AB 554 signed into law today
October 8th, 2007AB 554 was signed by Governor Schwarzenegger today. This law will permit non-PEMHCA agencies to join CERBT, the Section 115 Trust managed by CalPERS. LF
Thank You Governor Schwarzenegger
September 15th, 2007Wrapped up as we have been in the fight to abolish mandated actuarial assumptions, it’s easy to lose sight of the bigger picture. AB 554 has been enrolled and has been or will be presented to the Governor for signature or veto some time in the very near future. While our arguments against AB 554 make perfect sense to us, we must admit objectively that Governor Schwarzenegger would have much to lose and very little tangible to gain from vetoing the bill, at least in the short run. If I were in the Governor’s position, would I sign or veto? The fact is, I’m glad I’m not in his position. I fear enough retribution from just our stance on one bill. Multiply that by the thousands of bills that come before the Governor each year…. it is truly staggering. How can he know whom to believe? How can he take the time to research every bill on his desk?
We’ve been very impressed with his signing and veto messages - he’s consistent, thoughtful, honest, and for all appearances, has the welfare of most Californians at heart. And, it’s hard to keep from shuddering at the thought of how poorly Governor Davis rose to these challenges and how much worse off the State would now be had not Governor Schwarzenegger arisen on the scene to rid us of Davis’ endless dithering and uninformed decision making. Even our climate seems better now with Arnold at the helm.
When Governor Schwarzenegger takes the proverbial pen to AB 554, we of course continue to hope for the veto, because we believe that it is absolutely vital to check PERS’ meddling in affairs best left to private actuarial professionals. But, if the Governor signs the bill instead, we understand that he is doing so for his vision of what’s good for the State of California. For that we applaud him and thank Providence that he is in the Governor’s office at this critical time in history. We’d rather have Governor Schwarzenegger and AB 554 than Governor Davis and no AB 554. After all, whether AB 554 be signed into law or vetoed, the real fight is only just beginning.
LF
AB 554 - Down the Homestretch
August 28th, 2007The next hearing on AB 554 is Thursday August 30th, day after tomorrow. The bill was amended last Thursday (August 23rd) to strike the urgency measure and return the bill to being subject to a simple majority vote rather than a 2/3 majority as it had been for the last 2 months.
We have been unable to learn the reason for this change. Looks like we will just have to do what actuaries don’t do very well - wait patiently to see what the future brings.
I’m a big one for analogies, and I would have to categorize our recent foray into California politics as being analogous to doing a 3,000 piece jigsaw puzzle without the box lid, in the dark, and having the feeling that you’re missing a couple hundred of the pieces but not knowing for sure.
In summary, I am eager to get back to just doing actuarial work - it seems so simple by comparison to politics. And I’m sure there are those who will not be overly upset when they don’t hear my name for a while. It’s been a good dress rehearsal for the fight against socialized medicine - of course, that is the fight that really matters. And let me tell you, we’re gonna take a shellacking if we don’t get better organized.
LF
On Principles
July 30th, 2007When was the last time you made a conscious decision knowing it would cost you money? It’s an increasingly rare practice, as far as I can tell.
We all like to think of ourselves as highly principled. But then we come to that crossroads, (and it is a crossroads, make no mistake) where it might behoove us to “rethink” our position a little bit. Maybe we were too hasty to say we’d never bend or compromise. Well, what’s changed? Maybe we’ve just matured….. more likely, we just didn’t think about how following our principles might call for a little sacrifice.
The actuarial profession lectures all its members endlessly about the importance of ethics - about doing the right thing - and yet, when our profession’s reputation is really put on the line, the powers that be mysteriously turn a deaf ear. Well, it’s OK for the actuarial bodies to come down hard on the little guy - I mean, how else you gonna make sure he stays little? - but when a really difficult situation comes along, such as the one we now face in California - being muscled by the state retirement systems and by the unions that control them (and practically everything else) - those actuarial bodies simply aren’t anywhere to be found.
Blame it on East Coast bias - if it happens West of the Mississippi, and nobody hears it, does it really make a noise?
Anyway, like the Jayhawkers who crossed Death Valley in 1849 in search of a better life in California, we’re finding out now just how “on our own” we really are. And we’ll either find that better life in California, or leave our bones scattered along the way, but as long as we keep our principles, as Jesus Jones said, “there is no other place we’d rather be”.
