parts of the system still under development. We recommend due diligence on the state’s part before implementing and then using this new assessment system for accountability purposes.”

“I don’t have the confidence it’s going to be done right. Too much emphasis is put on one assessment,” said Riverview Superintendent Russell Pickell, echoing the formal statement by the superintendents.

“We believe a statewide assessment applied to every student in every grade needs to be carried out ONLY because it is required by the federal government in order to receive federal funds,” the superintendents said. “If not for that, we would not support a single statewide test given every year to every student for accountability purposes. If federal rules allowed, we believe that the state could accurately inform itself as to the progress of students on the standards via state-developed benchmark testing which could be done at three grade levels (such as 4,7,10) with a random sample of students.”

Pickell also questioned “the amount of time these tests take.” He said the state is being rushed into the new system because of deadlines.

He worries about how the test results will be used, and pointed out that it is so technology dependent — i.e., can only be taken online — some scores “may have nothing to do with achievement.”

The first time the test is used it can do nothing more than establish a baseline, Pickell said.
Wyandotte School Superintendent Carla Harting also indicated support for the concerns raised in the statement by the superintendents from the three counties.

The superintendents from the three counties acknowledged they appear to have no choice.

Earlier this month, officials from the Education Trust-Midwest addressed the legislature to voice support of the state’s plans to implement the new college- and career-ready state assessment system.

“Michigan’s new assessment system will provide us a powerful driver to transform our public schools’ teaching and learning — and ensure all of our students are college- and career-ready for today’s globally competitive knowledge economy,” said Amber Arellano, executive director of ETM.

However, ETM cautioned against state leaders allocating budget money to be used to support one state assessment for educator evaluations and to measure student performance, and another to measure student growth for school accountability purposes.

“Such a move would result in unnecessary additional testing time for students, and unnecessary and significant additional costs for the state to bear,” Arellano said.

“Our state’s planned new assessment system will generate far more reliable, helpful student growth data than Michigan has ever had,” said Sarah Lenhoff, director of policy and research for ETM. “These rich new data will help educators and schools tailor interventions and learning strategies for students, even in their K-3 years. If developed and funded appropriately, we will have such a system in place by spring of 2015.”

“This is a game-changer for our state,” Arellano said.

Tuesday, February 18, 2014

Michigan tax relief certain, but what form will it take?

That some Michigan residents will be getting a tax cut is virtually certain. The form it takes is very much up in the air, however, despite Gov. Rick Snyder’s support for a partial restoration of the Homestead Property Tax Credit.

Many Republicans are not happy with Snyder’s proposal, which would permanently raise the income cutoff for the Homestead Property Tax Credit to $60,000, still short of the $82,650 threshold that existed before the governor took office in 2011.

Snyder felt that tax relief should be targeted for lower- and middle-income families. His proposal would mean an estimated 1.3 million taxpayers would pay $103 million less in taxes in year one, equaling about $79 per filing, according to an Associated Press report.

State Rep. Patrick Somerville (R-Huron Twp.) indicated he would favor something that is broader based. He worries about “further complicating the tax code.”

Somerville instead favors a plan that would reduce the income tax from its current 4.25 percent to 4.15 percent on Oct. 1; to 4.05 percent in October of next year; and possibly to 3.95 percent the year after if the state has a surplus of $300 million or more at the time.

Pension tax relief also might be in order, he said.

Sen. Patrick Colbeck (R-Canton) said his first concern is the condition of Michigan’s roads, but he concedes there may be room for tax reduction. Colbeck, whose district includes eight communities in the southern portion of Downriver, said he likes “the idea of reducing property taxes,” and he also thinks that “promoting charities is a good way to help the poor.”

To that end, he indicated he would support an increase in the limit for charitable tax deductions. Colbeck feels the private sector is more effective in helping the underprivileged than the public sector.

Democratic lawmakers questioned for this colum did not respond, but Rep. Andrew Kandrevas of Southgate last year endorsed a Democratic plan to restore tax credits and deductions to middle-class families and repeal new taxes on retirees.

