Health Insurance Drives Sky-Rocketing Health Care Costs

My girlfriend, Sandy, and I had our first springtime “spa-day” last week.

Being “girls” we talked about our travels, our families, and fashion while enjoying a pedicure.

Sandy worked in the health care industry before her recent retirement, and I have consulted extensively to large health care organizations over the years.

Not surprisingly the conversation quickly turned to health care – the Republican proposal to repeal and replace “Obamacare” and the just published Congressional Budget Office analysis of that proposal.

Beyond our professional experience, we are consumers. We are experiencing the increasing cost of health care insurance, co-payments, drugs and other expenses.

Spending Other People’s Money

Over our sun-drenched lunch, Sandy and I talked about the growing role of government into our health care system and about some of the unintended consequences.

During his very wonky Power Point press conference, Paul Ryan accurately pointed to the spending of “other people’s money” as a powerful driver in the alarming rise in the cost of health care.

Let’s break this down.

  1. Obamacare requires that every American citizen must be covered by health insurance. Americans are required by force of law buy to insurance from a private insurer if they are not covered by an employer plan and have an income above the Federal Poverty Line.   That insurance must include benefits you or I might or might not want.
  2. Your individual premium is calculated on age, number of insured in the family, and the average cost of all the mandated benefits – whether you may use them or not – because someone else insured by the same company may – indeed – use those benefits. That is called sharing all the risks.
  3. If you do not buy insurance, the Internal Revenue Service will impose a penalty (i.e. a tax on you) that is used – in theory – to help pay for health insurance or Medicaid for your neighbor whose income and family size qualify them for help paying their legally required insurance premiums.
  4. All insurance payment premium payments for health insurance are paid into the insurance companies’ premium account(s). Premium accounts  are a pool of money in which your individual contributions can no longer be identified or separated out for your specific use.

Once our dollars are pooled with every other tax payers’, we have no control over how they are invested or spent.  They become someone else’s to spend on any person or any benefit – at any price the insurer agrees to.

The more services the government mandates insurers to cover from first dollar or after a minimum co-payment, the less sensitive the consumer is to how much that service costs.

For example, last Tuesday my allergy doctor suggested a vapor treatment for my pollen-driven chest. I said okay. It never occurred to me to ask how much does the treatment cost because I won’t get a bill. The charge will merely be an object of curiosity when the insurance company sends me an explanation of benefits they paid.

If I had to pay the bill for that treatment, I would have asked more questions about the cost and efficacy.

Are government bureaucrats creating an almost irresistible temptation for the health care providers? In a word, YES!

If the insurer is required to pay – no questions asked – for tests and treatments, the profit-making health care eco-system is going to prescribe more tests and charge more for them.

The Affordable Care Act (Obamacare) mandates for first dollar coverage of preventive and diagnostic testing exaggerate these consequences.

The more services are mandated without adequate cost controls, the more the insurers must charge in premiums and co-pays.

Faced with exploding insurance costs for all of us, is it time to change the assumptions about personal responsibility for your own health care and government’s power to mandate that responsibility be underwritten by the taxpayer?

The Purpose of Health Insurance

“Sandy, I think I remember paying bills from the pediatrician when Craig was a kid – like his well-baby care? What do you remember from your children?”

“Yes”, she replied “I remember paying the pediatrician”. Sandy was living in the mid-west at that time and remembers she took her children to community childhood immunization clinics that were “much less expensive” than the pediatrician.

When Craig was born, insurance paid for hospital costs for both of us – but I paid a contracted amount – directly – for my obstetrical care – spread over the pregnancy.

I was in graduate school and working for the University of California’s Statewide Office of Administration at the time. That meant I had really good (state employee good) health insurance.

What I experienced was normal practice in the 1970s.

I don’t remember when the practice changed and I stopped paying doctors’ bills and started paying only a co-payment – and it doesn’t matter. The point is health insurance started out as hospitalization or serious illness insurance – not the primary vehicle for obtaining routine care.

Health care coverage, today, is not only protection against major illness, major accident or hospitalization. It is, also, really pre-payment of anticipated routine services – an indeterminate number of services each at an indeterminate cost. Indeterminate is driving rising premiums and deductibles.

Necessity is Driving Innovation

While Congress is debating how to insulate more people from a price and service model no longer affordable for either the American tax payer or the individual middle class consumer, a few health care practitioners are developing real solutions in real time for real people.

Here are two examples I found – without even trying – that are working in local practices today.

As of January of this year, my dentist is offering patients an annual contract for care. For a monthly fee paid automatically via credit card, the dentist will provide all preventive care and fillings. Other services are paid by the patient at a discounted price – determined before service.

The monthly expense is two-thirds of what my previous dental insurance company charged for a smaller benefit. If I were to need a crown, I would still pay less, out of pocket, than the previous premium plus co-pays.

Not only is this a good deal for the patient, it is a good deal for the dentist. If a majority of his patients subscribe to his plan, it smoothes out the cash flow peaks and valleys of a traditional small business and it allows him to schedule his employees – hygienists, dental assistants and office staff –efficiently.

This efficiency removes time consuming disputes with insurance companies.

Taken as a whole, the dentist can grow his practice while, at the same time, controlling his payroll costs. In other words, he can make a larger profit on same or lower revenue.

While we were talking, Sandy remembered a friend whose family practitioner has a similar program for healthy patients not yet eligible for Medicare. That doctor charges a flat fee of $2000 a year for all routine and sub-acute office visits plus annual preventive care – including blood draws and other routine laboratory testing.

That patient must still purchase major medical (i.e. hospitalization and catastrophic illness) coverage. But, according to my quick Google search, those policies start at about $600 a year.

This approach is definitely a money saver. It’s less than the cost of Medicare plus a Medicare Supplemental Plan for someone who meets the health criteria implied in the contract.

Here, too, the regular payments help to smooth the doctor’s cash flow and simplify insurance claims processing – benefitting the bottom-line.

Both of these patient/provider contracts are treated equally with employer-based health care premiums for tax purposes through the use of Health Savings Accounts – an objective of the GOP sponsored plan.

