Friday, February 06, 2009

Uncle Ted sends a message to charter schools!

From John Curry, February 6, 2009

Charter schools: Strickland's plan for cuts is unfair
Ban on paddling students also in budget
Friday, February 6, 2009
By Jim Siegel
Gov. Ted Strickland's new budget would ban corporal punishment, but charter schools say they are the ones really getting spanked.

After trying unsuccessfully two years ago to ban for-profit companies from managing charter schools, Strickland is taking a new tactic this time around. He's still targeting for-profit school managers, but this time he's added a new club to the bag: a nearly 20 percent cut in funding.

Charter schools are getting $617 million this year, a number that would drop to about $497 million next year under Strickland's proposal, before rising to $534 million in 2011.

"A double-digit reduction in the funding of charter schools is crippling," said Bill Sims, president and chief executive officer of the Ohio Alliance for Public Charter Schools. "It's a separate but unequal strategy for starving charter schools and their students to a slow death."

About 82,000 Ohio students attend the state's 332 charter schools.

"The funding disparity is grossly disproportional to charter schools that serve high proportions of disadvantaged students," Sims said.

Administration officials defend the plan, which for the first time would give charter schools their own line-item and their own separate funding formula.

"They should be able to operate on the dollars we are providing them," said John D. Stanford, the governor's top education adviser. "We don't agree with the statement that we're trying to put charter schools out of business."

State Budget Director J. Pari Sabety said charter schools would be funded for teachers, aides and other things differently than traditional schools, "based on the current business model we see in evidence in Ohio's charter-school movement."

For example, the new formula does not pay for a superintendent or treasurer in charter schools, because the schools do not employ them.

Strickland "has not supported this idea of a for-profit management company being a part of the charter-school educational system or the public educational system," Stanford said.

While Democrats have grumbled about charter schools, including the salaries paid to some administrators, Republicans have argued that it shouldn't matter who is running a school, as long as it's providing students a quality educational option.

The issue is likely to spark a heated legislative battle in the Democratic-controlled House and Republican-controlled Senate.

Teachers unions, which have raised a number of concerns about privately run charter schools, gave more than $600,000 to legislative Democrats in the past election cycle. At the same time, David Brennan, the state's largest charter-school operator, and William Lager, who runs a major online school, gave Republicans nearly $840,000.

Meanwhile, Strickland also hopes to end the practice of paddling students.

Rep. Brian G. Williams, an Akron Democrat who sponsored a bill last session to ban corporal punishment, said only 10 to 12 districts still practice it. The bill passed committee last year but never got to the House floor for a vote.

"Not everybody supports it. I can't believe it in the 21st century," Williams said.

Those who oppose the ban often raise issues over local control.

Most schools stopped spanking students in the mid-1990s when the legislature said that if a district wanted to continue the practice, a school board had to opt in and conduct a study by a local committee.

Nine good reasons not to go with a Medicare Advantage plan..............

From John Curry, February 6, 2009
The problems people have in Medicare private health plans (also known as Medicare Advantage plans) are numerous. Many people discover these flaws only after they have joined the plan— and most cannot switch until the following year. Most of the cases MRC handles fall into the following categories:

1. Care can cost more than it would under Original Medicare;

2. Private plans are not stable;

3. Difficulty getting emergency or urgent care;

4. Continuity of care is broken;

5. Members have to follow plan rules to get covered care;

6. Choice of doctor, hospital and other providers is restricted;

7. Difficulty getting care away from home;

8. Promised extra benefits can be very limited;

9. People with both Medicare and Medicaid can encounter higher costs.

For complete article, with elaborations and testimonials, click here:

Fw: Hey're a "state entity," aren't you? Remember that pay freeze (not a cut but a freeze) that Dr. Leone brought up?

From John Curry, February 6, 2009
Pay cut yet to catch on among state entities
Groups outside Strickland's control not going along
Friday, February 6, 2009
By Mark Niquette, Jim Siegel and James Nash
While Gov. Ted Strickland has called for employees at agencies under his control to take a pay cut of up to 6 percent to help balance the upcoming state budget, no other state entities have followed suit.

That includes other statewide elected officials, the Ohio Supreme Court, the legislature and state university administrators, including college presidents.

Some officeholders are considering ways to cut their budgets to save money in the recession, but none has volunteered to join Strickland's call for pay reductions, which includes his salary.

Strickland isn't calling for cuts in state entities not under his authority, and he thinks they should make payroll decisions "based on their particular budget situations," spokeswoman Amanda Wurst said.

Treasurer Kevin L. Boyce is cutting 10 percent of his agency's operating budget and freezing the salaries of 12 directors for this fiscal year, spokeswoman Kim Kowalski said.

Auditor Mary Taylor is "considering a wide range of options" to reduce spending but has not committed to a pay reduction, spokesman Chris Abbruzzese said.

Secretary of State Jennifer Brunner's office also said that cost savings are being pursued but that no decisions have been made and negotiations with unions haven't started.

"Please recognize that the proposed budget is in a very preliminary stage of the legislative process," G. Thomas Worley, Brunner's chief of staff, wrote to employees in a memo this week. "It is subject to extensive discussion and amendment in the months to come."

