Economic situation

Economic situation

Summary

In this page we review the proximate economic situation. 

Economic trends are discussed. 

Introduction

Heath care markets are key aspects of the US economy. 



Dramatic economic shifts suggest major transformations of health care:




Economic change provides the potential to destabilize the US health care network. 

  • Americans are increasing their use of prescription drugs (Nov 2015)
  • Federal Reserve of 1913 was a response to a series of banking panics with the goal of responding effectively to stresses.  It setup:
    • At least 8 and not more than 12 private regional Federal Reserve banks.  Twelve were setup
    • Federal Reserve Board with seven members to govern the system.  The President appointed the seven, which must be confirmed by Congress.  In 1935 the Board was renamed and restructured. 
    • Federal Advisory Committee with twelve members
    • Single US currency - the Federal Reserve Note. 
    report argues: Economy is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.   robust allowing for interest rate increases, Wage growth sluggish due to poor productivity is the efficiency with which an agent's selected strategy converts the inputs to an action into the resulting outputs.  It is a complex capability of agents.  It will depend on the agent having: time, motivation, focus, appropriate skills; the coherence of the participating collaborators, and a beneficial environment including the contribution of: standardization of inputs and outputs, infrastructure and evolutionary amplifiers. 
    , Decline in work force participation among less educated Americans because of technology, Women providing child-care rather than entering the work force, Oil increasingly produced domestically reducing export of dollars, Trade war not mentioned as a significant risk (Jul 2018)
  • The financial network is betting on:
  • Can society afford to pay for the treatments?  US pricing is supported by the MMA is:
    • The Medicare Modernization Act of 2003.  It includes Medicare part D, the Medicare prescription drug benefit, which constrains Medicare from negotiation of its drug prices and created MAC and RAC.  It was sponsored by Senator Bill Tauzin and implemented by Tom Scully.  
    • Mammalian meat allergy which is induced by a month prior tick bite that introduced the allergen alpha-gal.  About 1% of bitten humans develop the allergy & prevalence is increasing.  Humans & old world primates & monkeys don't make alpha-gal (Jul 2018).  Symptoms can include: hives, anaphylactic shock, low blood pressure. 
    's legislative constraints on Medicare is a social insurance program that guarantees access to health insurance for Americans aged 65 and over, and younger people with disabilities and end stage renal disease or ALS.  Medicare includes:
    • Benefits
      • Part A: Hospital inpatient insurance.  As of Dec 2013 Medicare pays for home care in only limited circumstances, such as when a person needs temporary nursing care after a hospitalization.  Part A covers 20 days of inpatient rehabilitation at a SNF after discharge from inpatient care at a hosptial. 
      • Part B: Medical insurance
      • Part C: Medicare Advantage 
      • Part D: Prescription drug coverage The MMA prohibits Medicare from directly negotiating drug prices. 
    • Eligibility
      • All persons 65 years of age or older who are legal residents for at least 5 years.  If they or a spouse have paid Medicare taxes for 10 years the Medicare part A payments are waived. 
      • Persons under 65 with disabilities who receive SSDI. 
      • Persons with specific medical conditions:
        • Have end stage renal disease or need a kidney transplant. 
        • They have ALS. 
      • Some beneficiaries are dual eligible. 
      • Part A requires the person has been admitted as an inpatient at a hospital.  This is constrained by a rule that they stay for three days after admission.  
    • Premiums
      • Part A premium
      • Part B insurance premium
      • Part C & D premiums are set by the commercial insurer.  
    pricing actions.  Pricing pressure has already impacted Europe due to budget problems and austerity measures.  The US is expected to follow the trend.  Pressure (Jul 2015) from government, insurers and managed care contracts together its subscribing patients with particular groups of doctors and hospitals who agree to provide contracted care for a particular price which the managed care organization reimburses.  It was based on the group practice organizations: Kaiser, Mayo Clinic; operations.  The initial HMOs, supported by the HMO act and PPOs has subsequently been joined by other forms of managed care.  Original capitation based implementations were problematic with only Kaiser succeeding.  Managed care is now enhanced by inclusion of upside measures as in alternative quality contracts. 
    companies will undermine big price increases. 
  • Global competition between brand-name and generic pharmaceutical manufacturers becomes more complex:
  • Evolved amplifiers of trade flows:
  • Boom and bust has been the typical scenario in health care/biotech.  
    • Part of a broader trend with low rates (Nov 2016)
  • Patent evergreening describes how drug companies try to extend patent protection by introducing a new version of a drug with minor variations without much clinical benefit but that extends the patent.  The new drug is heavily advertised so that it replaces most of the still patented, but old, drug on the market.   and pay-for-delay is a practice used to extend the high profits of a soon to be off-patent protected drug.  The companies pay generic manufacturers to delay release of their generic competitor to sustain high pricing. 
    are under threat (Nov 2015).  
  • Payment and financial innovation have been slow to keep up.  But the 2015 health evolution summit sees a shift.  

