Issue 30 A lunar Home March,11,2013

We discussed living in the vacuum of space, but what about on the moon or even Mars. Much of the technology will cross over to building homes on the surfaces of other planets and moons like radiation shielding, sanitation and the like. But the environments will require unique requirements to maintain human life.

Moon: On the moon, there is a desperate need for a water supply. If you have no water, then human life cannot be maintained on its surface (obvious right). So apart from shipping water from Earth to the moon or even Mars for that matter, we as humans would need to find some form of water source. Thankfully there is a source of water on the moon and Mars, though getting it may pose a problem. In respect to the moon, asteroids/meteorites have hit its surface on a number of occasions. Beneficially for us, some of those meteorites were made of ice and have settled at the bottom of some of the craters (albeit the water is frozen at 400 degrees below Celsius). The first lunar colonies will have to be made inside the craters with this frozen ice. A way to melt the ice, and possibly purify it will be needed, and a system of agriculture developed to maintain food supply without taking up all the water. In other words allot of work to create a self sustaining colony once established. Thankfully, the Green Movement has provided much of the impetus for cleaner, more efficient technology. Their push for lights that use little to no electricity, carbon capture technology and more ensures that the energy needed to produce and maintain a lunar colony (even a Mars Colony)is minimal and not a large drain on resources. Spin off technology from the military like micro smart grids and water recycling technology will be essential. It really comes down to bringing all this technology together in a compact form so it can be transported on the cheap (yea it's all about cost too).

Mars: Mars to has water, but like its Lunar counterpart, it is frozen. On Mars there is dry ice. Frozen water and CO2 that if melted can aid in heating up Mars enough to maintain plant life. But we have to melt it first. Ideas from nuclear bombs to dropping heaters from space have all been put on the table. However, those take time, and people want the abundance of natural resources Mars has to offer. In other words, why strip mine Earth where there is a natural environment with plant life when you can get those resources from Mars. Basically, outside of space tourism, mining for natural resources will be the key to tempting man kind into space and further spreading us out into the universe. Though, we will still need water to survive. So my guess is that at some point, we will be able to produce water by combining oxygen and hydrogen ourselves in a machine in the same way we do diamonds. Basically, get an initial sample in the machine H2O, and place it under the right conditions while injecting more oxygen and hydrogen and watch the water flow out. And who is to say we as humans will not raid nearby Moons orbiting Mars and Mars' polar ice caps. Why go through the cost to terraform a planet when it can be done piecemeal.

The Issues: There will be some issues, like with living in space, when it comes to living on these low gravity worlds. For one, just like space, the muscles and bones will become weaker as there is less strain on the human body. But, we may grow taller as that same gravity inhibits how tall we become. The biggest mountain in our solar system ever recorded is on Mars, and that is only the case of the lower amount of gravity. Basically, the higher the gravity, the more strain on an object which leads to that objects size being limited. So on Mars and the moon, we can build 4 mile high skyscrapers without fear. People with dwarfism may be able to grow taller due to less gravity; high people with gigantism may not suffer from bones that are too heavy for their bodies to support (though this is just theory). Likewise people may be able to live longer due to less stress on the human body. The cost though, is that people born on Mars or the moon after continuous generations probably may not be able to set foot on Earth. They would literally collapse from the higher gravity. We would have a new class of human, a space human, a lunar human, and a Martian human. Each different on the inside, and maybe even the outside due to their bodies adapting to the living conditions of the planet they are living on, but will at no time be any less human.

All, in all, to live in the stars, sacrifices will be made. Those sacrifices being, money, resources, and maybe even never having your grandchildren see Earth in person. However, the rewards are many; a civilization on another planet, natural resources to profit from, and other money making opportunities ripe for the picking. It is a choice, a choice that we as a people must make.

Tomorrow, I discuss NASA's new role in space exploration (my opinion on what it will evolve into).

Issue 29 Space Homes!? March,8,2013

Switching from politics for a bit, I thought it would be nice to discuss space and humanities future amongst the stars. One of the biggest eventualities is a space home....or at least a space hotel. Essentially another space station, but designed so people can live there in comfort.

First and for most, to get a space station into orbit requires light weight materials and equipment that can be transported into space on the cheap without overburdening the rocket which will bring it up there. Thus, some scientists and inventors have developed the inflatable space station. It is lighter, but from tests is more durable than a traditional metal space station. Using layers of materials like Kevlar allows for an inflatable space station the size of a football field to be brought up (in its compact size of course). So the hurdle of getting it to space is largely solved. Inflating it is a simple task of inflating it with a lightweight gas like nitrogen. From there it is all about putting in what you want and need for human habitation.

The problem with living in space however is that there is no gravity. Due to the lack of pressure on our bodies our digestive system does not work all to well. You can eat something, but it might not come out the other end for days. If such an event occurs, then you can't eat anything new either because you risk bursting your organs. NASA has use the equivalent of a human centrifuge to mitigate this problem, but it is no substitute. Thus, we need artificial gravity and there is but one other way to accomplish that. Have the space station rotate at a high enough speed that artificial gravity on the human body is produced. Literally a person would work on the hull of the station with less gravity the closer one gets to the center of the craft. This system will also help with preventing your bones from becoming too brittle and your muscles shrinking as in space; your body does not need to work as hard to accomplish movement. Actually if a person lived all their life in space, they may turn into the equivalent of the human blob. So you see why gravity is so essential.

A space station can be self sustaining. Waste can be recycled, and certain vegetables do not need soil. Basically, the station, (to keep costs down) will have a hydroponics garden with nutrient rich water running through the roots of the plant to aid in its growth....potatoes just need a spray once a day and they will grow just fine.

