Higher wages: is that what this country needs?

I hear that a lot of "fast-food" workers will strike today for higher wages.  There is talk of a national minimum wage of $15.00 an hour. It makes me stop and think.  And what I think is things won't get better, and here is why.

You might have learned that prices are based upon the economic principle of supply and demand; that is only partially true.  There are more factors involved. One of these factors is risk and reward.

If the basic wage is $15, then the people now making $15 per hour will want more. To maintain the parity, all wages will go up. To clarify this last statement, wages are one form of reward for excellence in performance.  The shift supervisor makes more than the busboy.  The manager makes more than the shift supervisor, and so it goes.  It provides incentive to do the best and advance in position.  Why would anyone want to take more responsibilities without more reward?

 Wages and other benefits are major portions of business expenses.  When expenses go up, profits go down. To maintain an acceptable profit margin and keep the business open, revenue must go up.  In most businesses that means prices must go up.  When the prices of goods go up then the costs of other businesses go up and they too must raise more revenue.  So things other than goods go up in price. 

 

There is talk about everyone deserving a living wage.  There was a time when many jobs were held by students, students who lived with parents and worked to save some money for school, or to get a few things for themselves that their parents didn't or couldn't provide.  They weren't working to survive, but to improve the life they had.  It seems that now everyone expects to live on every job's income. That is a tremendous change in attitudes toward work.

Why do people expect more from what were once considered entry level or part-time jobs?  Because more and more jobs are being converting to part-time. This is partially due to the government placing more and more requirements and restrictions on full-time employment positions. Employers can no longer afford full-time employees.

Another point; when wages go up so do taxes, and not just income tax.  There is the Social Security tax, unemployment taxes, sales taxes on higher priced goods, and other monies collected by government from businesses. Our government actually has its own motivation to increase the minimum wage: more tax revenue.  

When I was a young man, a student, the minimum wage was $1.00 per hour.  Gas was 25 cents a gallon. A McDonald's hamburger was 15 cents. A movie ticket was 25 cents. A Saturday night date might run you five, ten dollars.  You could eat a good lunch for a dollar or less. Tips were small change.

This whole issue isn't about people making more; it's about people expecting more for less.

Affordable Health Care Insurance?

There has recently been a great deal of conversation about the availability and cost of health care insurance under the ACA.  So, once more, I went to the source document to see what I could find.  I have added some bolder type to the sections I found most interesting.

‘‘SEC. 2718. BRINGING DOWN THE COST OF HEALTH CARE COVERAGE.

‘‘(a) CLEAR ACCOUNTING FOR COSTS.—A health insurance issuer offering group or individual health insurance coverage shall, with respect to each plan year, submit to the Secretary a report concerning the percentage of total premium  revenue that such coverage expends—

‘‘(1) on reimbursement for clinical services provided to enrollees under such coverage;

‘‘(2) for activities that improve health care quality; and

‘‘(3) on all other non-claims costs, including an explanation of the nature of such costs, and excluding State taxes and licensing or regulatory fees. The Secretary shall make reports received under this section available to the public on the Internet website of the Department of Health and Human Services.

‘‘(b) ENSURING THAT CONSUMERS RECEIVE VALUE FOR THEIR PREMIUM PAYMENTS. —

‘‘(1) REQUIREMENT TO PROVIDE VALUE FOR PREMIUM PAYMENTS. — A health insurance issuer offering group or individual health insurance coverage shall, with respect to each plan year, provide an annual rebate to each enrollee under such coverage, on a pro rata basis, in an amount that is equal to the amount by which premium revenue expended by the issuer on activities described in subsection (a)(3) exceeds—

‘‘(A) with respect to a health insurance issuer offering coverage in the group market, 20 percent, or such lower percentage as a State may by regulation determine; or

‘‘(B) with respect to a health insurance issuer offering coverage in the individual market, 25 percent, or such lower percentage as a State may by regulation determine, except that such percentage shall be adjusted to the extent the Secretary determines that the application of such percentage with a State may destabilize the existing individual market in such State.

‘‘(2) CONSIDERATION IN SETTING PERCENTAGES.—In determining the percentages under paragraph (1), a State shall seek to ensure adequate participation by health insurance issuers, competition in the health insurance market in the State, and value for consumers so that premiums are used for clinical services and quality improvements.

 ‘‘(3) TERMINATION.—The provisions of this subsection shall have no force or effect after December 31, 2013.

‘‘(c) STANDARD HOSPITAL CHARGES.—Each hospital 

Well, for a while there I thought that they might have done something for the consumer.  BUT what is that termination clause all about?  What, they will no longer need to provide an annual rebate for excess profits?

Selective News

Last night the President was on the Tonight Show.  At any rate that is what I read; I don't watch the Tonight Show.  There were some clips on the news, and on some other shows, but I didn't hear or see any of them run the conversation I include below as it shows in a transcript of the interview.  The part I have highlighted was left out of the clip that I saw.  If it had been a Republican making these comments all we would be seeing is the portion highlighted and we would be seeing it over and over and over. Oh, just in case geography wasn't one of your favorite subjects, Charleston, Savannah and Jacksonville are all on the Atlantic Ocean, not the Gulf.

