A View into the Future: Post Script to June-November 2012

Using the previous 4 years experience as guide we may expect:

The national economy will continue to languish with low growth and high unemployment. I do not believe we will enter another recession during the next four years but we will be becalmed. Some states – New Jersey under Christie/Sweeney among them – will continue to apply the brakes on the nations’s economic growth. Neither Obama nor Romney, and certainly not the U.S. Congress, will address the factors in the U.S. tax code which encourage capital export.  Accordingly, regardless of who wins, Wall Street will remain disconnected from Main Street.

Needless to say, the national debt will continue to grow with either one.

Even if president Obama wins in November 2012, we already know his capability for abdicating postulates made while campaigning. We should expect that there will be negative effects on Social Security and Medicare, two social programs which candidate Romney has on his hit list, even if Obama is victorious. Obama will adopt some of Romney’s proposals. Such effects would most likely be cuts in both programs, perhaps somewhat smaller under Obama than those which would be implemented by a hypothetical President Romney.

We should also expect a re-elected President Obama to slightly reduce other social programs that he is now, during the campaign, defending with vigor. Either Obama or Romney will sweeten draconian cuts by phasing them onto the younger generations.

I would also expect that a re-elected President Obama would abandon at least some of his tax positions in support of the lower and middle classes, all for the sake of compromise. Similarly, there will be retreats in issues such as the environment and Wall Street regulatory statutes.

As a rule of thumb, President Obama will cede ground wherever big money is involved. He will hold out better in social issues such as birth control and same sex marriage.

President Romney would be very negative on the social issues mentioned above and similarly or even more accommodating toward big money.

Income gap would grow more under Romney than under Obama although the difference between the two will not be large.

We should expect that either President Obama or Romney will continue making inroads into our civil liberties using terrorism as excuse, even after Al Qaeda is wiped out.

A President Romney would be more likely to get the United States involved in another major foreign war.

With either president, New Jersey should expect very little help from Washington and that is why our own gubernatorial election of 2013 is so important: We will be basically on our own. We can hardly afford irresponsibility, demagoguery, and incompetence any longer.


Christie Vetoes Health Insurance Exchange

Governor Christie caved in to ideology and is pandering to Romney to get the VP spot in the republican national ticket. In fact, New Jersey should have the healthcare Exchange, with a good public option in it, even if ACA is overturned by the U.S. Supreme Court. A conditional veto, sending the bill back to the legislature with modifications was in order.

Yet, the democratic bill has defects. That is why I suggest the conditional veto with modifications as the best avenue to follow: Why a paid board as the democrat- tailored bill proposes? That is another nest for patronage jobs. Then, if the state becomes the arbiter deciding what private plans are admitted in the exchange, lawsuits will fly. Lawsuits are costly.

Christie has used the excuses the democrats gave him to torpedo a good idea. That is how the two parties play with New Jersey.

But one of the objections of Christie is senseless: The Exchange and the Medicare-like expansion have no relation other than both being part of ACA. We have the choice of having one without the other – or adopting both – if ACA is overturned.

Furthermore, the Exchange has nothing to do with ACA’s mandate to buy insurance – the main point of contention in the USSC. I myself am not comfortable with such mandate. But I repeat, the Exchange has no impact on the mandate issue nor the mandate has an effect on the usefulness of the Exchange.

The virtual Exchange I foresee is just a website where all the private plans and policies available are included, together with a cost-neutral public option, and all are compared objectively according to cost, value, and any other applicable parameters. The existence of the Exchange would  make the selection of health coverage easier for individuals and businesses alike.

That is the type of Exchange I envision: A virtual market for health services for New Jersey in the XXI Century without a bureaucracy behind it.

Read Governor Christie’s veto message

New Jersey State Health Benefits Program VS. Private Brokers/Healthcare Managers

The New Jersey Comptroller Office provided the report (first below) supporting the premise that many government subdivisions – municipalities, and authorities – are wasting taxpayers money by having private brokers/managers choose their health insurance coverage rather that doing it through the New Jersey State Health Benefits Program (SHBP). The SHBP was established in 1961 to provide health insurance coverage to State employees, retirees and their dependents.

The report, issued late February by Comptroller Matthew Boxer, said four local government bodies collectively would have saved $12.5 million over a two-year period had they been a part of the state’s health benefit plan. That amounts to about $1,000 per enrollee, the report said. An accompanying press release said if those ratios were to hold true for all public workers who aren’t part of the state benefit plan, then more than $100 million would have been saved each year. Fourteen of the state’s 21 counties and 217 of its 566 municipalities were not a part of the state benefit plan as of April 2011, Boxer wrote.

