Archives For January 2010

As I wrote yesterday, I cut my thumb on December 22, 2009. I went to the minor care center, which is an EXTENSION of the hospital’s own emergency room—it’s just in a different location. I know, because I called the hospital and they told me so. When I arrived at the minor care center, I noticed a sign posted on the window that read something like, “Christus Minor Care Center will bill this visit as an emergency room visit…”

Under my Aetna plan, emergency room visits are covered no matter the location. In fact, the Minor Care Center’s portion of the bill has been paid in full and is taken care of. The Minor Care Center billed it as an emergency room visit and coded it as such and Aetna gave them no problems.

The doctor, however, is a different story…

For some reason, the doctor billed my visit as an office visit. Under that coding, Aetna will not pay the bill. Aetna told me to call the physician’s billing department and have them resubmit the bill and then they (Aetna) will pay it.

So, I called the billing company. THEY REFUSE TO CHANGE THE BILL! The woman told me that they got tired of trying to work with insurance companies because some would want it billed one way and others would want it billed another way. So, she said they researched it and figured out that it was against the law for a physician to bill something as an ER visit if it was at a minor care facility. So I informed her that the minor care facility is AN EXTENSION of the hospital’s ER and she said, “But it has to be physically-attached to the hospital in order for it to be considered a part of the hospital’s ER.”

WOW! I was stunned and was getting angry. So I asked her, “What if the minor care facility is on the same campus as the hospital but not physically-attached to the hospital?” She said it would still not be considered a part of the ER.

What’s even more mind-boggling is the letterhead for the physician’s bill reads: Jefferson EMERGENCY Medical Associates!

Now, was this woman feeding me a line of bs? I don’t know. I just can’t understand why they don’t want to do what necessary to get paid because I can tell you right now: I’M NOT PAYING THAT BILL! I have insurance and the insurance company is willing to pay as long as they receive the correct bill.

I tried calling the physician but his office is already closed for the weekend. Aetna did at least tell me that I can file an appeal with them if the doctor’s billing company refuses to work with me. We’ll see how that goes.

Stupid Stitches…

January 28, 2010

On December 22, I was making dinner. I had placed a heavy knife on the counter. When I went to reach for it, I didn’t grab it correctly and it started to fall. Like an idiot, I tried to catch it and ended up with a pretty deep cut (at least it seemed deep to me) on my thumb.

I decided to head to the minor care center that is a branch of the hospital that is in our network. I had to pay $150 deductible and the doctor who treated me billed separately. Well, I got the bill for the doctor today. The bill, after a “courtesy reduction” was for $776!!!!!!!

My insurance company is claiming the doctor is out of network and therefore won’t pay. I’m working on them to get this changed. I have a feeling that there’s a mix-up somewhere. Unfortunately, I’m getting mixed messages too. One guy told me the coding was wrong and that if I got the doctor to code it differently, the insurance company would make an exception and pay the bill. So, I called the doctor’s billing company and they said that they can’t code it differently. The lady at the billing company then called the insurance company and that’s when a different person told her that I was out of network.



And no, this is not an endorsement for Obamacare.

Read: A GOP Road Map for America’s Future by Paul D. Ryan

In the article, Ryan lists several components of the GOP’s Road Map. I thought it would be interesting to look at each of them. NOTE: As you most of you know, I am fairly conservative and vote Republican [although I’m not tied to one particular party, I have never voted for a Democrat]. But, this is not an attempt to push my ideology down your throat. Rather, I want to look at this ‘road map’ to see if it has merit.

Okay, so here are the components mentioned in the editorial:

Health care – The plan ensures universal access to affordable health insurance by restructuring the tax code, allowing all Americans to secure an affordable health plan that best suits their needs, and shifting the control and ownership of health coverage away from the government and employers to individuals.