The Ohio Supreme Court echoed Worley's comments. The state's highest court pays its staff and justices as well as part of the salaries of judges across the state. The judicial salaries can't be reduced under the Ohio Constitution, but Chief Justice Thomas J. Moyer is keeping pay at 2008 levels.

As for nonjudicial Supreme Court staff members, there's neither a salary freeze nor a plan for raises, court spokesman Chris Davey said. He noted that the entire court budget is less than 0.5 percent of state spending.

Attorney General Richard Cordray's 1,300 employees aren't under a salary freeze, but spokeswoman Holly Hollingsworth said negotiations with the office's three unions are scheduled for this year. Those agreements could set the tone for nonunion employees, who include office lawyers.

State legislators did not see their $60,583 base pay increase this year, and no cuts are planned for them or their staffs. Both House and Senate officials said they are holding down spending in other ways.

"We have moved aggressively to cut the size of our budget," said Keary McCarthy, spokesman for Speaker Armond Budish, D-Beachwood. When Democrats took over the House this year, they cut the payroll by 6 percent, he said.

Matthew Schuler, chief of staff for Senate President Bill M. Harris, R-Ashland, said the Senate returned 8.3 percent of its budget to the general-revenue fund at the end of fiscal year 2008, and it plans to make a similar contribution when this year ends June 30.

"Knowing things were going to get tighter, we intentionally did not fill positions," he said.

State universities are working on efficiency initiatives to save money, but university boards of trustees decide the pay of administrative staff members, said Michael Chaney, a spokesman for the Ohio Board of Regents.

The Strickland administration announced this week that as part of the governor's plan to balance the upcoming budget and limit layoffs, he's asking employees to take pay cuts of up to 6 percent and pick up part of the cost of dental-, vision- and life-insurance coverage to save up to $200 million a year.

Pay cuts would be zero, 4 percent, 4.5 percent, 5 percent or 6 percent depending on the salary; those such as Strickland earning $125,000 or more a year face the 6 percent cut.

But the cuts are only a proposal and are subject to negotiations with state unions. The expectation is that whatever agreement is reached with unions will be applied to nonunion employees as well. About 14,600 of the state's 60,500 workers are "exempt" -- not under a union contract.

The Ohio Civil Service Employees Association is the state's largest union, representing 35,000 workers. Instead of pay cuts, it wants Strickland to cut the ranks of middle managers and consider forgoing the last round of a state income-tax cut.

Wednesday, February 04, 2009

Where is OEA?

From Molly Janczyk, February 4, 2009
Subject: FW: An STRSer's personal experience with Medicare Advantage after reading: even gave this well-deserved title ["Rip-off"] to Medicare ...
We may be thrown out of STRS Medicare supplemental and made to enter Medicare Advantage though NEA opposes it strongly! WHERE IS OEA? Who fights for current retirees other than Leone?

The hole in the donut causes retirees to drop meds...they can't afford them!

From John Curry, February 4, 2009
Study: Seniors in 'gap' cut back medicines

Seniors participating in the Part D Medicare Advantage prescription program cut back on their medications by 14 percent once they hit the "doughnut hole" coverage gap, raising questions about possible risks to their health.

A new study from the University of Pittsburgh Graduate School of Public Health suggests that a better approach might be adding coverage for generic medication -- for about one-fourth the cost of a brand name drug -- during the coverage gap. Then, to offset the added expense for the program, a beneficiary's contribution in the first phase would be slightly increased.

The Pitt study is published in today's online issue of Health Affairs magazine.

The lead author is Yuting Zhang, assistant professor of health economics at Pitt's Graduate School of Public Health, and her co-authors are Pitt colleagues Judith Lave and Julie Donohue, and Joseph Newhouse of Harvard University.

Medicare Part D, enacted three years ago, is meant to help seniors who face huge medication bills. Under the plan, beneficiaries have an initial $250 deductible for prescriptions, then a 25 percent co-payment until they reach $2,250 in payments.

After that the coverage gap, or doughnut hole, goes into effect and seniors pay 100 percent of their drug costs until costs reached $5,100, after which about 95 percent of the costs are covered.

The study looked at medication purchase practices of more than 11,000 Part D members and found that about 25 percent of Part D participants hit the doughnut hole coverage gap. About 4 percent progressed to become eligible for the catastrophic coverage.

Typically, those reaching the doughnut hole coverage gap were seniors with chronic conditions such as diabetes or hypertension who filled an average of five prescriptions per month.

Once they hit the doughnut hole, though, their medication use dropped 14 percent, dropping on average nearly one of the five prescriptions.

Because those with generic drug coverage did not see such a drop, "one can assume not only that the lack of coverage in the doughnut hole had adverse health consequences but also that it could have increased costs for hospital and physician services," the authors concluded.

Steve Twedt can be reached at or 412-263-1963.