The report also found, of the 4 local government units studied that the they are not procuring their insurance coverage and insurance brokers in accordance with requirements of the Local Public Contracts Law and the State’s “pay to play” law. The audits found several violations of these laws, including the award of a government contract to an insurance broker that had made campaign contributions that should have disqualified the broker from receiving such a contract.


Pay to Play Law looks very good in the paper but lax enforcement can make it irrelevant. Like the bidding law: Either they are porous or they are ignored when nobody is looking. The study that found NJ to be one of the states with the least corruption because of its laws gave me a good laugh. It was published about 2 weeks ago: It was like saying that the Soviet Union was the freest nation in the world because of its constitution.

It did not take long before a critic of the comptroller’s report surfaced. He is the former commissioner of the Department of Banking and Insurance, Tom Considine, now chief operating officer of MagnaCare, a health benefits manager. That is the same line of work that the SHBP does at no cost and obviously that makes the opinion of Mr. Considine much less objective. He is after a piece of the action. In fact he does not hide his desire of getting more public clients. That places his company in direct competition with SHBP.

Ex-insurance commissioner questions claims that N.J. towns would save millions in state health benefit plan | NJ.com.

“We believe in and of itself that (the state benefit plan) is an incomplete solution,” said Tom Considine, now chief operating officer of MagnaCare, a health benefits manager. “Many municipalities fair far better at pursuing a cost-effective solution by going out to bid.”

The last sentence may be a stretch: It is very rarely (if it ever happens) that health insurance goes out to bid; I have never heard of it.

Rather, the contract is awarded to someone (usually a broker/manager such as MagnaCare) under the clause of “professional services” – a loophole of the bidding law. Typically the contract is given to an agent or firm who is already known to the municipality or subdivision of government

Other “professional services” not subject to competitive bidding include law firms, other types of insurance, engineering consulting firms, lobbyists, etc.

He goes on: “One steep hurdle local governments face in switching to the state health plan is getting approval for the move from local unions, a process that is oversimplified in the comptroller report, Considine said.”

In my personal experience, it was quite the contrary: In 1991 I was vice president of my union and convinced then president Elaine Berg to vigorously protest publicly – at the very gate of the Bergen County Utilities Authority on a night when the Commissioners met. The reason was that BCUA had announced it planned to leave New Hersey Health Benefits Plan (SHBP) for a private management company, Insurance Design Administrators, IDA, which was then either owned or partially owned by the the late N.J. Attorney General Gary Edwards, who was also a republican candidate for governor of N.J. but lost in the primary to James Courter who in turn lost to Jim Florio in 1989.

There was no open bid at all in the selection of IDA. I believe that SHBP was a cheaper option. Speculation at the time was that Mr. Edwards needed help to pay his election debts.

Then BCUA Executive Director, Larry McClure, cancelled the plan to abandon SHBP but only temporarily. The BCUA implemented the change sometime later, after I had left my union position. Elaine never felt at ease with those street actions – perhaps too third world for her – and that was one of the reasons why I resigned from the VP post a few months later.

I tend to think that Mr. Considine’s opinion in this issue is greatly influenced by the fact that he wants to expand his business in the public sector. SHBP would be a very powerful competitor with his company. His opinion here, I believe, is contaminated with self-interest.

This is just another issue where both republicans and democrats are guilty alike. Health costs take a good chunk of the government dollars. We better get it right. We can not afford being fleeced any longer.

Just for the record: I support SHBP. I believe the NJ Comptroller is right.

Healthcare in Post-ACA New Jersey

The arguments in front of the U.S. Supreme Court have ended and it is likely that the judges have already formed their opinions. But it may take months before they put them in paper, researching for all case-law that supports their conclusions, etc.

The U.S. Supreme Court, like almost everybody else, appears to be divided along party lines

If the insurance mandate – the economic centerpiece of ACA – is thrown out, the entire reform may become untenable for its cost. Once the millions of young and healthy are not forced to buy insurance but the insurance companies are forced to accept customers regardless of previous condition, premiums will dramatically increase for all. Small businesses and those with individual policies who are not poor enough to qualify for subsidies will be the most affected.

New Jersey must chart its healthcare course regardless of what happens in Washington.

I had proposed Medical Tort Reform since 2010 when my campaign began, either with award caps or a right to sue option similar to that of auto insurance. Democrats appear to be the major obstacle to such reform.

