It's a Stampede!

In my July 19th post I reported that three unions had sent letters to the President demanding the repeal or reform of ObamaCare.  By "reform" they meant they are demanding that the federal government subsidize union members health insurance under ObamaCare.  They were also concerned that rules requiring employers to provide health insurance to full time workers, defined as 30 hours or more, was creating a situation were employers were reducing hours (and pay) of full time workers and would destroy the time honored tradition of the 40 hour work week.
Well, union concern has grown to five unions:

- International Brotherhood of Teamsters
- the united Food and Commercial Workers
- Unite Here
- Laborers' International Union of North America
- International Brotherhood of Electrical Workers

the two new unions wrote the President that the new law "will not only shatter our hard-earned health-benefits, but destroy the foundation of the 40 hour work week".

Also entering the union outcry this week was the National Treasury Employees Union, the union of the IRS employees that will implement and run ObamaCare for the Federal government.  Not us, they said, how dare you try to put us into ObamaCare.

Makes you feel really good about what is coming, doesn't it?

ObamaCare: fraud, identity theft AND bad health care

Democratic State Insurance Commissioner David Jones has issued a warning:  consumers could fall prey to fraud, identity theft, or other crimes at the hands of the people hired to help them enroll in ObamaCare.  “We can have a real disaster on our hands” he said in an interview this month.

Jones, whose Department regulates more than 300,000 insurance agents and brokers in the State is concerned that Covered California, ObamaCare in California, does not have the proper procedures in-place to ensure that people hired as counselors are adequately screened and monitored nor have they established procedures for handling complaints or working with police about those complaints.

Covered California will certify 21,000 "enrollment counselors" from 3,600 Community organizations.  These “counselors” will guide enrollees to the proper plan for them and complete the enrollment process.  They, and their community organization, will receive a commission for each enrollment.

What could possibly go wrong?

Covered California‘s rules do not specify offenses that disqualify applicants from a counseling position.  “We don’t want applicants from communities where the exchange really needs to reach out being sent away because they made a mistake in the past or bounced a rent check or have a minor drug offense”, said a spokesman for the California Pan-Ethnic network, one of Covered California’s Community organizations. 

Jones (remember, he’s a Democrat) continued by saying, “Once they are in that position of trust, it’s possible they will obtain information that will allow them to build the trust they have with the individual they are working with and potentially sell them all manner of bogus products, steal their identity, gain access to certain assets they might have.  The list is virtually endless.”

What could possibly go wrong?

The Los Angeles Unified School District is taking another approach, one directly from the East German Stasi (secret police) playbook.  The district will use students to sell ObamaCare to their parents and report to district officials those parents who do not co-operate.

As for the implementation side of the equation, the Federal government is implementing the largest government database ever assembled.  Called “The Hub”, it will combine data from the IRS, Social Security System, Health and Human Services, and other Federal databases with State location and MediCaid (MediCal in California) information.  So, Community organizers/counselors will have access to our Social Security numbers, tax data, residential location, business information and health data.

What could possibly go wrong?

 In a strange twist of fraud, the Obama Administration has not been able to get “The Hub” working.  Being unable to check employer records for pay, health insurance coverage, co-pays, etc., they have postponed the “employers mandate” for one year (until after the election; they may be technically stupid, but are not politically stupid).  The individual mandate, the requirement that everyone must buy health insurance or pay a fine, will go forward even though an individual’s employment, pay, and health insurance records cannot be verified.  Individuals will be asked to “self-assert” that they should get a government subsidy (Mr. Jones, do you certify that you deserve a $12,000 government subsidy, or do you want to forgo it this year?). 

What could possibly go wrong?

MediCare provides health insurance to 48 million Americans (40 million seniors, 8 million disabled). Implemented in 1965, Congress projected its costs would eventually grow to cost taxpayers $12 billion per year.  In 2010, expenditures were $528 Billion.  Fraud (“improper payments” in Federal government jargon) that year, was $47.9 billion.

Medicare is prone to fraud because it is based on the honor system for providers and patients.

ObamaCare is based on monstrous complexity, incompetence, and a willingness, almost gleefulness, to tolerate fraud.  Targeting 300 million Americans, what could possibly go wrong?

Am I Next?

The San Francisco Chronicle on Sunday 21 had a front page article on the protests related to the Trayvon Martin/George Zimmerman verdict.  Accompanying the article was a picture; both the picture and article generated this letter to the editor, which was published on July 24:

Editor:

Your front page on Sunday, July 21 had a picture of a young black boy with a sign that asked Am I Next?”

Tell him yes, if he lives in a black neighborhood.   Then refer him to your coverage of Alaysha Carradine or any of the dozens of killings in Oakland, any year.