In a statement on his website, State Sen. Hoon-Yung Hopgood (D-Taylor) said “the governor’s incomplete restoration of the Homestead Property Tax Credit pales in comparison to the thousands of dollars in additional taxes he has placed on Michigan families, and his budget continues to rely on taxes on retirement income and the elimination of the child deduction and the reduction of the Earned Income Tax Credit.

“The proposed increased income threshold to qualify for the Homestead Property Tax Credit remains far below what it was before it was slashed by the governor earlier in his term, leaving thousands of middle class families unable to qualify for it and paying higher taxes as a result.”

Democrats have been consistent in their criticism of the governor and the legislature for raising taxes on individuals while cutting them on businesses in 2011.

Colbeck said it is certainly nice to be talking about a $1 billion surplus as opposed to the $1.5 billion deficit that faced lawmakers and Snyder in 2011.

“It’s tough to say what will pass,” Somerville said. It could be a “combination of everything.” He called the situation a “moving puzzle,” but said there should be enough in the surplus to provide significant tax relief, increase funding for roads and schools and set aside a rainy day fund in the range of $750 million.

There’s still time for taxpayers to weigh in. They should email their state representatives and senators.

Monday, February 10, 2014

What's wrong with retirement, part-time work?

The Affordable Care Act will lead to the equivalent of 2 million fewer jobs by 2024, according to the nonpartisan Congressional Budget Office, but that does NOT mean Obamacare is causing more unemployment.

These are people leaving the job market. Why is that a bad thing?

Many of these are folks who will be retiring early because with the ACA they can now rely on themselves to get health coverage instead of being dependent on their employer.

Again, why is this a bad thing?

Yet Rush Limbaugh is leading the charge among Obamacare critics by saying the law is turning people into “wards of the state.”

“You take away the desire, necessity, to work, you're effectively dehumanizing people,” Limbaugh said on his radio program.   “You are taking away from many people one of the primary sources of their confidence, self-identity, reason for being, particularly in men, but in more and more women now with feminism and so forth making its giant strides.  It's just a tragic thing here that's happening, and it's turning more and more people into satisfied wards of the state.”

What does he mean?  Are Social Security recipients wards of the state? This sounds a bt like Mitt Romney’s damaging remark about the 47 percent of the populace who are dependent on government.

Well, we’re all dependent on government in one fashion or another. It is what it is. The horse is out of the barn. You couldn’t turn the clock back if you wanted to.

But what’s going on here is very simple.

Previous to the ACA, people were dependent on their employers for health care, which in most cases they could only get by working fulltime. Everybody knows people who hold jobs solely because they need health insurance.

With ACA there are now choices. Many people are able to get their own health insurance at very low rates, especially if they qualify for the generous subsidies that are part of the law. As a result, many will opt to retire early or cut back to part-time status.

Retirements create job openings. The quicker older people leave the workforce the quicker opportunities will be created for younger people. Instead of a drag on productivity, energetic young people  could stimulate economic output.

ACA foes quickly — and erroneously — seized on the CBO report as proof that Obamacare is a job killer.  People can decide for themselves whether what is going on is a good or bad thing, but some of us feel that early retirement or cutting back on our hours is the door to our opportunity at this particular stage of our lives.

Limbaugh and his ilk can say that taking advantage of ACA subsidies or drawing Social Security benefits earlier rather than later makes people “wards of the state,” but the alternative, in some cases, is working in a virtual sweatshop. Limbaugh apparently thinks it’s a good thing to be stuck in a job you don’t want.

Money and careers are not the only things in life. There are other — some of us think finer — values in life: family, travel, fitness and volunteer activities, for instance.

What  do you think?

Saturday, February 8, 2014

Bipartisan measure could rebuild nation's roads, infrastructure

Taxpayers should encourage their federal lawmakers to support the Partnership to Build America Act so Michigan — and every other state, for that matter — can improve its roads.

The measure, officially House Resolution 2084, would create the American Infrastructure Fund to pay for the rebuilding of our country’s transportation, energy, communications, water and education infrastructure.

More than that, it would create incentives for companies to invest at home rather than abroad.

The AIF would be funded by the sale of $50 billion in bonds that would  have a 50-year term, pay a fixed interest rate of 1 percent, and would not be guaranteed by the U.S. government, according to a website explaining the program.