An STRSer's personal experience with Medicare Advantage after reading: ' even gave this well-deserved title "Rip-off" to Medicare ...‏'

From Shirlee Zerkel, February 4, 2009
Subject: Re: even gave this well-deserved title ["Rip-off"] to Medicare ...
How true this article is because that is just what happened to my sister's husband under Parimont Elite (sp). First no premiums and they refunded the Medicare B premium. Then they no longer refunded the B premium and then the next year they also charged a premium for their coverage in addition to the Medicare B premium. Plus many doctors pulled out of the plan until there was only one heart doctor in Toledo that he could go to. How is that for for affecting the man's health care.

Molly Janczyk: We simply want some equity, that's all. We are invisible.

From Molly Janczyk, February 4, 2009
Subject: FW: A commentary on Bloomberg's "Medicare Rip-Off Hits Elderly as Obama Maps Changes"
Seems STRS and OEA have displayed no conscience yet regarding current retirees. Now, if we are thrown to Medicare Advantage, the ill among us may not get satisfactory coverage combined with yet more increased costs.
Consider increasing years to full retirement; %'s of pensions to pay for HC to make it more equitable for all; sliding scales for all out of pockets and premiums based on full retirement getting the best costs down to those who can afford to retire early paying heavier costs.
THERE ARE areas that can be retooled to actually help retirees too! They are not even considered - all consideration goes to the actives though the reason the organizations are here is due to the work of retirees. We simply want some equity, that's all. We are invisible.

A commentary on Bloomberg's "Medicare Rip-Off Hits Elderly as Obama Maps Changes"

From John Curry, February 4, 2009
Anybody want to shed a tear for the health insurance companies?

Private Health Insurers Losing their Medicare Advantage
By: Click Broker
Wednesday, February 4, 2009
"It takes careful shopping for seniors to get value from the Advantage plans, which is no different from anyone shopping for health insurance. But being the government is paying the majority of the bill, it also must get value for its money. It seems as though the added benefits in the Advantage plans are coming at the government’s expense. When the government starts refusing to pay extra for outsourcing Medicare, it is unlikely the Medicare participants will. This spells trouble for the health insurance companies, who are rapidly losing private membership.

Bloomberg’s “Medicare ‘Rip-Off’ Hits Elderly as Obama Maps Changes” reports that Humana (HUM), Health Net and UnitedHealth (UNH) are all changing their strategies for offering Medicare Advantage plans to eligible seniors. Princeton political economy professor Uwe Reinhardt told Bloomberg: “The insurers’ dream was that maybe 80 percent of the elderly would enroll in Medicare Advantage and then traditional Medicare would just die, and these private health plans could do what they want.” Now President Obama wants to extract 15% in excessive fees that the Advantage plans cost over traditional Medicare.

Seniors get $96 per month deducted from their Social Security to pay for Basic Medicare. At the start of the Advantage program, private insurers were rebating part or the entire Basic premium to lure senior membership. Now the rebates have ended and premiums with annual increases are common. In addition to the $100B the government pays private insurers for Medicare Advantage, the seniors contribute $5B in premiums.

Reinhardt concludes that the absence of premiums was “unsustainable”, a “come-on” to get things started. Advantage plans now enroll about 23% of Medicare participants, but seniors are beginning to rebel against the higher premiums. Most Advantage plans have raised their premiums to as high as $50 per month, but UnitedHealth has taken a different path. Instead of raising premiums, UnitedHealth dropped its plans for the chronically ill and increased the remaining policies’ out-of-pocket costs. UnitedHealth hopes to gain the membership that the others lose.

It takes careful shopping for seniors to get value from the Advantage plans, which is no different from anyone shopping for health insurance. But being the government is paying the majority of the bill, it also must get value for its money. It seems as though the added benefits in the Advantage plans are coming at the government’s expense. When the government starts refusing to pay extra for outsourcing Medicare, it is unlikely the Medicare participants will. This spells trouble for the health insurance companies, who are rapidly losing private membership. even gave this well deserved title -- "Rip-off" -- to Medicare Advantage programs!

......and some at STRS want to implement Medicare Advantage?????
From John Curry, February 4, 2009
Medicare ‘Rip-Off’ Strikes U.S. Elderly as Obama Maps Overhaul
By Avram Goldstein

Feb. 4 (Bloomberg) -- Just as President Barack Obama starts his overhaul of the U.S. medical system, providers of U.S.- backed health plans for the elderly are jacking up prices.

Humana Inc., Health Net Inc. and other providers increased 2009 premiums by 13 percent on average, or more than five times as much as last year, for people who use the Advantage version of Medicare, according to Avalere Health, a consulting company in Washington. The elderly say higher costs for the Advantage plans, which add features such as drug coverage to Medicare, are reducing money for groceries and utilities.

Obama has vowed to control spending in the $2.6 trillion U.S. health-care system while extending coverage to more people, and, during his campaign, criticized the costs of Advantage plans to taxpayers. The premium increases, charged directly to the elderly rather than the government, are further evidence that insurers’ need for profits is ballooning patients’ expenses and reducing the efficiency of care, said Arnold Relman, former editor of the New England Journal of Medicine.

“Medicare Advantage is a rip-off,” said Relman, 85, who is also a professor emeritus at Harvard Medical School in Boston, in a telephone interview on Jan. 23. “I cannot see that they do anything better than public insurance does, and they do a lot of things worse.”

