Take Pitty On Your State Insurance Commissioner

I watched President Obama talk today about administrative remedies that his administration is going to make so that he can make good on his promise of "if I (oops, I mean you) like your insurance plan, you can keep your insurance plan, period."

Either Mr. Obama knows nothing about how insurance companies do their business, or, he knows all too well...

Insurance regulation falls within the purview of state government, since it is not an enumerated power of the United States Constitution.  This means that the insurance companies have to re-apply to the state insurance boards where they sell products, to every state where they sell products, and ask for approval to sell the old products.  And most likely, these will not be under the same rates.  I have never seen this process take shorter than months (having been in the insurance industry).

But, Mr. Obama has done his part.  Blame for losing your plan can now be placed on either the state insurance commissioners or the insurance companies if they decided not to re-instate products for which cannot be sold to new customers (a big waste of time and money), or both.

Problem solved and promise kept!

Republican Stategery

In the Wall Street Journal this morning (and in many news casts), the reports are all about law makers' desires to fix the Affordable Care Act.

Did I miss something?  Republican strategic ineptness is astounding.

The Republicans practically committed political suicide "shutting down" the federal government.  It is truly amazing to me that so many people got so worked up over not being able to go to the park.  The federal park system did seem like the only government program affected by the "Great Shutdown of 2013."  In any case, Republicans went to the mat over shutting down the federal government over a desire to repeal or change the Affordable Care Act.  It was laudable but foolish.  Democrats would not budge on changing it, period.

Now the Obama administration and Democrats generally claim ignorance to the effect of millions of people losing their ability to renew plans in the individual insurance marketplace.  Never mind it was predicted and documented in the federal register back in 2010.  If you think the current situation is bad, just wait until the employer market is impacted.  In the June 17, 2010 Federal Register on page 34553, a Kaiser Foundation employer survey is quoted that predicts between 39% to 69% of employer plans will lose grandfather status (that is the "if you like your plan, you can keep your plan, period" rule) in 2013.

Message to Republicans: Leave the ACA Alone!  You spent so much capital in the shutdown trying to change the ACA.  You showed that you wanted to make changes for the very reasons that are now becoming known.  But that time has now passed.  As Americans in general and independents in particular see the impact of left-winged Democratic socialism, they will flock back to the Republican party.  All you need to say is vote for Republicans in 2014, and change will be on the way.

HHS Wolves Guarding The Privacy and Security Hen House

As a former technology executive of a health and welfare benefits technology company, I am well versed in privacy and security regulations governing the protection of health information.  Those regulations are promulgated by...wait for it...the U.S. Department of Heath and Human Services, or HHS.  Yes, the very same department responsible for the failed rollout of the insurance marketplaces of 34 states.  If the totality of the problem was simply the inability of HHS to sell insurance products through their web site, that would be one thing...

Security and privacy regulations of "protected health information", or PHI, are governed by a law first passed in 1996 called the Health Insurance Portability and Privacy Act (more commonly know as HIPAA).  That law, associated amendments, and the HITECH act enacted as part of the infamous "shovel ready" American Recovery and Reinvestment Act of 2009 (or ARRA) and their associated regulation have transformed the information technology, data handling, and personnel management environment for companies (or their departments) that deal in personal health information.  There are stiff penalties and disclosure requirements for compliance failures.  The Office for Civil Rights (OCR) maintains a "wall of shame" for those covered entities that have faced enforcement action.

In the businesses where I served, our company would sign "business associate" agreements with our clients.  The purpose of those agreements was ensure that our company and those sub-contractors that we hired would appropriately safeguard protected health information of our client's employees.  Those safeguards were stringent and costly.  They ranged from hiring practices (including background checks) to numerous technological investments, to extensive training and finally a rigorous audit regimen.

This leads me to numerous questions now that the federal government is so involved in the procurement of health care:

1. Is HHS subject to the HIPAA law?
2. Is HHS a business associate to the health plans to which they are collecting personally identifiable information for the provision of health care?
3. Have contractors that HHS is using to build the technology for the marketplaces signed business associate agreements with HHS?
4. Has an independent auditor (not the OIG, which is again...part of HHS) established an opinion on the appropriateness of operational controls (via a Reporting on Controls at a Service Organization of the SSAE16 auditing standard or other established auditing standard) to assure those using the exchange that their information will in fact be safeguarded?
5. Will HHS disclose their own privacy violations to the OCR, and will those be posted on their own wall of shame?

Katy ISD Board of Trustees, Fix THIS: Portable Education vs. Permanent Football

Following up to my earlier posts, I decided to research the portable education infrastructure that Katy ISD is grappling with.  Ask yourself...is this the best we can do for our kids' public education in a district with vast resources?  I believe (I hope) this is why the November 5 bond did not pass.  KISD Board of Trustees - please prioritize the elimination of portable education first prior to providing for more permanent football.