So the main hurdle to space living is gravity generation and cost. But where are you going to put the space station. When the first of this new bread of station goes up and is proven to be habitable for human life, they will be placed into orbit. So with your telescope you can see your neighbor hovering above you. There is an alternative place to place the stations, a Lagrange point. A Lagrange point is a spot between two celestial bodies with neutral pull. In other words, if you place an object there, it will not move as the two planets, stars, or whatever else is out there are pulling at the object in the "point" preventing movement. Interesting is it not?

The first groups of people in space will be the rich and those seeking fortune (by raiding space of whatever it has in value). Once the technology becomes cheaper, expect to see retirement homes in orbit as with less strain on the human body, the elderly will be able to get around without the need for a walker. So I can predict hotels, casinos, and retirement homes in space first before anything else. In other words money is the driving source of our future in space, and tourism is its key.

My next post is on lunar and interplanetary colonization, then the future of NASA, followed by the politics of space.

 

Issue 28 Paul Ryan Plan Part 3 March,7,2013

The Final part....read it and don't weep. ;)

The Ryan Plan part 3: Social Security and jobs

            America’s favorite government program is Social Security (SS).  It was established as a temporary program to aid the elderly who were discriminated against job wise during the great depression.  SS was also established as an incentive for the elderly who were working to retire and thus make way for younger workers.  Needless to say, the temporary program became permanent, but today SS is threatened with insolvency.  Congressman Paul Ryan (R, Wisconsin and the current vice presidential hopeful) has proposed a reform to fix the problem once and for all; it’s been dubbed? Or it’s called “The Ryan Plan.”  Ryan has even added reforms to the Federal jobs program to help people have and keep their jobs no matter how the job environment may evolve.  This has the added benefit of ensuring that individual workers will have a job to contribute to SS and secure their own personal retirement.

            According to the Social Security Trustees, Social Security is going broke. Congress has raided the fund multiple times to fund their pet projects and meet cost overruns.  Also, more and more people are retiring with less and less people putting into the system resulting in a fiscal glut and causing seniors to have their benefits cut.  The rate of return for SS now is 1% to 2% but our children are expected to have a rate of return of less than 1%.  In short, SS will not be able to meet the demands placed on it for future generations rendering it a useless program that helps no one.

            There is an alternative to Social Security’s collapse, and that is Congressman Ryan’s SS reform.  First of all, people age 55 and over are unaffected, while all those under 55 will have a choice to go into the new system with the same guaranteed benefits as traditional SS or stick with the current program.  The new system calls for personal savings accounts with a guarantee that no matter the fiscal situation of the country (inflation, market down turns, etc) the recipients will get their money.  For those choosing the new system, the  personal account option will be phased in for easier transition with the first 10 years having 2% of the initial amount of $10,000 annual payroll tax going into the account and 1% for every dollar after that.  That initial amount of $10,000 is indexed for inflation to account for any changes in the value of the dollar.  After, the first 10 years of transition, the initial amount will have 4% taken out and 2% for every dollar after that.  Then in the next 10 years it goes to 6% and 3%, then finally 8% and 4% for an account averaging 5.1%.

            To ensure these accounts remain physically sound the money is invested in approved bonds and investments by the Social Security personal savings account board.  They administrate by choosing funds where contributions to personal accounts are deposited with the board being held responsible for all administrative expenses and all investment options offered by approved non-governmental firms.  The board will consist of five (5) members, each with a four (4) year term, and appointed by the president with two (2) appointees chosen after being recommended by the U.S. Congress.  As to qualifications, they must have “substantial experience, training, and expertise in the management of financial investment and pension benefit plans.”  The investment options are the same as provided to the members of Congress and Federal employees, but my question is, why not have the same money managers who insure Congress’ investment also govern the rest of the American peoples under this new plan?  Even better, why not just place us in system that Congress and the rest of the government uses?  These questions should be answered.

             Investment in this part of the plan works as follows: you start in Tier 1 where you invest in low risk instruments until a low threshold is reached upon which you enter Tier 2.  Tier 2 is when you are automatically enrolled in a “lifecycle” fund which adjusts your investment portfolio based on age.  A form of risk adjustment will be applied where accounting for your age your money will be invested in certain type of equities and bonds.  However, in Tier 2, you may also switch the “lifecycle” option to either a: 1. a government securities investment account; 2. a fixed income investment account; 3. common stock investment account; 4. small capitalization stock index investment account; or, 5. an international stock index investment account.  Once you have achieved a sum of $25,000 you enter Tier 3.  In Tier 3, you may choose to invest in additional non-government options that are pre-approved by the Social Security personal savings account board.  The best part of this plan is that the money in the account is 100% yours which is in stark contrast to the current Social Security program that allows the government to borrow against the fund—because by law the money in the current system is not really yours.  The money in the reformed program proposed by Ryan is your money and your property.  In addition, your earnings when you collect are not taxed, thanks to Ryan’s tax plan that prevents double taxation.  Also, because it’s your account, if and when you die you will be able to pass on your account to a beneficiary or estate from either your account or an annuity.  Yes, there is an annuity which must be purchased upon retirement to receive your benefits. 

            You purchase an annuity to provide your monthly payment, but only when your account has reached an amount where your payout is equal to of 150% of the poverty level or larger with any excess money provided to you in a lump sum.  To purchase an annuity, you must buy one from an office known as the Annuity Insurance Authority (AIA) (a government office to be created as part of the Ryan plan) which will provide all options for individuals to purchase their annuity.  However, I don’t understand why we have to pay to get our money.  Shouldn’t it be automatic for our accounts to automatically convert to an annuity upon our sending our notice of retirement once all the financial criteria for the account are met?  So it is a bit confusing when Ryan’s plan seeks to make sure that we finally own the money in Social Security, but still makes us pay the cost of converting to an annuity.  As a side note, but an important one, under the Ryan Plan, there is no change to the survivors and disabled benefits under SS.