More than 90% of African-Americans who die violently, die at the hands of another African-American.

I am tired of black leaders , black community organizations, and black protesters saying they are fighting racism by telling their children and grandchildren that they will be killed by people of another color.  This message only enhances the chances that racism will continue in the future and these hustlers will continue to collect the checks they generate being hateful.

I feel awful for both the Martin and Zimmerman families, but can we just shut up and get back to reality.  And work for the end of racism.

Hal Bray

Unions demand repeal or reform of "ObamaCare"

The Obama administration has managed to pull off a “hat-trick” when it comes to people and organizations hating the President’s signature health care achievement: Business owners, labor unions and taxpayers are all demanding health reform be repealed or significantly reformed.

Unions are the latest to join this demand.  The Presidents of three of the largest unions in the country, the International Brotherhood of Teamsters, the United Food and Commercial Workers, and Unite Here, are demanding that the Affordable Care Act, or “ObamaCare”, be repealed or “fixed” to their satisfaction.

In a letter to the President , Nancy Pelosi and Harry Reid the unions reminded the President and Democrats that it was union support—boots on the ground and money-- that got them elected and “time is running out: Congress voted for this law; we voted for you…we have a problem; you need to fix it”.

The unions have multiple problems, in fact, with the law.  Union multi-employer health plans currently have approximately 20 million members.  The unions’ most serious concern is that union health plans will be hit with a double whammy on January 1, 2014: the cost of their multi-employer plans will rise  and union members will not have access to federal subsidies available to individuals purchasing lower priced plans in the State exchanges (Covered California in California).  The unions are afraid that many members will leave union health plans or that many, especially smaller, employers will drop union health plans to allow their workers to purchase plans on the individual market.  Both scenarios would be “devastating” claim the unions and make union membership less important to current and potential future members.

The unions are also concerned "ObamaCar" “will shatter not only our hard-earned health-benefits, but destroy the foundation of the 40 hour work week” by defining “full-time” as 30 hours or more per week and requiring employers to provide health care to full-time workers.   These requirements, they complain, are incenting employers to cut current employee hours and only hire part-time workers.
Current employment numbers seem to bear out this fear.  The consequences of these provisions are two-fold: fewer hours equals less pay for workers and the loss of employer provided health insurance.

An unrelated study at Northwestern University supports the concerns expressed by unions.  The study forecasts that up to 940,000 people will quit their jobs when ObamaCare becomes available.  Why?  The authors show that many people work, not for the money, but to obtain health insurance.  Other employees stay at their current employer because of the company’s health plan.  With exchanges available and providing subsidies in the individual markets, the authors show that many people will quit working or use the individual markets to free themselves from the restraint of employer and/or union provided health plans.

Are the union concerns valid?  Does the Northwestern study show pending devastation or freedom?  What will hundreds of thousands of people quitting work or dropping union health plans for government subsidized individual health plans do to tax rates and government debt?  Maybe the ultimate question is why would you pass legislation with this complexity, with this potential disastrous effect on one-seventh of the economy without understanding these concerns?

Nancy Pelosi said when passing the Affordable Care Act, “we have to pass this legislation so you can read what is in it.”  Maybe someone could have read AND understood it before voting for it.

Obamanomics: Learning to love temporary, part-time and contract work

The July fifth jobs report was reported in the mainstream media as possibly the greatest economic event in years.  The economy, the media screamed, created 195,000 jobs and job creation for the past two months were upgraded raising the three month average 202,000 per month.  The unemployment rate stayed at 7.6% as more people started looking for a job.

Underneath all the hoopla is a different story.

First, 60% of the job gains, according to the Wall Street Journal, were in low paying industries: retail firms added 37,000 jobs, leisure and hospitality companies added 75,000; the number of higher paying manufacturing jobs decreased by 6,000. 

The number of people wanting full time work, but working  part time increased by 322,000 to 8.2 million (1.3 million in California).   The underemployment rate (the unemployed, the people working part time who want full time work, and the people who have stopped looking for work) now totals 20 million Americans and rose in June from 13.8% to 14.3%. 

According to the Associated Press, temporary and contract  workers currently number 17 million in the economy as companies turn to them in the face of uncertainty in the economy.  The number of “temps” in the workforce has increased more than 50% to 2.7 million people since the recession ended four years ago.

One explanation for the accelerated growth of part-time, contract and temporary jobs is ObamaCare.  The law requires employers with more than 50 workers to provide full time workers health insurance or pay a $2000 fine; it defines “full time” as 30 hours per week or more, giving businesses an incentive to hire more part-time or temporary workers.

