1. Regarding the downgrade itself, I think S&P’s criticisms are spot on. However, I do question whether S&P has strayed from evaluating credit risk to evaluating the national economy. After all, if the federal government had absolutely no other option available, it could simply print more money to make the payments.

Granted, doing that would be even more catastrophic to the economy than a one-position downgrade, but it is an option.

I’ve often wondered how much of the work done by entities like S&P is art, rather than science. Recent events have me shifting the needle more towards the art side of the gauge I’m afraid.

2. As to who’s fault the downgrade is, I have a novel idea: Rather than pointing fingers at political parties or individual politicians, perhaps we the people should be looking in mirrors and pointing fingers at ourselves.

It’s We The People who elected the current crop of politicians, who seem to have a chronic inability to do anything other than posture for political benefit.

It’s We The People who consume sensationalized media, creating demand for “news” stories that thrive on strife, soundbites, junk science, and the inability to appreciate that reality has multiple grey dimensions instead of the flat, two dimensional black-and-white fiction portrayed in the media.

And it’s We The People who want our cushy services (be they welfare programs, shiny military toys, or government contracts for particular industries) without having to pay for them or otherwise experience inconvenience.

When a society shifts from the balance of realism to unstable, unrealistic chaos, the results will be messy and unfortunate.

If, as a society, we have truly lost the ability to assume personal responsibility for our messes, a federal credit downgrade is probably the least of our problems.

The article reports that the increase in interest rates will likely lead to immediate drop in the market value of bonds in investors’ portfolios to the tune of up to $100 billion, and that the U.S. can expect to be liable for $2-$4 billion annually in additional interest payments on the national debt.

Despite what it will sound like further on in this post, if finger-pointing must be done, both donkeys and elephants deserve blame for the mess, as does the American public in general for re-electing these jokers every 2 or 6 years.

I respect the efforts of the GOP to stick to their guns on their insistence that the federal government rein in its spending to sustainable levels. As someone who’s not a fan of taxes, I appreciate their efforts to take federal revenue increases off the negotiation table.

However, there is a time to fight for ideals, and there is a time to be practical. Practicality and realism are called for when fighting for your ideals is on track to be counter-productive.

In this case, protecting investors from tax hikes leading to a $100b decline in the value of investors’ portfolios, as well as the fight to cut spending leading to additional multi-billion dollar annual obligations both seem…well, dumb.

I admit there is plenty in politics that seems dumb when viewed from outside the Beltway, but perhaps this is a time when our legislators ought to quit wallowing in idiocy and find a way to make things work?

This blog will remain “active”, such as it is, for non-ham subject matter.

You’d think that with all the premiums we collect, we could afford to move the insurance capital of the country someplace warmer.

I think the next time there’s a regional actuarial meeting, I will have to formally propose that we re-headquarters our companies in Las Vegas, a much less frigid locale where other local industries are well-suited to the nature of our profession.

Okaloosa County investigators say a poaching investigation resulted in the bust of a math lab.

It’s a sad, sad day when one can get in trouble with the law for doing math.

The story was actually about the discovery and closure of a methamphetamine production facility…but it was the phrase “math lab” that really caught my attention.

I guess it’s a media strategy for a new decade – reel in readers/viewers through attention-grabbing typos.

She: “Don’t want white fluffy snow.  Want white fluffy sand.”

73 AB1??

1. The attempt to require consumers to enter the market for health insurance is a regulation of economic inactivity that is beyond Congress’ power to regulate economic activity under the Commerce Clause. The judge noted that if the Commerce Clause were to be extended to regulate inactivity as well as activity, there would literally be no ground in any area of human life that would be beyond Congress’ regulatory reach, including decisions about personal nutrition.

2. The Necessary and Proper Clause does not save the individual mandate because it only gives Congress the power to use all “necessary and proper” means to pursue ends that are within Congress’ constitutional reach. Having found that regulation of economic inactivity is outside of Congress’ constitutional reach, the fact that the individual mandate may be necessary and proper means to regulate it does not remove that fundamental unconstitutionality.

I still stand by a comment I made previously on the predecessor blog – that universal health care is no more or less constitutional than Medicare, in my opinion.   However, the comment, “there would literally be no ground in any area of human life that would be beyond Congress’ regulatory reach, including decisions about personal nutrition” drives straight to the heart of my discomfort towards increased government involvement in health care: He who pays for health care gets a say in how you live your life.

Put another way, it is not difficult to imagine a scenario where the feds, feeling the burden of a staggering health bill, feel obliged to combat rising costs by obliging Americans to eat better.  All of a sudden…eat a Twinkie, and go to jail (or a medium security fat farm, more likely).  

It sounds nuts, but don’t underestimate the power of the almighty dollar to convince a politician or a bureaucrat that nuttiness is a wise path to follow.

Regarding the second point…at least the summary above hints at an acknowledgement at something else that I and virtually every actuary have been saying about health insurance reform – that if coverage is to be universal, almost everyone must participate.   If low-risk folks opt out of the system, finding not enough benefit derived from the cost, the cost of the system will increase at a faster rate, incenting more people to opt out, … and so forth until the system collapses.

If the District Court’s opinion survives the appeals process up through the Supreme Court, we could be left with the harsh reality that only two options are available without a Constitutional amendment:

• The pre-Obamacare status quo (perhaps with a few Obamacare tweaks which render the individual health market prohibitively expensive for many); or
• Single-payer: The feds pay all medical bills, and health insurance as we know it goes away.

In a way, those choices seem representative of what the political situation in this country has become – only the two polar opposites are viable given the current rules in place; a compromise between the two might actually be illegal.

While that court ruling certainly dominates the news cycle, something else has popped on my personal radar:  My wife spent about a week in the hospital in March, where a spider-bite, compromised immune system, and MRSA conspired to lock her away for a few days behind a CDC quarantine warning.

The bill reads:

Total charges	17,925.78
Amount paid by insurance	3,731.76
Amount paid by patient	93.33
Adjustments	-13,252.75
AMOUNT DUE	847.94

In the grand scheme of things, it’s not horrible…but it does touch on two things I’ve always wondered about hospital billing:

1.  Given the amount of “adjustment” required to bring the cost down to something insurance was willing to pay, isn’t that an indication that the pre-insurance charges might be a bit excessive?  Sure, health insurers have an incentive to drive a hard bargain…but something just feels wrong in the algebra here.

2.  It’s taken nine months for the hospital to get us a final bill.   That’s nine months of lost interest.   Surely such inefficiency is an economic drag on the hospital, if not the health care system in general.

I suppose I should a third item to my list of things to wonder about:

3.  What did we do to annoy Santa enough to deliver this little lump of coal?   Granted, I thought we were lucky when we paid the prior bill, and perhaps I should have been suspicious for such a favorable outcome, but even so it’s not nice having a surprise $850 bill so close to the holidays.

You’d think that they could have at least included a Yuletide card to take a bit of the edge off.

She hasn’t mastered the art yet…but I saw her succeed for the first time last night.

Soon the world will not be safe from teh evil.