My tax reform plan would also assure that more people would have or be able to buy medical insurance without any government intervention. But the hefty increase of the minimum wage with healthcare benefits and even higher without would only be tolerable for businesses if we bring the New Jersey corporate tax to zero. Otherwise we would just be putting people out of business and increasing unemployment.

In turn, to be able to afford the loss of nearly $3 billion in corporate tax revenue, the government itself must undergo a drastic haircut. That haircut can only be functional at the top, with at least an entire layer of government trimmed.

That is how all elements of my plan concatenate. Think of it as a chain and every step is a link. All its components are a must. Perhaps the most important one will be the spike in wages because it will give a super-boost to aggregate demand for all goods and services, including health insurance.

And finally, a New Jersey health exchange should be open to all private insurers, to minimize adverse litigation, but the state should offer a rating of the available plans. The NJ Health Exchange should welcome non-NJ companies. There must be a cost-neutral public option in the exchange as well although I believe its administration should be put out for bid. Republicans are more likely to oppose the public option.

New Jersey Healthcare Exchange is Born and Crawls for Governor’s Desk

The healthcare exchange, a mandate of the U.S. Affordable Care Act (ACA)  would primarily affect the approximately 1.3 million New Jersians without health insurance, among then many employees of small businesses. For those unable to afford the premiums, there would be federal subsidies. ACA mandates that all individuals must posses health insurance or pay a tax penalty. The latter portion is one of the issues whose constitutionality is being reviewed at the U.S. Supreme Court. The USSC will rule on the subject around June this year.

Here is the bill as it moves toward Christie’s office:.S1319 1R.

At first glance, I see two major problems with the bill:

The first is the composition of the Board. By creating a board populated with political appointees, no matter how we dice it and regardless of the conflict-of-interest provisions, there will be influences exerted on the members and their decisions.

How? Insurance companies, insurance brokers, corporate healthcare providers bankroll elections of politicians. Politicians appoint board members, Board members support those who supported the politicians who appointed them. That is the Bermuda Triangle where public dollars disappear  every day. Board members should be Civil Service Classified Service professionals, insulated from any political influences, and possibly as part of the New Jersey Health Department.

If I am elected governor and there is already a Board in place and it is working well, I would consider grandfathering the current members into the CSCS.

The issue above is a major flaw in design but this is New Jersey and it is how our Legislature is used to function. They create an apparently good bill but there is always a poison pill in it somewhere.

The second problem is how the Board will operate: It is apparent that it will exclude health plans that do not meet a certain criteria of value. This is what is called an active plan which sounds good – at first it was my favorite but after some reading and reflection, I dropped it. The active exchange will inevitably lead to a tangle of lawsuits, a very good thing for New Jersey trial lawyers but not necessarily good for New Jersey. Instead, I would have the board accept all plans but establish a rating: It could be AAA, AA, AB, etc., according to value, quality, access to care, etc. This system would be much less likely to generate legal challenges and insurers would strive to upgrade their offerings.

As I have stated elsewhere, at some point I would introduce a powerful public option in the exchange but it is a bit early for that now.

Governor Christie has said that he would prefer to wait for the USSC to rule on the constitutionality of ACA. Either way, this bill – or law if he signs it – needs work.

Healthcare in Flux

NJ Spotlight | Opinion: Active or Passive, That Is the Question.

The Patient Protection and Affordable Care Act (ACA), also known as Obamacare, mandates that states must have health exchanges (HE) in place by January 2014 but they must tell the US government one year in advance whether they will be able to do so or the federal government may set the HE for them. Although the New Jersey Legislature is ready to pop up a bill creating the exchange, there are conflicting views on what the bill should establish as criteria for inclusion in the HE. Some advocate for a very active government role allowing only the best plans although the criteria for determining what is “best” appears to be ill-defined. Others would like to see a marketplace open to all plans and let the customer select.

There is a very good possibility that the New Jersey HE bill will be lacking in detail regardless of what position it takes on the screening of permissible plans. The N.J. Legislature is notorious for producing an astronomical number of bills with little or no debate. If the bill takes the most active role denying access to some plans, those insurers left out are likely to sue unless the HE has an iron-clad system of selection. The latter is rather unlikely to be the case. On the other hand, a HE where the government simply makes a list of plans without screening would leave patients abandoned facing a maze of confusing information and rates. Many patients could make the wrong selections for them.