U.S. corporations would be incentivized to purchase these new infrastructure bonds by allowing them to repatriate a certain amount of their overseas earnings tax free for every $1 they invest in the bonds. 

The AIF could leverage the $50 billion of bonds at a 15:1 ratio to provide up to $750 billion in loans or guarantees.

The AIF would provide loans or guarantees to state or local governments to finance qualified infrastructure projects. The states or local governments would be required to pay back the loan at a market rate determined by the AIF, but this is something states would have a hard time doing on their own. There would be no federal taxpayer obligation.

HR 2084 was introduced last year by U.S. Rep. John Delaney, a Democrat from Maryland. It is a rare bipartisan measure in Congress, with 50 co-sponsors in the House of Representatives evenly divided between the two parties.

It was also introduced in the U.S. Senate last month by a small bipartisan group of senators.

Sadly  — incredibly, actually — none of the sponsors is from Michigan. That’s a shame because Michigan’s highway needs are plain for all drivers to see everyday.

A report released last month by TRIP, a national transportation research group, said Michigan’s bad roads cost the state’s residents
approximately $7.7 billion annually in the form of additional
vehicle operating costs, lost time and wasted fuel due to traffic congestion and traffic crashes.

That translates to an individual cost of $1,600 for Detroit area drivers, where 57 percent of major roadways are in poor or mediocre  condition.

Plus, highway conditions are critical to economic development.

“Increasingly, companies are looking at the quality of a region’s transportation system when deciding where to relocate or expand,” the TRIP study said. “Regions with congested or poorly maintained roads may see businesses relocate to areas with a smoother, more efficient and more modern transportation system.”

Our federal lawmakers need to hear from citizens. They need to put Michigan’s interests ahead of any narrow partisan considerations.

CBO underscores need to address national debt

It was just one paragraph in a 182-page report, but it was arguably the most important.

Predictably, it received virtually no media attention.

The Congressional Budget office’s non-partisan study on “The Budget and Economic Outlook: 2014 to 2024” said that “the large budget deficits recorded in recent years have substantially increased federal debt, and the amount of debt relative to the size of the economy is now very high by historical standards.

“CBO estimates that federal debt held by the public will equal 74 percent of GDP at the end of this year and 79 percent in 2024 (the end of the current 10-year projection period).”

And the consequences? They are potentially dire, according to CBO.

“Such large and growing federal debt could have serious negative consequences, including restraining economic growth in the long term, giving policymakers less flexibility to respond to unexpected challenges, and eventually increasing the risk of a fiscal crisis (in which investors would demand high interest rates to buy the government’s debt).”

And yet what CBO had to say on the impact of Obamacare got most of the attention.

Our government needs to address out $17-trillion-plus national debt while there is still time to avoid potential disaster.

Thursday, February 6, 2014

Fight bipartisan plan to tax Medigap

Senior citizens face the fight of their lives over Medicare and it’s  a battle they need to prepare themselves to wage.

For some time there has been bipartisan support to tax Medigap policies in order to control Medicare,  but now a new study is giving ammunition to advocates of this approach.

Bipartisanship is a great thing and extolled here at “Between Extremes.” But not this type of bipartisanship.

Chuck Austin of Oakland County (Mich.), head of the SeniorNews and Advocacy Coalition, called our attention to the study by University of Chicago and University of Texas researchers that claims Medigap policies are adding 22 percent annually to Medicare costs.  They propose a 15 percent tax on Medigap policies to discourage their use.

Medigap is supplemental private insurance senior citizens purchase to pick up expenses that  Medicare fails to cover. Medicare only covers 80 percent of most expenses and there is no out-of-pocket maximum on medical costs that individuals may incur.

Think of it. Without Medigap, senior citizens with serious illnesses such as older people normally suffer would end up in the poorhouse.

There is no disputing the figures the researchers came up with. But there is insufficient evidence to show that the costs are not covering vital health services, which, of course, is the whole purpose of Medicare.

"They can say nothing at all about whether that utilization is life-saving cancer care or discretionary back surgery," Bruce Vladeck, who ran Medicare under President Clinton,  told Kaiser Health News. "Maybe it would be a good paper in a graduate econometrics course, but it just doesn't reflect reality."

