Why You Shouldn't Complain About Obamacare "Rate Shock"
Hillary Rosner, a Colorado-based freelance journalist, tweets about her search for a post-Affordable Care Act health insurance plan:
Applied for new non-ACA health plan (ACA plans way too $ in CO). Insurer charging me 20% above quote bc I had a c-section. So fucked up.-- Hillary Rosner (@hillaryrosner) December 5, 2013
Here's the thing. You can have it one way on "rate shock," but you can't have it both ways.
There are, broadly, two ways that individual market health insurance could work. One is the situation we have now in most states, where it works more or less like homeowners' insurance: The insurer evaluates how many claims you're likely to make and sets your premium at expected claims plus a profit margin. If you have diabetes, you'll pay more, just like you'd pay more for homeowner's insurance if you lived on the beach.
Rosner is seeing a mild form of that problem. She's pricing out a policy that would start in 2013, meaning it's not subject to ACA rate-setting rules. The insurer thinks her prior Caesarian section makes her likely to make somewhat more claims so it's adding 20 percent to her premium. Rosner thinks that's messed up, and a lot of people agree.
Which brings us to the other way you can price health insurance: mandate that insurers charge the same price to everyone, regardless of health risk. The ACA does this, with the caveat that insurers are allowed a limited degree of age-based premium variation. Under ACA rules, the insurer wouldn't be allowed to raise Rosner's premium over a C-section.
But because insurers know they'll have to write a lot of policies to sick people at a loss, they're going to raise premiums across the board to make up the difference.
That's why ACA-compliant health plans are "way too $" in Colorado, as Rosner puts it. The pricing structure doesn't just protect people with modest claim-increasing conditions like a prior c-section, but people with very expensive pre-existing conditions like diabetes or cancer or HIV/AIDS.
That protection costs money. What Rosner is getting in exchange for a higher premium on an ACA-compliant plan is reassurance that insurance will be available to her, regardless of her future health condition.
That said, it's likely that Rosner has been personally made worse off by health plan switches induced by the ACA. Even before the ACA, federal law barred insurers from dropping their existing members for developing a new health condition, or raising their premiums as a result of that condition. This is a policy called "guaranteed renewal."
If Rosner had been able to stay on her old plan, she wouldn't face either a 20 percent C-section-related premium hike or the need to pay to cross-subsidize people with more costly medical conditions. But that narrow protection for pre-existing conditions, often cited by conservatives as a reason to think the existing individual market is working, hasn't been working very well for very many people.
First, the value of the protection is limited. You can't change plans or insurers without subjecting yourself to a large premium increase or a coverage exclusion. The insurer can't raise your premium because of your personal health condition, but it can raise premiums based on the average claims filed by all the participants in your plan. To this end, the insurer can close your plan to new participants; over time, the healthier participants will tend to leave, driving up premiums for those who remain. And you're out of luck if you move to another state.
Second, this protection only works if you maintain continuous coverage in the individual market from the same insurer, and very few people are doing that. Over 80 percent of people who lack coverage from an employer or the government go uninsured rather than buying coverage through the individual market. Those who do carry individual coverage often do so for only a short time, such as during a gap between jobs that provide coverage.
Michael Cannon has noted that guaranteed renewal was a common feature of individual health insurance plans even before it was mandated by federal law, and it doesn't raise premiums nearly as much as the ACA's rules do. But that's actually a demonstration of how guaranteed renewal doesn't work: It's not very expensive for health insurers to offer because few insureds actually figure out how to turn it into effective coverage for expensive health conditions they develop.
This is a key difference in how liberals and conservatives view the health insurance market. Conservatives see a market that is working so long as you're responsible enough to keep yourself covered at all times so guaranteed renewal protects you from pre-existing condition exclusions. Liberals see a market that is stacked against people's efforts to access such protections.
Given how few people are making the protections of the existing system work, liberals have the better of this argument. They've found a way to make insurance available to the chronically sick that will actually work for most of the public. But they haven't been upfront about the fact that their fix will be paid for with higher premiums for lots of healthy people, including Rosner.
This Mind-Boggling Profile of Osama Bin Laden Came out Exactly 20 Years Ago Today
This article from Dec. 6, 1993, by Robert Fisk of The Independent, titled, "Anti-Soviet warrior puts his army on the road to peace," is stunning to consider 20 years later.
