Letter to Congressman Wu.

March 19, 2010

I just sent this letter to Congressman Wu.  It seems he is an idealist that is sure that he knows better than ordinary folks what’s best for us, but I at least have done what I can  to make my views known in a respectful manner, heh.

Feel free to copy it and use it for your own template if you like it.

I urge you to vote NO on the current health care reform bill.  This bill will not help the American people and will raise costs for us all.  It is built on incorrect assumptions about current conditions and even more incorrect assumptions about how to improve things.

We need reform, but we need reform that respects the Constitution of this great country as well as its people’s freedoms.  We need to step back, think through things logically and attack this problem one step at a time…not enact a bureaucratic behemoth of an experiment with the American people as its lab rats.

Please remember that you represent more than just the democrats in your constituency and vote NO on this terribly partisan bill.

Thank you for your time and consideration.


A change of direction.

February 1, 2010

I’ve decided that my blog is becoming a bit too focused on the health care issue and that is only one of many issues I want to write about.

I’m going to abandon the analysis of the letter from Rep. Wu in favor of more general issues based posts.  My analysis was getting quite long-winded and I’m only half way through the letter at this point.  I’d hate to drag my readers through even more, heh.  Suffice to say the rest of the letter is more of the same misinformation and most of it is pretty specific to HR3200 rather than health care reform in general and is therefore pretty dated now.

Analysis of political letter from Representative Wu on HR 3200 (Part 6)

December 21, 2009

            At last we get to the core of the health care reform issue.  Almost all of the attention is being placed on the insurance industry and the reforms of that industry that are supposedly needed to fix our health care problems.  I’ll be doing a little number crunching today as well as taking a look at the workings of the insurance industry to find some answers.  Are the insurance companies really the bad guy…or just a scapegoat?

            H.R. 3200 will also reform the practices of health insurance companies so that they will no longer be able to engage in discriminatory practices like refusing to sell or renew policies due to an individual’s health status, or exclude coverage of treatments for pre-existing health conditions. The legislation also protects consumers by prohibiting lifetime and annual limits on benefits, and limits the ability of insurance companies to charge higher rates due to health status, gender, or other factors. Under the America’s Affordable Health Choices Act premiums can vary based only on age, geography and family size, and a new essential benefit package will serve as the basic benefit package for coverage in the health exchange. The basic package will include preventive services with no cost-sharing, mental health services, oral health and vision for children, and caps the amount of money a person or family spends on covered services in a year. 

Let’s start by looking at how insurance works.  It seems like it should be basic enough that people would already understand it, but that is obviously not the case, given the ridiculous and sorely misdirected attempts by our lawmakers to reform all the wrong things.

At its core, an insurance company does one thing.  It offsets a portion of their customers’ financial risk for a premium.  That premium will include the amount they are likely to have to pay out, the administrative overhead to maintain their business, and some profit (if they’ve calculated correctly).  It is a pretty simple concept.  You contract to pay the insurance company a certain amount of money to offset a certain amount of risk.  The higher the risk involved, the more money it costs you to insure against it.

Let’s look at a simplified example to clarify things (we’ll omit administrative overhead and profit to keep it as simple as possible).

  • An insurance company has a policy to protect against the cost of cancer treatment.
  • They know, statistically, that cancer costs $1000 to treat and that 10% of people will be diagnosed with cancer.
  • They have a pool of 10 customers with this particular policy.

Given these statistics, they know they have a 10% risk per customer in the pool of paying out $1000.  In this simplified case that means they are guaranteed to pay out $1000 to cover their pool of 10 customers.  Without administrative costs or profit, they would have to charge each customer $100 to break even.

Now let’s look at what happens when a bureaucrat decides to “reform” insurance by disallowing the “discriminatory practices” of raising the rates of higher risk customers without allowing a commensurate rise in premium.

  • We still have a policy for the treatment of cancer.
  • The costs stays the same at $1000 for treatment…but now you have a pool of customers with a 20% chance of being diagnosed with cancer.
  • You still have a pool of 10 customers.

Based on our previous calculations, we should now be charging this pool of customers $200 per policy to break even. (20% chance of diagnosis * 10 customers * cost to treat of $1000 = $2000 to be divided between the 10 customers)  Unfortunately, our bureaucrat has decided that it’s not fair to charge people any more than $150 for a policy.  Basic math will show you this isn’t sustainable and the company will take a $50 loss per customer.

There isn’t any way to cheat these numbers.  If you don’t allow the insurance company to recoup what it pays out with what it receives it will go out of business with certainty.  I can already hear the complaints…”But the insurance companies are making huge, obscene profits!  If they were just better human beings and didn’t insist on profits, our health expenses would drop dramatically!”

Aside from the fact that it’s ridiculous to think that some company should take on that much risk without a profit motive, let’s look at some numbers and see what these “obscene” profits really look like.  (Numbers taken from 2008 SEC 10-K filings.)

