Mar 04

In responding yesterday to President Obama’s push for health care reform, Senate Minority Leader Mitch McConnell commented that “looking at the poll data, one could conclude that you would be history if you voted for this bill.”  Spoken like a true career politician with over 25 years in the U.S. Senate.

Isn’t it time for term limits on Capitol Hill?  Not to directly criticize McConnell’s comments, but isn’t this attitude (or arrogance) part of the problem?  For many years they have touted the need for experience and continuity as their arguments against term limits, but isn’t that really just empty spin?  It seems that McConnell considers this a career position that comes with a sense of entitlement if you put your priorities around maintaining that status.

Weighting of decisions based on one’s ability to survive politically seems to run in conflict with a commitment to public service.  Surely years of campaigning and serving in office provides these senior statesmen with plenty of opportunities for employment in the private sector (or other jobs in the public sector if they so choose) following their distinguished, but albeit, shorter careers in Washington.

The idea of term limits, or rotation in office, dates back long before the foundation of America.  As a result, when the continental congress appointed a committee of thirteen in 1776 to examine forms of government for the impending union of the United States, Thomas Jefferson promoted a limitation of tenure, “to prevent every danger which might arise to American freedom by continuing too long in office the members of the Continental Congress….” As a result, the Articles of Confederation stated that “no person shall be capable of being a delegate for more than three years in any term of six years.”

In contrast to the Articles of Confederation, the federal constitution Convention at Philadelphia omitted mandatory term-limits from the Constitution. Nonetheless, due to broad support for the principle of rotation, rapid turnover in Congress prevailed.  Also George Washington set the precedent for a two-term tradition at the presidency by refusing to run for a third term.

According to a February profile prepared by the Congressional Research Service, the average length of service for Representatives at the beginning of the 111th Congress was 11.0 years (5.5 terms); for Senators 12.9 years (2.2 terms).  Representative John Dingell (D-MI) has the longest service of any House Member in history (54 years).  In the Senate, Robert C. Byrd (D-WV), 92 years old, has served longer (51 years) than any other Senator in history.  As a point of reference, the President at the time each began their career was Dwight Eisenhower.

At the beginning of the 111th Congress, the average age of Members was 58.2 years, with the average for Senators at 63.1 years.  Keep in mind the average would exclude Joe Biden (67 years) who became vice-president in January 2009 and Ted Kennedy (77 years) who passed away in August 2009.

Traditionally, incumbents have improved odds in running re-election campaigns.  Access to campaign cash, voter recognition, claims of accomplishments during previous terms, and established media recognition form the foundation of successful campaigns.  The seniority system in Congress also adds to the appeal of re-electing an incumbent.

Over the years, many proposals have been put forward concerning term limits for Congress.  In November 2009, Jim DeMint (R-SC) introduced a proposed constitutional amendment that would apply term limits to all members of Congress, limiting U.S. Representatives to three terms, or six years, and U.S. senators to two terms, or 12 years, of service.  As Senator DeMint comments, “Some say only long-serving, seasoned elites have the skills to lead the people, but that’s exactly what we have today and how do you think it’s working for us?”

Changes to the Constitution would not come easy however.  Any term limitation bill would require a two-thirds vote in each of the House and Senate along with approval by three-fourths of the States.

While unlikely to gain much traction, Senator DeMint’s observation highlights one of the root causes of the gridlock we have in our current system.  As the saying goes, “Lead, Follow or Get Out of the Way!”  Unfortunately, it seems that the folks in Congress show little desire for any of these under their own initiative.

BA

Feb 25

And it didn’t take many voices…..

You may recall I have posted a couple of blogs on Anthem Blue Cross and Blue Shield’s recent rate hikes and on February 11 I had called on Commissioner Morrison to join California in a review of their rate filings.  We may have had some success.

Yesterday the Denver Business Journal reported that Anthem Blue Cross and Blue Shield would be examined by the Division of Insurance noting 35 customer complaints in the month of December alone. (I’m not sure whether my 3 hours reviewing Anthem’s documents at the Division’s office on December 18 counted towards this number or not.)

The review is to commence on March 1 and is expected to take about eight weeks to complete.  Based on this timeline, Colorado’s review should be completed around the same time as California’s.  It is not clear what ultimate action may result, however House Bill 1389 does provide the Division with some “teeth” to discipline Anthem by ordering rebates, assessing fines, along with other actions.

Coincidentally, WellPoint president Angela Braly testified in front of the House Energy and Commerce Committee yesterday defending their rate hikes.  She may be right.  She may not.  But I hope pressure from the States can drive Congress and the industry for solutions, not excuses.  As they say, “if you’re not part of the solution, you’re part of the problem.”

Ok, so what do I find of interest that could come out of this?

First, I and others have contacted Anthem and switched individual plans to reduce monthly premiums over the past several weeks.  In light of this examination, it seems appropriate that Anthem should leave the option open to switch back pending the outcome of this review.  I will be calling them.