Osama bin Laden, fresh off the U.S.-backed mujahideen's victory over Russia in 1989, flew his men, materials and money down to Sudan, ostensibly to start public works projects. When asked if they were militant training camps, the "Saudi entrepreneur" and future leader of al Qaeda told Fisk: "I am a construction engineer and an agriculturalist. If I had training camps here in Sudan, I couldn't possibly do this job."
The piece is fascinating because it is a positive profile of a man who would become a global terrorist mastermind.
Some key lines:
"OSAMA Bin Laden sat in his gold- fringed robe, guarded by the loyal Arab mujahedin ..."
"With his high cheekbones, narrow eyes and long brown robe, Mr Bin Laden looks every inch the mountain warrior of mujahedin legend."
"He is a shy man. ... married - with four wives - but wary of the press."
"Was it not a little bit anti-climactic for them, I asked, to fight the Russians and end up road-building in Sudan?"
Bin Laden's work in Sudan purportedly involved overseeing a 500-mile highway from Khartoum to Port Sudan. Fisk reported that "Bin Laden has brought the very construction equipment that he used only five years ago to build the guerrilla trails of Afghanistan."
The Fantastically Small Amount Spotify Pays Artists Per Song
Each time Spotify plays a song, your favorite singer or band gets as little as 0.6 cents, the company said.
At that rate, a song would need to be played 166 times for the artist to earn $1 in royalties (100 cents divided by 0.6 = 166).
The info comes from a fascinating—and hugely welcome—article Spotify published on its revenue model. In a single post, Spotify has done more to demystify artist royalties in streaming music than Pandora and Apple have ever done, combined.
But before you get angry at the fantastically tiny amount of cash that bands get for each song, remember that those fractions of pennies add up.
This is Spotify's revenue picture (below). The company says it has 6 million users paying $9.99 (or £9.99 or €9.99) in 2013: That would imply its gross revenues from users are somewhere north of $720 million annually:
The company also said it will pay out $500 million in royalties this year:
Spotify says it pays 70 percent of its gross revenue in royalties to artists. Again, that would put Spotify's annual revenue from users at around $720 million. (Spotify didn't talk about advertising revenue, which it generates on top of that.)
In terms of per-song fees, Spotify said: "Recently, these variables have led to an average 'per stream' payout to rights holders of between $0.006 and $0.0084."
Here is how that breaks down for artists over time (below). Spotify has also projected future revenue for artists if the service grows to 40 million paid subscribers:
Here's How to Undo a Sent Email in Gmail
You clicked send. Oh crap.
When you send a no-take-backs email—maybe an admission to a secret crush, or accidental reply-all—there's an instant pang of regret. It feels like there's no going back.
Meet Gmail's Undo Send feature, a lifesaving little hack buried in the Gmail Labs settings. It gives you a 10-second window to "undo" sending an outgoing email. You just have to enable it first.
Here's how it works:
1. Click the gear icon in the top right corner of your Gmail window and select Settings from the dropdown menu.
2. Select Labs from the row of tabs.
3. Scroll all the way to the bottom where you see Undo Send and click Enable.
4. Hit Save Changes at the bottom.
5. Breathe easy.
Now when you send an email, the yellow dialogue that displays "Your message has been sent" will also give you the option to Undo. Our tests consistently showed that you have about 10 seconds before the Undo option disappears. Click it, and the email will reopen, un-sent, in the composition window.
[UPDATE, Dec. 5, 2013: It defaults so that you have 10 seconds to click before the Undo button disappears, but you can adjust that window of opportunity. Go to Settings > General > Undo Send, and select a cancellation period up to 30 seconds.]
We weren't the first to discover this cool trick, but Gmail's interface has changed since Mashable's tutorial was published in 2010, so we updated the steps. Note that features in Gmail Labs are experimental and may change, break, or disappear at any time. You've been warned.
See also: Gmail's Top Nine Hidden Features
Some Companies Are Offering to Rig App Store Rankings
Apple's App Store will not reveal how its top charts' ranking system works, but a study from Boston app marketing agency Fiksu found that it is not purely driven by download volume and speed. Somehow, ratings factor in. And critics think it is ripe for exploitation.