It provides a refundable tax credit—$2,300 for individuals and $5,700 for families—to purchase coverage (from another state if they so choose) and keep it with them if they move or change jobs. It establishes transparency in health-care price and quality data, so this critical information is readily available before someone needs health services.

State-based high risk pools will make affordable care available to those with pre-existing conditions. In addition to the tax credit, Medicaid will provide supplemental payments to low-income recipients so they too can obtain the health coverage of their choice and no longer be consigned to the stigmatized, sclerotic care that Medicaid has come to represent.

I’m all for giving control to individuals. I like the idea of a tax credit but worry that it would only set a pricing floor for health insurance.

• Medicare. The Road Map secures Medicare for current beneficiaries, while making common-sense reforms to save this critical program. It preserves the existing Medicare program for Americans currently 55 or older so they can receive the benefits they planned for throughout their working lives.

For those under 55—as they become Medicare-eligible—it creates a Medicare payment, initially averaging $11,000, to be used to purchase a Medicare certified plan. The payment is adjusted to reflect medical inflation, and pegged to income, with low-income individuals receiving greater support. The plan also provides risk adjustment, so those with greater medical needs receive a higher payment.

The proposal also fully funds Medical Savings Accounts (MSAs) for low-income beneficiaries, while continuing to allow all beneficiaries, regardless of income, to set up tax-free MSAs. Enacted together, these reforms will help keep Medicare solvent for generations to come.

• Social Security. The Road Map preserves the existing Social Security program for those 55 or older. For those under 55, the plan offers the option of investing over one-third of their current Social Security taxes into personal retirement accounts, similar to the Thrift Savings Plan available to federal employees. This proposal includes a property right, so those who own these accounts can pass on the assets to their heirs. The plan also guarantees that individuals will not lose a dollar they contribute to their accounts, even after inflation.

The plan also makes the program permanently solvent by combining a modest adjustment in the growth of initial Social Security’s benefits for higher-income individuals, with a gradual, modest increase in the retirement age.

Of all the government programs, Social Security ticks me off the most. I hate the fact that they can raise taxes collected each year and we just have to pay in. We get no say whatsoever. Currently, the maximum amount paid into the program is over $6,621.60 (or $13,243.20 if you include the employer’s portion). That’s A LOT of money! Oh how I’d love to have control of that money. I’m 100% positive I could manage it better than the gubment.

I would love to see this program reduced in size and scope. Reduce the taxes and the benefits. I know I’m probably dreaming…

• Tax Reform. The Road Map offers an alternative to today’s needlessly complex and unfair tax code, providing the option of a simplified system that promotes work, saving and investment.

This highly simplified code fits on a postcard. It has just two rates: 10% on income up to $100,000 for joint filers and $50,000 for single filers, and 25% on taxable income above these amounts. It also includes a generous standard deduction and personal exemption (totaling $39,000 for a family of four), and no tax loopholes, deductions, credits or exclusions (except the health-care tax credit).

The proposal eliminates the alternative minimum tax. It promotes saving by eliminating taxes on interest, capital gains, and dividends. It eliminates the death tax. It replaces the corporate income tax—currently the second highest in the industrialized world—with a business consumption tax of 8.5%. This new rate is roughly half the average in the industrialized world and will put American companies and workers in a stronger position to compete in a global economy.

I actually disagree with this one. I think as long as we have an income tax, we should tax interest, capital gains, and dividends. My reasoning is that it’s not fair to not tax these since it’s conceivable that very wealthy families could have nearly all of their income come to them in the form of interest, capital gains, and dividends, leaving them with no or very small income tax burden. Having the same rates for everyone and taxing all income is the only fair way to treat an income tax.

So, what are your thoughts on this ‘plan’? Do you like it? Do you dislike it? Like I said earlier, I am conservative. I don’t like the government making decisions for people that they should be making for themselves. The government’s job should be to provide for national defense and basic infrastructure and then get out of the way and let us handle the rest.