Could these be early signs of return to a health care model more typical in the 1970s? A model middle class Americans and their health providers can afford.

When routine health care was something consumers paid out-of-pocket, we paid attention to how much it cost. We shopped around for the best deal.

Old fashioned competition is the elixir of innovation – a tonic the American health care system urgently needs.

Graphic — screen shot by author.  With all thanks to MSNBC and my Samsung Smart TV

CBO Waves Yellow Flag at GOP Healthcare Bill

By the time I had printed out a copy of the just released Congressional Budget Office (CBO) cost estimate of the GOP proposal to “repeal and replace Obamacare” my inbox had filled up with draconian headlines and alerts:

A complete reading of the 27 page report paints a more complicated picture but does urge caution as the House of Representatives moves to debate, amend and attempt to pass the American Health Care Act (AHCA).


To reach the cost estimate, the CBO had to begin by making a set of assumptions.

1. Health care is an entitlement – just like Social Security and Medicare.

2. The nation’s health care eco-system is a permanent fixture that cannot be evolved and made more cost-effective.

3.  Health insurance is and should be the future primary source of payment for an individual’s health care.

4.  The non-group insurance market place will see a smaller portion of premiums returned as benefits to insured individuals – resulting in higher out-of-pocket expenses for the insured.

5.  Higher out-of-pocket expenses are, by definition, bad for the insured individual.

      6.  Absent a government mandate and associated tax penalty, about 14 million Americans will choose to go without health insurance.

7.  Absent a government mandate, many employers will stop offering health insurance to their employees.

Everyone in business knows step one in making a go/no go decision on any proposed project or product rollout is to validate the underlying assumptions. If even one of the assumptions is proven to be invalid, then the rest of the analysis is immediately called into question.

The project cannot be green lighted until all of the assumptions are deemed valid – either by addressing the flaw in the proposed project that invalidated an assumption or by proving the assumption, itself assumed the wrong input or outcome.

Below I’ve made a quick pass at whether the American Health Care Act should be “green or yellow lighted” – based on CBO assumptions.

Health Care Is an Entitlement

Let’s give the Democrats their due. Regardless of its flaws, the Affordable Care Act of 2009 firmly established health care as an entitlement due every American.

Other entitlement programs – i.e. veterans’ benefits, government pensions, Social Security and Medicare all require some prior contribution by the individual beneficiary. The beneficiary is said to have “paid into the system”– before receiving a specific and defined benefit.

For example, in Social Security there is a legally defined, published maximum benefit paid monthly regardless of how many additional dollars the recipient may have (or is) paying in Social Security taxes.

Payroll taxes (Medicare, Social Security etc.) deducted from your wages are deposited into a trust fund to be used to pay your benefits in retirement. Congress considers these benefits to be “earned”.

Contrast the new health care entitlement. It is paid for entirely by current income tax payers, in addition to taxes paid for their own future Social Security and Medicare benefit (or taxes on these benefits), and by future tax payers (borrowing). Borrowing that is moving the nation ever closer to the “fiscal cliff”.

There is no dedicated new funding source to pay for this new entitlement.

The taxes – now suggested for repeal by the GOP bill – are a mirage. They “move the chairs around on the deck of the Titanic”. The tax paid in column A is credited back in column B or passed on in higher health insurance premiums. There’s no new money except borrowed money!

Show Us the Entitlement Money

Republicans in the House of Representatives need to affirm healthcare is an entitlement and then develop a new funding source to pay for it. They are, after all, the “party of fiscal responsibility. Or, they’d like to have us believe they are?

The GOP (Study Group) should recognize that voters’ theoretical – i.e. gut reaction – to the idea of “government controlled health care” (2010) and their opposite reaction to getting a new health care “benefit”(2012) are both rational.

Voters are afraid of government mandates but will punish anyone who tries to take away a benefit bestow by those mandates once they’ve experienced it.

In 2016 voters supported “repealing” the higher cost of Obamacare era insurance premiums, co-pays and deductibles. They did not vote to give back the additional benefits received from Obamacare!

Accepting that a new entitlement exists does not mean the entitlement cannot be changed. The fact is that there are too many mandates, rules, and required benefits under the current law.

But any change made must demonstrate that is a fairer, better deal for a majority of Americans. Most Americans must be able to see and feel – experience – that the change is a better deal and be willing to pay for it, directly, or it is not going to work in practice.

Health Care Eco-System is Static

The CBO analysis completely misses the most compelling problem. Their analysis assumes the current structure is here to stay and that all reforms will be made through and not to the existing health care delivery model.

That assumption is incorrect.

The cost of health care services, drugs, appliances and anything else associated with the delivery of health care in America today must be changed – lest it bankrupt the nation.

The government is consumed by the question: How to pay for insurance premiums covering the unaffordable existing health care model?

At the same time, the American private sector (the consumer) is already experimenting with new models – more efficient and less costly.

Twenty of the nation’s biggest employers are banding together to create the Health Transformation Alliance aimed at using modern technology to control the rising cost of employee health care benefits. These employers, including American Express, Verizon and IBM (Watson) all understand the power of information to spearhead innovation.

These major employers are making an investment in reform because they remain committed to maintaining health insurance as a necessary employee benefit – calling into question, as well, the CBO’s 7th assumption.

These two CBO assumptions are incorrect. That means the 10 year projected cost estimate is reduced to pure conjecture.

14 Million More Uninsured in 2020

Not even the CBO “believes” this assumption.

Instead, they argue that an expanded range of choices in insurance products available to younger Americans – after the expiration of government mandates – will actually attract more young and healthy Americans to the non-group insurance market after 2020. This will positively impact the ratio of younger/to older Americans involved in the market place.

CBO projects a 10 percent reduction in overall insurance premiums as a result.

But – and here I agree with the CBO – the American Health Care Act – needs to be improved for older Americans still too young to qualify for Medicare.

These are people whose income exceeds the ridiculously low federal poverty guidelines – making them ineligible for Medicaid – who cannot afford health insurance premiums of $12,000/yr or more – that are only slightly reduced through $4000 “tax credits”.

