Curtis Bowman

David Blackbourn Reviews Jonathan Steinberg's "Bismarck: A Life"

David Blackbourn, author of The Conquest of Nature: Water, Landscape, and the Making of Modern Germany, reviews Jonathan Steinberg's Bismarck: A Life.

What the Affordable Care Act Has Done for Me - #1

When I moved back to Texas in 2003, I had to find new health insurance. It seemed that the company I had been using in Philadelphia didn't underwrite insurance in Texas. I contacted an agent, and he steered me towards Blue Cross Blue Shield of Texas. I applied and was accepted.

Because I'm a self-employed scholar, I wasn't eligible for a group plan. So I had to go with an individual plan with a deductible of $2500. Over the years the cost of this not-very-good policy has risen by roughly 150%. At my current premium of $312 a month, I'm now paying $3744 a year for my coverage.

Because I had health insurance, however mediocre, I never figured that the Affordable Care Act would make much of a difference to me. Turns out that I was wrong about that.

A few days ago I got a surprising letter from BCBSTX. Here are the important excerpts:

The Affordable Care Act requires Blue Cross and Blue Shield of Texas (BCBSTX) to issue a rebate to you if BCBSTX does not spend at least 80 percent of the premiums it receives on health care services, such as doctors and hospital bills, and activities to improve health care quality, such as efforts to improve patient safety. No more than 20 percent of premiums may be spent on administrative costs such as salaries, sales, and advertising. This requirement is referred to as the "Medical Loss Ratio" standard or the "80/20 rule". The 80/20 rule in the Affordable Care Act is intended to ensure that consumers get value for their health care dollars.

[. . .]

The Medical Loss Ratio rule is calculated on a State by State basis. In Texas, BCBSTX did not meet the Medical Loss Ratio standard. In 2011, BCBSTX spent only 71.0% of a total of $1,054,029,473 in premium dollars on health care and activities to improve health care quality. Since it missed the 80 percent target by 9.0% of premiums it received, BCBSTX must rebate 9.0% of your health insurance premiums.

[. . .]

We are issuing a credit to the bank account you used to pay your premium. Your credit is $357.56.

Color me surprised. I guess that some BCBSTX executive gets one less expensive dinner in a fancy Dallas restaurant.

I must have heard about this aspect of the Affordable Care Act at some point, but I can't remember anything about it. Since this would have been a major selling point for people like me who already had health insurance, I have to wonder how hard it was pressed when the bill was winding through Congress.

Did the Obama administration simply not talk this up very much? I really can't remember. But if you can, please let me know. Go to my "about me" page to get my email address.

And if you google "medical loss ratio" for yourself, you'll get lots of hits.

Two Passages From Roger Bootle's "The Trouble With Markets"

I recently read Roger Bootle's The Trouble with Markets: Saving Capitalism from Itself. If you're looking for an intelligible, not especially technical explanation of the causes of the financial crisis, then this might be the book for you. I read the revised and expanded paperback edition.

Mr. Bootle's book is well written, but two passages really jumped out at me.

Here's the first, from page 181:

Is there a need to do anything at all? Indeed, is there anything that can usefully be done? According to some people, recessions clean things up and sort things out. So, far from complaining about the recession or trying to stop it, we should simply lie back and enjoy it.

I see things differently. Yes, a little bit of recession can sometimes do you good. So too, I am told, can the occasional cold bath. But spending the whole day immersed in freezing water is not to be recommended. The current economic downturn has gone well beyond a short, sharp dip. The fashionable phrase for crisis deniers is "creative destruction," first coined by the economist Joseph Schumpeter. However, remember that this phrase and the associated idea only gained traction from the contrast with their more frequently observed cousin, destructive destruction.

Here's the second, from page 217:

It has long amused me that the doctrine of efficient markets, and the much looser but wider endorsement of free markets in general, find their strongest supporters in university economics and finance departments, by and large peopled by individuals who, protected by their tenured appointments at not-for-profit institutions, never come face to face with the capitalist system in action. They are the ones who blithely assert the case for free markets, even to the point of arguing the merits of allowing the whole financial system to be allowed to implode, confident in its later resurgence, stronger and healthier—and presumably in the resilience of their own pension schemes. They would not last five minutes on a trading floor before being eaten alive.

Taken together, these two passages express an idea that I've often had, namely, that those who most vociferously extol the virtues of capitalism are never those whose jobs are creatvely destroyed by the workings of the marketplace. This has always struck me as morally obnoxious, especially when those whose jobs have survived untouched use their influence to obstruct or defeat policies designed to help those who have been thrown out of work through no fault of their own.

Anyway, I recommend Mr. Bootle's book to your attention.