Tag Archives: costs

Obamacare Suggests Government Knows Best – Not the Consumer

By Mary Taylor
Ohio Lt. Gov. and Insurance Director

Obamacare is so complex that only a few of its impacts have been widely publicized. In fact, many of the law’s far reaching mandates and requirements are still being defined by Washington bureaucrats. But as you look closer at some of its lesser known provisions, one thing becomes clear: the authors of Obamacare are more concerned with a government takeover of health care and less worried about you the consumer and the increasing cost of health insurance because of this law’s mandates. Here are just three of the major market changes – among many – that all Ohioans should understand.

First, the law’s heavy-handed mandates force insurance companies to include coverage for many benefits and services you may not want. Say for example, you do not have any children. Under Obamacare, you would still have to carry insurance that covers pediatric, maternity and newborn care even though you do not need it. Such mandates remove consumerism from the process and replace it with a one-size-fits-all approach. By requiring consumers to buy services they do not want or need, costs will rise significantly.

Second, Obamacare limits the deductible amount a consumer can choose to pay each year. Today, similar to car or home insurance, health insurance can be purchased with high deductibles or low deductibles impacting the monthly premium you pay. Obamacare limits high deductible plans leaving consumers with fewer choices. These restrictions, however, have not yet been clearly defined by Washington bureaucrats who could make them even worse.

Third, Obamacare squeezes the rating rules for insurance carriers in Ohio forcing some to pay higher premiums. This means you will no longer pay premiums for health insurance based on your choices and lifestyle as much as you do today. For example, insurance companies can currently rate an individual on a wide array of factors such as health status, occupation, and tobacco use. Because there are so many factors, there is more competition among insurance companies resulting in more options and lower costs for consumers.

But when Obamacare is fully implemented there will be only four rating factors permitted under law. Those are age, family status, geographic location and tobacco use. By narrowing the playing field, consumers will have less control over their health care costs based on the decisions they make compared to today’s laws. And because choices are no longer rewarded, insurance companies will be forced to treat everyone the same resulting in skyrocketing premiums for many low-risk, health conscious consumers.

Simply put, these changes all have one theme in common – government knows best. In other words you the consumer do not know how to buy insurance for yourself; you need the government to tell you what you must purchase. There is no consumer-driven, market-based approach when Obamacare is fully implemented. Choices will be limited, mandates will be increased and costs will continue to rise but at a much faster pace. The intent behind the law seems clear. Obamacare is government telling you what you must have – it is not a solution that provides you with the health care options that you want and need.

Mary Taylor is Ohio’s 65th Lieutenant Governor. She was sworn into office on January 10, 2011, the same day Governor John R. Kasich named her to serve as the director of the Ohio Department of Insurance and to lead CSI Ohio: The Common Sense Initiative to reform Ohio’s regulatory policies.

Is U.S. Becoming a Low-Cost Country?

As Chinese wages are rising at 17% per year and yuan’s value increases, the U.S. is looking pretty good as a place to locate manufacturing plants, according to a new analysis by The Boston Consulting Group.

“We expect net labor costs for manufacturing in China and the U.S. to converge by around 2015. As a result of the changing economics, you’re going to see a lot more products ‘Made in the USA’ in the next five years, said Harold L. Sirkin, a BCG senior partner.

“Since wage rates account for 20% to 30% of a product’s total cost, manufacturing in China will be only 10% to 15% cheaper than in the U.S. — even before inventory and shipping costs are considered. After those costs are factored in, the total cost advantage will drop to single digits or be erased entirely,” Sirkin said.

Products that require less labor and are churned out in modest volumes, such as household appliances and construction equipment, are most likely to shift to U.S. production, the group says.

Does this mean Americans are less capable of performing intensive manual labor? And, what about the dollar to yuan wage similarity? Does the converging of labor costs mean manufacturing wages in America will be less?

Although those questions remain unaswered, the rest of the article titled Is U.S. Becoming a Low-Cost Country?can be read on Indusry Week’s webiste.

SBE Council Urges Senators to Vote for McConnell Amendment to Stop EPA Overreach

Congress is currently on break, but the House and Senate return next week where the Senate will pick up where it left off on small business legislation. There are several key amendments to the legislation that SBE Council is weighing in on, one of which is the McConnell amendment that would nullify EPA’s intrusive greenhouse gas (GHG) regulations. SBE Council is strongly supporting the McConnell amendment and will KEY VOTE the amendment next week as a vote for small business for our forthcoming Ratings of the 112th Congress.

The EPA regulations will have a significant impact on businesses, driving energy costs higher. Various studies have found EPA’s GHG regulations could destroy 800,000 to 7 million jobs over the next several decades. As SBE Council has told Congress on many occasions, unelected bureaucrats should not be determining the fate of our economy, and EPA does not have the authority to regulate GHGs under the Clean Air Act.

In a March 16 media release, SBE Council President Karen Kerrigan said American businesses must be given “a fighting chance to stage an economic recovery and compete in the global economy.” Higher energy costs will not allow firms to fully rebound. “We must remove uncertainties and burdens in order to spark needed investment, and the vote on the McConnell amendment offers the opportunity to take a major step in the right direction,” she added.
Senator Jay Rockefeller (D-WV) has offered an amendment to delay implementation of the EPA rules for two years, which will also be voted upon. The delay only creates additional uncertainties for businesses of all sizes. With a delay, we anticipate that businesses will start preparing for eventual implementation of the costly EPA rules, which means less investment, less job growth and more businesses looking overseas to expand. A mere delay of the regulations does nothing to address the core problems – higher energy costs and the fact that the EPA does not have the authority to regulate GHGs under the Clean Air Act.

