The Market Ticker
Commentary on The Capital Markets- Category [Health Reform]


A switch in health care saves Oklahoma County hundreds of thousands of dollars and could be millions by the end of the year, but those on the other end of the switch claim there's more than meets the eye.

Charts show patients cost savings on a variety of surgeries. Each one with a difference of several thousands of dollars.

The reason? A switch to self-funded healthcare coverage.

Dr. Keith Smith makes sure, from first glance, you know his Surgery Center of Oklahoma loves the free market.

"It seems like every industry but health care has free market discipline has to endure," said Dr. Smith. "Competition is a healthy thing."

What does the other side (the hospital folks) say?

"It's creating less costly care, which is good for the consumer, but it's making the hospital setting even more costly, because what you're leaving the hospital with are sicker patients and more complex patients," President of the Oklahoma Hospital Association, Craig Jones, said.

So let me see if I get this right.

Mr. Jones appears to have made an admission -- his association members have been cost-shifting onto the backs of people coming into the hospital with "less sick" and "less complex" situations.

That is, by virtue of intentional obfuscation of the price of a procedure up front you are effectively forced to pay for someone else's procedure in whole or part.

Now here's the problem with that: It's broadly illegal to conspire to do that in other industries.

For instance, a car repair shop cannot fail to give you a binding estimate, within a reasonable tolerance (say, 10%) of the cost of a procedure before they start work.  In fact, consumer protection laws force them to do so.  Were said garage to intentionally try to cost-shift an engine replacement onto the backs of those who just need their oil changed by refusing to tell us up front how much the oil change would cost, then surprising us with a huge bill, we would call that fraud, because it would be.

Indeed, that sort of practice -- getting a car up on the rack with a vague promise of it being "reasonable" to fix and then presenting the owner with a huge bill that must be paid to get the car back used to be common in the car repair business.  

Laws were passed to prohibit this practice because it was (properly) seen as outrageously abusive to consumers who lack enough knowledge to be able to detect this sort of deception and effectively deal with it.

So why does the medical profession get away with this, given that Craig Jones, President of the state's Hospital Association, appears to have just admitted to the very same practice?

Oh, just for reference, the Surgery Center of Oklahoma's pricing is approximately one fifth of that of many hospital's "Chargemaster" rates for the same procedure.  We are not talking about a 10 or 20% difference here, we are talking about 10 or 20% of the price.

Note that most people have a roughly 20% co-insurance and deductible combination on their so-called "health insurance."

If this crap were to be stopped you wouldn't need so-called "health insurance" as you would pay approximately the same price for the entire procedure as you now pay in "co-insurance" and "deductible", which means you are effectively paying an "insurance premium" for no reason other than to enable this practice by the hospitals and insurance companies.

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Obama's government has repeatedly claimed in court filings and elsewhere, including when the IRS itself made it's "determination" that you could have a subsidy even if your state did not set up its own exchange, that this was an "interpretation" of what the drafters of the law intended.

There's a problem: One of the actual architects is on video saying not once but twice, in two widely-spaced and different appearances, that the intent of the subsidy was to coerce states to set up said exchanges -- and that you would not obtain the subsidy without one.

Last night, the Competitive Enterprise Institute broke a heck of a story: A video showed Jonathan Gruber, one of the architects of the Affordable Care Act, supporting the plaintiff's argument in Halbig v. Burwell.

Gruber claimed that he "misspoke" during the Q&A.  Perhaps believable -- once.

But not twice.

We have a major problem in this nation with The Rule of Law -- or rather, the lack thereof.  It is that specific issue that leads to all sorts of other problems, most of them hurting you as citizens.  Whether it be the monopolist actions of the medical industry, the games played with so-called "insurance", rigging of Wall Street markets and more, The Rule of Law is a bad joke in this country.

Simply put it is clear not only from the legislation itself but from the context and statements made by one of its chief architects that the intent of the subsidies was to coerce the states into setting up exchanges.  

It was a blatant threat, and thus, by black letter law, residents of the states that opted out are ineligible -- not only on the black letter wording but the clear intention behind the clause in the statute itself.

But what startles me is that not "someone" has mentioned this -- hell, I've brought it up several times, including a number of years ago when the IRS decided to change the law on its own initiative, which it is not allowed to do.

No, it's that this comes from Bloomberg, which has never seen a lefty proposal -- or interpretation -- it didn't like.

Until now.

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Oh my....

WASHINGTON –  A powerful federal appeals court dealt a major blow to ObamaCare on Tuesday, ruling against the legality of some subsidies issued to people through the Affordable Care Act exchanges.

A three-judge panel ruled 2-1 on Tuesday that the IRS went too far in reinterpreting the language in ObamaCare to extend subsidies to those who buy insurance through the federally run exchanges, known as

This ruling, if it stands up through appeals, will destroy Obamacare.

It makes subsidies unavailable in those states that did not set up their own separate exchanges -- which, incidentally, is what the law actually says.

There are only 14 states that run their own exchanges.

This ruling, if it stands, invalidates subsidies in all of the other states!

Yes, the government will appeal....

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If the law actually mattered, this would be a knife through Brosurance's heart.

But it doesn't -- and we, the people, refuse to insist that the Rule of Law be restored.

As a result I fully expect a decision adverse to the actual language in the law -- simply because deference to whatever The King and His Court want is far more important than the actual law itself.

The case, Halbig v Sebelius, is a major legal challenge that cuts to the heart of the Affordable Care Act by going after the legality of massive federal subsidies and those who benefit from them.

A ruling could come as early as Friday.

