Thursday, March 25, 2010

Castro Endorses Healthcare Reform Law

The healthcare reform bill has much Cuba.

Cuban leader applauds US health-care reform bill

HAVANA — It perhaps was not the endorsement President Barack Obama and the Democrats in Congress were looking for.

Cuban revolutionary leader Fidel Castro on Thursday declared passage of American health care reform "a miracle" and a major victory for Obama's presidency, but couldn't help chide the United States for taking so long to enact what communist Cuba achieved decades ago.

"We consider health reform to have been an important battle and a success of his (Obama's) government," Castro wrote in an essay published in state media, adding that it would strengthen the president's hand against lobbyists and "mercenaries."

But the Cuban leader also used the lengthy piece to criticize the American president for his lack of leadership on climate change and immigration reform, and for his decision to send more troops to Afghanistan, among many other things.

And he said it was remarkable that the most powerful country on earth took more than two centuries from its founding to approve something as basic as health benefits for all.

"It is really incredible that 234 years after the Declaration of Independence ... the government of that country has approved medical attention for the majority of its citizens, something that Cuba was able to do half a century ago," Castro wrote.

The longtime Cuban leader — who ceded power to his brother Raul in 2008 — has continued to pronounce his thoughts on world issues though frequent essays, titled "Reflections," which are published in state newspapers.

Cuba provides free health care and education to all its citizens, and heavily subsidizes food, housing, utilities and transportation, policies that have earned it global praise. The government has warned that some of those benefits are no longer sustainable given Cuba's ever-struggling economy, though it has so far not made major changes.

In recent speeches, Raul Castro has singled out medicine as an area where the government needs to be spending less, but he has not elaborated.

While Fidel Castro was initially positive about Obama, his essays have become increasingly hostile in recent months as relations between Cuba and the United States have soured. Washington has been increasingly alarmed by Cuba's treatment of political dissidents — one of whom died in February after a long hunger strike.

Cuba was irate over the island's inclusion earlier this year on a list of countries Washington considers to be state sponsors of terrorism. Tensions have also risen following the arrest in December of a U.S. government contractor that Havana accuses of spying.

In Thursday's essay, Castro called Obama a "fanatic believer in capitalist imperialism" but also praised him as "unquestionably intelligent."

"I hope that the stupid things he sometimes says about Cuba don't cloud over that intelligence," he said.

Copyright © 2010 The Associated Press. All rights reserved.

Tuesday, March 23, 2010

Government Run Healthcare - Freedom vs. Health

What Do You Think About Healthcare Reform? It is a dramatic change and comprehensive overhaul, resulting in much more government control of the healthcare system and the way medical care is delivered. It depends on whether you value freedom and individual responsibility compared to government intervention and control.

Below is an excellent article from Investors' Business Daily:

20 Ways ObamaCare Will Take Away Our Freedoms

By David Hogberg (From Investors' Business Daily)

Sun., March 21, '10 3:24 PM ET

With House Democrats poised to pass the Senate health care bill with some reconciliation changes later today, it is worthwhile to take a comprehensive look at the freedoms we will lose.

Of course, the overhaul is supposed to provide us with security. But it will result in skyrocketing insurance costs and physicians leaving the field in droves, making it harder to afford and find medical care. We may be about to live Benjamin Franklin’s adage, “People willing to trade their freedom for temporary security deserve neither and will lose both.”

The sections described below are taken from HR 3590 as agreed to by the Senate and from the reconciliation bill as displayed by the Rules Committee.

1. You are young and don’t want health insurance? You are starting up a small business and need to minimize expenses, and one way to do that is to forego health insurance? Tough. You have to pay $750 annually for the “privilege.” (Section 1501)

2. You are young and healthy and want to pay for insurance that reflects that status? Tough. You’ll have to pay for premiums that cover not only you, but also the guy who smokes three packs a day, drink a gallon of whiskey and eats chicken fat off the floor. That’s because insurance companies will no longer be able to underwrite on the basis of a person’s health status. (Section 2701).

3. You would like to pay less in premiums by buying insurance with lifetime or annual limits on coverage? Tough. Health insurers will no longer be able to offer such policies, even if that is what customers prefer. (Section 2711).

4. Think you’d like a policy that is cheaper because it doesn’t cover preventive care or requires cost-sharing for such care? Tough. Health insurers will no longer be able to offer policies that do not cover preventive services or offer them with cost-sharing, even if that’s what the customer wants. (Section 2712).

5. You are an employer and you would like to offer coverage that doesn’t allow your employees’ slacker children to stay on the policy until age 26? Tough. (Section 2714).

6. You must buy a policy that covers ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services; chronic disease management; and pediatric services, including oral and vision care.

You’re a single guy without children? Tough, your policy must cover pediatric services. You’re a woman who can’t have children? Tough, your policy must cover maternity services. You’re a teetotaler? Tough, your policy must cover substance abuse treatment. (Add your own violation of personal freedom here.) (Section 1302).

7. Do you want a plan with lots of cost-sharing and low premiums? Well, the best you can do is a “Bronze plan,” which has benefits that provide benefits that are actuarially equivalent to 60% of the full actuarial value of the benefits provided under the plan. Anything lower than that, tough. (Section 1302 (d) (1) (A))

8. You are an employer in the small-group insurance market and you’d like to offer policies with deductibles higher than $2,000 for individuals and $4,000 for families? Tough. (Section 1302 (c) (2) (A).