Katy Elementary Schools

Fun Facts: 35 elementary schools, 27 schools with portable buildings representing 77% of the schools with temporary classrooms, and 174 portable buildings in all.  This information derived from pictures from Google Maps.

Fun Conjecture: Each portable building holds two classrooms (this I know because I attended classes with my daughter), each classroom holds ~20 kids, and lets assume 80% occupancy (this is a WAG), so that is 174 * 2 * 20 * 0.8 = 5,568 children in portable education facilities.  Of the 30,602 elementary students (derived from page 35 of this presentation), I estimate ~18% are attending class in portable buildings.  Ask yourself: how many elementary school students participate in extracurricular activities that would be hosted at the new proposed football stadium?  I am going to guess none, zero.  So, $70MM that benefits none of the 30,000 elementary students while 1/5 of them attend class in temporary facilities.  Hmm...

Katy ISD Board of Trustees: Reset Your Priorities

The voters spoke on November 5th and it was not even close.  Katy ISD voters, by a 55 to 45 margin, said no to extravagance over education.  The area's rapid growth has strained basic infrastructure.  In my last blog, I wrote about my experience in my daughter's overcrowded elementary school.  That school is not an exception.  In the coming weeks, I intend to document, for the benefit of Katy ISD Trustees, the scope of the problem.

This was never a battle over taxes, per se, or whether a new stadium was actually needed, or whether the trustees played loose with the justification.  A new stadium probably is justifiable.  A STEM center IS warranted (the Wall Street Journal just this morning has an article documenting MBA migration away from finance to tech).  The Ag Center is in keeping with the cultural roots of the area.  This is simply a statement about priorities.  Cover the basics first...adequate classrooms and adequate transportation.

I hope Katy ISD Board of Trustees got the message, but lets not rely on one ballot box defeat.

Open Letter to Katy ISD Board of Trustees: Your priorities are wrong

I live in Grand Lakes, a subdivision in the Katy Independent School District. We could live anywhere, but my wife and I choose to live here with our two daughters because of the outstanding school system in this far west Houston suburb.  My daughters attend Beckendorf Junior High and Alexander Elementary.  Our property taxes are high, but I accept it because I believe that the educational value for the dollar is good.  Both of these schools are outstanding.

On November 5th, 2013 voters will decide on a $99 million bond referendum to build a $69.5 million stadium, a $25 million agriculture science center, and a $4.5 million science, technology, engineering, and math education center.  Mr. Bill Moore, CFO of Katy ISD is quoted in the October 31, 2013 newspaper The Rancher to the effect that taxes will not have to be raised to pay for the bonds.  I have no reason to doubt the assertion.  Set aside for a moment then, that if true, it means that our tax rate is higher than it needs to be...

I walked around the Alexander Elementary campus numerous times yesterday, as I participated in the very rewarding Watch D.O.G.S. program sponsored by our local PTA.  I also sat inside my daughter's classrooms.  The 5th grade is mostly situated in outdoor portable buildings.  Alexander has 11 of them.  They are windowless and cramped.  What struck me the most was the disruption caused by kids having to get in and out of the classroom.  The doors, rightly, because the buildings are outside on the generally unsecured campus grounds, are automatically locked.  You need a key to get in to the classroom and also to the main building.  There is one key in each classroom, and so when kids need to go the the library, or the bathroom, etc., a student "key master" as I called him, goes with the kids so they can be let back in as a group.  Otherwise, someone is constantly opening the door to let students in.  Frankly, it was insane.  But I marveled at how the students managed to focus on their work.

Katy ISD Trustees, on this bond issue, you have your priorities wrong.  Is it really necessary to build a $70 million stadium when our kids' classrooms are like this?  I have a suggestion...allocate money to existing schools to get kids out of portable buildings, build a modest stadium with basic bleachers, and use the existing portables freed up from the schools for any indoor needs at the stadium.  My guess is that this can be done without raising taxes too, and it will delay the need to raise them some time in the future.

I voted no on this bond.  Do not interpret that vote as a failure to acknowledge facility needs (extracurricular needs included).  I voted no because the priorities were wrong.  Forego extracurricular extravagance and favor frugality.  Mr. John Eberlan, stadium design bond committee member, states that "some fans will be turned away during marquee play-off matchups due to capacity issues."  If that happens with something more modest, so be it.  Build facilities for education first and extra curricular activities second.

Something Called A Debt Ceiling

Earlier this week, Professor Obama gave the country a lecture about "something called a debt ceiling."  My wife and I looked at each other, stunned.  It was being explained to "the people" as if we can't understand the meaning of two simple English words.  And it was explained as something being in crisis outside the realm of Mr. Obama's making.