In the case, the plaintiff claims the Obama administration – in particular, the Internal Revenue Service -- is breaking the law by offering tax subsidies in all 50 states to offset the cost of health insurance. The suit maintains that the language in ObamaCare actually restricts subsidies to state-run exchanges -- of which there are only 14 -- and does not authorize them to be given in the 36 states that use the federally run system, commonly known as 

That's true.  Not only is it true in the law as-written the debate and intent of that clause was to coerce states into offering their own exchanges.

Many said "no" anyway.

The IRS and Obama then ignored the black letter of the law and issued "subsidies" to people who didn't sign up through a state exchange, which is unlawful as the PPACA is written.

They didn't care, just as they haven't cared about the other aspects of the law they have selectively ignored, such as the employer mandate.

We shall see if this court engages in the sort of twisting of language and/or resorting to outright unconstitutional acts (such as the Roberts Court did in finding PPACA Constitution in the first instance, effectively ruling it an unapportioned direct tax -- a flatly-unconstitutional thing) or if it just simply refuses to follow the law as written.

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This post is likely to make you rather angry if you're one of the people commenting on various threads around the Internet over the last day or so, especially if you're a woman.  If it does, I strongly suggest that before you open yourself up to being castigated in public you think long and hard about what's below -- it's not conjecture, it's fact, and if you've displayed the emotional incontinence that marks you as unfit to engage in intellectual debate somewhere else you might want to consider doing something about that -- and not showing it off here.

Yes, I expect to swing the ban hammer a lot in this thread, and will probably***** off a lot of people.  Nonetheless, if you wish to argue my point here then either argue with the arithmetic or don't argue at all, because appeals on other grounds are going to be met with a big splat in response.  You've been warned.

Yesterday the Supreme Court ruled in Hobby Lobby that a closely-held corporation was not required to include contraception in their health insurance plans, Obamacare notwithstanding, because it violated the Religious Freedom Restoration Act, an act of Congress that recognized and elevated The First Amendment's Free Exercise clause.

Ginsberg filed a 30+ page "blistering" dissent to the decision, by the way.  I read it.  If she really believes a word of that tripe she's certifiably senile and ought to be removed from the bench.

Looking around the 'Net I have seen countless screeds by people, including a few I know, claiming that there is some "right" to these prescription pills because they were already paid for in the premium charged.

Folks, that's nonsensical -- in fact, it's beyond nonsensical, it's stupid, and to the extent such a claim has any validity at all it is a declaration of intended (and executed, in the past tense) armed robbery.

Here's why.

Do you understand the basics of business?  

How do you think your so-called "health insurance" premium is calculated?  

I argue those doing the screaming do not.

Health insurance is calculated roughly like this:

((Pi * Ci) * Oh%) + (Ce * Oh%) across the entire population insured where

Pi = The probability of unexpected illness striking a person
Ci = The cost of unexpected illness if it strikes a person
Ce = The cost of expected and planned expenditures
Oh% = The overhead (expressed as a percentage greater than 100%) charged by the insurance company to operate

Contraception falls into "Ce"; that is, it is not an unexpected illness that has a probability (low) it is instead an expected purchase that you intend to make and thus has a probability of 100%.

You know those nice buildings you see with names on them such as "Aetna" and "Keiser" and the full parking lot outside that strongly implies during the day that building is full of people collecting a big fat salary?

How do you think all that gets paid for, never mind shareholder returns for public insurance companies?

Let me give you a hint: "Oh%"

Now think this through folks -- how much would your car insurance company charge you for collision coverage if as you were buying the coverage you told them you were going to go wreck the car tomorrow morning?

They would charge you (Ce * Oh%) -- that is, they would charge a premium that reflected the value of the car you were about to intentionally destroy plus a fee for handling the money!

Do you understand how dumb you are arguing for this so-called "benefit" yet?

The cheapest price for contraception occurs when you go buy it yourself, as there are fewer hands on the money and thus less cost overall.  As soon as you stick a middleman in there you will pay more because the insurance company does not work for free, their building is not free and neither are their employees.  In addition most of them are for-profit companies and they have shareholders who expect a return too!  

All of that comes out of your hide.

So when Hobby Lobby says "we won't cover this routine expense" your health insurance premium will go down by the cost of the expense plus the overhead that is no longer extracted from you!  If you were paying the premium out of your check you won't pay that part of it any more and if the company currently pays it those funds won't get spent by the firm on your behalf and will be now be available to give you a raise with.

You will thus pay less in total for the contraception you desire to consume -- not because Hobby Lobby is a bunch of thieves and religious nuts but because the additional set of hands that has to handle the money if it's "covered" no longer does, and as a result the total price you will pay will go down

There is only one way this does not happen -- if you demand that men (or post-menopausal women and, for that matter, those with a religious objection), who don't use prescription contraception, pay for it anyway -- plus the overhead.  Then the "price" you see might be lower with "coverage" -- but in that case you are simply using the government to stick a gun up my nose and demand that I buy your birth control pills, and what's worse is that you're lying about what you're doing.

You might expect people to react badly if you commit armed robbery against them.  You damned well better expect me to.

So which is it, so-called feminists?  If you're really interested in the best price (all-in) on contraception, or any other routine and expected medical expense then you want the fewest hands to handle the money between when it is earned and when the contraception (or other good or service) is purchased.  That means you do not want it "included" in said "plans", because by definition you are then paying for both a building and salaries of people in it not to produce the pills (or IUDs, or whatever) but simply to take the money from you and give it to someone else.

That's so dumb that if you truly believe Obamacare's "mandate" is a "better way" I argue that you're factually flat-out mentally incompetent.

And by the way, this particular bit of infantile screaming and demonstrated mental incontinence is not limited to contraception -- the same thing is in fact true for all routine and expected spending that takes place through so-called "health insurance" companies.

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