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It's a Bad Thing

Sweeping CO2 under the mat

By Aeon McNulty in: Environment •

It's not just a question of putting out less CO2, but of removing that already there. Whether it's causing the earth to warm, or is the result of the earth's warming, it's a bad thing and we want rid of it because CO2 molecules hold back the heat from the surface and warm the atmosphere....

Harvard Pilgrim HMO Premiums, debriefing myself

In a previous post that I don't seem to be able to reference, I noted that the new mandatory Massachusetts health care law had forced Harvard Pilgrim to drop my existing non-group HMO policy (single, 60, male, non-deductible, with drug benefits) and offer a new spectrum of plans that comply with the new law. I also noted that I had had some expectation that the resultant plans would cost less than the $900 per month that a renewal of my plan would likely cost.

Given that healthcare insurance plans are almost unique for every individual, at least in terms of price, I will list the prices of all the HMO plans offered for reference and note some other tidbits that I picked up in multiple calls to the insurer.

For 7/01/07 thru 6/30/08, single, male, 60, with drug benefits, per month

Plans with copays only:

Premier HMO 10 $812.96
Value HMO 15 $700.30
Affordable HMO 20 $654.55 ** compare
Affordable HMO 25 $603.15
Tiered Copay HMO 20 $601.74

Plans with copays and deductibles:

Best Buy HMO 500 $625.70
Best Buy HMO 1000 $591.92
Best Buy HMO 2000 $538.42 ** compare

The details of these plans are here on page 2.

Comparing the two **-marked plans above, the major differences are that the $2000 deductible plan has an ER copay of $100 vs $50 and no inpatient and day surgery copay of $500. Note that copays are not counted against calendar year deductible liabilities.

Ignoring the copays, the non-deductible plan has a total premium of $7854.60 and the $2000 deductible plan has a total premium of $6461.04. This means that a relative annual saving of up to $1393.56 could result for the deductible plan if no such liabilities were incurred and the relative loss would be limited to $606.44 if the full $2000 liability was incurred.

Nuggets stumbled upon (some may well be specific to Harvard Pilgrim):

1. Deductible liabilities incurred are the highly discounted contract prices, not the full invoice prices. This was a pleasant surprise. For a hypothetical example, the deductible paid for a $600 MRI would be the same contracted $240 or so that Harvard Pilgrim itself pays.

2. Fourth quarter deductible carry-over. Any deductible payments made for services supplied in the fourth calendar quarter are applied to start satisfying the next calendar year's deductible amount.

3. Harvard Pilgrim apparently has a substantial advantage over competitors in terms of placing drugs in Tier 2, as opposed to the much more expensive Tier 3. This is said to be the result of a benefits manager organization in Ohio with strong bargaining power.

4. Surprisingly, mail order prescription fulfillment of three months' supply of drugs only costs two months of copays for Tiers 1 and 2.

5. if I remember anything else.

Non-economic quota-filling entry

From here

...The superstate will glide onward in its steel and vinyl splendor, tagging and numbering us with its scientific tests, conscripting us with its computers, swaggering through exotic graveyards which it filled and where it dares to lay wreaths, smug in the ruins of its old-fashioned, man-centered promises to itself.

Uninsured Prices for Healthcare Products and Services

It is often claimed that drugmakers and other healthcare providers raise prices for the uninsured to make up for the profits lost when selling to insurance companies, for example, here.

This is almost certainly a mistaken belief, as I note in the following comment :

The high prices for the uninsured are the inevitable result of the insurance companies as a group being the dominant customer for both drugs and other medical services.

If the uninsured could get the same discounts as the insurance companies, the insurance companies would have no real reason to exist in anything like present forms.

So if a drug company or other provider wants insurance company business, it must agree to not sell to the uninsured at a discount. As long as the business of the insurance companies is of vital importance to the providers, they can only get adequate prices from the insurance companies by raising the pre-discount price for the uninsured, EVEN IF THAT PRICE IS SO HIGH THAT IT PRODUCES NO SALES AT ALL.

If healthcare were a normal market without third party payments, the market prices would be much closer to the discounted prices that the insurance companies currently pay.

Regards, Don

Jobs Created By Exports

In a comment to my story on Walmart vs Boeing,

Kevin writes :

Your analysis makes sense, except you forgot to put in there the part about Jobs. Exports create more jobs internally to the US while import create more jobs in the country they come from. While exports bring in more money to the country, thereby lowering the over-all value of the Dollar, it does create more jobs.

While this is technically true, it doesn't really mean what it seems to.

When Boeing sets up a new factory in Seattle to build 747s for export, the jobs that it creates are new, but virtually all the workers have been bid away from other employment all over the country. When those new Boeing workers assemble copper wire into the fuselages, that copper has been bid away from other lower-valued uses elsewhere.

Both the copper and the workers have been redeployed in order to satisfy the Chinese desire for 747s, and away from satisfying the desire of US consumers for consumer goods (in part). This results in a lower supply of US consumer goods and higher prices due to scarcer production factors even before we worry about the increase in US money supply from Chinese payments for the 747s.

In order for the export of 747s to improve the general standard of living In the US, as opposed to only the standards of living of the Boeing workers and shareholders at the expense of everyone else, the sale proceeds of the 747s must be effectively used to import more consumer goods at low prices in order to offset the loss in domestic consumer good production due to the redeployment of labor and materials to the 747 export production.

In summary, it is the import of inexpensive consumer goods by Walmart that keeps the export of 747s by Boeing from resulting in an overall reduction of the standard of living in the US.

Walmart vs Boeing, Which Enhances US Economic Welfare?

When Walmart imports inexpensive Chinese consumer goods, it causes US consumption to rise, both of the imported goods themselves and of domestic goods as well, now more affordable due to both an increased residual consumer purchasing power and an increased purchasing power of the monetary unit resulting from the reduction of the money supply remaining in the US. This all results in an increased standard of living in the US.