"Apple is a super helpful company. But its algorithm needs to change. It's still a mystery. You'll see two-star apps in the top 10, and you say, 'Why?' There are companies out there that will pay to download your app. And there are guys out there that are a complete sham," Chris DeWolfe, CEO of the Social Gaming Network, told Adweek.
His allegation may be a bit exaggerated, as a recent study from Readdle found that it takes between 3,500 and 4,000 downloads per day for a 4.5 ranked app to make it into the top 10. But a cursory look at the top 20 apps does show the occasional app that has more one-star ratings than five-star ratings.
There are certainly dubious services available to inflate an app's ranking. SafeRankPro.com, for example, offers "a large network of USA reviewers (several thousand) that can download and rate your apps favorably," with positive reviews available from 80 cents—and that was information provided by the company's sales manager Karan Khubchadani.
Developers told Adweek that it is common to see a message coming from a country like Nepal that promises to give an app thousands of American downloads for a price.
But the consensus seems to be that these manipulations are increasingly marginal.
"Last year was all about chart-boosting. Buying as many app installs as possible [in] as short a timeframe as possible to get to the top of the charts. Now there are fewer loopholes available to artificially inflate rankings, and legit companies won't spend their time with it," Bill Clifford, chief revenue officer at the mobile ad agency SessionM, told Adweek.
Everyone Wants to Know Who's Behind ViralNova. You Won't Believe the Answer.
You clicked the headline above to get here. Would you click on these stories?
Likely. You might even share them via Facebook or Twitter with friends that will share them as well.
They're from ViralNova, an obscure website that launched in May with a headline format that suddenly has journalists and bloggers everywhere trying to crack its code. Why? Because the headlines work. They hit an emotional, empathetic, and yes, curious note with readers, and in this click-hungry industry, the new kid on the block is making waves.
But here's the catch: no one is absolutely sure who the new kid is.
Alex Litel at The Wire did a deep dive into ViralNova's creation:
There are no good traffic statistics. The site is not tracked by comScore and its "About" page is intentionally vague — but according to Alexa, in May it was the 443,652nd most popular website in the world and now it's ranked 1,685th.
Litel mentions that ViralNova's "About Page" scoffs at the media folks who have tried to uncover the identities of the people behind it. There's an FAQ section with snippy answers ("Where are you located?" "The Internet." "Who's your audience?" "People.") and it also states they aren't running paid ads on their site. Consider big sites like BuzzFeed, Gawker, and Business Insider that are funded and feature sponsored content in order to employ its developers, editors and writers. ("How many people work at ViralNova?" "Take a guess. It’s less than that.") Whoever is behind ViralNova doesn't give interviews.
Litel discovered more:
Despite the attempts to hide their identity, we were able to connect ViralNova through its AdSense account (follow the money) to a number of other sites, including Epic Voices, Paw My Gosh, That Cute Site and Must Smile. And following the trails of those sites, there [was one name] that consistently came up: Scott DeLong.
Litel reported that two other names surfaced time and time again in relation to the site. DeLong, who emailed Business Insider after this article went up, said that he was the only person involved in ViralNova out of the three names Litel reported.
The ordeal rings similar to when BuzzFeed soared to new heights with its discovery of how well the "listicle" worked. People moaned and groaned over it (and some still do), but its clicks don't lie.
BuzzFeed, now responsible for as many hard-hitting pieces as it is 90s GIFs, earned senior editor Matt Stopera a profile in Bloomberg Businessweek in 2012:
But there’s something about Stopera’s lists on BuzzFeed that calls to mind every bewildering pop-culture streak you’ve ever puzzled over. It suggests somebody has cracked a code.
Luckily, the code switches up every once in awhile, but it's interesting that those responsible for ViralNova don't want the glory of being the next craze throwing the media world off its game.
This Chart Tells You Everything You Need to Know About Pairing Wine With Food
Wine can be an integral part of a meal. But for those who aren't sure what to serve at their next dinner party, Wine Folly has created the perfect beginners' wine chart. The infographic breaks down the basics of every type of wine, including calorie count, alcohol content, and most importantly, which wines pair best with which food.
Having pizza? Try a nice Merlot. Ordering in some spicy Thai cuisine? Go with a sweet white, like a Moscato. Vegetarian? A dry white such as Pinot Gris will pair well with sautéed vegetables or flaky fish. Never pair your dinner with the wrong wine again. Check out the chart below (click to enlarge).