Although initially I was inclined to support the most active HE possible, the possibility that such an approach will be viewed by many as government interference has made me reconsider. I believe now , after tapping on the expertise of others, that the best approach would be the middle of the road: One HE where all plans are accepted but at the same time the government adds a value table to advise buyers. The table could even include several  scales following different parameters such as lowest cost, or abundance of providers, etc. As Joel C, Cantor says above: “It is important to get it right this time.”

ACA already defines the role of the HE to a great extent: The HE must review and certify for offered health plans based on their scope of benefits, marketing practices, provider network adequacy, inclusion of safety net providers, enrollment practices, quality measurements, etc. The only thing New Jersey has to do, I believe, is to follow those guidelines and make the subsequent analysis available to the public in the most clear and concise manner – sort of like the nutrition labels in food

Since there is already a healthcare market that pre-exists the formation of the HE. the latter will be a parallel market where many of its patients will receive federal subsidies. Should the two markets compete or be balanced? ACA opens the door to competition between the two by 2017. And more importantly: Should we have a public option, like a New Jersey Health Benefits Plan for the private sector? I must indicate here that I favor the latter idea.

Complicating the situation somewhat, governor Christie does not want to sign any legislation creating the New Jersey HE until the US Supreme Court decides the fate of ACA. Because of his reluctance, New Jersey has already lost some grant money from the the U.S. ($30 or 40 million) and may  lose even more.

In any event, we must understand that healthcare is one of the greatest factors influencing both economic growth and quality of life. Together with medical tort reform (already in my proposals since 2010) the operation of the HE is at the center of my program for New Jersey.

High Healthcare Costs Hold Back Economic Growth in New Jersey

NJ Spotlight | Watchdogs Target Insurance Brokers Cashing In On Lucrative Government Work.

In the public sector, government, private health insurers, and health insurance brokers form the Bermuda Triangle where the public money vanishes. These high costs are passed onto the private sector and public in the form of taxes.

Of course the almost 2000 government units and subdivisions of the State of New Jersey would save a lot of public money if they went back to the New Jersey Health Benefits Plan (NJHBP), eliminating the middle man. However, most middle men are politically connected and donate to politicians. They have political power. In a few cases, they are not only insurance brokers but political brokers as well.

Once upon a time, almost all government units participated in the NJHBP and the health costs were lower. Under the pretext of introducing competition, more or less like is happening with education now, many government subdivisions hired brokers to look “for the best options”. They often threw the carrot of better coverage to the unions. It was a long process but yielded the high cost health benefits system that we have today.

The biggest name in the insurance brokerage business for local governments is George Norcross, the South Jersey Democratic power broker and often ally of Republican Gov. Chris Christie. Why is it that I am not surprised?

From NJ Spotlight: “Nine months ago, Senate President Stephen Sweeney (D-Gloucester) attempted to insert a provision in pension and healthcare legislation that would have barred the State Health Benefits Plan from accepting any more county or municipal governments or school districts as members. Sweeney pulled the offending clause after the New York Times charged that Sweeney was trying to help Norcross, his political mentor and childhood friend, whose firm was losing business to the low-cost state government competitor.”

My deduction is that Sweeney is a puppet of Norcross. Mr. Norcross has now become very interested in education issues.

To address the State fiscal crisis, motivated in part for those inflated heath care costs, the governor and a complacent legislature declared heath care non-negotiable and imposed on public employees a partial contribution toward premiums. The fairness of such contributions may not be viewed in the same way by everybody but the first step the administration should have taken was to reduce health care costs, not only for public employees but for the private sector as well.

Now the New Jersey Comptroller and the Citizens Campaign Chairman Harry Pozycki point the way to do so. Eliminating the fleecing of the government will not, by itself, solve the issue of high cost of general healthcare but it will be a step in the right direction.

The excuse that many local governments are offering not to switch back to NJHBP is the existing union contracts. But that is a very lame excuse because contract negotiations can be reopened by mutual accord, on a single subject, without having to wait for the expiration of the current labor agreements.

As New Jersey moves along to establish the Healthcare Exchange mandated by the Patient Protection and Affordable Care Act, New Jersey should adopt the most aggressive posture of active purchaser. The Christie administration has remained undecided on the issue and the Norcross connection may be a causal factor in the governor’ s inactivity. The status quo benefits the brokers.

I have long supported a very strong Healthcare Exchange for New Jersey, with a  powerful public option which could be cored with the NJHBP. Furthermore, the State of New Jersey should be an active player in the market, screening out those plans that aim to take advantage of the least insurance-savvy patients. That is the active purchaser role.