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What’s Missing in the Unemployment Insurance Discussion

One of the burgeoning problems of opening the country back up is that many employers are struggling to properly restaff their businesses. It appears that many employees are  refusing to go back to work because they prefer unemployment benefits. But workers are only entitled to these benefits if they cannot find work. They should legally lose the unemployment benefits if they refuse going back to work. Yet reporters covering this emerging situation seem ignorant of the concept.

I have been reading on far too many newspapers and websites regarding the inability of businesses (particularly restaurants) from all over the country unable to induce their employees to come back to work. The primary driver of this is the $600/week federal supplement to State unemployment insurance (“UI”) payments. This results, in many situations, in the employee being financially better off by being on unemployment than by working.

But this makes no sense. An employee is OBLIGATED to represent that he has no employment opportunity in order to get UI in the first place. Even asking his employer to not take him back is unethical, if not illegal. It is likewise unethical, if not illegal, for an employer to agree to such a request.  

What were these writers thinking when they wrote these articles?

Obamacare rate hikes Nov 2016

Obamacare futures continue to worsen in recent weeks. A couple of weeks ago, UnitedHealth Group chose to exit the majority of Obamacare exchanges because it expects roughly 2/3 billion in losses. Next, Aetna announced that it might break even this year, but called for Congressional fixes to ensure sustainability in the marketplace.

The immediate fix, however, will be another round of premium rate hikes — with some expecting to be more than 10%. However, timing may play a key in the November elections; the rate hikes will hit when Obamacare open enrollment begins on November 1, just days before the presidential and Congressional elections. If high premium rate hikes happen as expected, voters may express their resentment at the ballot box.

Some notes on the current state of insurers and exchanges:

**”Blue Cross and Blue Shield plans, which dominate many state exchanges, saw profits plummet by 75 percent between 2013 and 2015, according to an analysis by A.M. Best Co. A chief reason for the financial woes: “the intensity of losses in the exchange segment.””

**Health Care Service Corp., which operates Blue plans in five states, dropped out of New Mexico’s exchange for this year after regulators refused to approve rate hikes as big as the company sought. In Texas, Illinois and two other states where HCSC does business, medical costs for individual customers exceeded premiums by more than $1.3 billion last year.

**Just over half of the 23 nonprofit startups seeded with Obamacare loan dollars have collapsed after hemorrhaging red ink. The 11 surviving plans continue to struggle, with more than $400 million in combined losses last year.

**New York-based Oscar, the much ballyhooed, tech-savvy startup bankrolled with billions in venture capital dollars, is sputtering. Medical costs for Oscar’s individual customers in New York, where it has the most customers, outstripped premiums by nearly 50 percent last year, according to financial filings.

**Just 28 percent of HealthCare.gov customers for 2016 were between the ages of 18 and 34, significantly below the 35 percent threshold typically considered necessary for a balanced marketplace.

Health and Human Services has yet to put out fresh numbers on the amount of enrollees who have actually paid premiums. The enrollment numbers were already widely off the mark from the predicted CBO numbers calculated when Obamacare was passed. Though many think Obamacare is an issue that has expired with the American electorate, it is certain to become more important in the days leading up to election day in November.

IRS Questions and Answers Regarding Individual Insurance Forms


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Today, the IRS issued a series of questions and answers about health care forms that individuals will receive in the next few months. These forms are the 1095-A, 1095-B, and 1095-C. The information is “intended to educate individual taxpayers and describe the forms, who will provides them, and the purposes they serve. The Q&As also provide information as to when taxpayers can expect the forms and what taxpayers need to do with the forms once they are received.”

The bulletin answers the following questions:

1. Will I receive any new health care tax forms in 2016 to help me complete my tax return?

2. When will I receive these health care tax forms?

3. Must I wait to file until I receive these forms?

4. What are the health care tax forms that I might receive and how do I use them?

5. How will I receive these forms?

6. My employer or health coverage provider has suggested that I opt to receive these forms electronically rather than on paper. Are they allowed to ask me that?