Medicare will spend 14 percent more this year, on average, for Advantage enrollees than for beneficiaries with basic coverage, according to a staff report in December by the Medicare Payment Advisory Commission, an independent agency that advises Congress.

Obama’s Stance

Obama considers the government payments “excessive,” said Jen Psaki, a spokeswoman now on the White House staff, in a Jan. 5 e-mail. During his campaign Obama promised to cut subsidies to Advantage by as much as $15 billion a year, or about 15 percent from last year’s total of $100 billion.

In addition, insurers collected about $5 billion in Advantage premiums from consumers last year, said Thomas Scully, the former top administrator of the U.S. Centers for Medicare & Medicaid Services, with headquarters in Baltimore. Scully, a lawyer with New York-based private equity firm Welsh, Carson, Anderson & Stowe. Scully, who helped design the Advantage program, also works for Alston & Bird, a law firm based in Atlanta.

Medicare is the U.S. health plan for the disabled and those over 65. Basic Medicare, with a monthly fee of $96, lets patients use any U.S. doctor or hospital. Beneficiaries can also buy separate private policies to cover prescription drugs and expenses exempted from standard benefits. Advantage, which covers 10.5 million people, bundles those options.

‘Good Plans’

“There are almost 11 million people who have chosen to participate in Medicare Advantage because they feel they’re good plans,” said Richard Barasch, chief executive officer of Universal American Corp., an insurer in Rye Brook, New York, in a telephone interview. “Medicare Advantage is a great value to them.”

The Advantage premiums paid by Blair Law and his wife, Mary, soared to $50 a month this year, up from zero under the policy’s initial terms.

“These guys have you by the short hairs,” said Blair Law, 77, a retired construction-company executive now living in Fort Myers, Florida, in a telephone interview. “They know you’re disinclined to shift to another plan, so they keep ratcheting the cost up.”

In 2007, the Laws joined an Advantage plan provided by Universal Health Care Corp. of St. Petersburg, Florida. Initially, the plan charged no monthly premium, and the insurer rebated the couple’s basic-Medicare premiums, according to the Laws. The rebate ended last year, and this year the company began charging the couple an additional $50 a month.

‘Real Hardship’

Pinched for funds, Law said he doesn’t eat as much beef as before, uses less air conditioning, and will cut back travels to see relatives across the country.

“That’s a real hardship,” Law said.

Universal Health Care Chief Executive Officer Akshay Desai didn’t respond to a request for comment. Many Advantage policies had no monthly payments first, according to analysts.

The absence of premiums was a “come-on” to spur enrollment for many insurers and was “unsustainable,” said Uwe Reinhardt, a professor of political economy at Princeton University in New Jersey. Advantage plans serve about 23 percent of Medicare enrollees, up from about 12 percent in 2003, according to Medicare officials.

“The insurers’ dream was that maybe 80 percent of the elderly would enroll in Medicare Advantage and then traditional Medicare would just die, and these private health plans could do what they want,” Reinhardt, whose specialty is health-care issues, said in a telephone interview on Jan. 23.

Investor Wariness

Investors, favorable toward price increases yet wary of the threat of cuts in U.S. subsidies, aren’t sure if there is money to be made in stocks of Advantage providers, said Carl McDonald, an analyst with Oppenheimer & Co. in New York. Most of the companies, in any case, also have other profit centers, and their fate isn’t tied wholly to Advantage.

On average, the almost 200 companies selling Advantage policies raised prices 13 percent this year for enrollees, to $41.40 a month, according to Avalere Health. In 2008, premiums rose 2.5 percent, Avalere found.

Humana, based in Louisville, Kentucky, more than doubled average premiums for its Advantage clients, to $30 from $14, the largest percentage jump identified in the Avalere analysis conducted for Bloomberg News. Universal American had the second- largest rise among publicly traded companies, moving up average monthly premiums 44 percent to $39. Health Net, of Woodland Hills, California, increased the monthly fee 24 percent to $51.

Ambulance Rides

In calculating the averages, Avalere compared premiums for plans offered in both 2008 and 2009 and weighted each company’s average increase by membership.

Health Net, Humana and other insurers also are requiring elderly plan members to pay more for ambulance rides and hospital stays or raise the amount people must spend before 100 percent coverage kicks in, according to Medicare data.

Humana, with 1.44 million Advantage members on Dec. 31, said yesterday it expects to add no more than 75,000 people to the plans this year, after gaining 293,000 last year. Health Net said yesterday its Advantage enrollment may fall as much as 2 percent this year, from 295,000 at the end of last year.

Not all companies are raising premiums. UnitedHealth Group Inc. dropped what it said were unprofitable Advantage plans for the chronically ill and increased out-of-pocket costs in other Advantage plans. The company, based in Minnetonka, Minnesota, is the largest Advantage provider, with 1.6 million members.


UnitedHealth is counting on competitors’ premium increases to drive the elderly to its policies, said Simon Stevens, former head of the insurer’s Medicare plans, in an e-mail. The company added at least 97,000 customers for policies that began on Jan. 1, according to U.S. government figures.