Some of these people are, also, sicker and more expensive to care for.

A Roadmap for Dialogue

To their credit, the CBO has done an extraordinary job of laying out the challenges not just to the current House AHCA proposal but to the underlying problem of health care delivery costs, as well.

How much better off would the nation be if Congress – both Republicans and Democrats – were to embrace the cost estimate as a starting point?

“What-if” the ACHA were viewed as a bi-partisan starting point from which our health care eco-system is encouraged to evolve?

  • “What-if” Medicaid could be reformed and modernized into an attractive, affordable option for some middle-aged, middle income Americans as well as those too poor to pay health care?
  • “What-if” members of Congress were to work with all the stakeholders (from the President to the smallest tomato grower) to examine, question and rethink each CBO assumption?
  • “What-if” Congress started a discussion that engages provider, payer and patient in a singular effort to achieve better quality and lower cost health care for all – i.e. those who must rely on the health care entitlement and those who must pay for it?

But, as the CBO report cautions, it’s not possible to put such far-reaching improvements into place by 2020 as the AHCA requires.

Congress must learn from its past mistakes. Reforming the healthcare entitlement must be both bi-partisan and implemented over a 10 year time horizon that allows for intermittent adjustments as circumstances require.

Photo at US Capitol by Author — March 2,2017

Here’s What GOP American Care Act is not — Affordable

“If you want your legislation to last, it has to be bi-partisan,” — Ron Johnson, Republican Senator from Wisconsin, told the No Labels Problem Solvers Conference in Arlington, Virginia, on March 1.

He illustrated his observation, echoed the next day by my own Congress member, Anna Eshoo (Democrat – California), by pointing to Obamacare and Dodd-Frank. Both were rammed through Congress without a single Republican vote and are now targets of a Republican majority in Congress. Sadly, it appears the House Republicans have not learned the lesson.

Every comment made by House GOP leadership, the White House, and Republican members of the Senate point to a decision to ram the Budget Reconciliation Legislative Recommendations Relating to Repeal and Replace of the Patient Protection and Affordable Care Act through Congress on a party-line vote.

Once again, the victory will be pyloric and short-lived.

Healthcare is 20 percent of the United States economy. It impacts each and every American. It’s a huge problem and it can only be solved through a bi-partisan debate in full view of the American people.

Obamacare Impacts 330 Million Americans

Right after the conference, I shared a lunch table in the Longworth Congressional Office Building cafeteria with a couple from Mississippi.

Just as it does in almost every conversation in the Capitol, healthcare costs came up as we were just sharing our experiences from meeting with our representatives.

Owners of a small business, the Smiths described the difficulty they have in providing health insurance to their employees. The individual monthly premium is $400 a month – split 50/50 between the employee and the employer. “It’s the most we can do to pay half the cost.”

The median income in Mississippi is about $37,000/year – meaning a family of four participating in employer-based health insurance is paying 17 percent of their pre-tax income for health insurance. The policy has very high deductibles. In a word it’s “unaffordable”!

An average family of four in Mississippi is only a few dollars above the federal poverty line. But if their employer offers health insurance, they are not eligible to enroll in Obamacare – where the same monthly premium would be heavily subsidized.

Friday, standing, jet-lagged at my regular grocery store I was chatting with the man standing behind me in line. I said I’d been in Washington and the conversation, inevitably, turned to healthcare. He said he pays $1000 a month to cover his healthy family of four on an employer-based plan.

Before the Obamacare mandated changes in his coverage, he complained, he always had an annual preventive physical. Now, he has to pay $40 for the initial visit, $40 dollars for each of the routine tests and $40 for the follow-up visit. He concluded his prevent care is too expensive when prioritize against co-pays for his children. He figures he will go to the doctor when he gets “really” sick.

Nothing in the newly released GOP plan addresses either of the problems which these accidental meetings illustrate.

  • It does nothing to reduce the cost of health insurance because it does nothing to change the underlying healthcare cost crisis.
  • It does nothing to reduce the employer-based premium increases triggered by Centers of Medicare and Medicaid (CMS) Obamacare mandates.

Healthcare is an Entitlement

The Republicans’ most conservative members are still resisting reality. They claim that they must repeal Obamacare because the country cannot “afford another entitlement”.

Get over it.

  • Supreme Court ruled there is a universal right to care for all people at the emergency room door.
  • Once the government provides a benefit to some portion of the people – it cannot be taken away – only expanded in the name of equity.

But the conservative wing of the Republican caucus is partially right: The USA cannot afford another entitlement that is not paid for before and after it is granted.

Rather than repeating the mistake the Democrats made when they enacted Obamacare on a party-line vote the Republicans should take the time necessary to craft a bill that clearly addresses the coverage issues and is paid for.

A Down Payment on Reform

Paul Ryan must have been joking when he said “every American should read the bill”. Take a look here.

I read it but I didn’t understand all of it – just like most members of Congress!

Speaker Ryan surely recognizes the importance of slowing down the process of moving the proposed legislation to give his team a chance to garner at least some bi-partisan support for the plan.

That begins with the Congressional Budget Office (CBO) “scoring the bill”. How many people will get coverage under the American Health Care Act (AHCA) at what cost to the tax payer, and what’s the indirect impact be on employer-based insurance health insurance premiums?

CBO scores are notoriously inaccurate – over-estimating the benefits of legislation and under-estimating the costs. But they offer a starting point for a negotiation.

The current 120 page bill is nothing more than a “strawman” that will be modified by the long process of moving legislation into law.

In business the “strawman” plan is assumed to be a “starting point” — something that every member of the team can “take shots at” (debate and amend) in an effort to improve the proposal and, through participation, to encourage skeptics to “buy-in”.

For example, what-if Republicans (based on CBO estimates) offered to improve out-year Medicaid funding in exchange for Democrats supporting equal tax treatment for Americans with employer-based and private purchased health insurance?

No Democrats may come around to voting for the plan but, at least, the American people will see Ryan and his team willing to compromise to improve the bill.