  • Contents






    2007 Jun Bear Stearns mortgage finance restructuring shows economic catalyst

    NYTimes
    Two hedge funds is an investment fund that accepts investments from a limited number of accredited individual or institutional investors.  Hedge funds are able to use investment methods that are not allowed for other types of fund. 
    aimed at avoiding both a fire sale in mortgage-securities market, and getting stuck with an exploding liability that could result in steep losses for financiers.  A melt down was avoided, but the New York Times wonders if the talks had just delayed an inevitable collapse over time. 

    The Bear Stearns investment bank was aiming to find out what they could obtain as payments from the market if the auctioned off mortgage securities with a face value of $2 billion.  The solicitations were hastily withdrawn when investors reacted with little enthusiasm.  However, by the end of the day some of the less risky securities had exchanged hands. 

    Bear Stearns was under pressure from other lenders who were worried about the effect of the sale on the book valuations of mortgage securities. 

    The week of escalating problems at the Bear Stearns's High Grade Structured Credit Strategies Enhanced Leveraged Fund and a related fund have jarred investors into confronting systemic risks in the once booming market for bonds that are backed by mortgages to homeowners with weak or subprime, credit.  Last year, more than $483 billion of such bonds were issued, up 5% from 2005. 

    The deal that JP Morgan Chase reached with Bear Stearns asset Management allowed it to sell $400 million collateral back to the hedge funds for cash.  It was not released what the price was. 

    Goldman Sachs and the Bank of America reached similar deals, though details remained unclear.  Also unclear is what price the assets will eventually fetch for the Bear funds and what types of losses investors, who have been unable to redeem their investments since May, will face. 

    The securities causing the most concern within the Bear Stearns funds are known as collateralized debt obligations, or C.D.O. is a:
    • Care delivery organization in health care. 
    • Collateralized debt obligation in finance.  The idea is to transfer the credit risk rather than the loan itself.  The bank enters into a CDS on the loans with a SPV.  The CDO allows the bank to shift its loans outside the reach of regulators.  The CDO also can distribute the risk unevenly by tranching.  Equity is most at risk.  Then any subordinated debt. 
    s.  Run by portfolio managers these complex instruments are akin to mutual funds in that they buy stakes in a variety of bonds backed by mortgages. 

    They often invest in the riskiest portion of the bonds, usually with a hundreds of millions or billions in borrowed money.  About $316 billion in C.D.Os specializing in mortgages were issued last year, up from $178 billion in 2005. 

    One worry about the possible unwinding of the Bear funds is that it will cascade into larger liquidations by other investors who hold similar securities at far higher prices.  Accounting rules require investment banks to mark the value of the investments to the price of similar assets trading in the market.  Many mortgage-related securities and C.D.O.s in particular, do not trade frequently, making them hard to value. 

    As a result Merrill one of the lenders who have seized Bear assets is quietly showing them to a small group of potential buyers.  Such an approach helps to keep the pricing of the securities under wraps, allowing Wall Street firms to avoid marking down their own stakes.  Keeping the sales price quiet also means that the firms may not have to add collateral immediately to shore up their portfolios. 

    Yet another worry is that the big investment banks that until now have generously lent billions of dollars on good terms to traders and portfolio managers are pulling back or demanding stricter terms. 

    One industry executive, said the banks involved in the Bear funds could collectively lose $1 billion on their lending to the Bear funds.  Lenders are already reducing the amount they are willing to lend against C.D.O.s. 


    May 2016 NYT A Choppy Year for Hedge Funds, but Chiefs Cashed In

    Alexandra Stevenson reports JPMorgan Chase paid its chief executive, Jamie Dimon, $27 million in 2015.  In another Wall Street universe, the hedge fund manager Kenneth C. Griffin [of Citadel] made $1.7 billion over the same year. 

    Institutional Investor's Alpha magazine reports the 25 best-paid hedge fund managers together received $12.94 billion in income.  This is even as the funds struggled to perform. 

    The hedge fund industry is now $2.9 trillion in size. 

    James H. Simons of Renaissance Technologies also took home $1.7 billion. 