Second, I would hope that the resulting report from the Division’s review will be made public…..timely.  I don’t want to know every detail but I would like to see this “special examination” contrasted against what the Division does as a matter of standard practice.

Finally, I would like to see the Colorado Division collaborate with California on this review.  I see know reason to do this in isolation and believe communication would facilitate an understanding of the potential for interstate commerce in the insurance industry.

We shall see…..

BA

SPECIAL NOTE:  Yesterday, Berkshire Hathaway announced that their annual report would be available on their website this Saturday at 8AM (EST).  The annual report contains Mr. Buffet’s annual letter to shareholders which is always a worthwhile read.  You should be able to find it (along with prior letters) at http://www.berkshirehathaway.com/letters/letters.html .

Feb 18

Thankfully some Colorado democrats on Monday took proposed Senate Bill 91 and tossed it in the bin.  Hopefully the House will take HB 1036 and do the same.  I wouldn’t want to see some soccer mom wrecking her Sienna in rage over school spending on the wrestling team or pizzas.

Colorado lawmakers had considered legislation in 2009 (that was defeated) that would have greatly increased the reporting requirements for school districts.  Similar measures have been on the agenda for 2010.  While their proponents promote the demand for transparency, I believe these proposals go way, way above the threshold representing quality communication in the spirit of solid corporate governance.

The most touted proposals would effectively require the school district to make their general ledger available online allowing any concerned citizen to “drill down” into the details including to see how much Ms. Jones, the 2nd grade teacher, is making.  Really?  So what sort of sound judgment is Joe Public going to gain from this level of detail?  Probably none.  It is unlikely he will spend the amount of time necessary to understand the overall workings on the educational funding and spending system let alone how Ms. Jones fits into the overall picture.

A limited number of school districts in Colorado have already gone down the path of detail disclosure.  Jefferson County R-1, Colorado’s largest school district, has implemented a website that presumably offers (I’m not so curious to look myself) significant details of spending.  Amazing what you can do when you get 10% of the State’s share of school district funding.

For decades the private sector has explored the boundaries of transparency and quality reporting.  Over those years, accounting principles have been continuously revised to respond to changes (or perceived changes) in public demand for information, accountability and transparency.  With these changes (and I believe most for the good), I haven’t seen one legitimate proposal that would suggest that GMAC, AIG, Freddie or Fannie should put their general ledgers out on the web in order for investors, regulators and taxpayers to  see every detail.  In fact, the principles of financial reporting demand that information is presented in a summarized format that is useful.  It is understood that most interested parties are not accountants and need management and the directors to exercise judgment within professional standards to ensure the information is understandable.

In Colorado this responsibility rests with the school district’s board, superintendent and staff having financial accounting responsibilities.  In most, if not all cases, this information is then subjected to an annual audit.  I would suspect that public availability of this report, board minutes, and open access to board meetings satisfies the vast majority of any legitimate interest in the activities and oversight of the school district’s activities.

Because something “can” be done, doesn’t suggest it “should” be done.  Nor is this a matter of monetary cost.  Those engaged to govern school operations have enough issues to deal without being subjected to scrutiny over frivolous claims of spending abuse.

As for this taxpayer, I don’t need an app for my iPhone.  Open communication and accountability for financial and academic results are enough.

BA

Feb 11

Yesterday, California Insurance Commissioner (and Republican gubernatorial candidate) Steve Poizner appeared on Fox Business News “Happy Hour” confirming that he is investigating proposed rate increases for 800,000 individual policy holders after California members received notices that their rates would increase up to 39%.  Poizner is asking Wellpoint, Anthem’s licensee in both California and Colorado,  to delay increases until May 1 while an independent actuary could review the increases.

Anthem’s move has been outrageous enough to even attract the attention of the Obama Administration who has also asked for justification.

Readers may recall that I had written about Colorado increases on December 10.  In their letter to me on November 30, they had indicated that “it is necessary to adjust our health care coverage rates to cover the escalating cost of health care.”  In reporting by the LA Times, it now seems that Anthem is placing a portion of the blame on the weak economy leading many people in good health to forgo coverage leaving those with significantly greater medical needs in its insured pool.  If California is like Colorado, my visit to the Colorado Department of Regulatory Agencies (DORA) would indicate that Anthem also modified their age groupings that contributed to higher rate increases to some (if not many) members.  Another day, another story.

In Poizner’s discussion on “Happy Hour” he identified three primary factors that need to change, (i) introduction of interstate competition, (ii) go after insurance fraud aggressively, and (iii) introduction of electronic medical records.  Sounds that some people are starting to get the message.

While Colorado has significantly fewer individual policy members with Anthem compared to California, maybe our regulator should get on the bandwagon and ask Poizner for permission to re-issue his letter under her signature.

Come on Commissioner Morrison, wouldn’t an hour investment be well worth the protection of public interest?

BA

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