LENO:    You mentioned infrastructure.  Why is that a partisan issue?  I live in a town, the bridge is falling apart, it’s not safe.  How does that become Republican or Democrat?  How do you not just fix the bridge?  (Laughter and applause.)      
THE PRESIDENT:  I don't know.  As you know, for the last three years, I’ve said, let’s work together.  Let’s find a financing mechanism and let’s go ahead and fix our bridges, fix our roads, sewer systems, our ports.  The Panama is being widened so that these big supertankers can come in.  Now, that will be finished in 2015.  If we don't deepen our ports all along the Gulf — places like Charleston, South Carolina, or Savannah, Georgia, or Jacksonville, Florida — if we don't do that, those ships are going to go someplace else.  And we’ll lose jobs.  Businesses won’t locate here.So this is something that traditionally has been bipartisan. I mean, it used to be Republicans and Democrats, they love cutting those ribbons.

LENO:   Yes.

THE PRESIDENT:  And we’ve got a bunch of construction workers who aren’t working right now.  They’ve got the skills.  They want to get on the job.  It would have a huge impact on the economy not just now, but well into the future.  So I’m just going to keep on pushing Republicans to join with us, and let’s try to do it.

More Dollars for Health Care

It's called the Affordable Health Care Act, now a public law.  I have read much of the 900+pages and I am amazed at the amount of money consumed by this law that claims to be such a landmark for "affordable" health care.

Below is the summary table from the current budget proposal for HHS

FY 2014 President’s Budget for HHS

 (dollars in millions)

	2012	2013	2014
Budget Authority	873,872	909,524	974,594
Total Outlays	848,153	907,797	967,295
Full-time Equivalents (FTE)	74,193	76,209	77,520

To compare those figures, here is similar data from the last three budgets of the Bush Administration.[ FY2009 budget proposal for HHS, was the last proposal by the Bush administration in 2008.]

FY 2009 President’s Budget for HHS

(dollars in millions)

	2007	2008	2009
Budget Authority	656,726	715,790	731,407
Outlays	670,413	707,723	736,793
Full-Time Equivalents	63,748	64,750	65,630

[FTE can most easily be described as the number of full time employees.]

Growth during the Obama administration

Personnel – 11,890

Dollars - $243,187,000,000.00

That's a two hundred forty-three billion, one hundred eighty-seven million dollar increase in the five years since President Obama took office, and nearly a 50% increase from the 2007 budget.

Budgets are all about money, usually money being spent.  The HHS budget proposal for FY2014 makes over 100 references to "affordable care."

Here are some excerpts.

 The Budget includes $389 million in discretionary and mandatory funding for the Office of Inspector General (OIG), an increase of $101 million above the FY 2012 level. This increase will enable OIG to expand CMS Program Integrity efforts for the Health Care Fraud Prevention and Enforcement Action Team and improper payments, and also enhance investigative efforts focused on civil fraud, oversight of grants, and the operation of Affordable Care Act programs.  

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  Health centers are an essential primary care provider for America’s most vulnerable populations and are a critical component of the healthcare system as more individuals gain insurance coverage and access health care services through the Affordable Care Act. The Budget includes $3.8 billion for the Health Center program, including $2.2 billion in mandatory funding provided through the Affordable Care Act Community Health Center Fund. In FY 2014, the Health Center Program will support more than 1,200 grantees, and serve approximately 23 million patients. 

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  IHS estimates that the Affordable Care Act will increase health insurance reimbursements by $95 million in FY 2014. These resources will allow IHS to address the needs of its ever-expanding population and provide additional health care, further reducing health disparities in the American Indian and Alaska Native population. However, estimating the amount of  the increase IHS will collect in FY 2014 is complicated  both by a lack of information about which states will  choose to expand Medicaid and uncertainty about the  number of American Indians and Alaska Natives who  will become eligible because of expansion and will  continue to use IHS services.   

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Additionally, the FY 2014 Budget includes $10 million to enable public health agencies to seek reimbursement from insurance companies for infectious disease testing covered because of the implementation of the Affordable Care Act. 

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The Budget  includes a total of $100 million for Patient-Centered  Health Research (also known as Patient-Centered  Outcomes Research or Comparative Effectiveness  Research), provided through the Patient-Centered  Outcomes Research Trust Fund (PCORTF). The PCORTF, established by the Affordable Care Act, transfers funding to HHS to build research capacity, translate and disseminate comparative clinical effectiveness research, and establish grants to train researchers. In FY 2014, investments will build on current AHRQ efforts, such as programs to train researchers in methods and standards for conducting patient-centered outcomes research and dissemination and translation efforts.  

 ………………. 

The Affordable Care Act includes an additional $350 million in program integrity resources over 10 years, plus an inflation adjustment. It provides unprecedented tools to CMS and law enforcement to protect Medicare, Medicaid, and CHIP from fraud, waste, and abuse. 

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