To be sure, Medicare expenses need to be controlled. But there are many other ways to do so, and many common-sense policies were advocated  by the President’s National Commission on Fiscal Responsibility and Reform in 2010.

But the idea of a 15 percent tax on Medigap policies is outrageous. Yet the idea of a tax or surcharge is supported by both President Obama and House Budget Committee Chairman Paul Ryan, according to KHN.

Senior citizens need to brace themselves to fight to protect their life savings.

Monday, February 3, 2014

New Republican health-care plan falls short

We have a guest blogger today. Rich Teets  is a retired automotive engineer with an
interest in health care policy. He is the chair of the healthcare task force for the Metro Coalition of Congregations, a group of faith based congregations joining together to advocate for the common good. 

By Rich Teets

 Republican senators Richard Burr, Tom Coburn and Orrin Hatch recently
provided a new health plan [1] which they claim is a good alternative to the
Affordable Care Act (ACA).

The new plan is the Patient Choice, Affordability, Responsibility, and Empowerment Act (CARE). The summary provided by these leaders is long on Republican trash talk about the ACA, and short on details. But the details provided suggest that this new plan would leave large holes in the healthcare safety net.

The first step of CARE is to repeal the ACA. It is replaced by relatively small vouchers to help low income people buy healthinsurance. The expanded eligibility for Medicaid that is
part of the ACA is replaced by a capped grant to the states and freedom to experiment.

The ACA requirements for quality standards in health insurance are eliminated. CARE includes some provisions to deal with pre-existing conditions, but it is unlikely these will
be acceptable to the insurance industry.

There are also suggestions to promote transparency
in pricing medical services and to reduce malpractice costs, both direct and indirect.

Consider first the subsidies offered to low income people
to help pay premiums. For people less than 200% of the federal poverty level (FPL) and ages 35-49, the suggested subsidy would be $2,530 for an individual and $6,610 for a family. A good
baseline for the premium cost for decent insurance is given by the average for employer provided insurance: $5,500 for an individual and $14,500 for a family.[2] So to buy
decent insurance, a low income individual would need to pay about $3,000 and a family would need to pay about $8,000.The FPL for an individual is $11,490 and for a family of 2 is $15,510. Clearly, this CARE plan would not allow these low income people to buy decent insurance. Even at 200% of FPL, people would not have enough disposable income to pay insurance premiums. In contrast, the ACA provides subsidies that allow an individual or a family of 2 living in metro Detroit and making just under 200% of FPL to buy good insurance for $1,000/year (with a deductible of $900 individual or $1,800 family).[3] These costs would still be challenging to a
low income family, but they are far more reasonable than the subsidies in the CARE plan.

Since the ACA subsidies are on a sliding scale, people making lower incomes would pay even less. This properly reflects the fact that people on very low incomes have almost no disposable income and little chance to build up savings. The CARE plan would repeal the expanded eligibility for
Medicaid, on the grounds that Medicaid is a “broken” system. Instead, the states would be given more freedom to innovate, and the growth in federal support for Medicaid would be capped at

In Michigan, it is expected that 400,000 people will qualify for the expanded Medicaid. It is not clear that the CARE plan would cover any of these people. In addition, health care cost inflation has usually been more than CPI+1. Therefore, over time the capped federal contribution would cover less and less.

Medicaid is far from ideal. In Michigan, Medicaid payment rates to doctors are about half the rates for  Medicare.[4] Consequently, many doctors will not take Medicaid. There are also
complaints by doctors that Medicaid red tape is burdensome. The main way to make Medicaid work better for the people it is supposed to serve is to increase payment rates to
providers. It seems unlikely this will happen. And the very low payment rates to doctors almost certainly mean that Medicaid is less costly to the federal government than
a comparable system based on private insurance.

