Wednesday, February 16, 2005

Politicians and Your Retirement Funds

A WSJ editorial (susbscription required) discusses Gov. Ah-nold's proposals to convert California's largest pension plans to partial private accounts (similar to a 401k).

What are some of the problems of the defined benefit plans? Drains on state treasuries, aging workforces and

Mr. Angelides, a Democrat with gubernatorial aspirations, says that Governor Schwarzenegger's proposal would limit the "corporate governance" efforts of pension overseers. And it's true that, as shareholders in U.S. companies, Calpers and other pension funds have every right to worry about how businesses perform.

But instead of limiting their concern to earnings and return on investment, Messrs. Angelides and Hevesi, among others, have used their clout to promote their own personal political goals and constituencies. Mr. Angelides pushed Calpers to abet last year's union raid on Safeway, while Mr. Hevesi pushes policies and settlements that help his trial-lawyer contributors, most recently in the WorldCom directors' settlement. As long as these vast pots of pension-fund money are managed by politicians, such abuses are inevitable.

A not-so-recent post on this blog addressed this exact concern. A lot of money in the hands of politicians, er, elected officials, is a recipe for problems.

Wednesday, February 02, 2005

HSA's: A Failure in the Making?

A Reuters article, citing a report issued by the Commonwealth Fund, states that recently created Health Savings Accounts are going to lower the quality of care and put more Americans into debt.
Health plans with high patient-paid deductibles, embraced by many Republicans as a market-based solution to quell soaring medical-care costs, lead to poorer quality care and increasing patient debt, a study released on Thursday said.
As with many studies put out by think tanks, one must understand the philosophical underpinnings of the organization. The Commonwealth Fund's mission statement states the following:

The Commonwealth Fund is a private foundation established in 1918 by Anna M. Harkness with the broad charge to enhance the common good. The Fund carries out this mandate by supporting efforts that help people live healthy and productive lives, and by assisting specific groups with serious and neglected problems. The Fund supports independent research on health and social issues and makes grants to improve health care practice and policy.

The Fund's two national program areas are improving health insurance coverage and access to care and improving the quality of health care services. The Fund is dedicated to helping people become more informed about their health care, and improving care for vulnerable populations such as children, elderly people, low-income families, minority Americans, and the uninsured. An international program in health policy is designed to stimulate innovative policies and practices in the United States and other industrialized countries. In its own community, New York City, the Fund also makes grants to improve health care.

Draw your own conclusions, but it is always a good rule of thumb to understand where the ideas come from.

Medical Debts the Cause for Bankruptcy?

A Harvard Study was recently issued providing insight into the makeup of debts discharged in bankruptcy.
Half of U.S. bankruptcy filers say that out-of-pocket medical expenses led to their financial hardship -- and most of the people had health insurance, according to a Harvard University study.
Recent posts on this site have discussed the difficulty researchers have had in trying to understand the underlying causes of bankruptcies. This study appears to be different because it interviewed persons that filed for bankruptcy in an attempt to provide context for the bankruptcy filings.
For the study, researchers surveyed 1,771 filers in five states, and as many as 54.5 percent cited medical expenses as a reason for filing. In addition, the study showed about a 30-fold increase in medical expense-related bankruptcies since 1981.

Researchers interviewed 931 of the filers to glean more financial, insurance and medical information. They also viewed financial data from public court records and calculated out-of- pocket expenses, which didn't include insurance premiums.

The noted items above give me initial pause, because interviews weren't conducted across the board and 'out of pocket expenses' were calculated. Without having viewed the report in detail, (and relying on a reporter's interpretation) it is not reasonable to draw any conclusions.

However, this report is already rousing the politicians. The backdrop to this report appears to be the state of America's health care industry.

Senator Edward Kennedy, Democrat of Massachusetts, said the health-care system is creating ``tragic burdens'' for families. ``The new study is powerful evidence of the need for a new direction in health care. The problem has undoubtedly grown much worse in three years since the study was conducted,'' he said.
Bankruptcy legislation (discussed in previous posts) is also in the political realm. Specifically, how to handle medical debts in bankruptcy?
``Senator Grassley has reintroduced the bill that is widely known as the credit industry `wish list.' It makes no distinction between people who file for bankruptcy after melting down credit cards at the mall and people who have been severely ill and run up debts because they were seriously ill,'' Warren said.
Lastly, a developing theme of this blog is to 'follow the money' or the ideas. In this case, The
Robert Wood Johnson Foundation's mission can be found at this link. The first one strikes me as (probably) the mission/fund which supported this study:

To assure that all Americans have access to quality health care at reasonable cost.
While that sounds good, I would like to know how this vision is to be carried out...

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