    Leda Braga of Systematica Investments got $60 million.  Earlier she was at BlueCrest Capital

    Five fund managers which lost money for their investors were in the Alpha list:

    May 2016 NYT Hedge Funds Reach for Hard Hats in Year of Collapsing Mergers

    Leslie Picker reports while last year set a record for the amount of money spent on corporate mergers -- $4.7 trillion -- this year is so far setting a very different record: the dollar amount of deals that have come undone. 

    $400 billion worth of corporate mergers has been withdrawn.  This is three times the 2007 record.  Deals that have backed out include:
    • Staples & Office Depot $6.3 billion merger
    • Halliburton and Baker Hughes $35 billion merger
    • Pfizer and Allergan $152 billion merger 
    • Anbang Insurance and Starwood Hotels $14 billion acquisition 
    • Energy Transfer equity and Williams Companies $38 billion - no evidence of collapse of the deal but its being treated as backing out by markets. 
    • Abbott labs and Alere $5.8 billion acquisition - no evidence of collapse of the deal but its being treated as backing out by markets. 
    Hedge funds is an investment fund that accepts investments from a limited number of accredited individual or institutional investors.  Hedge funds are able to use investment methods that are not allowed for other types of fund. 
    that focus on merger arbitrage is a hedge fund strategy where for stock mergers of companies, the hedge fund will simultaneously purchase the target and short sell the acquirers stock, while for cash mergers the hedge fund purchases the target stock; to speculate on the successful completion of the deal, when the target's stock should reach the offer price, leveraging pricing inefficiencies awaiting the event.  are seeing greater uncertainty is when a factor is hard to measure because it is dependent on many interconnected agents and may be affected by infrastructure and evolved amplifiers.  This is different from Risk.   in their strategies.  In April macro funds is a hedge fund strategy where bets are made on the direction of global economic trends.   and merger arbitrage were the worst performing hedge fund strategies.  Ramius was impacted by the collapse in Allergan's share price. 


    Aug 2018 NYT The Stock Market Is Shrinking.  That's a Problem for Everyone. 

    Jeff Sommer reports the American stock market has been shrinking.  It's been happening in slow motion -- so slow you may not even have noticed.  But by now the change is unmistakable: The market is half the size of the mid-1990s peak and 25 percent smaller than it was in 1976. 

    Sommer notes:

    Oct 2018 NYT The Biggest Buyers of American Stocks Are on the Sidelines Right Now

    Matt Philips reports there are plenty of potential catalysts for the stock market sell-off that has swept through the markets this week.  They include rising interest rates, growing tensions with China, expanding federal deficits and increasing regulatory risks for technology companies. 

    But Philips notes the largest buyers: companies repurchasing their own stocks; aren't buying as they get ready to report earnings.  Some of the large market dips of 2018 correspond to these quarterly reporting periods. 

    Repurchasing has reached $770 billion this year.  That's twice the size of ETF is exchange traded fund, which tracks stock and bond indexes, adhering to a set of financial rules.  These methods can be used to track any financial market segment.  They are transparent, and low cost to operate, and invest in.  But their performance is impacted when they are forced by changing conditions to sell assets at a loss (Jul 2018). 
    generated demand for stocks. 


    Sep 2017 NYT How to Protect a Drug Patent? Sell it to a Native American Tribe

    Katie Thomas reports the drug maker Allergan announced Friday tht it had transferred its patents on a best-selling eye drug to the Saint Regis Mohawk Tribe in upstate New York--an unusual gambit to protect the drug from a patent dispute. 


    Allergan agreed to sell & lease back the patents for Restasis to the Saint Regis Mohawk Tribe.  The tribe will be paid $13.75 million by Allergan to claim sovereign immunity as grounds to dismiss a patent challenge filled by generic drug makers: Teva; under the AIA is the Leahy-Smith America Invents Act of 2011 which aimed to modernize the patent system.  A key provision of AIA was the creation of the Inter Partes Review process which third parties can use to contest the validity of a patent (for not being novel & non-obvious) within 9 months of its issuance to the Patent Trial and Appeal Board. 
    .  The lease back will provide the tribe with $13 million annually as long as the patents remain valid. 

    Allergan's Brent Saunders siad that the company made the move to avoid what he described as the "double jeopardy" of having the same issue heard in two venues.  "We did this to really make sure that we can defend these patents in only one forum." 

    Restasis 2nd quarter 2017 revenues were $336.4 million. 




    Botox was Allergan's leading product by 2017 2nd quarter revenue. 




    The novel legal strategy was devised by Shore Chan DePumpo, following a similar successful defense they developed for the University of Florida which owned a patent being challenged by Covidien (now part of Medtronic).  Shore Chan argued successfully to the patent review panel that the University was an arm of the state of Florida and had sovereign immunity. 