7. Will I get at least one form?

8. Will I get more than one form?

9. Will I get a Form 1095-C from each of my employers?

10. How are the forms similar?

11. How are the forms different?

12. What do I need to do with these forms?

13. What should I do if:
I have a question about the form I received,
I think I should have gotten a form but did not get it,
I need a replacement form, or
I believe the form I received has an error?

14. Can I file my tax return if I have not received any or all of these forms?

15. Am I required to file a tax return if I receive one of these forms?

16. Should I attach Form 1095-A, 1095-B or 1095-C to my tax return?

If you have these or similar questions, you should read the IRS bulletin. You can see the full questions and answers here.

Obamacare: Bad Economics, Bad “Insurance”

Obamacare was sold to the public as universal health insurance. Insurance, in and of itself, is an exchange of a premium payment in return for a guarantee against specific loss criteria — such as damage or death. Prime examples of this are home and life insurance. And yet, health insurance in our country is not merely a guarantee against loss due to ill health; it encompasses much, much more. In this way, health insurance doesn’t follow the examples of other insurance industries, and therein lies a major reason for Obamacare’s growing economic difficulties ($1.85 trillion) and growing opposition.

Typical health insurance plans nowadays function by providing both insurance and coverage of certain medical costs. With ObamaCare comes the individual mandate, which most people understand the meaning to be that everyone is required to purchase for themselves a health insurance policy (hence the idea of “universal coverage”). The rationale in favor of the individual mandate is to safeguard against societal calamity — that if someone doesn’t have health insurance and they get into an accident or get sick, he doesn’t become a burden on society.

A mandate to buy health insurance might not sound so terrible on the surface to some, because it dictates the purchase of something that just about everyone wants to buy anyway since it is sensible to do so. But what makes Obamacare’s individual mandate so odious is that it it forces people to buy a product comprised of both insurance and a slew of pre-selected, prepaid medical care – which includes paying for stuff they don’t need. This intentionally misuses people’s ability to buy their own reasonably priced insurance. And because the mandate requires coverage to be universal, you have to include everything and everyone, such as preexisting conditions, high risk, etc. Therefore, the individual mandate requires an-insurance-that-is-not really-just-insurance, making reality very different than what it is thought to be.

From an economic standpoint, the individual mandate is a terrible idea because its sole purpose is to obfuscate the true cost of caring for those persons whose circumstances or risk, such as preexisting conditions or age, would result in paying more for health insurance. By controlling the prices through artificial means instead of private competition, the individual mandate creates a misallocation of resources, which is a failure of the fundamental principles of Economics 101.

A second major problem with the individual mandate as it is written is that you can forgo coverage in lieu of paying a penalty and then if you develop a condition, you can still get coverage without being denied due to a pre-existing condition. Unfortunately, this only serves to make prices more expensive for those who are healthy because there must be funds to cover those who are not.

I would argue that having health insurance coverage should not be a mandate in the strict sense of the word; i.e, one should not be required to purchase it. That being said, I also think that people should regard the ownership of a health insurance policy (a “true insurance”) as a basic necessity for proper living. The attitude toward health insurance coverage –- by citizens, legislators, and insurance companies alike —- truly needs a paradigm shift if health care is to be reformed for the better. The health insurance sector must be restructured to resemble other insurance industries such as life, fire, and home; in doing so, they will create a more competitive and dignified system as well as fulfill the purpose of safeguarding against an unforeseen disaster. Therefore, the actual components of what comprises “health insurance” (currently insurance and pre-paid medical care) must change.

The idea of helping everyone to carry health insurance sounds like a lofty goal. However, the individual mandate is the wrong way to attain this. From human point of view, the idea that all persons have coverage may be good, but imposing the mandate is bad for liberty. Turning basic economics on its head, it incentivizes the wrong things and creates most expensive health care possible.

