October 2009 Archives
October 16, 2009 1:05 PM
The health insurance industry got a sweet deal in return for their agreement to support health care reform legislation in this Congress. They will get millions of new customers, and were able to take off the table in this Congress many other potential health care provisions that would impact health insurers, but could have significantly reduced health care costs. The Democrats worked to keep as much of their end of the bargain as possible, but in the Senate Finance Committees healthcare package passed this week Senator Baucus was not able to deliver as many new customers as the healthcare insurers and many Democratic leaders had hoped.
Considering the many other provisions Congress and the Administration could have included in the original package, the Senate Finance healthcare reform package is still a bargain for healthcare insurers. For that reason it is surprising that the insurers have broken the agreement by running the Medicare ads last weekend. On the plus side, the insurers' abrogation of their commitment to support healthcare reform legislation does create a wonderful new opportunity for the introduction of a supplementary healthcare insurance bill to create some additional healthcare insurance cost savings.
We suggest that Congress introduce another healthcare bill that would complement and follow the one now moving through Congress. That bill would allow healthcare insurers to compete across all state lines, direct a federal study of additional ways to increase competition/reduce costs in the health insurance sector, and (just as a backup), also prohibit preexisting healthcare insurance exclusions in the future. No doubt creative legislators and some of the folks at the White House could come up with additional provisions to reduce health insurance costs. They should title the legislation the "American Healthcare Insurer Payback" bill (AHIP).
This new package would also give the health insurers some additional legislation to focus their 2009 advertising dollars (and our insurance premiums) on, and the diversion would hopefully make it more likely for an amalgamation of currently pending healthcare bills to eventually pass. Since deals like the one made with AHIP are usually good only through one Congress anyway, this new complementary package would also give Congress an early start on working out the bugs and refining the measure so that it will be shovel ready for early serious consideration in the next Congress.
October 12, 2009 11:42 AM
A Congressional Oversight Panel recently concluded that the Obama administration's Home Affordable Modification Program (HAMP) is not going to be able to address many troubled mortgages. The program was not designed to address foreclosures caused by unemployment, and many borrowers also have loans that aren't eligible for the program. requirements. Even if it meets its goal of making 25,000 to 30,000 loan modifications each week, half of expected foreclosures won't be addressed. Many of the HAMP modifications are unsuccessful because lenders are not making modifications that are affordable to borrowers.
The Panel missed a possible fourth fundamental weaknesses in the HAMP program - fraud. A government witness at a recent House Financial Services Committee hearing testified that some mortgage modifications scored as HAMP loan mods were really normal refinancings of healthy mortgages. The lenders motivation for doing so would be to get the government to pay for the administrative costs (they are subsidized by HAMP) and earn points with the Obama administration for "doing the right thing". Both Congress and the Congressional Oversight Panel should investigate this allegation because it would have a significant impact on the actual success of the program.
The lack of support for HAMP by the lender community suggests that the best alternative is to let independent third parties decide whether it is in the interest of the lenders' stockholders to rework troubled mortgages. This is a traditional and appropriate job for bankruptcy judges, and Congress should enact bankruptcy reform legislation to empower them to do so.
October 7, 2009 1:27 PM
I listened to an interview with the Democratic and Republican candidates for Governor of Virginia last night. One of the hot topics in Virginia (and many other states) is transportation infrastructure. All states have been hurt by the recession, and most also face the twin budget challenges of how to expand their transportation infrastructure to serve increased future demands, and a deteriorating transportation infrastructure. I was disappointed by what I heard.
Both candidates are missing a great opportunity to address Virginia's transportation gridlock. Both are currently focused entirely on how to pay for more road and transit projects rather than on how to reduce the need for those projects. The biggest problem is peak capacity. Traffic on major roads in the Washington DC area (rt.66, 495, 95, etc.) isn't bad during the middle of most weekdays. During rush hour those roads turn into parking lots. Many of Virginia's proposed transportation projects are mainly about widening the parking lots in urban/suburban areas. There is a better solution to spending all that money on widening those parking lots in Virginia and many other states, which in many cases would be creating capacity that is unneeded except during rush hours.
On August 3, 2,286 federal and private sector employees as well as 1,765 state employees participated in Telework Day in Virginia. Those teleworkers saved approximately $113,000, avoided driving 140,000 miles and removed 75.89 tons of pollutants from the air on one single day. If all eligible Virginia employees teleworked one day per week for a year, teleworkers in the Commonwealth would collectively avoid driving 602 million miles, remove 360,800 tons of pollutants from the air, and save $807 million in commuting costs. Over the course of a year this would equal a $1,822 annual raise for every teleworker in Virginia, and save 46 hours a year in commuting. A survey of Virginia's teleworkers also showed that 69 percent felt they accomplished more than a typical day at the office and 91 percent said that they would be more likely to telework again as a result of their experience.
Similar experiments in other states have also showed similar favorable results. The federal government has adopted policies to encourage telecommuting. Today an estimated 7% of federal workers telecommute. If we reduced the average number of daily commuters in Virginia and other state cities and suburbs by 20% (by letting them work at home one day a week), rush hour gridlock would probably end or be substantially reduced in most areas. The pressure on the state transportation infrastructure would thus also be greatly reduced. We need to move from Governor Kaine's worthy experiment to concrete permanent state teleworking policies to reduce rush hour traffic. The need for transportation infrastructure investments in Virginia can be substantially reduced by enacting permanent policies and incentives such as tax credits for homeowners and their employers to encourage teleworking. Both candidates should redirect some of Virginia's transportation budget to directives and incentives that would enable more Virginians to work from their homes, which in turn will reduce the need for many of the transportation infrastructure investments.