Because of the limitations of the Congressional Budget Reconciliation process, the AHCA cannot address the underlying problem: the cost of health care. The reality is that no health insurance plan Congress generates can be affordable and effective without addressing the underlying problem.

To insure that Congress takes on the larger problem with urgency, the current bill must be amended to include concrete triggers guaranteeing healthcare cost containment legislation is written, investigated, debated and passed prior to the effective dates of AHCA.

For example Democrats get stronger drug pricing controls and the Republicans get malpractice reform.

Only by incorporating these guarantees in this first bill can we, the people, be assured the subsequent legislation will ever be introduced – let alone passed.

The battle ahead will be fierce — fiery.

Reimagineamerica will continue to observe, educate, clarify (if possible) and prepare each of you to be an active advocate in the battles to come.

Photo Credit: the author’s iPhone with thanks to MSNBC live broadcast

What Americans Don’t Want to Hear About Healthcare

I decided against going to a Healthcare Town Hall Meeting with a local Congressman because I knew the outcome before the gavel went down.

There will be a lot of speculative hysteria surrounding potential changes to Obamacare benefits or changes to Medicare.

Let’s relax. Entitlements once granted never go away – they take on a life of their own.

What attendees won’t be told is that Obamacare is collapsing under its own weight – insurers are fleeing in droves unable to sustain the coverage losses they’ve experienced over the last few years.

Nor will they hear the Congressional Budget Office prediction; Medicare Hospital Trust Fund will be bankrupt in 2020 and the larger Medicare Provider Trust Fund will be exhausted in 2028.

But Obamacare and Medicare are not the problem – they are just a symptom.

Medical Bills Are Killing Us

In a seminal piece written for Time Magazine in the summer of 2013 Steven Brill laid out the problem in detail.

Medicine in 21st century America is big business. It’s very profitable for employees and stockholders.

The United States of America spends more on healthcare than the next 10 biggest spenders combined! Based on exhaustive comparative studies of Adult Welling Being the additional $650 billion a year does not result in better outcomes for Americans.

McKinsey Consulting studies have shown that the average private healthcare employer has a net operating margin (profit) of 16.2 percent compared to ExxonMobil’s 8.2 percent.

Spending for healthcare services, drugs, devices and facilities equals 20 percent of total USA Gross Domestic Product (GDP) or about $4 TRILLION a year – every year.

By comparison, the American Association of Civil Engineers estimates the total national backlog of needed infrastructure (airports, trains, highways, energy grids, etc.) will equal only $3 trillion by 2020.

Healthcare Spending is Out of Control

We see the headlines – EPIPEN price increases from $57 to $600 per prescription in a decade.

New York is the financial capital of the world – right? Wrong, of the 18 largest employers in New York four are banks and eight are hospitals.

We have heard for years that employer based (and private) insurer payments to doctors, laboratories and hospitals needed to be increased to cover the losses health care providers experience in serving Medicare patients, Medicaid patients and the uninsured.

If Medicare is “unprofitable” why does every major for-profit healthcare system aggressively pursue those patients? It’s simple. The Medicare payment formula includes a guaranteed percentage of profit!

It stands to reason, then, that if there are 23 million more insured patients the providers’ need to recover “uncompensated care” costs has decreased but medical spending continues to increase dramatically.

While healthcare is something we all need; we’ve come to expect someone else to pay for. On average, the patient pays only about 12 percent of the total bill.

That’s made us insensitive to prices and providers greedier. The escalating greed is reflected in the skyrocketing price of health insurance.

Medicare Cost Data for All

If we want good healthcare coverage with reasonable insurance premiums, Americans must become active consumers. We must advocate for a system without hidden costs.

If we want the impending debate in Congress to conclude with a better outcome than just “Obamacare2.0”, we, the people, are going to have to hold our representatives’ feet to the fire!

We must insist they begin with a comprehensive investigation of the underlying costs of healthcare.

Rather than focusing on perpetuating yet another “entitlement”, Congress’s objective must be to reduce the cost of care for all Americans – not just those who receive government subsidized care.

Brill argues that Medicare can compute the real (true) cost of delivering each health care benefit they cover. They reimburse providers based on cost of service delivery in the provider’s region in the country – i.e. cost of a day in hospital costs more in California than in Idaho.

Then Medicare applies a percentage of profit authorized by Congress to the provider. Cost plus profit is the contracted price Medicare pays to providers – no negotiation.

But Medicare is prohibited by Congress from sharing that cost data.

As consumers we have to start to shop for the best deal even if someone else is going to pay the bill!

As voters we must insist Congress allow Medicare to share their cost data — putting other insurers in a stronger negotiating posture with healthcare providers. The result would be a better deal for both patient and insurance carriers.

Manage Costs or Ration Care

As a nation, we cannot continue to fund a healthcare system that has no self-discipline. To do so would pass an immoral debt onto several generations of Americans not yet born.

If we are going to make the promise universal health care (not single payer health care) an affordable reality for all we must be willing to make changes in the ways we consume and pay for healthcare – that includes Medicare patients.

  • A redefinition of what health insurance is and what it pays for.
  • A reorganization of how we deliver healthcare to increase efficiency and reduce costs.
  • Rapid adoption of technology to both better determine diagnosis and treatment and to manage chronic disease
  • Greater transparency so that patients can make smarter decisions about where and how they will receive necessary care.
  • Greater transparency around the relationship of drug development costs and drug prices
  • Medical malpractice tort reform.
  • Identification of realistic funding sources for health insurance subsidies, Medicaid, Medicare and veterans’ health care.

The good news is there is a great marketplace of ideas about how to tackle all of these issues.

The bad news is that all of the good ideas are being drowned out by the political rancor on both sides of the aisles of Congress and the army of special interest lobbyists who feed that rancor.

Over the next few weeks, I’ll explore each of these opportunities with you – so that we can help our fellow citizens understand both their possibilities and possible perils.

It is up to us to engage our elected representatives in “fixing healthcare for all”, not fighting to score political points for the 2018 mid-terms.

Born After 1950? Counting on Social Security OR IRA Retirement Savings? Think Again!

I had never heard of “Pink Day” until Alyssa, my 13 year old granddaughter, said we had to absolutely go on Friday for back to school shopping.