The government has never been efficient with other people’s money. The economics of the current health care law will only serve to reduce the quality of health care for our citizens because it lacks free market competition. A health care reform solution could be focusing on providing a ” true insurance” product that everyone could have – one that protects against having an extraordinary event happen whose economics is more than can be afforded. Obamacare is not an insurance; it is pre-paid medical care system whose product provides for all at all costs. Imposing an individual mandate for such a program is ultimately economically unsustainable. The current health care law should be overturned for the sake of the economic health of this country.

The Need for Reform: ObamaCare is not Health Insurance

The basic premise that everyone should be protected in case of serious illness or injury with appropriate insurance is not an unsavory idea. But the concept of an individual mandate does nothing. Not only does it not help with that problem of encouraging everyone to carry coverage, it confuses the entire idea of what “health insurance” is or is supposed to be — so much that it affirmatively discourages or reduces the likelihood that people will have insurance. I propose that the concept of health insurance should only really be related to major medical situations, like other true “insurances”.

The individual mandate is both unconstitutional and ineffective because it leads to a poor allocation of resources. In order to understand why, it requires an understanding between the difference of real health “insurance” and what currently counts as health insurance (a broad medical coverage plan).

Insurance, by definition, is a payment of a premium to cover the very unlikely event that would result in high economic consequences. Therefore, it has the effect of relatively low premiums to protect against that economic possibility.

In contrast, what counts as medical insurance in this country is a small portion of real insurance, but is largely pre-paid medical care: you pay your monthly premium which you get back every time you go to the doctor because you’ve already contributed x so many dollars a month which covers the doctors’ fees (minus a “co-pay” or “deductible”). It’s not an efficient practice, however, nor a cost-effective one. It gives the false impression that going to the doctor is cheap, when in reality, you’ve already paid in advance for doctor visits – that you may or may not have.

This is in contrast to other types of true insurance. I submit it is necessary to remodel the health insurance system after other insurance sectors – such as life, fire, or home insurance. For instance, it is both accepted and reasonable that you will pay more for life insurance at the age of sixty than at twenty-five. The reason for this practice is the understanding that the risk is higher.

Likewise, people buy fire insurance because the economic loss is from a fire is extraordinarily great and the cost for coverage is relatively low. But even with fire insurance, you pay more if you home is made of wood and not brick, and if you live farther from a fire station than closer — that is the matter of risk.

Everyone should have routine doctor visits. If everyone paid for those out-of-pocket, it would be more economically viable, because one would only be paying for what he needed – and would probably result in more healthy citizens who have an economic incentive to take better care of themselves.  Instead, the government intentionally combines and obfuscates the meaning and definition of insurance to include medical coverage or routine costs. The only people who truly need that are the same people who can’t afford anything — and should be treated like those who can’t afford routine food.

You don’t need insurance to go to a doctor. That is welfare. For the average person who pays 15-20K a year of medical coverage, a very large percentage of the cost is not insurance – it’s the prepaid care for a larger pool of people. Therefore, individuals are really overpaying when it is set up this way because the real insurance part is intentionally combined with health care so you can hide the cost of those with higher risks, i.e the cost is buried within premiums.

The term “individual mandate” is intentionally confusing. The individual mandate — as the administration would describe it — is a requirement that everyone buy their own health insurance. The basic concept of everyone having their own health insurance is not, in and of itself, terrible — if health insurance were actually insurance in the same way life or fire insurance are. Obama Care, however, is not  and therefore the individual mandate is not a mandate to buy health insurance as we’ve been told — it’s a mandate for universal and pre-paid medical care.

Since people of different ages, medical conditions, pre-existing situations, etc have different anticipated costs, the purpose of an individual mandate has nothing to do with getting people to buy their own insurance. It is the forcing of individuals to buy into a system that makes people pay for medical treatments that are not theirs, support welfare, and overpay for services in order to create a coverage that is similar for all person. That is legal plunder and anti free-market. The health care industry would best serve our citizens if Obama Care and the individual mandate was rescinded and if it restructured health insurance as a ‘true insurance’.