            For those under 55, the Ryan plan will implement progressive price indexing (a mix of wage and price indexing) for initial SS benefits.  If you make less than $27,700 per year (adjusted for inflation) you will continue to get your benefits based on wage indexing which inflates the value of your money allowing poorer citizens to get more for their money.  If you make $27,700 to $149,900 a year, your benefits will be adjusted upward by a combination of wage and price indexing, with adjustments becoming oriented toward price indexing as you proceed up the income ladder.  For example, if you have an income equal to the halfway mark between $27,700- $149,900, 50% of your benefit will be wage indexed and 50% will be price indexed.  Individuals making over $149,900, after retirement, your benefit will be solely adjusted through price indexing.  All will see their benefits grow with inflation under the Ryan system and the progressive price indexing is more accurate and thus pegs the cost of living adjustment to a far more realistic measure. 

            Also under the Ryan plan, if receiving the personal account option, you may retire early if your account contains an annuity equal to 150% of the poverty level (those in the current system will be allowed to retire early if their payout equals 120% of the poverty level).  To stave off a fiscal glut, Ryan gradually raises the retirement age to meet with the growing life expectancy of Americans.  Again, only for those Americans under 55, the retirement age will ultimately be age 70 by advancing the current Reagan transition age of 67 by a year then increasing the retirement age by 1 month every 2 years.  However, those who wish to retire early are not affected by this age change, and neither are those who realize that under this plan, the longer you wait to retire, the higher payout you will receive.     

            Retirement means nothing if you don’t have a job to fund it, so Ryan tries to fix the federal jobs training program to make it more effective for those who use its services.  Originally, the program was adjusted under the workforce adjustment act (WIA) in 1998 to consolidate existing job programs, aid in job training and help workers become more marketable.  For the most part it helped, but failed to aid any workers who were laid off.  WIA did not end duplication and there is no way to measure the current programs success and failure rate because the existing 49 that are run by 8 different agencies have no standard way to measure success.  Ryan seeks to change this by creating a performance metric which requires every federal job program to track the following; 1 type of training provided and its cost per student; 2 employment status immediately after training and 1, 3, and 5 years after training; 3 whether or not the trainee is working in the field they trained for in order to determine if training led to employment; 4 participants income two (2) years before and five (5) years after training to see if training led to increased income; and 5. Participation level in Federal support programs like supplemental income and Temporary assistance to needy families (TANF) before and up to five (5) years after to see if training led to self sufficiency.  The plan does not prohibit programs from creating and adding additional measures of performance.  With this, the government and us the American people will know how effective the programs really are and when to call for a change.

            For the sake of transparency as well as to prevent wasteful spending, the Department of Labor (DOL) will provide publically annual performance and spending data for all federally subsidized job training programs on one centralized website.  Additionally, the site will include data on program administrator salaries, administrative expenses and expenses spent on the students.  The DOL will conduct periodic control group studies to compare participants (using the performance metric) who are using the subsidized training to individuals who did not receive the training but are in similar life and economic situations.  In addition, the Inspector General of the Government Accountability Office (GAO) and DOL will conduct a periodic audit to insure that outcomes are not due to trainees being selected because they are likely to succeed or have successfully completed the program.  The GAO will also conduct studies to report on successes and failures and any form of duplication to Congress within one year with a report every two years analyzing the results of the program.

            The job program also requires competitive bidding for all private contractors to receive job training grants (excluding block and formula grants) with the DOL giving priority to grant proposals that “leverage private sector investment.” If the private program fails to help participants succeed, renewal of job training grants will be denied.  Flexibility will also be offered by the new plan.  Currently those who are helping workers in the job program must go through a step by step process ignoring what the workers immediate needs, while the plan allows for steps to be skipped or to be done in a different order such as offering a training voucher first rather than as the last step in the process.  Ryan’s plan also tries to increase awareness of job training opportunities via public broadcasting by giving the broadcaster incentives (what these incentives are is not clear) and requires all job training programs who receive grant money to conduct lifelong awareness campaigns.  However, I question the idea of advertising what I can only see as a form of welfare, and another mandate that costs businesses money and ad space which could be better used to advertise for businesses seeking more customers.  What I do like though is that the plan allows for States to present to the DOL a three year plan to improve upon the existing outcomes with a three year waiver on existing regulations.  If successful, the waiver will continue to be issued with the new idea serving as the new model.  Of course failed ideas will result in the return to the established set of rules. 

            Overall, Ryan’s Social Security plan is a must.  As an American starting out in life, I do not expect to see any benefits from Social Security.  And thus have already made the commitment to not rely on it for my future retirement needs.  So I’m saving up early.  I do believe that Ryan’s idea will provide a greater payout for those who choose the new system and will relieve some of the burden on the existing monstrosity of the current system.  I also like how it uses investments to allow for a greater payout once seniors are eligible to collect and that those who normally would be financially incapable of investing (the poor) would finally have a chance to invest in the market.  Of course as a by product of this, the market will grow with all the new investors.  On the other hand, I’m not a big fan of the job portion of Ryan’s plan.  While I agree with the new performance metric and the multiple ways of finding waste and preserving transparency, I would much rather see all 49 programs either consolidated; all 8 agencies consolidated; or a return to where job training belongs, at the local and State level of government, with private industry saying what positions are available and/or paying for the training of said individuals.  Job training by government is the same as food stamps, a form of welfare, and any effort to reduce the role of welfare in our society and make Americans self sufficient is a must.  My biggest concern however has to do with the Social Security plan.  With all that new investment in the market driving growth, who is to say that the government will not have those who monitor our retirement investments work a little magic in an economic downturn or invest in a pet project like the failed Solar panel company Solyndra?  Some form of way to prevent this from occurring is needed.  Lucky for us, Ryan clearly states in his outline of his plan that it is subject to change, change that I believe will make the plan even better. 