LF
Politicians afflicted by myopia
June 28th, 2007Dan Walters: Politicians afflicted by myopia
By Dan Walters - Bee Columnist
Assemblyman Ed Hernandez is an optometrist by trade, so he’s an expert on the symptoms of myopia, or what most call nearsightedness — clearly seeing what’s right before our eyes but experiencing blurred vision while viewing distant objects.Political myopia is the tendency of officeholders — and often voters — to make decisions on the dynamics of the moment and ignore longer-term consequences. One example: a bipartisan decision seven years ago this month to spend most of a one-time, $12 billion state income tax windfall on permanent tax cuts and spending, thus creating a “structural deficit” that still plagues the budget.That brings us back to Hernandez, a West Covina Democrat who is carrying two particularly shortsighted bills that have cleared the Assembly and are pending in the Senate. One, approved Monday by the Senate Public Employment and Retirement Committee after a five-minute hearing, is a questionable fix for a decree by the nationwide General Accounting Standards Board that beginning July 1, state and local governments must account for long-term retiree health care costs.
About the writer:
- Reach Dan Walters at (916) 321-1195 or dwalters@sacbee.com. Back columns: www.sacbee.com/walters.
Who’s Really ‘Sicko’ June 28, 2007
June 28th, 2007
Who’s Really ‘Sicko’By DAVID GRATZER Toronto ‘I haven’t seen ‘Sicko,’” says Avril Allen about the new Michael Moore documentary, which advocates socialized medicine for the United States. The film, which has been widely viewed on the Internet, and which will officially open in the U.S. and Canada on Friday, has been getting rave reviews. But Ms. Allen, a lawyer, has no plans to watch it. She’s just too busy preparing to file suit against Ontario’s provincial government about its health-care system next month. Her client, Lindsay McCreith, would have had to wait for four months just to get an MRI, and then months more to see a neurologist for his malignant brain tumor. Instead, frustrated and ill, the retired auto-body shop owner traveled to Buffalo, N.Y., for a lifesaving surgery. Now he’s suing for the right to opt out of Canada’s government-run health care, which he considers dangerous.
Ms. Allen figures the lawsuit has a fighting chance: In 2005, the Supreme Court of Canada ruled that “access to wait lists is not access to health care,” striking down key Quebec laws that prohibited private medicine and private health insurance. In the U.S., 83 House Democrats voted for a bill in 1993 calling for single-payer health care. That idea collapsed with HillaryCare and since then has existed on the fringes of the debate — winning praise from academics and pressure groups, but remaining largely out of the political discussion. Mr. Moore’s documentary intends to change that, exposing millions to his argument that American health care is sick and socialized medicine is the cure. It’s not simply that Mr. Moore is wrong. His grand tour of public health care systems misses the big story: While he prescribes socialism, market-oriented reforms are percolating in cities from Stockholm to Saskatoon. Mr. Moore goes to London, Ontario, where he notes that not a single patient has waited in the hospital emergency room more than 45 minutes. “It’s a fabulous system,” a woman explains. In Britain, he tours a hospital where patients marvel at their free care. A patient’s husband explains: “It’s not America.” Humorously, Mr. Moore finds a cashier dispensing money to patients (for transportation). In France, a doctor explains the success of the health-care system with the old Marxist axiom: “You pay according to your means, and you receive according to your needs.” It’s compelling material — I know because, born and raised in Canada, I used to believe in government-run health care. Then I was mugged by reality. Consider, for instance, Mr. Moore’s claim that ERs don’t overcrowd in Canada. A Canadian government study recently found that only about half of patients are treated in a timely manner, as defined by local medical and hospital associations. “The research merely confirms anecdotal reports of interminable waits,” reported a national newspaper. While people in rural areas seem to fare better, Toronto patients receive care in four hours on average; one in 10 patients waits more than a dozen hours. This problem hit close to home last year: A relative, living in Winnipeg, nearly died of a strangulated bowel while lying on a stretcher for five hours, writhing in pain. To get the needed ultrasound, he was sent by ambulance to another hospital. In Britain, the Department of Health recently acknowledged that one in eight patients wait more than a year for surgery. Around the time Mr. Moore was putting the finishing touches on his documentary, a hospital in Sutton Coldfield announced its new money-saving linen policy: Housekeeping will no longer change the bed sheets between patients, just turn them over. France’s system failed so spectacularly in the summer heat of 2003 that 13,000 people died, largely of dehydration. Hospitals stopped answering the phones and ambulance attendants told people to fend for themselves. With such problems, it’s not surprising that people are looking for alternatives. Private clinics — some operating in a “gray zone” of the law — are now opening in