After I paid the bill for her “loot”, I looked her in the eye and said “my credit card is now in DEEP FREEZE!

That didn’t keep her from trying, again, on Saturday to see if she could get me to use it, again.

No dice, sweetie. Unlike our government I need to live within my budget.

Once a month, I have to gather all the bills, including that credit card, check my bank balance, pay all the bills, subtract the payments, and put some of the remainder into savings. What is left is so-called “discretionary revenue”.

National Debt will Reach 110 Percent of GDP by 2036

If we impose that kind of prudent thinking on the American economy — that means no more “pink days” for Congress and the American people.

We can’t pay the bill!

The Congressional Budget Office (CBO) projects, based on current law, the National Debt will rise to 86 percent of Gross Domestic Product (GDP) by 2026 and will exceed 110 percent of GDP by 2036. (The 2016 LONG-TERM BUDGET OUTLOOK Table 1.1)

That’s the rosy scenario.

As debt grows, interest on the debt grows, squeezing out private investment and with it economic growth. As the economy shrinks, the ratio of debt to GDP accelerates.

Before the United States reaches the 100 percent Debt to GDP threshold, no investor, foreign or domestic, will be willing or able to purchase our debt at any interest rate.

The largest economy in the world — the collapse of the USA’s economic system would lead to a worldwide cataclysm.

The military superiority the world has depended on to bring order and stability since the 1940s would disappear – in fact, we wouldn’t be able to maintain an army or navy to defend the homeland.

Prepare to Lose Your IRA Savings!

Not planning on Social Security — believe your retirement savings will secure your old age? Think again.

On our current course, you are likely to live to see the United States unable to meet its financial obligations either domestically (Social Security, Medicare, Education) or internationally.

The combination of political and social instability and the collapse of our financial system will swallow everything – including your savings.

For a preview of what could happen during your lifetime or your children’s look to history the rise of Nazism in Germany  or to Greece or Venezuela today

President Obama Couldn’t Defuse Debt Bomb

During his 2008 Presidential campaign Barack Obama excoriated President George W. Bush and the GOP Congress for increasing the National Debt (credit card) from 33 percent of GDP in 2001 to 35 percent of GDP in 2007.

Three big, unexpected events drove the Bush-era increase in the National Debt:

  • Cost of tax rate reductions following the 2001 recession
  • Unprecedented spending for Homeland Security after 9/11
  • Wars in Afghanistan and Iraq.

When President Obama came into office in January 2009, “Job 1” was stabilizing the economy – that meant spending more money to get the country moving forward, again. The only way to do that was to borrow still more money – the National Debt quickly rose to 62 percent of GDP.

During his tenure in the White House the first of the Baby Boomer Generation would retire – putting more pressure on an already stressed Social Security System.

The President faced a steep challenge — balancing the budget would require shared sacrifice across the American population and the American economy.

Every special interest served by the Federal Budget would resist. He needed a Bi-Partisan PLAN.

His answer: A National Commission on Fiscal Responsibility and Reform.

To lead the effort he invited former Republican Senator Alan Simpson and former Clinton Chief of Staff Erskine Bowles. Both of these men have strong reputations as citizens before they are partisans.

Among others, he appointed Alice Rivlin, who had served as Clinton-era Director of the CBO. She warned about debt in general and the need to reform Social Security in particular.

The Commission membership included Republican and Democratic House and Senate leaders and others from the Administration and outside government.

Their findings were published in December 2010 — to significant fanfare — subtitled The Moment of Truth:

But the Moment of Truth never reached Congress for an up or down vote.

Instead the National Debt rose from 62 percent of GDP in 2009 to 75 percent of GDP in 2016.

The striking rise in debt is the result of unrestrained government spending, Congressional reluctance to raise or reform taxes, natural disasters, and continued military operations.

Next President Has Last Chance to Defuse the Bomb

And yet, unlike Barack Obama, neither Hillary Clinton nor Donald Trump have focused on the rising ratio of Debt to GDP or the risk it presents to every aspect of our national life and government.

Libertarian Gary Johnson (former Governor of New Mexico), has made debt reduction and balancing the budget a priority in his campaign but the limited press exposure he receives has allowed Ms. Clinton and Mr. Trump to “skate” on the issue.

In fact, both promise more discretionary spending, expanded Social Security and lower taxes.

They are either lying or they can’t do basic math?? I’ll let you decide.

Every American Must Make the Hard Choices

One thing is certain, as citizens, taxpayers, parents, and grandparents it is our solemn duty to elect a President and a Congress willing to confront debt, deficit, and balancing the national budget honestly and courageously.

No one wants to pay more in taxes, but the fairly small sacrifices required of each of us in this decade pale in comparison to the consequences that could face our children in the next decade.

  • It is up to YOU

    Get Involved

    In the coming weeks, will do what our Presidential Candidates and other politicians are not - throw out some positive and plausible ideas to "right the ship of state".

    Ideas you can ask candidates about during the Fall Campaign.

Photo by author

Honor Orlando with One Small Step toward Unity of Purpose

After I turn off the lights each night, I repeat the basic prayer of my faith followed by a brief, extemporaneous chat with God. It was just after 1 AM Sunday morning when I asked God to do what he can to achieve peace on earth.

At that very moment the largest mass shooting in the history of the United States was taking place across the country.

How can it be that 49 people were murdered in an Orlando, Florida, night club? How can it be that 53 people who went out for a good time on Saturday night – ended up fighting for their lives in Orlando hospitals on Sunday?

Then the “other shoe dropped”. The killer who pledged allegiance to ISIS — was known to the FBI but still was able to buy a military-style assault rifle from a legitimate gun dealer.

Massacres Have One Common Denominator

Watching the breaking news, I was struck by the sounds recorded by law enforcement. The rat-a-tat-tat – the speed and the volume or shots fired.

It sounded like a Hollywood war movie!

It’s the same sound we heard in the videos of Fort Hood, Sandy Hook, Tucson, San Bernardino, Charleston, Aurora and a dozen other instances in the last 8 years.