I hope this helped those who wished to know more of the details that our politicians usually lack.  Though I did have to condense the Paul Ryan budget plan from 99 pages to these 3 posts which total 15 pages typed.  Thank you as always for reading and see you back soon for more interesting and hopefully fun articles for you to read.

Issue 27 Paul Ryan plan part 2 march,6,2013

Shorter than the previous part 1, this one deals with taxation.

The Ryan Budget Part 2: Taxes and the Budget

            One of the key parts of the Paul Ryan budget plan is his total overhaul of the Federal tax code and how those tax dollars are spent. Ryan’s goal with the tax system is to simplify the system to make it less of a burden on Americans and American business while expanding the tax base for a larger amount of money to be collected.  While it sounds contradictory, Ryan’s plan achieves simplification, expansion of funding and lower taxes all in one.  With the addition of Ryan’s budget control measures Ryan’s goal is to reduce the burden of government on the people while paying for all of governments functions.

            For the individual, Ryan offers a choice.  You can keep using the current tax code or use his, depending on which is better for your financial situation.  Ryan’s version is a 10% rate on adjusted gross income (AGI) up to $50,000 for single filers and $100,000 for couples, with anything exceeding those amounts taxed at 25%.  Taxable income (which is your AGI) is your gross earnings minus a standard deduction of $12,500 for single filers ($25,000 for couples) and a personal exemption of $3,500 which would apply in either case.  This tax system is much simpler than the 6 tax brackets, hundreds of deductions, credits and loopholes in our unintelligible tax code we have now.  The tax rates in Ryan’s plan are adjusted each year by a cost of living adjustment which is measured by increases in the consumer price index.  Also, the only deduction will be the health care refundable tax credit which is $2,300 for individuals and $5,700 for couples.  With such a simple tax code, your tax form is the size of a post card.  You’ll never need turbo tax again.

            Additionally, the Alternative Minimum tax (AMT), which was originally designed to tax the rich but now hurts the middle class, is eliminated.  All forms of double taxation are also eliminated such as taxes on capitol gains, dividends and other investment taxes.  It has already been shown that taxes on investments slow economic growth and that when scaled back like under the Kennedy administration and the Reagan administration job growth expands rapidly.  Imagine America without such economically debilitating taxes.  The estate tax (death tax) is also repealed.  This tax is a tax on your inheritance from your now dead family members which has caused some people to go bankrupt and mainly hurts small business owners who want to pass on their work to their next of kin.  Not only is its elimination great economically but it ends an immoral tax which leaves grieving families footing the tax bill. 

            If by your calculations, you’ll be paying more taxes under the Ryan tax code, don’t worry for the older clunky system will still be there if you choose to stay with the existing code.  Within the first ten years of the enactment of Ryan’s tax plan you may choose the new system or the old system with one additional change over permitted within your lifetime.  Also, you may change over to either tax code when a major life event occurs changing your tax status such as death, marriage, or divorce.  This ensures no one can game the system while allowing you to choose the tax code that best fits your financial situation.   

                   To ensure competitiveness in the world market, taxes on businesses are completely overhauled.  The current code taxes businesses at 39% which is one of the highest corporate income tax rates in the world.  Ryan replaces this tax with a business consumption tax (BCT) with a rate of 8.5%.  Under the BCT a businesses taxable income is total sales minus total purchases the business makes.  For example, a furniture store buys a couch for $100 from the manufacturer, when sold for 125 the cost of the business to buy the couch is subtracted from the purchase price at sale.  So the $125 minus the $100 is $25, and thus that $25 is taxed at 8.5%.  The tax is collected quarterly and is easier to pay as it does not require any special forms, or records, just the existing buying and selling records.  Also, business investments are expensed immediately rather than the current system allowing a portion to be expensed each year.  In addition, there will be no taxes on exporting good, something other countries have already stopped doing and will allowing for business to finally compete on a more level playing field globally. Ryan even accounts for issues with transitioning to the new system and thus includes some form of relief measure. With business investments not taxed, no export taxes and a new low tax rate America will become a source for future investment.

            You may be worried that the personal income taxes and the business tax rate will rise due to the usual governmental ineptitude.  Well fear not as Congressman Ryan’s budgetary reforms account for that.  For one, the total amount of taxes (personal income and business taxes) the government may take in is limited to 19% of the Gross Domestic Product (GDP).  This cap on spending limits how much the government may collect in proportion to economic progress.  In addition, Ryan’s reform accounts for issues in the budget process itself by finally allowing entitlement programs (like Social Security) and other forms of automatic spending to be reviewed so as to be rid of bad portions of the programs, allow essential functions to be reformed and even make trade offs between mandatory and discretionary expenditures.  This also means changing how government sending’s impact is measured. Currently the base line measure that is used projects entitlement growth beyond what is capable of being funded, and if the growth is slowed then the base line measuring system labels it a spending cut.  Then Congress gets creative by using revenue and/or spending “gimmicks” to off set the real costs, hiding the long term impact of the spending itself. 