Canada at a rate of about one per week. Canadian doctors, once quiet on the issue of private health care, elected Brian Day as president of their national association. Dr. Day is a leading critic of Canadian medicare; he opened a private surgery hospital and then challenged the government to shut it down. “This is a country,” Dr. Day said by way of explanation, “in which dogs can get a hip replacement in under a week and in which humans can wait two to three years.” Market reforms are catching on in Britain, too. For six decades, its socialist Labour Party scoffed at the very idea of private medicine, dismissing it as “Americanization.” Today Labour favors privatization, promising to triple the number of private-sector surgical procedures provided within two years. The Labour government aspires to give patients a choice of four providers for surgeries, at least one of them private, and recently considered the contracting out of some primary-care services — perhaps even to American companies. Other European countries follow this same path. In Sweden, after the latest privatizations, the government will contract out some 80% of Stockholm’s primary care and 40% of total health services, including Stockholm’s largest hospital. Beginning before the election of the new conservative chancellor, Germany enhanced insurance competition and turned state enterprises over to the private sector (including the majority of public hospitals). Even in Slovakia, a former Marxist country, privatizations are actively debated. Under the weight of demographic shifts and strained by the limits of command-and-control economics, government-run health systems have turned out to be less than utopian. The stories are the same: dirty hospitals, poor standards and difficulty accessing modern drugs and tests. Admittedly, the recent market reforms are gradual and controversial. But facts are facts, the reforms are real, and they represent a major trend in health care. What does Mr. Moore’s documentary say about that? Nothing. Dr. Gratzer, a practicing physician licensed in Canada and the U.S. and a senior fellow at the Manhattan Institute, is the author of “The Cure: How Capitalism Can Save American Health Care” (Encounter, 2006). |
![[Sicko]](http://online.wsj.com/public/resources/images/ED-AG037_gratze_20070627170303.jpg)
Customer Health Care
June 28th, 2007Customer Health Care
By GRACE-MARIE TURNER
Wall Street Journal
May 14, 2007; Page A17
It’s Friday evening and you suspect that your child might have strep throat or a worsening ear infection. Do you bundle him up and wait half the night in an emergency room? Or do you suffer through the weekend and hope that you can get an appointment with your pediatrician on Monday — taking time off your job to drive across town for another wait in the doctor’s office?
Every parent has faced this dilemma. But now there are new options, courtesy of the competitive marketplace. You might instead be able to take a quick trip on Friday night to a RediClinic in the nearby Wal-Mart or a MinuteClinic at CVS, where you will be seen by a nurse practitioner within 15 minutes, most likely getting a prescription that you can have filled right there. Cost of the visit? Generally between $40 and $60.
These new retail health clinics are opening in big box stores and local pharmacies around the country to treat common maladies at prices lower than a typical doctor’s visit and much lower than the emergency room. No appointment necessary. Open daytime, evenings and weekends. Most take insurance.
| Who needs magazines and crowded waiting rooms? |
Much like the response to Hurricane Katrina, private companies are far ahead of the government in answering Americans’ needs, this time for more accessible and more affordable health care. Political leaders across the country seeking to expand government’s role in health care should take note.
Thousands of free-standing primary care clinics have been operating for years in malls and main streets around the country, often staffed by physicians and many offering a broad range of health services. The retail health clinics are creating a new model with more limited services at lower prices and almost always staffed by nurses. The Convenient Care Association estimates there are about 325 of these retail clinics operating nationwide today. Seventy-six of them are in Wal-Marts in 12 states, but the company announced last month it will expand to 400 clinics by the end of the decade and 2,000 in five to seven years. They will be run by outside firms, including for-profit ventures like RediClinic as well as local and regional health plans and hospitals.
The industry is rapidly expanding. You can find a MinuteClinic in the CVS on the Strip in
Prices vary for services from flu shots ($15-$30), to care for allergies, poison ivy and pink eye ($50-$60), and tests for cholesterol, diabetes and pregnancy (less than $50). Competition already is starting to drive prices down.
Of all patients who have visited the clinics, almost half went there for a vaccination, and one-third received treatment for ear infections, colds, strep throat, skin rashes or sinus infections. Ninety percent said they were satisfied with the care they received. The nurses staffing the clinics are under physician supervision and follow strict protocols to refer patients to physicians or emergency rooms if problems are more serious.
