June 15, 2010

Democrats Want to Kill Medicare Advantage

I wrote several blog posts in February and March explaining why Democrats hate Medicare Advantage.  To see them, look in the archives for those months.  Simply put, this was a program designed to encourage private alternatives to the traditional government Medicare program.  It provided lower costs to consumers and, at the same time, superior service.  The trade-off was that consumers had to deal with the doctors and hospitals on the insurer's list -- they gave up some freedom of choice.

The Wall street Journal has now published an interesting opinion article,  entitled Farewell, Medicare Advantage, which describes the attempts of the Administration to blame the inevitable cuts in the Medicare Advantage program on the insurance companies, rather than on the costs cuts required by the healthcare legislation.  It also notes some of the studies showing that Medicare Advantage improved the quality of medical care.  Thus, the Journal says:

"According to the Medicare Payment Advisory Commission, the Advantage HMOs that serve 15% of all seniors in Medicare cost on average two percentage points less for the same benefits than the traditional program, without fiat pricing.
Using government data, the insurer trade group AHIP estimates that Advantage beneficiaries in California spend 30% fewer days in the hospital than fee for service, 23% fewer days in Nevada. These successes and others have come about because Advantage allowed insurers and providers to collaborate, pay for value and coordinate care."

The article is well worth reading.  It is unfortunate that the Democrat's general antagonism to private enterprise leads them to  cut a program that provides major benefits to a quarter of all Medicare enrollees.

June 4, 2010

More Recognition of Increasing Cost of ObamaCare

Karl Rove has an excellent column this week in the Wall Street Journal about the inevitable increases in costs that will result from the ObamaCare bill.  He talks about the same Congressional Budget Office estimate that I blogged about two weeks ago -- it increased its estimate of costs by $115 billion more than it assumed when the bill was passed.  He also makes the interesting forecast that the government will seek to keep the Medicare Advantage plans from announcing their 2011 increases until after the election.  It's well worth reading, and there are 416 comments (most not very coherent) as of today.

Followup on Net Neutrality -- AT&T Adopts Tiered Pricing Structure for Cell Phones

Last week, I discussed in a lengthy post the current disputes about the pricing of joint products, including internet service.  I noted that the entire net neutrality fight was a dispute between heavy and more moderate users of internet bandwidth.  The latest news is that AT&T has attempted to do something to apply appropriate pricing so that bandwidth hogs are not subsidized by the rest of us.  David Pogue, the NY Times technology guy explains the new pricing structure.

June 1, 2010

Merchant Fee Battle Continues in House

According to one recent comprehensive trade press article, the battle over the merchant fee provisions in the Senate Finance bill is continuing in the House.  The article notes that while small merchants are the public face for merchants, it is really the large merchants that are doing lobbying and will benefit most from the legislation.

The article notes the consequences of one of the bizarre provisions of the bill.  The "reasonableness" requirement for merchant fees will not apply to banks with $10 billion or less in assets, to 99% of the banks in the country.  As the article explains:

"Meanwhile, merchant acquirers are trying to figure out how to make the back-office changes necessary to implement Durbin’s provisions should they become law. The measure would exempt from possible regulation the interchange income of financial-institutions with $10 billion or less in assets—a group Durbin said includes 99% of banks and credit unions. The amendment instructs the Federal Reserve to assess what would be “reasonable and proportional” debit card interchange based on the processing costs incurred. That means there could be one set of interchange rates for a few large debit card issuers and another set for all the others—on top of existing rates based on transaction volume and merchant type."

So the Senate has proposed to regulate the debit card charges of only the largest banks.  It has apparently given no thought to the competitive distortions this would impose on the debit card industry.