There is a common denominator: A semi-automatic, military-style assault rifle (AR-15). We learned after Aurora that you can buy this type of weapon at Wal-Mart!

To the best of my knowledge there are no wars going on in Aurora!

Democrats could not resist the urge to politicize the tragedy. They took to the Floor of the House of Representatives shouting “Shame” at the Republican Majority. They ignored the fact they failed to pass any meaningful gun control legislation when they were in the majority in both the House and the Senate. This is an Election Year and gun control is a perpetual issue to rouse voters.

Not a Time for Typical Politics

When I work on a new strategic direction with a corporate client I start with the facts. Focusing on facts avoids inter-personal tensions and political agendas from side-tracking the discussion.

All the participants are focused externally – listening more than talking — until they all come to a consensus about what to do with those facts. It is a first step in building the trust necessary to take more significant, risky actions.

People are scared.

What they want are solutions not posturing.

Our leaders must avoid political finger pointing and focus instead on quiet conversation that allows the evidence to lead us to constructive consensus, which would build a new multi-pronged strategy to combat all forms of domestic terrorism.

It is a fact – based on ample evidence – federal gun purchase background checks do not work to make us safer. 80 percent of Americans agree they must be strengthened.

Background Checks Are Not Gun Control

Congress passing legislation to expand and strengthen background checks could be a confidence building step toward a new homeland security strategy.

They have the facts:

  • The Charleston massacre last year demonstrated that an arbitrary three day maximum waiting period is not long enough for a thorough FBI background check.
  • The Orlando killer had been under FBI surveillance for nearly a year (2013-14) as a suspected terrorist but was able to walk into a gun store and walk out with a military assault rifle – no questions asked.
  • The Department of Homeland Security maintains a “no-fly list” of potential terrorists to prevent the use of an airplane as a weapon of mass destruction but Congress has refused – so far –to make it illegal for these people to buy a gun.
  • This policy is in fact: Crazy in its contradiction!

Congress has had more than a dozen opportunities to debate this subject over the last seven years. It’s time to stop talking and listen to the American people!

Amend the background check legislation this week with a simple amendment to the law that honors the memory of those who died in Orlando – while they were just out living their lives.

  • Remove the 72 hour restriction from the background process. The FBI completes the background check when they have all the data required – no matter how long it takes.
  • Integrate FBI interview records and the “no-fly list” with FBI gun background check system.
  • If someone who has been interviewed or surveilled as a potential terrorist attempts to purchase a gun they should be flagged for an FBI interview before any action is taken on the gun purchase application.
  • Similarly, anyone on the “no-fly list” who applies to purchase a gun must be subject to FBI interview and further investigation before any action is taken on the gun purchase application.

This legislation would be a small, politically safe step for Congress. It would be a huge step forward toward building a national consensus on steps that can make our homeland and our homes more secure by following the evidence the FBI and the ATF are developing in Orlando and across the country.

To do less dishonors the lives lost!

True TSA Story–Blond Ponytail is Dangerous Weapon

As a “million mile flyer”– I am skilled at managing my way through airport security with as little hassle as possible.

Even when I am “TSA Pre-cleared” I always have my liquids in one regulation size plastic bag, always declare my iPad or PC, and avoid wearing jewelry or high heel shoes that can set off a metal detector.

But I was completely unprepared for my experience with the TSA this past week.

Career Girl Hairdo Threatens Airplane

On Tuesday I had an early morning flight from San Jose to Los Angeles – the outbound leg of a one day round trip. Pursuing my no hassle, no stress strategy, I wore a pair of fashionable flat sandals with my red and white spring dress – and limited my jewelry to tiny post earrings and a watch. My hair was in a sophisticated updo – appropriate for a high power business meeting.

My coat and purse (with iPad and iPhone) were going through X-Ray when I stepped into the scanner and put my hands over my head.

I stepped out, grabbed my bag and turned to leave when I was stopped by a female TSA agent who told me she had to “pat down my (hair) bun”. I was stunned!

Her supervisor agreed the agent had to change her gloves but supported her assertion that my hair bun could contain some dangerous weapon!

She didn’t pat, instead she rummaged. Her gloved hands drove through my whole hairdo. Hairpins went flying.

Thank God I was dropped off at the airport at 6:50 AM for a 7:55 AM flight. After leaving security, I had to buy a can of hair spray, go to ladies room, take my hair completely down and redo the updo before proceeding to the gate.

From Los Angeles in the afternoon, the very same hairdo caught nary a glance from TSA.

The Truly Dangerous Ponytail

As my mother observed when I was a child, I never made the same mistake twice.

On Friday I arrived at the airport for a flight to Las Vegas — where I was attending a weekend conference — with my hair in a ponytail.

Bags checked I sailed right through San Jose TSA security.

Then last night returning – after spending Monday on a tour of Death Valley – tanned and wind-blown I was stopped after the scanner.

You guessed it. No, the TSA agent didn’t need to change her gloves – she just wanted to “look at my pony tail”! As soon as I turned around she had her dirty gloves all over my head.

TSA Fears Blond and Curly

I was still steaming when I Googled “TSA Hair” and found the cause of my harassment.

The American Civil Liberties Union (ACLU) successfully sued the TSA for its attention to women of color with “afro” hairdos the TSA asserted weapons hidden in their hair.

It was unfair, they charged, that other women (i.e. white women) with buns and ponytails were not hand searched.

The TSA signed a consent decree in late 2015.

The logical resolution would be to upgrade TSA’s screening technology.

If any CT or MRI medical scan can penetrate hospital gown and skin to expose our musculature, bones, and internal organs – surely the TSA can procure scanners that penetrate human hair to the scalp!

Rather than improving their screen techniques – i.e. scanner abilities – the TSA widened its net to include white women.

I am in a quandary. My fine textured hair is always done in some kind of bun or a ponytail.

Is it reasonable that the TSA compel me to submit to an invasive hair “strip search” or cut my hair super short just to board an airplane?

How does the TSA treat a woman in a hijab or a man in a turban?

What if a woman is wearing a wig?