This Map Shows Which States Are Booming, Which Are Stagnating, and Which Are Starting to Fall Behind
Every month, the Philadelphia branch of the Federal Reserve publishes a look at coincident economic indicators by each state to show which states are thriving and which are now.
The good news is that over the past quarter, the economic data has shown improvement in 45 states. Only five are seeing shrinking right now. On the map, the dark green areas are booming, light green represents modest improvement, and red is shrinking.
Sorry Folks, Rich People Don't Actually "Create Jobs"
As America struggles with high unemployment and record inequality, everyone is offering competing solutions to the problem. In this war of words (and classes), one thing has been repeated so often that many people now regard it as fact. "Rich people create jobs." Specifically, by starting and directing America's companies, rich entrepreneurs and investors create the jobs that sustain everyone else. This statement is usually invoked to justify cutting taxes on entrepreneurs and investors. If only we reduce those taxes and regulations, the story goes, entrepreneurs and investors can be incented to build more companies and create more jobs.
This argument ignores the fact that taxes on entrepreneurs and investors are already historically low, even after this year's modest increases. And it ignores the assertions of many investors and entrepreneurs (like me) that they would work just as hard to build companies even if taxes were higher. But, more importantly, this argument perpetuates a myth that some well-off Americans use to justify today's record inequality—the idea that rich people create jobs.
Entrepreneurs and investors like me actually don't create the jobs—not sustainable ones, anyway. Yes, we can create jobs temporarily, by starting companies and funding losses for a while. And, yes, we are a necessary part of the economy's job-creation engine. But to suggest that we alone are responsible for the jobs that sustain the other 300 million Americans is the height of self-importance and delusion.
So, if rich people do not create the jobs, what does? A healthy economic ecosystem—one in which most participants (the middle class) have plenty of money to spend. Over the last couple of years, a rich investor and entrepreneur named Nick Hanauer has annoyed all manner of rich investors and entrepreneurs by explaining this in detail. Hanauer was the founder of online advertising company aQuantive, which Microsoft bought for $6.4 billion. What creates a company's jobs, Hanauer explains, is a healthy economic ecosystem surrounding the company, which starts with the company's customers.
The company's customers buy the company's products. This, in turn, channels money to the company and creates the need for the company to hire employees to produce, sell, and service those products. If the company's customers and potential customers go broke, the demand for the company's products will collapse. And the jobs will disappear, regardless of what the entrepreneurs or investors do.
Now, again, entrepreneurs are an important part of the company-creation process. And so are investors, who risk capital in the hope of earning returns. But, ultimately, whether a new company continues growing and creates self-sustaining jobs is a function of the company's customers' ability and willingness to pay for the company's products, not the entrepreneur or the investor capital. Therefore, as Hanauer argues, suggesting that rich entrepreneurs and investors create jobs is like suggesting that squirrels create evolution.
Or, to put it even more simply, it's like saying that a seed creates a tree. The seed does not create the tree. The seed starts the tree. But what actually grows and sustains the tree is the combination of the DNA in the seed and the soil, sunshine, water, atmosphere, nutrients, and other factors that nurture it. Plant a seed in an inhospitable environment, like a desert or Mars, and the seed won't create anything. It will die.
So, then, if what creates the jobs in our economy is, in part, "customers," who are these customers? And what can we do to make sure these customers have more money to spend to create demand and, thus, jobs? The customers of most companies are ultimately American's gigantic middle class—the hundreds of millions of Americans who currently take home a much smaller share of the national income than they did 30 years ago, before tax policy aimed at helping rich people get richer created an extreme of income and wealth inequality not seen since the 1920s.
America's middle class has been pummeled, in part, by tax policies that reward "the 1 percent" at the expense of everyone else. It has also been pummeled by globalization and technology improvements, which are largely outside of any one country's control. The prevailing story that justifies tax cuts for America's entrepreneurs and investors is that the huge pots of gold they take home are supposed to "trickle down" to the middle class and thus benefit everyone. Unfortunately, that's not the way it actually works.
First, America's companies are currently being managed to share the least possible amount of their income with the employees who help create it. Corporate profit margins are at all-time highs, while wages are at an all-time low.