Meanwhile, Martha Baker, 74, said her Health Net plan increased her share of costs for ambulance care and other services this year. Her premium also went up, to $38 a month from zero.

“What’s disheartening is, I’m a person who has never taken from the system,” said Baker, who retired after directing the women’s ministry at a Tucson, Arizona, church. “I’ve always paid into it, and now it seems to be failing me.”

Ralph Lloyd to STRS re: Bonuses

From Ralph Lloyd, February 4, 2009
Subject: Bonus Payments
Dear STRS:
Here is another letter for you, even though I have yet to receive an answer from you, I will continue to send these to you until you open a dialogue with me. Latest news in from The Times/Reporter newspaper today is that in order to help get their house in order Huntington Bank is laying off 500 workers, taking away their 401-K program donations for their workers, and eliminating all incentive payouts. So what has STRS done to improve their assets (reduce the $26 billion that was lost on investments)? ALL THOSE INCENTIVES OR BONUSES YOU PAID OUT TO YOUR INVESTMENT COUNSELORS, INCLUDING THE DAYCARE WORKERS, DID NOT IMPROVE THE SITUATION. When I and another person coached wrestling and racked up 144 dual match victories no-one gave us a bonus, nor when I taught students who did well, did I receive a bonus.
Ralph L Lloyd
Note: Ralph did receive responses the next day (Feb. 5) from Laura Ecklar and Dennis Leone telling him some belt tightening was starting at STRS. KBB

Tuesday, February 03, 2009

Some parts of Columbus are freezing...but not at STRS!

From John Curry, February 3, 2009
When Dr. Leone made a formal proposal in November to freeze wages at STRS, his motion died due to a lack of a second. Mike Nehf publicly stated, prior to Leone’s motion, that he did not support any staff at STRS receiving a wage freeze. The board then voted to refer the wage freeze question to its Salary/Benefits Committee for reconsideration. The matter, however, did not receive any discussion whatsoever at either of the committee meetings that were held in December and January.

Another Columbus institution bans bonuses...Dr. Leone, once again, you were ahead of the ball game!

From John Curry, February 3, 2009
Maybe the four STRS Board members who didn't vote against bonuses should read this article! The unemployment office is full of professional investors looking for a job, isn't it? John
Huntington to cut 500 jobs, freeze pay
February 3, 2009
By Steve Wartenberg
The Columbus Dispatch

Photo: Huntington Bank, downtown Columbus
Bancshares announced it will cut 500 jobs as part of a $100 million cost-cutting measure.
The job cuts will take place in Ohio, Indiana, Kentucky, Michigan, Pennsylvania and West Virginia through March 1, but the Columbus-based bank has not yet said how many of the job losses would be in the Columbus area.
Huntington has about 11,000 employees.
The bank also announced it will eliminate all 2008 bonuses, maintain salaries at last year's level and suspend the company match for its 401(k) plan.
"We believe these steps address current market challenges, while also aligning management and associate compensation and shareholder interest," said Stephen Steinour, Huntington's new chief executive, in a statement.
Huntington recently announced fourth-quarter losses of $417.3 million, due in large part to its exposure to subprime mortgages through its involvement with Franklin Management Corp.
On Monday, Huntington stock closed at $2.02, a 29.9 percent drop and the lowest it has been since 1988.
"Our regulatory capital ratios are at least $1.9 billion above the 'well capitalized' minimum threshold," Steinour said. "Our liquidity is strong. In the fourth quarter we reduced our Franklin relationship exposure to current realizable values."
The initial total of $1.5 billion in problem mortgages from Franklin was down to $650.2 million on Dec. 31.

Curious about Medicare Advantage?

Click here to view previously blogged articles on Medicare Advantage.

Next CORE meeting February 19

From CORE, February 3, 2009
CORE (Concerned Ohio Retired Educators) will hold its February meeting on Thursday, Feb. 19th at the STRS Building at 275 East Broad Street in Columbus.* Parking is free in the STRS parking garage behind the building. We encourage you to also attend the STRS meeting which usually begins around 9:00 a.m. on Thursday in the meeting room on the 6th floor but this beginning time varies from month to month. For this reason, we encourage you to check the STRS website ( to confirm the time. CORE meeting attendees usually leave the STRS meeting around 11:30 in order to go to the cafeteria on the 2nd floor to get our lunches. We then take our lunches to the small cafeteria room behind the Sublett Room on the 2nd floor of the STRS building where the CORE meeting will begin promptly at 11:45.
If you have suggestions for the Feb. CORE meeting agenda, if you plan to be a candidate for the open STRS Board seats, or if you know someone who plans to be a candidate in the upcoming STRS election and would like to visit a CORE meeting, please contact John Curry. He will relay this information to CORE President, Dave Parshall, for consideration.
This February meeting will be an important one as those members in attendance will be deciding IF CORE will be endorsing a STRS Board candidate/s as well as determining the extent of support for candidates based on CORE's current resources. Please plan to attend and participate in this most important decision-making process. Invite a friend. Pick up a new supply of CORE's new pamphlet to share with others. Visitors are always welcome!
*Map/directions to STRS, 275 E. Broad St. Columbus, OH 43215
Click here to join CORE

Monday, February 02, 2009

Share in the misery due to tough times...yeah, right...gotta protect that bottom the elderly's expense! They AREN'T jesting!!‏

From John Curry, February 2, 2009

What's YOUR 2009 "profit forecast?" Here's Humana's............