Security Begins with Consistency

TSA publishes regulations on size and quantity of liquid containers, jackets, shoes and so forth.

They must similarly publish rules to guide women on how to style their hair if that is now a criteria for passing TSA security.

Similarly they must establish standards of sanitation that travelers can be assured will be followed by TSA agents.

There are two reasons why I am not waiting with bated breath for these new regulations: ineptitude and political correctness.

Ineptitude – why was the ability to see scalp through hair not specified when scanners were procured?

Political correctness – consent decree signed by unelected, unaccountable, anonymous, unionized, unimaginative and arrogant bureaucrats.

In the meantime, I will be making an example of the TSA by removing my pony tail scrunch or bun hair clip and letting my hair fly before entering the scanner – sure to prompt questions from my fellow passengers.

TSA policy is NOT making us safer – just more cynical.


USA Doesn’t Need More Security, It Needs Smarter Security

I never expected to find myself sitting on an airplane watching live footage from a police/terrorist shootout taking place in San Bernardino, California.

I was flying from San Francisco to Washington, D.C. — a business – then fun — trip.

I will admit that the ISIS videos promising attacks in Washington and New York gave me a moment of pause before the trip.

But my sense of adventure won out.

Washington streets were bustling. Restaurants were packed with Holiday Season celebrants.

New York was crowded with tourists, theater goers, shoppers from all around the world on the busiest shopping weekend of the year. It took me an hour to walk 10 blocks from 7th and 55 through Times Square to 45th- — on my way to a Broadway matinee — swept along on an ocean of humanity.

Reactions to Terrorist Acts

San Bernardino dominated the news but none of the travelers or “locals” I met seemed overly concerned. None where concerned enough to change their plans.

My random sampling of opinions found no widespread fear of foreigners or of Muslims in particular.

There were maudlin jokes – some mine — but no fear.

A common theme was a desire for smarter government security rather than just more government security – i.e. heavily armed police on every corner.

Smarter Security Requires Exercising Imagination

The San Bernardino attack, the Boston Marathon bombing, the thwarted Times Square bombing, and the thwarted Fort Dix attack all share three common characteristics: inadequate research into visa applications, polite, political correctness, and — most frighteningly — an amazing lack of imagination.

These are exactly the same conditions that made the 9/11 attacks possible.

The 9/11 hijackers entered the US on student and tourist visas. All of these terrorists had been background checked and interviewed before the visas were granted; yet it took extensive post 9/11 investigation to piece together their true identities.

Has the US Consular Service ( put any of the “lessons learned” from the 9/11 post-event investigation into practice to “plug the holes”?

When a seemingly assimilated American citizen of Pakistani descent orders a mail-order bride from Pakistan and that fiancée shows up for her K-1 interview in a black hijab – it is a failure of the visa approval process, plus political correctness (PC), and a failure of imagination not to wonder “why” and perhaps to think “what if” — to not look a little harder into the applicants’ backgrounds.

Traveler Tracking Loophole Must Be Closed

Several of the 9/11 hijackers had over stayed their 90 day U.S. visas, but U.S. Immigration and Border Patrol officials as well as law enforcement had no process, no technical tools to track foreign travelers’ movements within the United States in order to detain and deport them.

The 9/11 Commission pointed to the urgent need for a foreign traveler tracking system more than 10 years ago.

The US government has spent $50 Billion to “harden the homeland” during that time but the tracking system still does not exist.

My iPhone and – consequentially — my car know where I am – latitude and longitude – and pop up the correct time and weather information unbidden.

My iPhone is able to track my every move – literally my every step — without any action on my part.

Congress should invite executives from Apple, Google, Microsoft, IBM etc. plus executives from Fed Ex and UPS to educate them on tracking technology.

Working with the private sector, the government should be able to test a prototype visitor passport tracking system in 30 days or 60 days – 90 days at the most!

Last, but not least, Congress must explain to you and me, the American people, why they have failed to exercise their oversight responsibility for homeland security over the past decade?

It took the deaths of 130 people in Paris to raise concerns. Fourteen Americans died in San Bernardino to focus their attention. That is shameful.

Congress, Action is Urgent.

Technology cannot immunize us against the threat of terrorism but it can aid our law enforcement officials to “level the playing field” against the unknown, unseen, unsuspected would-be terrorist.

It can, also, be a measurable “down payment” on stemming the flow of illegal immigration. Fully 40% of the estimated 11 million undocumented/illegal immigrants in the United States today are “tourists” who overstayed their visas and just blended into the population.

The clock is ticking!

Why the American Postal System is Dying

Saturday started out as a really wonderful day. No alarm clock, morning dog walk with the neighbors.

Just as I was getting ready to leave for my long anticipated Spa Day, I saw the postman walking up the short path from the gate to the front door of my cottage. I went to the door to meet and greet him.

That was the end of my wonderful morning.

The weekend postman explained to me that the regular postman was holding my mail at the Post Office because I had put my brand new mail box up on the outside of my brand new fence surrounding my brand new cottage rather than 35 feet up the unlighted, dirt/mud track to the 50 year old mail box of my neighbor.

When Common Sense and Government Bureaucracy Collide

My address is a brand new address issued by the township for this brand new cottage! In fact, when I first went to the Post Office on August 3, they claimed the address did not exist.

The postman felt no need to even notify me he was unhappy that I had not put the mail box “at the established mail stop” as “decided by the mail carrier” – per “USPS Regulations”.

Am I the only adult in this nation of 330 million who has not read and absorbed the entire USPS Mail Delivery Regulations Manual before purchasing an “approved” mail box at Home Depot?

After I installed the mailbox – right outside the front gate – I received mail for the week after Labor Day. Then there was no mail – puzzling but not alarming.

If I had left 5 minutes earlier last Saturday, I still would not know — and it wouldn’t have occurred to me — the Post Office was holding my mail or considered my mail box somehow illegitimate.

I am not seeking a confrontation. I am not asking to be treated differently than anyone else in the community. I am only expecting the Post Office to deliver the mail to my address.

Fed Ex and UPS are privately owned businesses that earn good profits because they provide good service. They are regulated by the government but receive no government guaranteed right to exist.