To quote a civil rights leader:

Let's talk right down to earth in a language everybody here can easily understand.  Everyone agrees that America has a very serious problem.  Not only does America have a serious problem, but the people have a problem.  America's problem is us.  We're her problem.

Malcom X

Message to Grassroots

October 10, 1963

 The plain language I am talking about is called a credit limit, and like most families that deal with their own credit limit every day, the government's credit limit is maxed out.  Finally.  But self-reflect on the reason why.  We are the reason.  We elect the politicians that continue to spend, continue to grow government.  It is because we have our hand out, and Mr. Obama has used that fact to his advantage.

Malcom X was speaking of the oppression of the white man over the black man, and the usefulness of bloody revolution to affect change.  In an ironic twist, and by a measure of how far the country has come in the 40 years since his speech, no revolution was required.  An election did the trick.

President Obama is using the government's money, our money, to wield his power to impose social change.  The government spends so much money now, that we have to raise more in order to demonstrate to debt holders that we have a means to sustain the current debt trajectory.  Where is that money going to come from...

Money means power.  As the government controls more money, it wields more power.  This power restricts liberty.  This power restricts the pursuit of happiness.

Put your hand in your pocket.  Let us change the words to make the meaning clear.  America has reached her credit limit, and by doing so, has breached the constitutional covenant to secure the people's inalienable rights. Those rights are only secured by limiting the government's access to money.  If we fail to take a stand now, the next revolution will be fought between those with their hand in their pocket and those with their hand out.

Height of Irresponsibility

Let's role play for a moment...

You are the CEO for a charity.  You have a strategy to grow those services, based on commitments you made to the board of directors, which selected you for the job.  In the past, you have borrowed money to fund worthy programs that your charity supports, and you have accumulated a debt that takes 10% of the money you take in to service.  That debt, over the years, has taken many forms and comes from many sources...banks, corporations, and individuals.  Part of the reason it has been so easy to accumulate the debt is because of your benefactors.  You have wealthy benefactors you can count on for roughly 60% of your operating needs, but you need to find the other 40% from somewhere else, because your budget for services rendered has grown so large.

Your benefactors are wise.  They placed certain controls in your company's charter.  You have an upper limit on which you can borrow, and you have to go back to them and ask to have it raised if you want to spend more than you take in.  This has also built additional confidence with your current debt holders, but more importantly, your future debt holders.  You have always paid your debts because your benefactors are so reliable and because these controls provide a reality check on growing services larger than can be sustained.

Your benefactors recently have grown concerned that the debt limits have grown so large, they have been reluctant to allow you to grow it any larger.  Your charity is very popular and many people know about it.  So, you have a plan...you and your CFO are going to go on TV and tell everyone that if the benefactors do not raise the company's debt limit, you may default on your debt holders debt payments.  Everyone hears the message, including future debt holders, because remember, you still have to borrow to sustain to your budget.

Height of irresponsibility?

Consider this...President Obama is the CEO of the United States, elected by the Board of Directors who also happen to be the wealthy benefactors, Tim Geitner is the CFO.  The debt holders really are banks, corporations, and individuals.

How have their actions been any different than the role play?

No Good Crisis

It is ironic that President Obama's use of crisis to affect change may ultimately tear down The Great Society.  He actually thought that he could use confidence eroding terms like "government default" and "economic catastrophe" to his advantage by getting congress to pass more spending without forcing hard decisions on what the country can afford.

The U.S. is not yet to the point of being unable to service debt with generated revenues.  Speaking so publicly and repeatedly of government defaulting on its obligations means one of three things: 1) its simple scare mongering meant to strong arm others to go along, 2) the U.S. would actually choose NOT to pay creditors first, or 3) and perhaps most ominously, we physically CANNOT choose who to pay when, because we have not built the information systems necessary to prioritize payment (I cite "Bracing for Fallout If Debt Talks Fail" by Damian Paletta, page A4, The Wall Street Journal, July 23-24 2011).

If the United States would actually choose not to pay creditors, and thus send payments to fund domestic obligations first, can one imagine what will happen to interest rates?  Can one imagine what would happen to banks that hold no reserve against the change in value of U.S. treasury bonds (which will naturally plummet)?  No responsible financial manager would ever do this, even if the news headline reads "China Gets Paid Before Grandma", unless that planner were a narcissistic politician...

Is it possible that the most powerful country in the world, with the most advanced technology in the world, that spends more money on government than any country in the world, did not add payment prioritization mechanisms to its financial management system, after the debt debates in the 1990's?  Irony truly indeed if we actually have the cash to service our debts yet we cannot sort the debt service payments from the Great Society payments.

Mr. Obama as the chief executive of the government, will be presiding over the most unprecedented spending prioritization exercise of the Great Society ever imagined.  In other words, a tear down.  His cynical strategies have come full circle.