Humana Inc., the second-biggest provider of U.S.-funded health insurance, beat analysts’ estimates for fourth-quarter revenue and said higher prices for elderly customers will help it meet its 2009 profit forecast. (Surely they jest-John)

Advantage Enrollment

The company’s [Medicare] Advantage enrollment this year has begun shifting away from plans that allow customers to use any doctor or hospital. The share of customers choosing 2009 plans requiring them to use doctors and hospitals that have contracts with Humana rose to 59 percent from 51 percent last month, the company said.

The unrestricted plans will lose Medicare funding in rural areas in 2011 because of action by Congress last year. The plans with provider networks are “more stable and politically safe,” said Matt Perry, an analyst with Wachovia Securities in New York, in a note to clients today.

Humana Maintains Forecast After Drug-Plan Increases (Update1)

By Avram Goldstein

Feb. 2 (Bloomberg) -- Humana Inc., the second-biggest provider of U.S.-funded health insurance, beat analysts’ estimates for fourth-quarter revenue and said higher prices for elderly customers will help it meet its 2009 profit forecast.

Revenue climbed 18 percent from a year earlier to $7.49 billion because of higher enrollment in health plans, the Louisville, Kentucky-based company said today in a statement. That compares with an average $7.35 billion in a Bloomberg survey of a dozen analysts.

Humana said it expects to earn $5.90 to $6.10 a share this year, helped by a 64 percent increase in average premiums for its biggest U.S. Medicare-backed drug plans for the elderly. In 2008, drug plans derailed Humana’s profit goals because a larger number of sicker people joined the plans and generated higher-than- anticipated claims. The company raised premiums, a move that Humana says may drive away 1.2 million expensive customers.

“They’re better off being very careful in their pricing, even if it means giving up some enrollment,” said Ana Gupte, an analyst with Sanford C. Bernstein & Co. in New York, in a telephone interview today. Medicare drug plans have “fairly tight margins.”

Humana jumped $1.89, or 4.9 percent, to $39.82 at 10:25 a.m. in New York Stock Exchange composite trading. The shares sank 54 percent in the 12 months before today.

At year-end, Humana covered 3.1 million customers in Medicare drug plans. Membership will plunge to fewer than 2 million in 2009, according to the statement.

Investment Income

The drug plans and lower investment proceeds dragged net income down 28 percent in the fourth quarter, to $174.1 million, or $1.03 a share. Earnings missed by 3 cents a share the average estimate of analysts surveyed by Bloomberg. Earnings for the year were $3.83 a share.

The company reported a 23 percent decline in investment income for the fourth quarter to $66.2 million.

The insurer is second to UnitedHealth Group Inc., the largest U.S. health insurer, in Medicare-subsidized plans for the elderly.

Humana covered 1.4 million people in plans known as Medicare Advantage, which provide drug coverage and extras not offered by traditional Medicare. That figure will increase by as much as 75,000 this year, after Humana raised prices on most of its Advantage plans, compared with 292,000 new customers last year, the company said.

Advantage Enrollment

The company’s Advantage enrollment this year has begun shifting away from plans that allow customers to use any doctor or hospital. The share of customers choosing 2009 plans requiring them to use doctors and hospitals that have contracts with Humana rose to 59 percent from 51 percent last month, the company said.

The unrestricted plans will lose Medicare funding in rural areas in 2011 because of action by Congress last year. The plans with provider networks are “more stable and politically safe,” said Matt Perry, an analyst with Wachovia Securities in New York, in a note to clients today.

“These results show that Humana’s strategy is working and are a positive sign for the long-term viability of Humana’s Medicare Advantage business,” said Perry.

The insurer also provides coverage through Medicaid, the state-federal program for the poor, and Tricare, for military personnel, families and retirees.

Drug Costs

Humana spent 83.3 percent of premium revenue from all plans on medical care in the fourth quarter, compared with 80.3 percent a year earlier, because of the drug costs, the company said.

Many of those unanticipated costs were in plans that offered zero premiums and out-of-pocket costs known as co-payments, said Sheryl Skolnick, an analyst at CRT Capital Group in Stamford, Connecticut.

“Seniors understand free,” she said in a Jan. 8 telephone interview. “All you have to do is say ‘free,’ and everyone lines up. Zero co-pays are an invitation to high utilization.”

In fourth-quarter earnings reported in the past 11 days, UnitedHealth’s net income declined 40 percent from a year earlier and WellPoint Inc.’s fell 61 percent. Philadelphia-based Cigna Corp. is scheduled to announce earnings this week, and Aetna Inc., of Hartford, Connecticut, plans to release them next week.