Medicaid does have the advantage that the co-pays are very small (typically $1). Consequently, it is affordable to very low income people. It is hard to see how the CARE plan would adequately cover people in the 30-100% of FPL range that have been left out of traditional Medicaid. The ACA
extends full Medicaid to people making less than 138% of FPL. Unfortunately, about half the states have chosen not to extend Medicaid, even though the federal payments
would provide a strong net benefit to the state. Low income working people in these states are simply dependent on the generosity of strangers when it comes to healthcare,
and finding charity care is often a daunting task. This has real consequences. “Lack of health insurance causes roughly 18,000 unnecessary deaths every year in the United States”.[5]

The CARE program has two ways to deal with pre-existing conditions. One approach is to use high risk pools for people with serious and/or chronic illnesses. That has been used in the past, but in most cases the funding source was not adequate. Therefore, people who had to take advantage of these high risk pools faced very high costs. An unfortunate aspect of this approach is that people that are unlucky enough to have a serious illness must also incur very high costs.
Many people would say that insurance should spread those costs across the whole population. Some people believe that high-risk pools are a relatively low cost way to help people with pre-existing conditions. But, as discussed below, these people require a substantial fraction of the medical spending in the U.S.

The second way that CARE addresses pre-existing conditions is to prohibit underwriting for people who have insurance and want to buy some other insurance. This would mean that people who maintain insurance could never be discriminated against because of pre-existing conditions. This has two serious problems. First, it ignores the common problem that when people lose their job, they often do not have enough savings to continue to pay for insurance. Second, it is unlikely that insurance companies could live with this rule. Since CARE puts no requirements for quality on insurance policies, healthy people would tend to buy low cost, low quality poli
cies. Then, if they develop a serious illness, they could freely buy better insurance.

We have seen that the CARE program fails to provide a good safety net for low income people who need health insurance. It also fails to solve the problem of pre-existing conditions. The authors of the CARE program also make a number of statements that seem to show a lack of understanding of
the reality of health insurance in America. For example, they state that surveys show that 85-90% of Americans liked their insurance except for the cost.[6] But 50 million
Americans don’t have health insurance. This is about 15%. It is hard to believe that every American who has insurance likes it. Many of us know people who complain that their insurance doesn’t cover things they think it should. In addition to the 50 million uninsured, there are about
30 million who are underinsured.[7] Do all these people like
their insurance?

The CARE authors repeat a lot of Republican dogma about the ACA. Clearly the ACA can be improved and the rollout of the website was terrible. But as a Navigator, I have helped many people sign up for insurance, and many of them simply could not have afforded insurance before. The website is now working well enough that many people can complete the application without problems.

The ACA also has several features that Republicans usually endorse. In metro Detroit, there are more than 10 private insurance companies competing. The insurance generally has high deductibles, so consumers have “skin in the game” and are likely to be thoughtful about the cost of medical care and whether that care is necessary. Republicans usually say that this is the key to driving down health costs. In addition, the insurance companies are motivated to negotiate low
rates with the providers in their network, because this is the main way they can keep their premiums low (and thus compete for more customers).

The CARE authors repeatedly claim that the ACA is driving up insurance costs. This requires careful analysis. First, the news recently has been full of reports that the
recent increase in healthcare costs has been surprisingly small.[8]. Three common explanations are: the ending of patents on a number of expensive drugs, lingering effects of the recession, and the ACA. Second, the costs of ACA insurance are comparable to the costs of employer provided insurance. For example, in metro Detroit a 45 year old can by a Blue Cross Premier Silver plan with $1,400 deductible for $4,200/year. This is comparable to the premium cost for employer provided insurance with a similar deductible. Both of these facts contradict the Republican dogma that the ACA is causing a spike in health insurance rates.

There are several ways that the ACA may significantly increase the rates paid by some people who have been in the individual market. First, the ACA has quality standards that some older plans did not meet. In some cases, this is because the older plans had big holes in their coverage. Often people did not discover these holes until it was too late, and this accounts for a significant number
of bankruptcies. Some people believe that it is wrong for the ACA to require maternity coverage, pediatric coverage, and coverage for mental illness and substance abuse. If I don’t have kids, don’t intend to have kids, and have no mental or substance abuse issues,
why should I pay for insurance for these conditions? But many people believe that insurance should cover broad risk pools.