The labor participation rate (the percentage of able-bodied Americans working or actively seeking work) rose from 63.4% to a still pathetic 63.5%.  The labor participation rate was at its highest point in 2000 when it hit 67.3%, but has been declining since.

The consequences of the move to temporary, part-time and/or contract workers are that the combination of low pay, few benefits and little job security makes these workers less likely to spend freely and, therefore, boost the economy.  It may look great that 195,000 jobs were added in June, but if most were people who lost jobs paying $60,000-$100,000+  and are now asking “do you want fries with that order”, we will see little economic recovery in the near future.

ObamaCare: Confusion and consequences

As the implementation of ObamaCare gets closer there is more and more confusion about the economic consequences of the law.  Businesses, workers, unions and taxpayers are trying to figure out how their decisions will affect their lives and the lives of others as the October 1 start date approaches.  How will decisions by others affect me?  Will I benefit from the law more than I suffer from it?  Who will suffer the most economic damage due to the law?

Nothing is causing more speculation and hurting jobs growth more than the requirement that most businesses must provide health care for full time employees, defined as 30 hours or more per week, or pay a fine.  Many in the retail, restaurant, non-profit and other lower paying industries (and the workers in those industries) are lobbying the Obama Administration to change the definition of full time back to the 40 hours per week standard and speculation is rampant that many of these businesses will reduce employee hours to 29 hours per week to avoid the health care requirement.

California Legislators are, of course, proposing a solution.

Assembly Bill 880 will impose State fines of $6,000 to $15,000 on top of Federal fines for not providing health insurance coverage to full time employees. It will also punish employers for reducing their employees' hours to less than thirty per week. It seems the Legislature cannot stop themselves from pushing businesses out of California.

Who will benefit and who will be punished with the intended and unintended consequences of this rushed, unnecessary bill?  Are they protecting the workers of the state or are they concerned about the financial burden a giant wave of part-time employees signing up for an expanded government funded Medi-Cal will have on the State? 

According to University of Chicago economist Casey Mulligan, they should be concerned for the State and Federal budgets.  He has calculated that workers in low paying industries, such as the retail and restaurant industries, may be better off working part-time and getting federal subsidies or state Med-Cal, rather than working full time.  His numbers show that many lower paid workers will net more income working part time and receiving government subsidies, than working full time with no subsidies.  And workers would have fewer expenses associated with going to work full time.

Taxpayers, of course, will bear the burden of this solution, funding up to $12,000+ per employee in this new employment paradigm.

How do unions fare in this new world? 

Twenty million people--workers, retirees and dependents-- receive their health care through union affiliated multi-employers trusts.  Unions are demanding that these workers and their families, excluded from the new health exchanges, be subsidized by the Federal government.   The Teamsters, carpenters, roofers, retail workers, janitors, etc. are dependent on union negotiated health benefits for health care, but in this new world will receive no subsidies or tax credits. 

And small non-union employers (less than 50 employees) will enjoy a competitive advantage of a 50% tax credit reimbursing them for the cost of health insurance while similar companies providing health insurance through union trusts plans will not.  Things go from bad to worse for unions in 2018 when the government will levy a 40% excise tax on so-called “Cadillac” health plans, plans often negotiated in labor contracts.

At this point many unions are demanding the Obama Administration subsidize their union plans or repeal the entire law.

So the final question is not who will suffer and who will benefit from ObamaCare, but why are we implementing a law affecting one-seventh of our economy without knowing these answers?

On March 9, 2010, Nancy Pelosi admonished the public when she told reporters “we have to pass this bill so you can find out what is in it”.

 Three years later we still don’t know what is in the bill and what the consequences will be.

Contract decisions in the National Basketball Association

National Basketball Association Center Dwight Howard is the most sought after free agent in the NBA.  Courted by five teams, most analysts think the bidding is down to the Lakers (his team last year) and the Houston Rockets.

People familiar with the negotiation think the important factors in picking where he will play for perhaps the remainder of his career,  includes team mates, the area, the history and culture of the team and, of course, the money.  But "the money" includes more than most people think.  Taxes may break a tie in his decision process.

LaBron James was the first basketball player to mention the "tax consequences" of picking a team to join.  Leaving Cleveland in 2010 he chose to play for the Miami Heat over the New York Knicks, citing taxes as one of his criteria in making the decision.

Mr. Howard, under the NBA's labor agreement, can be offered more by the Lakers than they can by the Rockets.  But, the Rockets offer of $88 over four years (the maximum they can offer under the NBA's labor agreement) compares favorably over the possible offers from the Lakers due to approximately $8 million in income tax savings in Texas, which has no income tax, and a lower cost  of living in Houston.

California's hostile business environment strikes again.