Only a vote for the McConnell amendment will protect small business!

In another piece of related news, the SBEC came out in support of Energy Tax Prevention Act of 2011 (H.R. 910).
As stated in a letter to both houses of Congress, “If this regulatory initiative moves forward, energy prices will continue to move higher undermining U.S. economic strength and competitiveness. Small businesses will be disproportionately impacted by EPA’s regulation, as our ability to create jobs and compete will be permanently impaired.”

3C is Going to Cost, Cost, Cost Ohio Taxpayers

By Marc Kilmer

Hopping a train and riding from Cincinnati to Cleveland or Columbus certainly seems like a popular idea. Opinion polls show strong support for it, a wide variety of civic organizations are backing it, and people are coming to meetings excited to see the trains roll. All this begs the question, though — if passenger rail is so popular, why do Ohio’s taxpayers need to subsidize almost 60% of its yearly cost?

There is often a difference between what people say and what they actually do. It’s easy to tell a pollster you are in favor of something. That’s an abstract question. But when it comes to actually paying money to achieve that object or otherwise paying a cost for it, many times the actions people take differs from what they tell pollsters. Other priorities take precedence over this objective they supposedly strongly supported.

Passenger rail in Ohio is a perfect example of this. The government agencies and community groups advocating for rail routinely trumpet opinion polls showing the strong support for their position. Amtrak’s recently completed feasibility study of passenger rail in the state, though, shows that this supposedly strong support is an illusion.

Sure, passenger rail supporters claim otherwise. They say that since Amtrak predicts nearly 500,000 people will ride it every year, there is a huge demand for rail service. This number is a bit misleading, though, as it includes people who will make multiple trips a year on the train. As other passenger rail systems have shown, a small number of people make numerous trips. Usually these are higher-income workers who travel between cities for meetings. The vast majority of people who have access to passenger rail never set foot in a train station.

Even if there are 500,000 trips a year on this new service (a dubious proposition), those riding the trains would only do so if someone else paid for most of the cost of their ride. Passenger rail users in Ohio would only pay for 41% of the cost of operating the system. State taxpayers would be paying the rest. If you have a business selling a product for forty-one cents that costs you $1.00 to manufacture, then you don’t really have a product people want.

Of course, the situation gets even worse for passenger rail advocates. Not only would taxpayers be required to pay $17 million a year for a system that costs $29 million a year to operate, they would also be required to fund the system’s start-up costs, which would run close to $500 million. And given the history of rail projects around the nation, it’s almost certain these initial estimates will be exceeded by the actual cost of the project.

Rail enthusiasts claim that of course passenger rail will be subsidized by taxpayers, just like all other transportation is subsidized. What they overlook is that road transportation is almost entirely funded by gas taxes paid by drivers and other vehicle-related revenue such as car registration fees. Air travel receives a subsidy, certainly, but it is less than one cent per passenger mile. Rail, on the other hand, receives twenty-two cents per passenger mile. When it comes to fleecing the taxpayers for transportation subsidies, rail is king.

Ohio’s backers of rail contend that Ohio’s neighbors are proceeding with passenger rail so Ohio shouldn’t be left behind. It’s true that taxpayers in Michigan, Illinois, and other states are subsidizing passenger rail in their states. If these state governments are wasting money, does it mean Ohio should, too? Lawmakers in some of these states are reconsidering their support for passenger rail. Michigan, for instance, is looking to slash rail subsidies and rail ridership is declining. These states would be in a much better fiscal position if they would have never begun rail subsidies in the first place.

Passenger rail may sound good in theory but when it actually comes to paying for it, those who would ride it just aren’t willing to pay its full cost. With Ohio’s budget problems, it makes little sense to ask taxpayers to pay the tickets of the small minority of state residents who would take the train. Any way you look at it, if passenger rail returns to Ohio, only a few Ohioans will use it, but every taxpayer will be taken for a ride.

Ohio pharmacist patient care plan in light of national health care costs and-benefits

In recent commentary on health care, Dr. Joseph Mercola provides some evaluative data on the bigger picture on health care benefits. For example, he quotes the Centers of Medicate & Medicaid Services (CMS) reports on the national health expenditure (NHE) as having increase 6.7% in 2006 to a total of $2.1 trillion dollars. That figure represents 16% of GDP and an average of $7,026 spent on health care is for each and every American. Out of pocket expenses paid by individuals amounted to $1.1 trillion or 54% of the total NHE. Prescription drug expenditures increased by 5.8% in the same year.

Based of CMS historical data, NHE was just $253.4 billion in 1980 or $1,100 per person, and accounted for 9.1% of GDP. Since 1960, Continue reading

Ohio pharmacists planning to increase cost-cutting patient care services and profits

The Cleveland Plain Dealer recently reported on the plans of Ohio pharmacists to expand their role in patient health care. This was revealed at the May 9 Health Care Summit on Pharmacist Provided Patient Care held in Columbus. One of the speakers was Debra Parker, an assistant professor at the University of Findlay School of Pharmacy. She believes pharmacists can improve patient health care while lowering costs to insurers. During her presentation, Parker said, Continue reading