On the other hand, when Boeing exports a 747 to China, it is using up both material and human resources in exchange for money. This money increases the purchasing power of Boeing shareholders and employees, but the result is the bidding away of consumption from almost everyone else. Total consumption is likely to be lower as no new consumer goods are produced, and some are lost as productive resources are re-directed outward. Also, the purchasing power of the monetary unit is reduced with the increase in the money supply. What we seem to have is large increases in the standard of living for those involved in the 747 production and export and small decreases in the standard of living for the hundreds of millions not so involved. There is no valid way to produce a net of the contrasting effects.

Both imports and exports are the result of voluntary, mutually beneficial exchange. However, imports seem to have positive overall welfare effects, whereas exports seem to be largely re-distributive in nature.

Of course, this violates the conventional wisdom that tends to say that exports are good and imports are bad, and seems to indicate that usefulness of trade balances is questionable, so feel free to identify any flaws you find in the arguments above.

Price the HMO Challenge

As expected, the new Massachusetts health insurance law has resulted in my non-group Harvard Pilgrim plan being eliminated. I will be required to choose a new plan beginning on July 1st. Perhaps naively, I think that it is possible that a new plan may end up with lower monthly premiums and overall costs.

I expect that I will receive rate information on the various HMO choices in the mail in the middle of next week.

The challenge is to predict the monthly premiums for a single, 60 year old male, with prescription drug coverage, for each (or any) of the eight HMO choices described in the link below. Also predict the plan that I will/should choose. For reference, my current non-deductible plan would likely fall into the $900/month range if it were renewed.

See page 2 of this pdf file.

For readability, use the 'fit width' option and expand the browser window to the full screen.

The Investment Disconnect, Viewed By a Disconnected Brain

In The Investment Disconnect, Mark Thoma follows up on a Paul Krugman post buried behind the NYTimes Select Wall.

Boiled down to basics, it is believed that high corporate profits should lead to high corporate investment levels, and that the corporations are somehow immorally refraining from investment.

While this sounds superficially plausible, it is a fundamental confusion of cause and effect. High corporate profits are the result of previous investments. If a corporation judges that a worthwhile investment exists within its core competency, then it will not wait for actual cash profits to appear, but will borrow and invest immediately. There is little or nothing to be gained by waiting, as the opportunity cost of investing and not holding cash equivalents in the money market (or whatever) is little different from the interest costs of borrowing.

What high corporate profits actually do is attract investment from potential competitors.

The fundamental law for public corporations is to maximize shareholder value. To believe that the presence of large quantities of cash equivalents, municipal bonds, for example, on a corporation's balance sheet is necessarily a mistake, is naive.

High corporate profits are the result of a specific set of skills being applied to the production of a specific set of products and services for which there exists, or will exist, a substantial demand. Those high profits depend on and are limited by the finite level of demand and the inability of contemporary competitors to meet it. It is most certainly not true that additional profits will necessarily simply result from additional investment.

While investment opportunities always exist in the economy as a whole, that doesn't mean that every company always has highly profitable opportunities available to it. If just anyone can invest in a given area, then it is almost certain that enough companies will invest to compete away the profits.

It is absurd to say that just because a corporation is currently accumulating high levels of cash profits that it has not already fully taken advantage of the opportunities available to it.

Quote Fragment

From a user forum at 3 AM.

I don't know if the utility I mentioned did the trick, or just if the planets aligned (what few we have left, anyway).

The Car Alarm That Wasn\'t There

This afternoon I had my apartment complex neighbor buzz my door and inform me that my car alarm was going off. I appreciated the notification, but my 2006 RAV4 was quiet when I went out to look, and furthermore, it doesn't even have an alarm system.

On further questioning, my neighbor insisted that there was no mistake in identity, but that it was indeed my car that had been flashing its lights and honking its horn. Read more »

Tax Stamp Answer

In the next to last post, I questioned what stamps were used to mail my state and federal income tax returns.

No one, including myself, was able to provide an answer.

However, by pure chance, the receipt for the transaction popped up.

Two line items as follows :

24c Buckeye PSA qty 1 $0.24
87c Albert Sabin PSA qty 2 $1.74

total = $1.98

Commenter Bob got the fact that a 87c stamp was involved

From the USPS : Read more »

Tax Stamps

Yesterday afternoon, I went to the local USPS branch and mailed my Federal and State 2006 income tax returns.

The two returns were mailed in identical flat envelopes, with the State return having less pages.

After weighing the envelopes, the postal clerk put a small, dark stamp on each envelope and added a larger colorful stamp to one of the envelopes, presumably the federal return. I couldn't see the face values of any of the stamps, but I was charged $1.98 for the total of the three stamps.

What were the face values of the stamps? Read more »

Math Challenge

Go here.

Check out the eight questions here.

Take the test and come back and read below the fold. Read more »

UPS Next Day Air Migration

03/13/2007 9:31 A.M. DELIVERY
03/13/2007 8:03 A.M. OUT FOR DELIVERY
03/13/2007 6:45 A.M. ARRIVAL SCAN

03/13/2007 6:14 A.M. DEPARTURE SCAN
03/13/2007 5:28 A.M. ARRIVAL SCAN

03/13/2007 4:08 A.M. DEPARTURE SCAN
03/13/2007 3:44 A.M. ARRIVAL SCAN

03/13/2007 2:47 A.M. DEPARTURE SCAN
03/12/2007 11:59 P.M. ARRIVAL SCAN

03/12/2007 10:44 P.M. DEPARTURE SCAN
03/12/2007 9:14 P.M. ARRIVAL SCAN

LYNNFIELD,MA, US Read more »