UnitedHealth Group

  • 2008 net earnings:  $3 billion
  • 73 million customers
  • Net earnings per customer = $41


  • 2008 Net Income:  $2.49 billion
  • 35 million customers
  • Net income per customer = $71


  • 2008 net income:  $1.38 billion
  • 36.5 million customers
  • Net income per customer = $38

Humana Inc.

  • 2008 net income:  $647 million
  • 11.5 million customers
  • Net income per customer = $56

Well, that seems to tell a pretty important story for just a quick look at the SEC filings and a calculation or two.  These are 4 of the biggest health insurance providers in our country making anywhere from $38 – $71 per customer in profits for one year.  That doesn’t seem unreasonable to me.  It certainly isn’t enough profit that these companies have a lot of wiggle room.  Sadly, what that means is that when our beloved bureaucrats take away these companies’ ability to control risk they won’t be able to do it without increasing premiums.  The profits just aren’t deep enough to absorb that kind of legislation.

The most important point to take home from this is that the insurance companies are not the source of our health care problems and therefore nearly every part of the health care reform is horribly misdirected.

Analysis of political letter from Representative Wu on HR 3200 (Part 5)

December 12, 2009

My analysis for today will have to stray a bit away from the numbers as the statements made by Congressman Wu are not verifiable for the most part.  I’ll try to use some solid logic in place of numbers and references where necessary.

The America’s Affordable Health Choices Act also creates a public health insurance option. The public option will operate on a level playing field, and will be subject to the same market reforms and consumer protections as private plans in the exchange. And, the public option will be self-sustaining – financed only by its premiums.

  • Level playing field?  How on earth can a private business ever be considered to be on a level field with a public entity that has no concern for remaining solvent because it can raise taxes or print money at will to support itself?  It’s a little like saying a Walmart store is on a level playing field with the local mom and pop stores (except that Walmart at least has to remain solvent and create profits to survive in the end).  Being subject to the same market reforms and consumer protections means nothing since the government will be making the rules.  To continue the Walmart analogy, it would be like Walmart being able to dictate what products the local small businesses could sell, to whom they could sell it, and at what price…all while “competing” with them.
  • If the government really wants to level the playing field, perhaps they should start by removing the onerous layers of regulation that are making it impossible for new insurance companies to come on to the scene.  This would cost taxpayers next to nothing (and might save a few dollars) and would level the playing field between the major insurance companies and startups that would finally be able to enter the market to compete, thus reducing costs through true competition.
  • The idea that the public option could be sustained only by it’s premiums is pure fancy.  I can think of no government agency or program that is self-sustaining as every single one is subsidized by continually increasing tax revenue (If you can think of any, please feel free to comment).  Why on Earth would anybody believe that the government is suddenly going to be capable of making this happen?

Great analysis of HR3962

December 7, 2009

I’m working on my next post on health care, but I just stumbled on this analysis of HR3962 at www.johndavidlewis.com.  I especially like his list at the end of the many new committees, programs, and boards that this legislation would create….there are over 100 of them!  Nice work!

Analysis of political letter from Representative Wu on HR 3200 (Part 4)

November 23, 2009

Here is another installment of my analysis of Congressman Wu’s letter about the “benefits” of HR3200.  In this segment he brings up the argument that you can keep your benefits if you like them.  Don’t believe it.

H.R. 3200 builds on what works in our current health care system and fixes many of the parts that are broken. It protects current coverage – allowing individuals to keep the insurance they have if they like it – and preserves choice of doctors, hospitals, and health plans. The legislation also creates a new health insurance exchange – a transparent marketplace for individuals and small employers to comparison shop among private and public insurers. The health insurance exchange works with state insurance departments to set and enforce insurance reforms and consumer protections, facilitates enrollment, and administers affordability credits to help low- and middle-income individuals and families purchase insurance.

  • Wow, so many claims are made here without one single reference to any piece of evidence to back them up.  I wonder why that might be?  What does he consider to be “broken” and what does he think “works”?
  • Let’s look at the first claim that is verifiable:  the protection of current coverage.  Looking at section 102 of HR3200 or section 202 of HR3962 you can find their idea of a “grandfather clause” here and here. If you read through these sections you will see that there is a grace period of 5 years.  Once the 5-year period is over, there will be no more grandfathering of past policies and all policies will have to be changed to whatever the government deems acceptable.  This means you can only keep your current health coverage for a maximum of 5 years, but even that is unlikely.  Before the grace period passes, your coverage is not allowed to change in any way or you will have to leave it.  Premiums can’t change, terms and conditions can’t change, and benefits and cost sharing can’t change.  I don’t know about any of you, but my insurance changes yearly.  It would take a very generous reader to conclude that the Congressman’s statement that we get to keep our current coverage is true.  Any rational view will see it for what it is…a lie.
  • Preservation of choice… Hmm, what to say about this?  I can only assume this will come under the auspices of the Health Choices Administration as legislated in Sec. 141 of HR3200 (Sec. 301 in HR3962).  So yes, you’ll have your choice…of whatever the Health Choices Administrator decides are your options.
  • The Health Insurance Exchange is billed as a market where you can compare various private plans and compare them with the public options.  This is just ridiculous.  The private plans will all have to meet certain specifications which will make them identical to the public plans, but since private providers are not subsidized by the taxpayer, they won’t be able to compete nor will they be able to offer anything particularly different from the public plans.  It’ll be a rigged game designed to push insurance companies out of business.  The fix will be in.
  • It sounds like the affordability credits would work similarly to Medicaid, but the language is painful to read and I honestly can’t do much with it.  Here is an example from HR3962:

(2) APPLICATION OF VERIFICATION PROCESS FOR AFFORDABILITY CREDITS- The provisions of paragraphs (4) (other than subparagraphs (F) and (H)(i)) and (5)(A) of section 341(b), and of subsections (v) (other than paragraph (3)) and (x) of section 205 of the Social Security Act, shall apply to the verification of eligibility of an eligible individual by the Secretary (or by a State agency approved by the Secretary) for benefits under this section in the same manner as such provisions apply to the verification of eligibility of an affordable credit eligible individual for affordability credits by the Commissioner under section 341(b). The agreement referred to in section 205(v)(2)(A) of the Social Security Act (as applied under this paragraph) shall also provide for funding, to be payable from the amount made available under subsection (h)(1), to the Commissioner of Social Security in such amount as is agreed to by such Commissioner and the Secretary.

Analysis of political letter from Representative Wu on HR 3200 (Part 3)

November 15, 2009

For this post I don’t have any references to cite as the paragraph I’m examining is just statements made without anything to back them up at all.  I should have another post up fairly soon with a little more evidence based writing for your perusal.

H.R. 3200, the America’s Affordable Health Choices Act, while not perfect, provides quality affordable health care for all Americans and helps controls health care costs. I have worked hard to improve the bill, and I will continue to work with my colleagues to make sure H.R. 3200 meets the health care needs of all Americans.

  • This paragraph provides nothing new.  Legislation cannot provide health care of any sort, as only people are capable of doing that.  It is possible for the government to use legislation to strong-arm the providers of health care into doing their bidding, of course, but that is hardly likely to produce “quality” care nor does that fit with the general philosophy of our country as a free nation.
  • The claims above are just not backed up by anything.  The Congressman is just asking people to take it on faith that he’s telling the truth.  The fact that so far in his letter every verifiable statement has turned out to be false or a dramatic exaggeration shows his statements so far to be… unreliable.
  • The last statement is just silly.  The vast majority of Americans already have their health care needs met.  HR3200 is over 1000 pages of legislation and HR3962 is nearly 2000.  Even if the legislation could provide health care to the remaining sliver of the population that is supposedly missing it (and again…coverage is the only thing they can actually arrange for so it’s really a false sense of security they are providing) do we really need that many pages of legislation to take care of the problem?

Analysis of political letter from Representative Wu on HR 3200 (Part 2)

November 9, 2009

At long last here is part 2 of my analysis of Congressman Wu’s letter about health care reform.  I realize that HR 3200 has now been replaced by other legislation, but the spirit is still there and my points and analysis still stand, no matter how many pages of pork they add to it (HR 3962 is 1990 pages long, up from HR 3200’s paltry 1017 pages ).  The pdf of the bill is here if you’d like a little light reading…

In Oregon, 270 people are losing their health care every day. Comprehensive reform is our best shot at controlling health care costs, which we all know are currently spiraling out of control. Oregonians and all Americans deserve better than the health care status quo. They deserve quality health care that they can afford, that does not deny them for pre-existing conditions, and that they can keep their coverage if they lose their job.