            To ensure the spending cap is maintained the plan calls for the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO) to make annual projections in comparison to the spending limit.  Also in the plan, a comprehensive review on the long-term budget outlook will be held every 5 years.  If spending exceeds the mandated limit and Congress fails to act during the review an automatic cut of 1% to all of the fastest growing programs as determined by the OMB will occur.  This is all in an effort to bring spending under control, but if the reduction fails then the reduction will occur again the following year.  Therefore Congress has a one year window to get its finances strait.  In order to make sure Congress does not just raise the 19% GDP cap and increase taxes, a 3/5ths super majority vote will be required in both the House and the Senate.  To sum up, Ryan wants transparency in the budget process and to make Congress do their job rather than find ways to dodge the issues.

            Overall, the business tax reform and the budget reform are probably the most essential reforms here.  The business tax makes the United States competitive globally and is much simpler than the current code.  As to budget reform, Ryan wants to ensure that entitlements and the obligations that our government has are taken care of properly.  In other words, if you’re on Social Security, you should have nothing to worry about.  I do criticize the personal income tax however, as a single flat tax rate is much more effective and hurts the poor less than the two tier system of Ryan’s plan or even the 6 tier system of the current code.  But I do like its simplicity, and is thus tolerable in that respect.  Also, it try’s to mitigate the impact on people with lower incomes transitioning to a higher tax bracket through the deductions.  The elimination of all forms of double taxation also helps as it makes the U.S. competitive as all other countries tax investment.  In addition, the 19% GDP cap on taxes/spending will force Congress to pass all essential spending first, before trying to sneak in their pet projects.  With the 3/5ths majority vote in place we will not have to worry about higher tax rates for a long time coming, while the auto 1% reduction in fast growing programs if Congress fails to maintain the cap ensures that the budget will be much more carefully looked at.  Overall, as an American I approve.

Update: With the sequester kicking in, Paul Ryan has proposed giving the President power to decide which cuts will go through.  Also, Ryan has proposed the elimination of several government departments (not disclosed as of yet) and going for a 17% flat tax as opposed to his 2 tier flat tax I described in my essay. Tax wise, the middle class and the rich will see a major drop in taxation while the poor will see a minor increase.  In addition, giving the President the responsibility and flexibility to cut what is necessary ensures only what is unnecessary and unneeded in the budget is cut (and it's the Presidents fault if something goes wrong).

Tomorrow is the final part and it is as long as part 1....but it is an important read.

Issue 26 The Paul Ryan plan part 1 march, 5,2013

Take your time reading, this is the big one.....it is the healthcare summary of Ryan's plan. The other parts are shorter I promise.

The Ryan Budget Plan Part 1:  Health care, Medicaid and Medicare

            One of America’s biggest and most pressing concerns is the rising cost of healthcare (HC).  Both treatment and insurance prices are rising; causing employers to drop health coverage, and people, when stuck with the bill, are going bankrupt.  State regulations are also contributing to the rising costs of treatment further exacerbating the problem.  Also, according to Congressman Paul Ryan over half of doctors do not accept Medicaid, partially because Medicaid under pays leaving doctors wanting for money.  Medicare is sinking into insolvency which will eventually leave our seniors and eventually us footing the bill ourselves.  Congressman Ryan attempts to address these problems with his budget plan.  Its purpose is to try to make healthcare cheaper and attempts to be ride of the government waste getting between you and your doctor.  He wants to put Americans back in the driver seat in deciding what healthcare is best for them.

            I am sure we can all agree that healthcare costs are the biggest driver of making HC unaffordable.  For Congressman Ryan, over regulation, subsidization and third party payments to doctors are the leading causes of rising HC costs.  What also affects private HC also inadvertently affects HC provided by the government which in turn shortchanges doctors or reduces coverage to keep costs in control.  The result is people losing coverage they need for high cost, often life saving procedures.  With respect to Medicaid and Medicare, the growing number of recipients is causing funds to be out spent.  So Ryan wants to put Americans back in control in an effort to reverse this trend.  Ryan starts with a refundable tax credit with $2,300 for individuals and $5,700 for families.  This credit is adjusted for inflation through the consumer price index (CPI) and the percent increase in the medical component of the CPI.  The credit is refundable which makes it available for low income persons who pay no taxes and is advanceable which means you can use the credit to buy HC at the beginning of the year rather than wait for your tax returns.  The credit is also assignable which allows the money to be forwarded directly to the insurer, whether that is your place of employment or another healthcare option of your choice.  Because the credit is applied to HC options of your choosing, the net result is cheaper HC because as the insurers market toward you the individual, as HC becomes more affordable due to the credit, they need to adopt new options to provide the best HC for you and your family rather than the cost savings plans that businesses usually get.  This is what everyone has wanted, HC customized toward the individual rather than one size fits all based on the business affordability.  As this credit is given to every citizen, even if a person should lose their job or go to a new business, your healthcare goes with you.  If the credit has left over money then it goes into an account for you to use on other HC expenses.  However, if the credit does not cover the full coverage you are buying then you is responsible for the difference.  Despite this, you having to pay beyond the credit limit are very unlikely, as under this plan you as the consumer decide what part of healthcare to pay for.  So you customize care according to your needs.  Employers will keep the business deduction for group health insurance for their employees, so people that need that extra bit of coverage can still get help from their employer.  Also, tax preferences for healthcare savings accounts with the 7.5% itemized deduction for medical expenses remains, but if using the credit your premiums are not counted for the purpose of the deduction.  Those on Medicare and Military health plans do not get the credit because they have a separate system to cover their needs.  Overall, the tax credit idea gives the portability and flexibility that was needed in HC to make it affordable for the individual American.