To contact the reporter on this story: Avram Goldstein in Washington at

NYT: Disgorge, Wall Street Fat Cats

New York Times, February 1, 2009
Op-Ed Columnist
Disgorge, Wall Street Fat Cats
The president’s disgust at Wall Street looters was good. But we need more. We need disgorgement.
Disgorgement is when courts force wrongdoers to repay ill-gotten gains. And I’m ill at the gains gotten by scummy executives acting all Gordon Gekko while they’re getting bailed out by us.
With the equally laconic Tim Geithner beside him, Mr. Obama called it “shameful” and “the height of irresponsibility” for Wall Street bankers to give themselves $18.4 billion worth of bonuses for last year.
They should know better, he coolly chided. But big shots — even Mr. Obama’s — seem impervious to knowing better. (Following fast on Geithner’s tax lacunae, Tom Daschle’s nomination hit a pothole when he had to pay $140,000 in back taxes he owed mostly for three years’ use of a car and a driver provided by a private equity firm.)
At least the old robber barons made great products. When you make money out of money, unmoored from morality and regulators, it must unhinge you. How else to explain corporate welfare queens partridge hunting in England, buying French jets and shopping for Lamborghinis?
Mr. Obama was less bracing than during the campaign, when A.I.G. executives were caught going to posh retreats after taking an $85 billion bailout. He called for them to be fired and to reimburse the federal Treasury. Now that he has the power to act, Mr. Obama spoke, as his spokesman Robert Gibbs put it, “like that disappointed parent that doesn’t embarrass you in the mall, but you feel like you’ve let somebody down.”
That’s not enough, not with the president and Geithner continuing to dole out what may end up being a trillion dollars to these “malefactors of great wealth,” as Teddy Roosevelt put it.
USA Today wrote about “the A.I.G. effect:” executives finding ways to spend more discreetly, choosing lesser-known luxury hotels and $110 pinot noir instead of the $175 variety.
More than a disappointed parent, they need a special prosecutor or three. Spare the rod, spoil the jackal. Anyone who gave bonuses after accepting federal aid should be fired, and that money should be disgorged to the Treasury.
Claire McCaskill popped out a bill to limit the pay of anyone at firms taking federal money to no more than the president makes — $400,000.
“These people are idiots,” she said on the Senate floor. “You can’t use taxpayer money to pay out $18 billion in bonuses. ... Right now they’re on the hook to us. And they owe us something other than a fancy wastebasket and $50 million jet.”
One Obama official said her idea is catchy, but it won’t work “because no one would come to Treasury to participate, and that means our economy would continue to stumble downward.”
Senator Chuck Grassley urged the administration to snatch back the bonuses. “They ought to give ’em back or we should go get ’em,” the Republican told me. “If this were Japan and a corporate executive did what is being done on Wall Street, they’d either go out and commit suicide or go before the board of directors and the country and take a very deep bow and apologize.”
He was shocked to learn that the Office of Management and Budget, insistent on following the Paperwork Reduction Act, was dragging down a special inspector general’s investigation of what banks are doing with taxpayer money. (After complaints, the O.M.B. yielded on Friday.)
“Once in a while, some C.E.O. comes and talks to me and I wonder if they’re laughing under their breath at having to talk to someone who makes 1 percent of what they make,” he said.
Treasury officials and Barney Frank are dubious about recouping bonuses. “Paulson let the cat out of the bag,” Frank said of Henry Paulson, Geithner’s predecessor, “and it can’t be gotten back.”
But aren’t taxpayers shareholders in these corporations now, and can’t shareholders sue or scream “You misspent my money!” like Judy Holliday?
“In ‘The Solid Gold Cadillac,’ ” said Frank, who knows the movie.
“We got some preferred shares,” he mused, “but I don’t think we could sue on that basis.”
Rudy Giuliani resurfaced Friday to defend corporate bonuses, telling CNN that cutting them would mean less spending in restaurants and stores.
Stupid. Even without bonuses, these gazillionaires can still eat out. It’s like Rudy’s trickle-up Make Work Program: Make Leisure.
Some Obama policy makers still buy into the notion that if they’re too strict, these economic royalists, to use F.D.R.’s epithet, might balk at the bailout, preferring perks over the prospect of their banks going belly-up.
The president needs to think like Andrew Cuomo. “ ‘Performance bonus’ for many of the C.E.O.’s is an oxymoron,” he said. “I would tell them, a) you don’t deserve a bonus, b) where are you going to go? and c) if you want to go, go.”

Sunday, February 01, 2009

"It's the Wall Street Culture" .... could it also be part of the Broad Street Culture?