Every time one segments the risk pool, one creates winners and losers. A man will never have a baby, but a woman will never have prostate cancer. A lot of these costs tend to average out. And if people are allowed to buy insurance that is tailored to their needs, what happens to people with pre-existing conditions? They will have to pay very high costs, because they are bearing the full cost of the risk associated with their conditions. The point of insurance is to spread the risk broadly, so that the unlucky people who have health problems don’t also have to bear a
disproportionate financial burden. 
There is another way that the ACA can raise some people’s premiums, and the
explanation is somewhat complex. There are many anecdotes of people with decent
insurance whose premiums have gone up significantly under the ACA. To understand this, we must first understand the distribution of health spending.[9] In any population,
there will be many people who have relatively low medical spending – they are very
healthy. There will be some who have high spending because they have chronic or acute
illness or serious injuries. If we rank the whole U.S. population by medical spending (not including health insurance premiums) we find that half the population is quite healthy,
and only accounts for 3% of the spending, less than $850 per person. On the other
extreme, 20% of the population accounts for 80% of the spending. So in the past, the key
way for an insurance company to compete in the individual market was to sell to healthy
people and to avoid selling to unhealthy people. This was the reason for extensive
underwriting and emphasis on pre-existing conditions. Another way for insurance companies to reduce costs was to cap annual and lifetime spending on any one person. 22% of the total medical spending in this country is consumed by the sickest 1% of the population, with annual costs exceeding $52,000 per person. So capping the payments could significantly reduce a
company’s cost, but with serious consequences for the unlucky 1%.

Thus, people who had a pre-ACA insurance policy that cost much less than $5,000
for an individual or $15000 for a family were buying “healthy people’s insurance”. This
insurance was not sold to people who had pre-existing conditions. People who believe
this is a good system are saying there should be two risk pools – one for healthy people
and one for unhealthy people. [10] The healthy people will pay relatively low premiums.
The unhealthy people will not be able to afford insurance, unless the government
provides large subsidies. And since the least healthy 20% cover 80% of the medical
spending, it will take very large government subsidies to cover their costs. Many people
believe that insurance pools should be broad, so everyone shares the cost and the risk.
The ACA does this.

There is one other aspect of the pre-ACA insurance environment that deserves
consideration. Many people think that insurance companies could cancel policies for
people who became sick. That could happen if there was a lifetime maximum for
payments or if the company was able to claim the consumer had an undisclosed pre-
existing condition. But federal law forbids indiscriminate canceling of policies.
However, the natural functioning of the market may have gradually eliminated unhealthy
people from the market. Many consumers change insurance every few years. This is the
main reason why most current plans were not grandfathered from 2010 – they did not
exist in 2010.[11]

Insurance companies have an incentive to offer new plans at low cost in order to attract the healthy consumers. The high cost of insurance motivates consumers to look for lower cost plans. Thus, healthy consumers were likely to move into new, relatively low cost insurance. The unhealthy people were prevented from buying the new plans, so they were stuck in their old plan, in a risk pool that became increasingly unhealthy. This caused the rates for the whole pool to go up rapidly, and
eventually many of the people in the unhealthy risk pool were no longer able to afford
insurance. In addition, some people enter the individual market when they lose a job.
Again, only the healthy people in this pool are able to buy insurance in the low cost plans
on the individual market.

Thus, much of the increase in cost for individual insurance related to the ACA is
due to a transition away from insurance that was either low in quality or limited to
healthy people. We have seen that in metro Detroit, the unsubsidized cost for ACA
insurance is about the same as for a comparable policy in the employer-provided
insurance market. Employer-provided insurance does not discriminate between healthy
and unhealthy people. Thus, it does not have the distortions that were common in the
pre-ACA individual market.

The CARE plan has some discussion of the relative costs for young vs. old
consumers. In the ACA, premiums can only vary by a factor of 3 based on age from age
21 to 65. Republicans have criticized this, saying this overcharges the young. Some
have even encouraged young people not to sign up for insurance, in order to protest this
inequity. Continuing this argument, the CARE plan suggests a factor of 5 range in
premium vs. age would be more appropriate. Reference [12] shows that the medical
costs for 65 years olds are more than 3 times the costs for 21 years old. Given that young
people may earn much less than older people, one might think the ACA should have a
much bigger factor than 3 in age-adjusted premium costs. However, there are other
important considerations.