            The plan does not stop at tax credits.  Small businesses will also benefit under the Ryan plan, through the establishment of association health plans (AHP).  While traditionally HC is too expensive for small businesses to afford, AHP’s will allow small businesses to pool their resources nationally as a group to offer coverage to their employees.  This however is regulated by the Federal Government which is something I do not agree with as they will say what and how to cover employees’ health needs rather than let businesses customize their plans to the work environment. 

            The plan also opens up the market to allow even more consumer options in buying coverage.  To do this people will be allowed to buy across State lines and health insurers to sell across State lines.  That means you are no longer stuck with the State manufacture healthcare monopolies that we are currently subjected to.  This also means that the mandated health benefits forced upon you by your State legislatures, which you may or may not need, will be able to be ignored as you can buy healthcare from a different State with different HC requirements’.

To do this Ryan allows States to pool their resources through State based exchanges and high risk pools (HRP) to help provide coverage to those normally denied HC due to pre-existing conditions, or are high cost as defined by the State.  Through the HRP, States my offer direct assistance and or some form of cost sharing for low income and/or high cost families.  To insure proper implementation States may contract with insurance companies, or another third party to run and administrate the exchange. The goal here is for people to choose the best plan for themselves with the States supporting them to make their coverage more affordable. What will be required however is that all participating insurers offer coverage without discriminating based on age or health history and that the same statutory standards for HC to Congress are applied to those using the exchange.  States will create transparency networks to help to improve transparency in price, quality and treatment in HC while showing any reductions in transition costs associated with enrollment.  Insurance companies will have independent risk adjustments through a non-profit independent board which will have to ability to penalize insures for picking and choosing the healthiest while rewarding those who take on the risk of higher cost patients.  The State exchange will also have an open enrollment period and auto enrollment allowing individuals to take part in the exchange through their place of employment, the DMV or the like, but are not forced in any way to have healthcare at any time.

            I do not agree entirely with the State based exchanges due to the costs and implementation.  States will be getting the highest cost patients which alone are a major drain on money and so how the exchanges are to be funded comes into question.  Do not get me wrong, those high cost patients are worth it, but if the HRP cannot be funded properly than the participants will suffer.  Also, while the non-discrimination on age and health history sounds nice, it will invariably drive up cost.  The older a patient is the more likely they are to need more expensive treatment, health history offsets this by allowing insurers to raise or lower premiums based on future health needs.  If you take these two particular forms of discrimination out, it drives up cost for everyone else and increases healthcare costs.  If you leave them in however, you allow for more customization of coverage to account for future health problems with only a small group paying out more in premiums who will need aid rather than a larger group.  With respect to transparency, States giving out price and quality data is a nice idea, but could that not be accomplished through Ryan’s proposed Healthcare Services Commission (HSC), discussed later on, and the costs of the exchange covered by already established transparency programs covering costs.  Also, why leave it up to the States to contract with each other for the free movement of healthcare.  It would be much easier to have one set of rules for healthcare for the entirety of the United States than a bunch of smaller more complex exchanges.  So I say leave the HRP’s in as an option for States that are struggling to be a health insurer of last resort.  Finally, the non-profit independent board with the ability to punish or reward companies for their choice to cover these higher cost people should not exist.  The States should be the insurer of last resort for these unfortunate people, but some of these people with pre-existing conditions will become cheaper to cover as healthcare cost decrease meaning only the most severe cases should be left.  Thus, the non-profit board has no reason to exist.  Overall, the exchange is a good idea, but States should be able to establish and abandon them based on cost.  For me only an insurer of last resort at the State level should exist, with a re-insurer giving money to the patient or health insurer directly when funds for a higher cost higher risk individual dry up.

            Ryan also creates the Healthcare services commission (HSC) (out of Health research and quality agency) which will act like the Securities and Exchange Commission (SEC) but for HC rather than financial data.  Its purpose will be to create standards of measure for data, pricing, and effectiveness of healthcare, of which there are currently none.  The HSC will publish and enforce quality and price information in the healthcare industry.  It will be led by 5 commissioners chosen by the private sector and appointed by the President with no more than 3 members being of the same political party.  A forum within the HSC will create the price, quality and effectiveness standards like the financial accounting board does for the financial industry.  The forum will have representation from the private sector and be authorized to create metrics to report on price and quality data.  Its membership will represent views of patients, doctors, researchers, and insurers all of whom will be serving independently of employment.  The forum will keep up with innovation and will publish, for public comment “a preliminary analysis on standards for reporting price, quality, and effectiveness of healthcare services.”  Once the comment period is over a final report will be published with its regulations guiding the publication and dissemination of healthcare information that will be enforced by the HSC.

            Paul Ryan also attempts to have the healthcare industry shift over to an all digital network to reap the benefits of cost effectiveness, fast access to records and reducing chances of doctor patient error.  To accomplish this, he wants people to own their own medical records and make them portable through the internet.  The mechanism for this will be what Ryan terms as the National Health Information Network and health record trusts (modeled on credit unions) which will manage your records for you in the same way banks manage your financial data.  In addition, Ryan’s plan accounts for medical liability reform.  Currently doctors fear lawsuits, even though some are justified, and thus practice defensive medicine which in turn raises the cost of healthcare.  Under Ryan’s plan a cap is placed on non-economic damages and assists States in lawsuit (tort) reform.  An example of reform might be expert panels to resolve a medical dispute or a specialized court on healthcare with judges specialized in dispute resolution.  Whatever reform is chosen, the ones that allow doctors to treat patients with less fear are the best.