From John Curry, February 1, 2009
I wonder if there's such a thing as pushing the "ethical envelope?" In my mind, STRS management pushed the "ethical envelope" by continuing to approve the payment of bonuses to STRS investment associates in light of STRS's loss of 30 Billion dollars. But then....that's an ethical call, isn't it? Can't blame the investment associates...after all, they didn't make the decision to approve the bonuses, did they? John
P.S. Thank God..... more cooler (and rational) heads on the STRS Board prevailed, didn't they? least 6 cooler (and rational) heads....3 just didn't get it and one couldn't make up her mind!
“It’s the Wall Street culture,” says Peter Henning, who teaches criminal and securities law at Wayne State University in Detroit. “You make money by pushing the envelope.”
Madoff Victims Suspected a Crime, Just Didn’t Care: Ann Woolner
Commentary by Ann Woolner
January 30, 2009
It turns out that some of the hedge fund and money managers who guided investors into the care of Bernard Madoff came to suspect that Madoff was breaking the law.
How else to explain his returns?
They pressed for answers, got none and told their clients, some of whom hightailed it out of the funds connected to Madoff.
But plenty of others didn’t care how Madoff was making them richer as long as he did so and as long as they couldn’t get into trouble themselves.
Here’s the funny part, if you like sick humor: The law that some so-called feeder fund managers thought Madoff might be breaking wasn’t the right one.
They figured he was “front-running,” or using orders placed through his brokerage, which once was huge, to plan trades for his money management business, Swiss banker Werner Wolfer told Bloomberg.
Front-running is illegal, not to mention unethical. Normally applied to situations where the broker trades ahead of the client, it means you put your interests above those of customers.
Forbidden Information
But if that is what he was doing, it was no skin off his investors’ teeth. They believed they were benefiting from the forbidden use of the information. And, if caught, Madoff would pay the price with regulators, not them, Wolfer and others told Bloomberg.
So the investors averted their eyes from the gift horse’s mouth.
“It’s the Wall Street culture,” says Peter Henning, who teaches criminal and securities law at Wayne State University in Detroit. “You make money by pushing the envelope.”
You run up to the edge of legality, he says, and sometimes, like Wile E. Coyote of the Road Runner cartoons, you look down to see nothing but thin air between you and the valley floor far, far below.
Madoff last month admitted not to front-running but to something more primitive and more dangerous for the investors who shut their eyes. He allegedly said he had been running a Ponzi scheme that ate up some $50 billion.
The Wrong Crime
It’s hard to feel sorry for those who assumed they were benefiting from someone else’s crime and got burned because they had the wrong crime.
That said, they no doubt represent a tiny portion of the thousands who lost huge sums to Madoff. Retirees and charities, hospitals and universities relied on advisers who failed to conduct the due diligence they should have, or who put money into other funds that invested in Madoff funds without looking too deeply into them.
And then there were those who suspected something fishy and didn’t warn others.
JPMorgan Chase & Co., which had $250 million in two Madoff- related funds, pulled out last fall because of its overexposure to hedge funds and because it was “concerned about the lack of transparency to some questions we posed,” a spokeswoman told the New York Times.
But JPMorgan never told its customers who had invested along with the company in a complicated arrangement it packaged, according to the Times.
Unwitting Customers
Unwitting customers were still paying fees to JPMorgan to manage their own investments in the funds, months after the company was too unsure of the funds to stay in it.
The bank couldn’t disclose its pullout under the terms of its contracts, the spokeswoman said. That is a claim that some of its customers may wind up challenging in court.
Others, such as Swiss money manager Notz, Stucki & Cie, wrote its clients it had investigated concerns about Madoff investments and found “a legitimate, profitable business.”
The firm described substantial vetting. It’s hard to fathom how it could have done all that and still find “no evidence to suggest improper practice,” as its letter to clients said.
What is clear is that lots of money managers, lots of feeder funds were drawing in substantial fees for hooking up with Madoff.
The permutations of clients, funds, advisers and advice seem endless at this point. And so do the lawsuits, which aim at getting money back.
Something in Common
But they all have in common this much.
“Bernie Madoff sold a black box to everyone,” says Henning. “His whole investment scheme was based on discouraging questions -- you don’t want to know, just take the result.”
The seductive notion that a few Wall Street gurus use secret strategies to beat the market isn’t limited to the Madoff scam. It’s the whole principle behind hedge funds.
They operate on trust. You hand over your money and don’t ask a lot of questions about what happens to it. Just enjoy watching it grow. Fortunately, legislation is afoot that would make them more accountable.
Whether it’s hedge funds or any other kind of investment, perhaps the Madoff scandal will make it clear that there is no black box. What Madoff had was a deep, black hole which swallowed believers, even doubters, who didn’t look too closely.
(Ann Woolner is a Bloomberg news columnist. The opinions expressed are her own.)
To contact the writer of this column: Ann Woolner in Atlanta at
Last Updated: January 30, 2009

Ponzi scheme simplified: Guess where we are, every time?

(Click image to enlarge.)

Ralph Lloyd: The investment managers should give back their bonuses or skip

From Ralph Lloyd, January 31, 2009
Subject: STRS workers bonuses
How in **** can you in sound mind and body permit the investment workers to get bonuses, when the investment portfolio shows that the reserve money is decreasing? I will paraphrase what O'Bama said the other day to the CEOs of the companies that got bailouts: "How can you people do that when your companies have to get bailed out? It is unconscionable!" I agree with him all the way; in fact, I would require all of those CEOs to repay their company. I would require all of those investment workers to repay their bonuses or find another job.
Ralph L. Lloyd
Larry KehresMount Union Collge
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