Readers of this blog know that I am not a fan of mortgage loan modification. That said, it’s not my intent to rehash that discussion. Rather, I want to discuss this editorial I read in today’s Wall Street Journal by Arkadi Kuhlmann, CEO of ING Direct USA, titled Why Mortgage Modification Isn’t Working.

Since the [loan modification] program began, more than three million homeowners have become eligible for assistance. In turn, mortgage servicers have reached out to these borrowers, initiating the modification process. Roughly 760,000 homeowners have received loan modifications on a trial basis. But just 31,000 modifications have been made permanent.

That’s a success rate of just 1%. This means that up to 99% of eligible homeowners struggling with their mortgage payments have been unable thus far to modify their loans.

Here’s his explanation for the ‘limited success’:

A big reason for HAMP’s limited success is that the government is suffocating banks with counterproductive accounting rules. Under current law, if a bank modifies a mortgage it must record the write-down as an expense on its books. For example, if a homeowner’s monthly mortgage payment is reduced by $400 per month for 24 months, the bank has to report that it “lost” $9,600 ($400 times 24 months).

The bank, though, didn’t lose any money—it’s still scheduled to receive the totality of the loan principal, just less interest.

I don’t understand why the entire loan modification is included as an expense. That seems a little harsh to me. I can definitely see how this would impact a bank’s desire to work with the borrowers.

The last sentence of the above quote seems to be badly worded. The bank does lose some money but the amount depends on the terms of the loan and how much modification was done.

Moving forward, one of the commenters on the article, Theodore Beckley, suggested going back to underwriting standards:

• 20 % minimum down payment on any purchase.

• Monthly payments no more than 25 % of taxable income.

• Total Income verified and notarized.

• No 2nd mortgage for down payment.

• No more than 80% of buyer’s principal for a mortgage loan.

• No loan if receiving Low Income Energy Assistance Program (Leap) or Food Stamps.

• Eliminate adjustable rate mortgages.

• Eliminate interest only payments.

• Subsidies and tax benefits not figured in meeting above requirements.

I like all of these ideas but I will say that my wife and I purchased our home with only a 5% down payment. BUT…we did at least buy a house we could afford and I believe we are in better financial shape now because of it.

I really like the one about food stamps. If someone can’t afford food without assistance, then they shouldn’t be buying a house. It’s just common sense.

The other comments on the article are worth reading too.

About Last Night…

January 20, 2010

Do you think the election of Scott Brown to the U.S. Senate sent a message to President Obama and the Democrats or do you think he was elected because Martha Coakley ran a bumbling campaign?

Personally, I think it was a combination of the two. I think the health care initiative has people worried and angry. I think that the “change” people voted for in 2008 was to get our country back on track, NOT make it more socialistic.

If you’re a Democrat, I don’t think all is lost. I do think it’s time to put the brakes on health care reform by scrapping the current plan and going back to the drawing board, and THIS TIME have open meetings with no backroom deals. However, if Democrats continue to try to push this bill through as-is, they will have a tough time getting re-elected in November.

Thoughts? Please, lets act like real adults here…

Reading Assignment: Restoring Faith in Financial Markets

Here’s a quick summary of what Bogle wrote (in his own words):

The process of restoring the faith of investors must begin with a demand that the agent/owners of investment America stand up for the rights of their principals/beneficiaries. What we need is congressional action to establish a federal principle of fiduciary duty—encapsulated by the phrase “no man can serve two masters.”

This principle will require institutional managers (1) to act solely in the interests of their shareholders and beneficiaries; (2) to observe due diligence and professional standards in their investment practices; (3) to honor their responsibilities as owners by active participation in corporate governance; and (4) to eliminate conflicts of interests in their activities.

Together, these standards would require the giant financial institutions of investment America to behave as owners of corporate America, actively voting proxies in the interests of their principals; playing a role in dividend payouts and executive compensation as well as in mergers and acquisitions; limiting (or even eliminating) excessive stock options; and demanding the independence of directors from management (including the separation of the roles of chief executive and board chairman).