First, the ACA has good tax credits to help low income people pay insurance premiums and to reduce their deductible and out-of-pocket maximum. Thus, 20 year olds with modest income will pay much less than 1/3 of the premium cost compared to an older person with a high income. [13] Because the insurance will likely be affordable for many young people, it seems unethical to
encourage them not to buy insurance. Also, even the factor of 3 causes premiums for people in their 60s to be relatively high. For example, in metro Detroit, a 63 year old would pay $8616 for a Blue
Cross Premier Silver plan with a $1400 deductible (without tax credits). An individual
earning $46,000 per year makes too much for a premium tax credit. It will be difficult
for such an individual to afford $8616 per year. It doesn’t seem wise to increase this cost
by going to a factor of 5x for age rating.

The CARE plan also includes some ideas on increasing transparency in medical
costs. And it suggests some ways to improve malpractice issues. Both of these seem
worth pursuing.

In conclusion, the CARE plan would be interesting if it is a starting point for an
honest discussion on ways to improve health care in the U.S. It will almost certainly be
necessary to modify the ACA as we learn more about specific issues. For example, the
rule for affordability of employer-provided family insurance needs changing the “family
glitch”[14]). But the CARE plan seems to be a significant step backward from the ACA
in terms of proposals to cover low income people.

Republicans often complain about the transfer of wealth from rich to poor that is intrinsic
to the tax credits that make ACA insurance affordable. But health care costs in the U.S. are clearly too high for low income people to afford without substantial help. If one believes
that low income people should have health insurance, then it seems necessary for upper
middle class and wealthy people to help pay the cost. 

1. The Patient Choice, Affordability, Responsibility,
and Empowerment Act

2. U of M Center for Healthcare Research and Transform
ation: premium costs in Michigan for 2012
(report dated Sept. 2013)

3. Premiums and other insurance costs under the ACA can
be determined by using the “See plans before I apply” button on healthcare.gov.

4. Medicaid-to-Medicare Fee Index (Kaiser Family Foundation) http://kff.org/medicaid/state-

5. “Insuring America's Health: Principles and Recommendations”, report of the Institute of Medicine, Jan. 13, 2004. This is part of the National Academies, the top medical research people in the U.S.

6. The Patient Choice, Affordability, Responsibility, and Empowerment Act – Frequently Asked Questions

7. Commonwealth Fund National Scorecard on U.S. Health System Performance, 2011. chart 49

8. For example: Medical-Price Inflation Is at Slowest Pace in 50 Years (Wall Street Journal 9/17/13)

9. Health Care Costs, A Primer (Kaiser Family Foundation, May 2012)

10. “ObamaCare's Plans Are Worse”, Wall Street Journal
editorial (11/29/13)
The editorial claims that average costs for a pre-ACA individual policy
was $2280 per year. The authors argue that the ACA insurance costs much more, because it is too good (first class). But they don’t mention that average employer-provided insurance costs about $5500 per year (for the employer and employee shares of the
premium). (see ref. [2]). Why should the pre-ACA individual policy be so much cheaper? Either because
it is much lower in quality (has major coverage gaps) or, more likely, because it is only sold to healthy
people. The employer-provided insurance cannot discriminate between healthy and unhealthy employees;
it must cover the whole risk pool.

11. http://www.huffingtonpost.com/bob-semro/grandfathered-plans-the-a_b_4283333.html#

12. “The Lifetime Distribution of Health Care Costs”, Berhanu Alemayehu and Kenneth E Warner, Health
Serv Res. 2004 June; 39(3): 627–642. http://www.ncbi.nlm.nih.gov/

13. http://www.rwjf.org/content/dam/farm/reports/issue_brief
Implications of Limited Age Rating Bands Under the Affordable Care Act

14. Consumer Reports – the “family glitch” http://www.consumerreports.org/cro/news/2013/10/replacing-

Charter schools: A Michigan success story

If there were no Trillium Academy, fewer students in the Taylor area would have the opportunity for instruction in the performing arts.

It is one of the school’s specialties. It also illustrates the value of  Michigan’s charter school movement, now marking its 20th anniversary.