Internists and family doctors are watching. Some see the clinics as useful in providing efficient care for a limited number of uncomplicated ailments, freeing physicians and hospitals to deal with more complex cases. But others are worried about lost business, fragmentation of care, and the quality of care if the clinics miss something serious.
Rick Kellerman, president of the
And competition also worked to force prescription drug prices down: When Wal-Mart announced last year that it was dropping the price of several hundred generic medicines to $4 for a month’s supply, other pharmacies, from Target to corner drug stores, followed suit. Wal-Mart now says that a third of all prescriptions filled at its pharmacies are for the $4 generics, and 30% of them are filled by people without insurance.
Take note, Congress: The market is providing cheaper medicines, more affordable care — and it is also helping the uninsured. A Harris Interactive poll conducted in March for The Wall Street Journal said that 22% of those visiting the clinics were uninsured. Wal-Mart says that half of its clinic visitors are uninsured.
Retail clinics are particularly attractive to 4.5 million people with Health Savings Accounts who have health insurance with higher deductibles and want an affordable option for some of their routine care.
And the clinics are working to solve another problem that is vexing
Critics of engaging private competition in the health sector will argue that the vast majority of health-care dollars are spent on a relatively small percentage of patients with serious illness, especially those with multiple chronic conditions.
But even coordination of care for those with chronic illnesses lends itself to patient-friendly solutions. The City of Asheville, North Carolina, cut its costs in half for employees with diabetes by teaming up with local pharmacists who did routine exams and got patients to their doctors or hospitals more quickly when they needed intervention. Employees received their medicines for free if they kept appointments, and their health improved.
Because health care is largely regulated and licensed at the state level, some states are more friendly than others at having non-physicians deliver care.
This industry is in its infancy and will hardly register in our nation’s $2 trillion-plus health care bill. But just as Nucor overturned the steelmaking industry with a faster-better-cheaper way of making low-end rebar, these limited service clinics could be the disruptive innovator in our health-care system. Package pricing for more complex treatments, like knee replacement surgery, may not be far behind.
Government can get in the way, of course, with protectionist policies that throw up more regulatory barriers to entry. But retail clinics could be just the beginning of consumer-friendly innovations, if Congress were to change tax policies in a way that would allow people to have more control over their health spending, as President Bush has proposed.
The linchpin is giving people the same tax benefits whether they get their health insurance at work or on their own, or buy coverage through groups like churches, labor unions and professional or trade associations. Allowing people to buy health insurance across state lines would inject another dose of healthy competition into the system.
With many congressional leaders hostile to free-market solutions, these policy changes are unlikely in the next two years. But as consumers get a taste of what consumer-friendly health care is like, they may well demand that the top-down, centralized health-care delivery of the 20th century give way to a system more in tune with the demands of 21st-century consumers seeking greater value and efficiency.
Ms. Turner is president of the Galen Institute.
Mandated Assumptions in an RFP
May 12th, 2007We encourage California cities, counties, and districts that are in the process of putting out RFPs for GASB 45, to permit responding actuarial firms to begin with a clean slate as far as selection of assumptions and actuarial cost method.
Coming to an actuary and saying first thing: “As a condition of your firm being awarded this assignment, you must agree to using a pre-determined set of actuarial assumptions and a pre-determined actuarial cost method” is almost precisely analogous to walking into a doctor’s office, and before even saying “God, it’s cold in here!”, demanding that the doctor prescribe you a particular form of pain reliever you’ve decided would be good for you, and walking out the door if the doctor refuses.
In other words, you’re taking all the value of the actuary’s professional experience and throwing it out the window, and supplanting it with someone else’s. And in the present situation, it might even be the professional experience of someone less qualified to be making the diagnosis than the actuary receiving your RFP.
Actuaries are required to pass a series of 10 actuarial exams that frequently take 7 or more years to complete. Actuaries are held to the highest ethical standards. If we have a conflict of interest, even an apparent conflict of interest, we’re required by the code of our profession to disclose it up front.
That’s why when you get advice from an actuary, you won’t have to wonder whether there’s a financial axe to grind that perhaps you’re unaware of. Unfortunately, this statement does not extend to organizations that serve as fronts for actuaries, but do not permit you to deal directly with the actuary.
In summary:
(1) Make sure you know who you’re dealing with
(2) Make sure you know how they are compensated
(3) Make sure you give them a chance to show their stuff.
LF