            Then there is the Medicaid mess.  Ryan offers the same tax credit to Medicaid patients which hopefully will pull some out of Medicaid, but for those who still can’t afford HC Ryan has a plan.  In the case of Medicaid, Ryan calls for more money to be given to the individual on top of the credit to help these people afford the care they need.  You qualify for Medicaid in Ryan’s plan by having a gross income of 200% or less of the poverty level and have one dependant under the age of 19 while not having health insurance.  Once qualified, the enrollees receive a healthcare debit card exclusively for purchasing healthcare.  If your income does not exceed 100% of poverty level you get $5,000, 100%-120% of poverty level you get $4,000, 120%-140% you get $3,500, 140%-160% is $3,000, 160%-180% is $2,500 and 180%-200% is $2,000.  There is an additional $1,000 for each family where there is a pregnancy for the 12 month period and an additional $500 for each child under the age of 1.  At the end of each year up to a quarter of the money left in the account can be rolled over for the next year.  Combine these amounts with the tax credit; a family under the poverty level can receive $10,700 a year to use toward healthcare purchases and insurance of their own choosing.  It empowers the poor to be able to control their own healthcare. 

            The Medicaid program will have a 4 month enrollment period per year with those already predetermined as eligible for Medicaid and the State Children’s Health Insurance Plan (SCHIP) automatically enrolled in the debit card plan. The debit card plan is implemented at the federal level, saving the States the excessive cost of running the program, but 50% of the expense will come from the States.  SCHIP does not change under this program, but recipients may take part in both the HC debit card and the tax credit.  The elderly, disabled and special populations do not take part in the program, but instead stay on the original Medicaid plan with States getting block grants to help fund the program, with the block grant indexed for inflation via the CPI and medical component of the CPI while being adjusted for population growth.  Personally, those with disabilities and special populations who can function independently should be allowed to participate in the debit card program, but get special aid to meet any additional health requirements which will allow for the most serious cases to be handled by the government.  Finally, Ryan provides education programs to educate qualifying families on enrollment in the debit card option and insurance plans.  However, I do not agree with any education program by the government because it is promoting welfare and why would an education program be needed if the recipients can get all the information they will need when they enroll.  Taken together, Ryan’s Medicaid program gets rid of lots of bureaucratic waste by letting recipients buy their HC directly rather than getting it through the government which I am sure we all like, but we don’t need the governments help beyond affordability and quality control.

            Medicare is the final component of HC changed by Ryan.  It does not affect those age 55 and older once implemented and is funded through the current Medicare payroll tax of 2.9% of the Federal Insurance Contribution Act (FICA) and Self-employed Contributions Act (SECA).  What does happen is that those under the age of 55will receive payments in excess of $11,000 per year (the current average Medicare payout) to buy what ever kind of HC our senior citizens so desire so long as they enroll in a health plan of some kind.  Just like those getting the tax credit (Medicare recipients don’t get the credit) and Medicaid enrollees, individuals will choose the health care options that best suit their needs with leftover money placed in an account or invested in a medical savings account (MSA) so as to be used to purchase or cover other HC costs or if the money is not enough the senior citizen is then responsible for the difference.  Again that should not be a problem as they now pick and choose HC based on need and not what the government thinks they need.

            The Medicare benefit is adjusted for inflation through a blended rate of the CPI and the medical component of the CPI.  For those affected, Medicare fee-for-service, Medicare part B, Medicare advantage and Medicare part D cease to exist and are replaced with the new program which is funded by the Medicare A and B trust funds.  Payment amounts for the new program are partially adjusted geographically which is phased out over time.  Amounts are also income related and risk adjusted.  Income relating is modifying the payment based on income with those with an income below $80,000 ($160,000 for couples) getting the full $11,000. Those having an income of $80,000-$200,000 ($160,000-$400,000 for couples) get 50% of the payment and those having an income greater than $200,000 ($400,000 for couples) getting 30% of the payment.  Risk adjustment is the base $11,000 (or income related amount) with additional money if an individual has been determined to be at greater risk based on their initial health exam by an insurer whose results will be made available to Medicare so as to determine your benefit. Thus, over paying and under paying for individuals virtually disappears.

            Low income beneficiaries are eligible for additional support.  Each Medicare recipient may establish a free MSA, but low income earners get one automatically with additional funds.  Specifically, those eligible for both Medicare and Medicaid and beneficiaries below 100% of the poverty level get a subsidy equal to the “full deductable amount of an average high deductable health plan” and those at 100%-150% of poverty getting 75% of the full deposit. 

            As part of the transition, those 55 and older will not be affected by the changes and not see any changes in premiums, but the program will be strengthened such as through income relating drug benefit premiums to create long term stability.  Those aged 55 and younger will see the eligibility age increase gradually to age 69 and 6 months.  Also, a fail safe mechanism is installed which will activate if the Medicare trustees determine the percentage of funding from the federal government general revenues exceed 45% in the prior fiscal year on one July or 2 months after the Medicare trustees report is released, which ever is later, resulting in a 1% reduction in payments in Medicare’s fee-for-service sector.  This is designed to keep costs down and in control and will only activate if Congress fails to solve the problem.  So if the fail safe happens, you can lay blame directly on Congress.  No pressure.

            Overall, I like what Ryan does with healthcare and combined with the other parts of his plan, healthcare will be very affordable.  What his plan does not address is the regulations at the Federal level.  At the State level, States will be lobbied by insurance companies to allow for more flexibility in pricing and plan options to adapt to the more patient centered environment so that area of regulation will handle itself.  I do question certain things such as some Medicare recipients being also eligible for Medicaid, but getting an additional benefit.  Also, rather than have an MSA, or a healthcare savings account, harmonize them into one account with a debit card for the entire population so as to simplify logistics.  Ryan’s budget does help a lot to address a good portion of the issues surrounding healthcare, but it is not the begin all and end all.  Much more work must be done at all levels of government to reduce cost, whether that be less regulation in one area or another, free trade with health insurance and doctor services or letting doctors cut out insurance companies completely by giving the doctor a monthly payment to cover all visits, so I can say with confidence we are not done.  Aside from my critics I would not mind Ryan’s plan as is being implemented and even Ryan himself said in the outline for his plan that changes can still be made.