    Allergan's patents on Restasis are being challenged under the AIA and in US District Court in Texas.  If the court finds the patents invalid the AIA avoidance strategy will be irrelevant. 


    Oct 2017 NYT Pfizer Considers Spinning Off or Selling Consumer Health Unit

    Amie Tsang reports the pharmaceutical giant Pfizer said [] that it had begun a strategic review of its consumer health care division that could result in the consumer health unit[] being spun off or sold. 


    The 2016 $3.4 billion revenue unit's products include Advil, Centrum supplements and ChapStick. 



    Ian Read has been reviewing Pfizer's business strategy alignment for over a year.  An extensive evaluation resulted in Pfizer concluding that it should not split up its Innovative Health and Essential Health divisions into separately traded companies. 


    Ian Read commented "Although there is a strong connection between consumer health care and elements of our core biopharmaceutical businesses, it is also distinct enough from our core business that there is potential for its value to be more fully realized outside the company." 





    Aug 2016 NYT Pfizer Pays $14 Billion To Expand In Oncology

    Andre Pollack and Lesie Picker report Medivation, which makes the big-selling drug Xtandi to treat prostate cancer is cancer of the prostate gland.  Genomics detected several common DNA variants associated with increased risk of prostate cancer.  Dr. Francis Collins explains that a cluster of these risk variants lies in a stretch of 1 million DNA base pairs on chromosome 8.  The cluster contains seven or more risk variants, each of which can raise the risk of prostate cancer by 10 to 30%.  The high risk variants occur more frequently in African-American men than European or Asians.  African-Americans die from prostate cancer at more than twice the rate of Europeans.  Research in mice may explain a link between obesity and prostate cancer (Jan 2018).  The average diagnosis is at age 66.  Worldwide in 2012 there were 1.1 million cases from which 307,000 died.  A common life-saving (Feb 2017) treatment is androgen deprivation therapy, but it has worrying side effects.  Various classically defined types of cancer can occur.  The most common is adenocarcinoma associated with the epithelial gland cells that generate seminal fluid.  Epithelial cell differentiation potency makes these significant cancer agents.  Other very rare types of cancer that can start in the prostate are:
    • Sarcomas
    • Small cell carcinomas
    • Neuroendocrine tumors
    • Transitional cell carcinomas
    , has finally found its buyer in a fellow American drug maker, Pfizer.  The deal is subject to regulatory clearance and Medivation shareholder agreement to tender their shares. 

    Medivation put its self up for auction to avoid a board takover threatened by Sanofi, after its bid for the company was rejected (Apr 2016). 

    Most pharmaceutical giants are pushing into oncology to leverage:
    Pfizer's oncology strategy has been weak until Ibrance became a hit.   Now Xtandi will add another hit, although the global sales will be shared with Astellas Pharma.  Xtandi competes with Johnson & Johnson's Zytiga and J&J's follow on drug development apalutamide is a non-steroidal androgen receptor competitive inhibitor developed to treat prostate cancer.  It is structurally similar to enzalutamide. 
    .  And Medivation's immuno-oncology uses the immune system to treat cancer.  Cancer cells often have different molecules on their cell surface.  Studies have shown that genetic signatures of tumors can help predict which patients will benefit from treatment with PD-1 checkpoint inhibitors.  Checkpoint inhibitor based treatments aim to make the immune system target these antigens.  Clinical trial results indicate they are prolonging lives - even if only by a few months.  They have reduced side effects relative to generic chemo therapy.  There are three main strategies: cellular, antibody and cytokine.  
    • Antibody therapies target receptors including CD20, CD274, CD279 and CTLA-4.  These therapies include MABs: Alemtuzumab, Ofatumumab, Rituximab; and may induce checkpoint inhibition.
    • Cellular therapies have typically involved removing the immune cells from the blood or a tumor, activating, culturing and then returning them to the patient.  Trials of these CAR and TCR therapies are proceeding, with some significant problems (Jul 2016). 
    • Cytokine therapies enhance anti-tumor activity through the cytokine's regulation and coordination of the immune system. 
    • Vaccines, including Sipuleucel-T for prostate cancer and BCG, classically a vaccine for tuberculosis, which is used for treating bladder cancer. 
    drug developments may allow Pfizer to attack BMS and Merck's leadership aims to develop plans and strategies which ensure effective coordination to improve the common good of the in-group.  John Adair developed a leadership methodology based on the three-circles model. 
    positions.  Its late stage PARP Inhibitor stops single stranded repair of DNA.  In cells with BRCA1/2 and PALB2 mutations this additional DNA repair inhibition will increase the likeliood that the cancer cells will die. 
    may allow Pfizer to attack AstraZeneca's breast cancer is a variety of different cancerous conditions of the breast tissue.  World wide it is the leading type of cancer in women and is 100 times more common in women than men.  260,000 new cases of breast cancer will occur in the US in 2018 causing 41,000 deaths.  The varieties include: Hormone sensitive tumors that test negative for her2 (the most common type affecting three quarters of breast cancers in the US, BRCA1/2 positive, ductal carcinomas including DCIS, lobular carcinomas including LCIS.  Receptor presence on the cancer cells is used as a classification: Her2+/-, estrogen (ER)+/-, progesterone (PR)+/-.  Metastasis classes the cancer as stage 4.  Genetic risk factors include: BRCA, p53, PTEN, STK11, CHEK2, ATM, GATA3, BRIP1 and PALB2.  Treatments include: Tamoxifen, Raloxifene; where worrying racial disparities have been found (Dec 2013).  International studies indicate early stage breast cancer typed by a genomic test: Oncotype DX, MammaPrint; can be treated without chemotherapy (Aug 2016, Jun 2018)
    lead (Lynparza). 