9. If you are a large employer (defined as at least 50 employees) and you do not want to provide health insurance to your employee, then you will pay a $750 fine per employee (It could be $2,000 to $3,000 under the reconciliation changes). Think you know how to better spend that money? Tough. (Section 1513).

10. You are an employer who offers health flexible spending arrangements and your employees want to deduct more than $2,500 from their salaries for it? Sorry, can’t do that. (Section 9005 (i)).

11. If you are a physician and you don’t want the government looking over your shoulder? Tough. The Secretary of Health and Human Services is authorized to use your claims data to issue you reports that measure the resources you use, provide information on the quality of care you provide, and compare the resources you use to those used by other physicians. Of course, this will all be just for informational purposes. It’s not like the government will ever use it to intervene in your practice and patients’ care. Of course not. (Section 3003 (i))

12. If you are a physician and you want to own your own hospital, you must be an owner and have a “Medicare provider agreement” by Feb. 1, 2010. (Dec. 31, 2010 in the reconciliation changes.) If you didn’t have those by then, you are out of luck. (Section 6001 (i) (1) (A))
13. If you are a physician owner and you want to expand your hospital? Well, you can’t (Section 6001 (i) (1) (B). Unless, it is located in a county where, over the last five years, population growth has been 150% of what it has been in the state (Section 6601 (i) (3) ( E)). And then you cannot increase your capacity by more than 200% (Section 6001 (i) (3) (C)).

14. You are a health insurer and you want to raise premiums to meet costs? Well, if that increase is deemed “unreasonable” by the Secretary of Health and Human Services it will be subject to review and can be denied. (Section 1003)

15. The government will extract a fee of $2.3 billion annually from the pharmaceutical industry. If you are a pharmaceutical company what you will pay depends on the ratio of the number of brand-name drugs you sell to the total number of brand-name drugs sold in the U.S. So, if you sell 10% of the brand-name drugs in the U.S., what you pay will be 10% multiplied by $2.3 billion, or $230,000,000. (Under reconciliation, it starts at $2.55 billion, jumps to $3 billion in 2012, then to $3.5 billion in 2017 and $4.2 billion in 2018, before settling at $2.8 billion in 2019 (Section 1404)). Think you, as a pharmaceutical executive, know how to better use that money, say for research and development? Tough. (Section 9008 (b)).

16. The government will extract a fee of $2 billion annually from medical device makers. If you are a medical device maker what you will pay depends on your share of medical device sales in the U.S. So, if you sell 10% of the medical devices in the U.S., what you pay will be 10% multiplied by $2 billion, or $200,000,000. Think you, as a medical device maker, know how to better use that money, say for R&D? Tough. (Section 9009 (b)).

The reconciliation package turns that into a 2.9% excise tax for medical device makers. Think you, as a medical device maker, know how to better use that money, say for research and development? Tough. (Section 1405).

17. The government will extract a fee of $6.7 billion annually from insurance companies. If you are an insurer, what you will pay depends on your share of net premiums plus 200% of your administrative costs. So, if your net premiums and administrative costs are equal to 10% of the total, you will pay 10% of $6.7 billion, or $670,000,000. In the reconciliation bill, the fee will start at $8 billion in 2014, $11.3 billion in 2015, $1.9 billion in 2017, and $14.3 billion in 2018 (Section 1406).Think you, as an insurance executive, know how to better spend that money? Tough.(Section 9010 (b) (1) (A and B).)

18. If an insurance company board or its stockholders think the CEO is worth more than $500,000 in deferred compensation? Tough.(Section 9014).

19. You will have to pay an additional 0.5% payroll tax on any dollar you make over $250,000 if you file a joint return and $200,000 if you file an individual return. What? You think you know how to spend the money you earned better than the government? Tough. (Section 9015).

That amount will rise to a 3.8% tax if reconciliation passes. It will also apply to investment income, estates, and trusts. You think you know how to spend the money you earned better than the government? Like you need to ask. (Section 1402).

20. If you go for cosmetic surgery, you will pay an additional 5% tax on the cost of the procedure. Think you know how to spend that money you earned better than the government? Tough. (Section 9017).

Sunday, February 28, 2010

Does this Deal Make Sense?

A quick way of figuring out if a deal makes sense is to ask the following questions:

1. How does this deal fit my strategy?
2. Is the price supported by current financial results?
3. How do I pay for this?
4. What is the right price, strategically and financially?
5. What are the risk factors?
6. Is the expected return worth the risk?
7. What are the seller's reasons for selling?
8. What is upside potential and what are barriers to their realization?

Each of these questions involve more depth, complexity and permutations, but these are the essential questions.

Friday, February 19, 2010

The Power of Prediction

One important lesson that I learned as an MBA student was that business abhors unpredictability. Business can confront and respond to all sorts of risks provided they are knowable and calculable. In fact, it is the stability of our system of the rule of law and a robust functioning free market economy, that enables businesses to plan, allocate resources and make investments for the future. The Healthcare Reform Bill posited as a massive overall of the healthcare system add a real dimension of fear and unpredictability for healthcare investors and owners, resulting in a slowdown of capital activity and thwarting of new development. The spectre of wealth distribution through much higher taxes and cap and trade tariffs does not help either. Now that it appears that the Reform Act as least as a comprehensive measure is dead, healthcare investors and those companies interested in expansion and development can leave the bunker and bask in the light of day again and get back to the business of growing market share and profitability. There will be challenges with the State Medicaid funding going forward but at least we can make decisions without the expectation that the Federal government will turn the industry upside down and change the rules of the game, let alone socialized overnight. That's the power of prediction. Racers, start your engine.

Mark Davis