 

:Ryan Plan up date: Ryan has proposed another form of Medicare on top of the existing parts A,B,C and D. It is known as an Administrative Service Organization (ASO) which under under current law has the employer fund the workers health benefits (they foot the bill) with an ASO setting up a co-payment system, network of doctors and the like.  The Medicare version substitutes the employer for the government and the ASO would be rewarded for saving medicare money (as long as quality of care is not reduced) and or increasing the quality of care.  Essentially you can think of it as an account that ignores typical State regulations on healthcare to avoid inflated prices.  So seniors would get a choice under Ryan's plan, of traditional medicare, the ASO version and medicare advantage.  This change replaces the voucher system that was so unpopular.

 

Told you this one would be big.  Hope you enjoyed part one, the other two parts are slightly shorter and will include any updates based on what is addressed in the essay.  See you tomorrow ;)

Issue 25 Trash for Cash March,4,2013

After two days of hard work I can finally write again. This time it is the concept of exchanging ones trash for cash.

Apparently in some countries a recycle program has been implemented where local residents trade in their recyclable goods for the equivalent of food stamps to shop at local shops. The idea itself though is not fiscally sound as the government running such a program needs to supplement the amount of money each person gets to make the program more sustainable and worth it for the individual to trade in that trash. In short, tax payers are still putting up a portion of the bill. However, it is a slightly less amount than required because those recycled goods are then sold to make up some of the money given away.

It is a nice idea. The concept of trading ones garbage for cash is not new unto itself, but has advantages of putting money into people’s pockets without the commission that some stores charge at the bottle return. I can imagine with 3D printers becoming more ubiquitous that metal and plastic recyclables will go up in price as demand for raw materials for the printers go up. I highly doubt many people will buy a digester for such material as it in my mind comes off as like owning a compost bin. They would probably prefer someone else doing the deed of cleaning the metal/plastic, sorting it, and ultimately turning it into something useful like 3D printer ink.

But organic waste has its value too. Organic waste has its own valuable metals and minerals that can be turned into fertilizer, separated for hydroponics farming, or turned into the vitamins you get over the counter. So there is a market for such goods, but government wastes it by putting it into dry landfills, the same landfills that can be turned into small electric power plants by allowing the material to biodegrade and harvest the natural gases emitted for fuel.

All trash has value, and it is up to the private sector and/or government to harvest that revenue source and profit. Though I hope they will make a model where they pay us to pick up our trash rather than the other way around.

Tomorrow, I give you the Ryan Plan. I have broken it into 3 parts that I hope are easy to understand and easier to read. The plan itself is over 99 pages, while my 3 parts total only 15. Hope you like and enjoy.

 

Issue 24 we survived the sequester March,1,2013

 
As of midnight last night, the sequester went into effect. As we are not dead, no pink slips for teachers have been given out, and people are still getting the support that they need, I think we are doing a fine job. Even though I'm a libertarian I applauded the Republicans and the majority of Democrats for holding steady for the sake of protecting the country from financial ruin (or at least further contributing to it).

There is another impact of the sequester that you will soon be hearing about however. Unfortunately, as the Federal government borrows so much money, the Feds are going to run out as they hit another debt ceiling. Yes you heard it right, the government, despite raiding our wallets is not going to have enough money to survive. Thus, unless another deal is made between Republicans and Democrats, the Federal Government will shut down. The best comparison is to the days when President Bill Clinton and House Speaker Newt Gingrich were butting heads.

So what happens in a government shut down? Well, first of all, your social security checks and other welfare payments will still be there, but it will take longer to receive the payments. National parks will shut down, but so will most government offices. The military will still function and protect us. Basically, only the essentials offices and programs will still be working. So, no need to fear another fiscal Armageddon. This is of course assuming a deal is not met.

Will a deal be met though? I don't think a deal will be done in time. The Republicans will play it off as we shut the government down to protect the country and our children from debt. Democrats will be placed under pressure if that happens, so expect President Obama and a large portion of Democrats to claim more Armageddon. Needless to say, if you are a political nerd, then grab your popcorn.

Well, once the shut down occurs we will save more money, which is good. The deal once reached (if it is ever reached) will likely contain token spending cuts which will count toward future sequester cut spending. Hopefully more tax reform in the form of getting rid of exceptions, deductions and the like starting from the top down (the rich), but this is less likely as most money the Democrats receive is from the rich (lawyers and such from NY and California), while Republicans get theirs from big business. But the Republicans are trying to rebrand and some younger Democrats are distancing themselves from the hard core of the party. In other words being a savior of the country and protecting kids from a debt burden their parents and grandparents gave them is more popular with voters. So basically the Republicans will win this round, unless something worse than a shut down occurs.

That something is bankruptcy. If that occurs, we will all be in trouble as no business would want to work in our country, let alone invest. However, the majority of the national debt will disappear, contracts will be renegotiated, but many people will lose their jobs in the Federal, State and Local governments (State and Local get government kick backs which they use to hire more personnel or to spend on pork spending to bribe voters). Essentially, we will have hell in a hand basket.

Can the course of the country be changed? Yes. But will it be changed in time, well who knows. Some one obviously cursed me and the rest of America to live in interesting times, and possibly to find what we a looking for. Face it....some times mediocrity and unpopularity are a good thing, and the politicians (who caused this mess out of greed for power) will find this out the hard way.