Their drivers open my gate and place the package inside with a smile and a wave. Sometimes they walk to my front door because the package is heavy. They are “selling” service.

Fed Ex and UPS drivers understand that I have a choice of parcel carriers and they want to maximize their share of my shipping dollar. That’s how they keep their jobs!

The US Postal Service is a Congressional protected monopoly. Post Office employees can fail to deliver the mail without fear of job loss or any sort of work place discipline.

Civil Service protected employment and a generous pension regardless of job performance are chief among the reasons the Post Office has accumulated losses of $46 Billion since 2007 – losses guaranteed by you and me.

Regulations are the Antithesis of Customer Service

Since the establishment of the republic, the Post Office has promised to deliver in “rain, snow, or dark of night” – until now.

Now, one of the bureaucrats who run today’s federal government and government services have made an inexplicable decision to make an exception to this rule in my case – demanding, I guess, that I trudge through “rain, mud, and dark of night” to get my mail out of a mail box at a different address.

Five agencies of the federal government touch the lives of most Americans – the Internal Revenue Service (IRS), Centers for Medicare and Medicaid Services (CMS), Social Security Administration, Veterans Administration (VA) and the Post Office(USPS).

To most Americans these agencies ARE the government.

What characteristics do these five agencies share? All of them are too big, bogged down by 20th century business models, and fossilized by 20th century bureaucracy – empowered by the ineptitude of Congress.  The last time Congress passed USPS Reform legislation, the Apple Computer had not yet been invented!

The first impulse of the Bureaucracy is not to streamline, modernize or “serve” citizens. Just the opposite, they hide behind “regulations” they’ve invented  or invent still more rules that penalize honest Americans.

The failure of Congress and the Executive to reform and modernize these institutions results in denied and/or delayed services for citizens — a tax, in fact, if not in theory, on the personal productivity of American citizens.

Is it any wonder, then, that 53% of Americans believe that the government infringes on their life and liberty, that the majority of Americans are afraid of and angry with their government and discouraged by the ineptitude of Congress?

I AM MADDER THAN HELL and I am not going quietly into the rain, mud, and dark!

A Private Sector Cure for a Terminally Ill Veterans Administration

The first question I always ask a potential new client is not “what’s your problem”. The first question I ask is “what are you in business to accomplish”?

Focusing on objectives serves as a roadmap to the future by clarifying which activities are core to the company’s survival – the activities that add unique customer value. Those are the activities the customer is willing to pay for.

Focusing on solving the problem, on the other hand, all too often treats the symptoms of malaise rather than curing the underlying disease. It just postpones the death throes of an ailing company.

$17 billion “Reform” at VA Postponing the Inevitable

The Veterans Administration Health Care System is terminally ill. It is afflicted, House VA Committee Chair, Jeff Miller, says with a “culture of corruption, lying and cheating”.

Chairman Miller believes the culture problem is so severe “no amount of legislation can fix it”.

The culture is a cancer on the organization –metastasized or worse. It requires immediate and radical organizational disruption – analogous to surgery and corporate chemo plus radiation!

It is time to clean house at VA Health Care – to shatter the thick, crystalline layer of middle management that has strangled the VA.

Why Outsourcing Is the Right Solution

It is time to eliminate this layer. To do this the Veterans Administration must be forced to outsource its health care delivery system.

All other government health care programs are, in fact, outsourced to the private sector. Whether Medicare or Medicaid or Obamacare. The government determines and certifies eligibility. The eligible beneficiary takes his or her “insurance card” to a private health care provider. The provider bills the “insurer“.

The only real difference between these programs and the VA is that over a century since World War I, the VA has built a huge network of hospitals and clinics and staffed them with permanent employees.

As inefficient and un-patient-friendly as Congressional investigators and VA Inspector General have found the system to be – it serves a patient population of nearly 9 million. It would be too disruptive to the national health care system to suddenly shutter the whole network.

Plus, the nation’s tax payers – including our veterans – have significant capital investment in the system – buildings, equipment and specialized medical research. That investment must be managed and/or recouped.

How to Increase Efficiency of a Government Organization…Contract externally!

Newly confirmed Secretary Robert McDonald, former CEO of global giant Proctor and Gamble, is no stranger to outsourcing. Mr. McDonald has seen that contracting externally for expertise your corporate staffs lack is the fastest and most effectively to increase the effectiveness and efficiency of an organization.

Thirty years ago P&G developed and manufactured every product it sold. Today P&G is more likely to provide marketing and logistics for new products and product lines– business functions where it has competitive advantage – while sourcing development and manufacturing from third parties who lack the size and expertise to bring their products to market successfully.

Mr. McDonald also knows that to be effective change on the scale required at the VA must be a blitzkrieg – it must be sudden, it must be very fast paced, it must be ruthlessly efficient to be effective.

Changing the VA Health Care System requires large and experienced health care management team – from one (or a consortium of several) of the nation’s large and successful health care management organizations – A team that has “done this before“!

On Day One the expert team would take over every facility replacing VA hospital and clinical management. They can’t be worried about civil service rules and/or hurt feelings. That’s the problem of the VA and Congress.

The managed service team would introduce proven combinations of people, process and technology that deliver high quality health care to tens of millions of Americans every day.

The goal: standardized care delivery across the VA in two years. Contract payments would be tied to meeting specific milestones and metrics.

Outsourcing VA health care delivery would solve the intractable problems of VA culture saving lives and money in the process. It would also reduce the tax payer’s burden by perhaps as much as $200 billion or more over a decade!

Efficiency is the Key to High Quality Health Care

Efficiency is – similarly — key to high quality government.

Woodrow Wilson first advocated the creation of a Civil Service to bring the efficiencies of the private sector to the delivery of government services a century ago.

While President Wilson’s theory was meritorious, the current VA health care system is a clear example of a good idea poorly implemented.

A successful managed services outsourcing of VA health care delivery is an opportunity to demonstrate the larger possibilities of a new partnership between government and the private sector – merging their core strengths to deliver efficient, effective, quality services to all Americans.

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