People forming charter schools can organize themselves around certain key components that they want in a school. That is the underlining principle for the concept: giving parents and students choices.

The state’s first nine charter schools opened in the fall of 1994.

Today, there are now 298 charter schools in the state educating more than 140,000 students — about 9 percent of the state’s school-age population.

Charter schools have particularly flourished in urban areas.

More than half the public school students in Detroit are now enrolled in charter schools, according to a recent report from  the National Alliance for Public Charter Schools.

That keeps Detroit second nationally among all cities, trailing only New Orleans, where 79 percent of students attend charter schools. Of the 100,255 public school students in Detroit, 51,083 were enrolled in charter schools, compared to 49,172 in traditional public schools.

It is hard to view charter schools as anything but a Godsend for the students and parents who make use of them. Their distinctives are alluring.

At Trillium, for instance, each student has his or her own educational plan, according to Superintendent Angela Romanowski. This approach has made the institution a “reward school” and it is in the top 5 percent in Michigan for its rate of student improvement.

Because it serves grades K-12, it is philosophically a one-room school house. Parents can send all of their children to the school.

Romanowski, who is in her 11th year at Trillium and originally worked in Monroe County’s Airport Community District as a Title 1 coordinator, said the family component is a special feature of the school. Parents, students and faculty members are all surveyed for input and teamwork is stressed.

Trillium has 695 students.

“It is hard to be much smaller if you are a high school,” Romanowski said.

Varsity basketball, softball, cross country and volleyball are offered, and the school partners with Gabriel Richard in Riverview for varsity football.

Three types of charter schools are allowed under Michigan law: 1) urban high school academies that can only be authorized by the state’s public universities; 2) schools of excellence that can replicate high-performing schools, function as a cyber school or base themselves on criteria that define superior academic performance; 3) strict discipline academies for the purposes of serving suspended, expelled or incarcerated young people.

The Michigan legislature last year lifted the cap on the number of charter schools that can exist in the state.

“We are still implementing choice,” said Dan Quisinberry, who has been president of the Michigan Association of Public School Academies (charterschools.org) since 1997.

Quisinberry said that while parents have access to testing data so they can rate a school’s achievement level, “it ought to be more understandable.” He is encouraged by a proposed A to F school accountability proposal now before the Michigan legislature.

Attaining equitable funding for charter schools also has been “difficult,” Quisinberry said, since there is still a “significant difference” between state funding for charters and conventional public schools.

Student performance of charter schools has been debated, but Quisinberry has pointed out that noted that research by Stanford University’s CREDO Institute, released last year, shows that the average charter school student in Michigan gains an additional two months of learning every year in reading and math. In Detroit, the study showed, it’s an additional three months of learning every year.

To be sure, the movement has its critics, who today are focusing on what they call the undue influence of corporate interests in the movement. But as Quisinberry said recently, “The research shows that charter schools are fulfilling the promise that increased innovation and accountability will lead to greater achievement …  That’s why so many parents are choosing charter schools. You can’t fool parents. They don’t care who runs the school, but they know when their child is in the right school.”

Clearly, charter schools are here to stay.

Saturday, February 1, 2014

Create more jobs, then raise minimum wage

Notice how the Democrats are always talking about extending unemployment benefits and, lately, raising the minimum wage.

For their own sakes, not to mention the nation’s, they need to tap into the depth of experience in their policymaking think tanks and recognize the problems we face are more complex, demanding a broader approach.

The public is ahead of them on this one. The reliable Rasmussen poll says the nation supports the minimum wage but opposes more unemployment benefits.

While raising the minimum wage looks appealing, the timing might be off. Even conservative economist Arthur Laffer suggests this might have merit, but only at the state level, where conditions vary from place to place.  To that end, a movement has been launched to raise the minimum wage in Michigan.

It should be kept in mind that we have several problems: income growth is dismal; the job recovery is the worst in modern history; employers are dealing with an array of problems right now, not the least of which is implementation next year of the Affordable Care Act.

Businesses are already behind the curve in creating jobs. Why throw another requirement at them right now?

The Republicans are correct in their focus on job creation. We’d get further if the two parties would work together on this one. They both have good ideas if they put them forth, eschewing the sound bites in the process.