Second, as Hanauer observes, America's richest entrepreneurs, investors, and companies now have so much money that they can't possibly spend it all. So instead of getting pumped back into the economy, thus creating revenue and wages, this cash just remains in investment accounts. Hanauer explains why. Hanauer takes home more than $10 million a year of income. On this income, he says, he pays an 11 percent tax rate. (Presumably, most of the income is dividends and long-term capital gains, which carry a tax rate of about 20 percent. And then he probably has some tax shelters that knock the rate down the rest of the way).
With the more than $9 million a year Hanauer keeps, he buys lots of stuff. But, importantly, he doesn't buy as much stuff as would be bought if his $9 million were instead earned by 9,000 Americans each taking home an extra $1,000 a year. Why not? Because, despite Hanauer's impressive lifestyle—his family owns a plane—most of the $9 million just goes straight into the bank (where it either sits and earns interest or gets invested in companies that ultimately need strong demand to sell products and create jobs). For example, Hanauer points out that his family owns only three cars, not the 3,000 cars that might be bought if his $9 million were spread out over a few thousand families.
If that $9 million had gone to 9,000 families instead of Hanauer, it would almost certainly have been pumped right back into the economy via consumption (i.e., demand). And, in so doing, it would have created more jobs. Hanauer estimates that, if most American families were taking home the same share of the national income that they were taking home 30 years ago, every family would have another $10,000 of disposable income to spend. That, Hanauer points out, would have a huge impact on demand—and thereby, job creation.
So, if nothing else, it's time we stopped perpetuating the fiction that "rich people create jobs." Rich people don't create jobs. Our economy creates jobs. We're all in this together. And until we understand that, our economy is going to go nowhere.
Here's Why Both Parties Lie All the Time About Health Care
A lot of the recent complaints about the Affordable Care Act go back to one theme: The law makes health care more expensive for some people with moderate incomes. This is true and it's a design feature of the law. And Democrats didn't want people to understand this about the law, so they lied.
The question for conservative critics is, what's the alternative?
The coverage expansion provided by Obamacare is expensive, and in part it's funded through higher insurance premiums on healthy people. If you dislike that, you either have to abandon certain goals of Obamacare, or you have to come up with another way to pay for them. That's the "replace" component of "repeal and replace," and ugly though the politics of Obamacare are, Republicans haven't come up with a good answer for it.
First, let's look at what the ACA seeks to do. It has three key objectives, and it's objective (2) that's leading to cost increases for some middle-income people:
1. Help people with low incomes afford insurance. The law expands Medicaid to people earning up to 133 percent of the poverty line and offers subsidies on a sliding scale to help people making up to 400 percent of the poverty line buy health insurance. This is all paid for with tax dollars, and therefore mostly financed by rich people.
2. Equalize insurance costs across people, so sicker people don't have to pay extra for health insurance. People pay the same premium regardless of whether they have pre-existing conditions and regardless of sex. Premium variation based on age is limited. This makes insurance available and affordable to people who have a lot of medical expenses, and is an implicit fiscal transfer towards them. This isn't paid for with tax dollars; instead, it tends to raise premium costs for people who are relatively healthy.
3. Control overall costs. The law does this by reforming how doctors and hospitals are compensated for the care they provide; holding down reimbursement rates paid by Medicare; imposing an excise tax that will discourage employers from offering extremely comprehensive health insurance plans; and other mechanisms, though it probably does not do as much to control costs as it should.
For many healthy people, the added costs created by (2) will be offset by subsidies made available under (1). But for families earning over 400 percent of the poverty line (about $90,000 for a family of four) there will be no subsidy. And as David Freddoso points out, while people in this position aren't poor, they often aren't exactly rich either.
Designing health reform so a significant part of its costs would fall on households with modestly above average incomes probably wasn't ideal. But what are the alternatives? When we walk through them, we find where the conservative objections break down.
1. Instead of sending the bill to middle-income healthy people, send it to richer people. Single payer is the most obvious way to do this: Instead of using premium cross-subsidy to fund the sick, the government levies a broad-based tax to pay for health costs and therefore most of the costs accrue to the people with the highest incomes. Of course, conservatives don't want to do this.