In addition, policy makers ought to be considering structural changes that would enhance the role of investors and diminish the role of speculators. For example, granting longer-term (say, two- to five-year holders of stock) extra voting rights and/or a higher dividend; a federal transfer tax on securities transactions; or a tax on short-term realized capital gains (say, shares held for less than six months), applicable to taxable as well as tax-exempt investors such as IRAs.

I’m not sure I like any of the suggestions in the last paragraph. Not all short-term transactions are speculative. What about rebalancing? If you have a stock that appreciates quickly, what’s wrong with selling some of it in order to rebalance your portfolio? I don’t think that should be penalized with a higher tax above and beyond what we currently pay.

I do agree with the four points he makes in the second paragraph. The question is: how do we make them do it?

For as long as I have been reading Barron’s they have published a roundup with various professional investors every January. I haven’t always read every roundup but I have to say that the last couple of years have been interesting. Here are some of the highlights from Part 1 of the roundup (there are 3 parts).

Talking about the TARP stimulus…

Scott Black: Nonresidential construction should have come back under the stimulus program, but it didn’t. The government budgeted $787 billion, including $40 billion for infrastructure, and yet very little of it has been spent. According to the trade associations, more than $2 trillion of roads and bridges need to be built. The [Franklin D.] Roosevelt administration hit the ground running in 1933. It thought jobs were the best social policy. President Obama, instead of pursuing both health-care reform and cap-and-trade legislation, should have been putting Americans back to work.

Regarding Ben Bernanke…

Marc Faber: He has been a catastrophe for the U.S. He wasn’t responsible for the Nasdaq bubble, but he was responsible for the housing and credit bubbles that followed. Anyone who owns natural resources around the world should send him a big thank-you note, however, because as a result of the credit bubble, the U.S. overconsumed, shifting wealth, capital spending and employment to emerging markets. And as those markets kept growing, they drove commodity prices higher.


Faber: Listening to all of you, I have come to the conclusion that we are all doomed. The Fed and certain academics in the U.S. don’t understand the instability brought about by excessive credit growth and artificially low interest rates. In a 7,000-word article in the New York Times several months ago, entitled “How Did Economists Get It So Wrong?,” Paul Krugman [the economist and Princeton professor] nowhere mentions that excessive credit growth or leverage was the cause of monetary instability and brought about the financial crisis. In a Jan. 3 speech in which Mr. Bernanke talked about monetary policy and house-price inflation, he never once mentioned excessive credit growth. The Fed has learned precious little and will keep interest rates at zero forever. Even if it raises rates, they will be below zero in real terms. If I had been a professor, I would have let Mr. Bernanke pass his exams, but I would have told him never to become a central banker.

Faber: That is why we are all doomed. The deficit will be above a trillion dollars a year as far as the eye can see. One day, Mr. Bernanke or whoever is at the Fed will have to increase short-term interest rates. When that happens, America’s interest burden will go up dramatically. Interest payments could go to 35% of tax revenue in 10 years’ time, but that is an optimistic assumption. I’m inclined to think 50% of tax revenue will go toward interest payments on government debt in 10 years. Then you are bankrupt. There is only one way out — the Zimbabwe way. You will have to print and print and print.

Needless to say, the first part of this week’s roundup was troubling. There’s simply not a lot to be optimistic about as far as our economy is concerned.

This quote from Faber regarding consumption really stuck out to me. In fact, I interupted my wife’s reading and read it out loud to her.

Faber: Jobs lead to consumption, but what leads to jobs? Capital spending. For the past 25 years, policies in the U.S. have been driven by the desire to stimulate consumption instead of capital formation. And capital formation isn’t just building factories. It is education, research and development, infrastructure and company plants and equipment.

He’s right. I have been wondering about this myself. Americans are saving money or at least paying off debts. There’s little money to spur consumption.