  • It appears he is getting these numbers from this report .  If you read through the report, you will find that these numbers are estimates from Dec 2008/Jan 2009 period and are based on unemployment numbers for each state for that couple of months.  His claim that 270 people are losing their “health care” every day is quite deceptive.  The report estimates “health insurance” lost which is absolutely not the same thing.  As I discussed in my previous post, EMTALA guarantees that no emergency room will turn you away if it accepts Medicare so medical emergencies are still going to be covered.  In any event, the problem here isn’t lack of health insurance or lack of health care…it is with lack of jobs, which is off the point of this post so I won’t delve into it here.
  • The rest of the paragraph is mostly opinion and fluffy thinking, but I’ll take a crack at it all the same.  I agree that comprehensive reform is needed, but I vehemently disagree with the direction the Congressman is trying to take that reform in.  Our government (in fact, most governments) has never shown any ability to control costs.  They are an ever-growing entity that will absorb every drop of money put into them and then demand more even as they provide less.  Based on information in this document, 46% of the health care spending in this country is government based.  For that amount they manage to provide insurance coverage for 30% of the population.  In other words, our government is spending similar amounts of money on health care (per capita and as a % of GDP) as many of the OECD countries all by itself…and providing coverage for less than a third of our population.  How anybody can believe the government (taxpayers) could pick up the tab for the additional 30 –33 million uninsured as well as the remaining people covered by private sector insurance and somehow magically reduce health care spending in this country is beyond me.  One further fact I’d like to point out is covered in articles here and here.  Every OECD country is suffering from the same “spiraling out of control” costs as the United States is.  Having a universal health care system has not shielded the other countries from rising costs any more than it would ours.  All countries are under the same pressures of aging, wealthier populations and increasing availability of procedures and services.

Analysis of political letter from Representative Wu on HR 3200 (Part 1)

October 26, 2009

I recently sent emails to President Obama, Representative Wu, and Senators Merkley and Wyden.  The following is the first bit of the propaganda letter sent to me in reply by Rep. Wu.  It is long, but I think it will be a good place to start looking at the truth behind this important issue.  Over the next few posts, I will be parsing through this letter and trying to sort out what is true and what is misinformation.


Dear Mr. Melroy:

Thank you for contacting me to express your thoughts regarding H.R. 3200, the America’s Affordable Health Choices Act. I appreciate hearing from you regarding this important issue.

I hosted a series of town meetings throughout the 1st Congressional District in July and August. I am truly sorry that not everyone who wanted to attend my August town halls was able to participate. However, I heard from many people during those meeting who expressed concern or support for the current health care reform proposals that were expressed in very respectful and productive tones. I value that input greatly.

Our health care system is suffering. The United States spends twice as much on health care as any other nation, and yet is the only industrialized nation in the world that does not guarantee access to health care for all of its citizens. Overall, the U.S. spends more than twice as much per person on health care as any other Organization for Economic Cooperation and Development (OECD) country. Nearly 50 million Americans are without health care coverage of any kind, and millions more are underinsured.


  • I won’t deny that health care costs in the US are higher than other OECD countries, but the above statement is not correct.  Based on statistics found here, we range from a high of 785% over Mexico’s per capita expenditure to only 53% more than Norway.  As a percent of GDP the range is from 170% over Mexico’s expenditure to 45% higher than France.  While we do spend twice what many countries do, it certainly isn’t all of them.  I’m not convinced that money spent is really a great gauge of a country’s health care system as a whole anyway, but the truth is our spending isn’t quite as out of line as the Congressman’s statement would imply.
  • The US does in fact guarantee at least emergency health care to all citizens (and non-citizens).  The Emergency Treatment and Labor Act (EMTALA) was passed in 1986 to guarantee that any emergency room will treat you regardless of your ability to pay (so long as the hospital accepts Medicare).
  • As for the supposed 50 million Americans without insurance…this is pure exaggeration.  According the US Census Bureau here, the total number of uninsured people in 2007 was 45.6 million (down from the previous year, incidentally).  Of that number, 9.7 million were not citizens…bringing the number of uninsured Americans to 35.9 million at most.  Next, Medicaid undercount needs to be considered.  As discussed here, this number is likely in the range of 3-6 million, leaving us with a total of 30-33 million uninsured Americans, roughly 10% of our population.  Obviously there are still a large number of uninsured Americans, but the evidence that all or even a large portion of them even want insurance or are suffering without it is lacking.  In this document about the Hispanic population and their health care tendencies, it is shown that about 53% of the Hispanic American citizens cite “no need” as their reason for having no health care provider.  More interesting to me is that only 27% cite financial reasons.  I would guess this is not a bad proxy for the population at large (or slightly underestimates).  In the end, I would guess that about 5% of the American population at most is truly without the ability to attain health coverage in this country.

It took a surprising amount of time and effort to fact check that small snippet of the letter so I’ll go ahead and post what I have now and will cover more of the letter in future posts.  Stay tuned.


Hello world!

September 22, 2009

Hi!  My name is Ian Melroy and this is my blog!  RAWR?

My intention is for this blog to be a repository for anything that interests me.  Fitness, nutrition, politics, technology, or whatever else happens to take my fancy will be fair game here.  I’ll be using this medium as a way to add some rigor to my thought processes and practice solid critical thinking.  Oh, I might also post fun things now and then…can’t be serious all the time!

So much of what we hear every day is nothing more than hearsay and gossip (or worse, purposeful misinformation).  I’ll do my best to provide solid logic and references so my readers (if I have any, lol) can verify my points for themselves.

If anybody has a counterpoint or comment feel free to post it, but keep it civil or I’ll delete it. 🙂