2. Don't bother equalizing insurance costs across people. Maybe we shouldn't view it as a public policy problem that being sick is expensive. This is most commonly the position of conservative health care wonks, who want to turn health insurance into a true insurance product (covering only expenses that would be financially ruinous) rather than a comprehensive product covering most medical expenses. This approach might well encourage cost savings and entail less public expenditure than Obamacare, Medicaid and Medicare. Coupled with the right subsidies, it would achieve some kind of universal coverage and protect people from medical bankruptcy. The problem is that the high deductibles this approach entails would be a real problem for people with chronic medical conditions. They would suddenly find themselves spending 15 percent or more of their incomes on medical care every year, on top of their insurance premiums. Today, conservatives are fretting about the plight of the middle-income healthy. What about the middle-income sick who would be screwed by these plans? Oh also, this approach costs money so actual Republican elected officials will never go for it.
3. Save money by not expanding health insurance to so many poor people. This is the de-facto position of most Republican electeds, who know the catastrophic-insurance approach favored by their policy wonks would be a political disaster. So they resist spending money on subsidies for poor and middle-income people, leaving them uninsured. But they still usually can't quite bring themselves to say they oppose universal coverage as a matter of policy, because universal coverage is popular. And then they do a certain amount of mumble-mumble-mumble about cost equalization, often saying that they too favor rules that bar insurers from charging more for pre-existing conditions, even though such a rule does not work without the surrounding Obamacare apparatus they oppose.
4. Control costs better so that the goals of Obamacare can be achieved more cheaply. This is a great idea. But here's the problem it creates for conservatives. The sort of cost control they like comes from turning insurance into a catastrophic product and making individuals bargain for lower costs from providers. This approach, which focuses heavily on shifting costs to the patient, screws the chronically sick. Conservatives tend to oppose top-down cost controls that don't involve screwing the sick, such as lower Medicare reimbursement rates. They even have opportunistically opposed cost controls they should support, such as the Cadillac Tax on high-cost health plans which mimics a proposal John McCain ran on in 2008.
5. Mumble mumble mumble tort reform sell insurance across state lines and empty hand wave in the direction of high risk pools. Given conservatives' dislike of the Obamacare approach and the unpalatability of their alternative approaches, this is the point they tend to land on, and it's not a real health policy agenda.
That's a long tour but it helps explain why we're in such a mess on health policy. Both parties implicitly realize that the American public is completely nuts on this issue. It is the official position of most politicians in both parties that the pre-Obamacare status quo needed sweeping reform, whether in a conservative direction or a liberal direction, while most voters just didn't want their cheese moved.
Both parties favor big reform because America's health care system sucks: We have astronomically high costs, outcomes no better than countries that spend half as much, and tens of millions of people with no insurance coverage. And yet, most Americans seem to inexplicably like the coverage they have today, and want any reform to the health care system to proceed with minimal disruption to them personally so they can keep the high-cost, middling-quality products they currently enjoy.
The huge disconnect between public preferences and partisan preferences on health care has led politicians in both parties to lie constantly, but about different things. Democrats chose to lie about how disruptive their proposed reforms would be. The president reassured people that they could keep their plan (which sometimes, oops, they can't) and that premiums would fall by $2,500 per family (the savings were never supposed to be specific to premiums, and the projected savings in overall costs haven't fully materialized). He probably lied about this stuff because he saw what happened to Bill Clinton when he didn't lie about it enough in 1993.
Republicans instead lie about whether they are interested in implementing the reforms they propose. Republicans have spent the last two months crowing about how disruptive Obamacare has been. This had led to warnings from conservative policy wonks that conservative health policy plans are disruptive, too, so Republicans should avoid staking out the position that disruption is bad per se.
But Republicans need not heed these warnings because they never have any intention of implementing health reform in a conservative direction. When Republicans have changed health policy, it has been in the direction of more public expenditure (Medicare drug benefit), more tax subsidies (Health Saving Accounts as an add-on to our system of health care subsidies rather than a substitute), and more comprehensive insurance (Medicare drug benefit, again).
Politically, Republicans have come up with the smarter set of health care lies. But Democrats, because their political coalition includes the people who are most acutely screwed by the American health care status quo, had to pick a set that actually led to policy change. And that's how we got to where we are today.
See also: Here's Why Health Insurance Is So Weird