    AbbVie similarly acquired Pharmacyclics for $21 billion in 2015 and Stemcentrx for $5.8 billion in Apr 2016


    Nov 2016 NYT Rolling Up Deals While Rates Are Low And Confidence High

    Steven Davidoff Solomon reports world-changing corporate transactions just seem to keep coming.  It won't last, however. 

    Huge numbers of multibillion-dollar deals, $329 billion in the US, have been announced in October 2016:
    • AT&T's acquisition of Time Warner for $85.4 billion, to gain control of content to compete with Facebook and Google
    • General Electric with Baker Hughes. 
    • BAT $47 billion acquisition of Reynolds American. 
    • Qualcomm's $38.5 billion acquisition of NXP semiconductor.  
    Earlier in the year was the $56 billion acquisition by Bayer of Monsanto.  Microsoft acquired LinkedIn for $26.2 billion to maintain its Internet reach.  And soon should come the restructuring of Viacom and CBS. 

    Davidoff Solomon notes that cheap money (interest rates at a 400 year low and liquidity looking for any yield) is the conventional explanation.  Hence AT&T can easily borrow $40 billion.  He concedes the banks are limiting their leverage in lending.  But he asserts that confidence is high since all the major trading blocks are exhibiting stability.  He reasons that in this low growth economy, with massive technological transformations CEOs are using consolidation to justify their positions.  The acquisitions are an easy way to grow, capture products/services and reduce competition before additional anti-trust rules are introduced in response to the development of oligopolies: 
    • The pharmaceutical giants captured drugs rather than developing them. 
    • Snap's high valuation IPO will drive more activity in high technology. 
    But Davidoff Solomon worries that inefficient conglomerates are returning which may destroy capital if caught in a bursting bubble, as interest rates rise, a market destabilizes or another catastrophe occurs. 


    Nov 2016 NYT Swimming in a Rising Tide of Mortgage Debt

    Paula Span reports the proportion of older adults still paying off homes is climbing, as is what they owe. 

    Prior to the housing bubble and consequent financial crisis of 2008 a majority of older couples: 65 year old husband and 62 year old wife; would be expecting to retire in their fully paid for house.  But now increasing percentages are amassing ever more mortgage debt and see selling their house as the only way to escape. 

    Two recent studies: Urban Institute, Boston College group; indicate:
    • A growing proportion of older homeowners (35%) now carry mortgage debt.  This is particularly true of Black and Hispanics without college degrees. 
      • Three quarters of older Americans are home owners.  The homes are their largest capital asset.  But they have little equity because of second loans, or lines of credit, taken out on the houses. 
    • The average amount of mortgage debt has doubled ($82,000).  
    In 1998 less than 3% of homeowners were "under water."  But by 2012 8% are under water.  And 19.5% now owe 80% of the value of their house. 

    Economists is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.   are looking at if this situation is likely to persist over time or is a onetime phenomenon. 

    It is already clear that the people in this situation are avoiding retirement. 


    Nov 2016 NYT Wells Fargo Asks Federal Court to Force Customers to Arbitration in Fake Accounts Cases

    Reuters report Wells Fargo has asked a Federal District Court to order dozens of customers who are suing the bank over the opening of unauthorized accounts to resolve their disputes in private arbitrations instead of court, according to legal documents. 

    Wells Fargo files the motion in the Utah US District Court in response to the first class-action lawsuit about it opening up 2 million deposit and credit-card accounts in customers names without asking their permission. 

    Wells Fargo has agreed to pay $185 million in penalties and $5 million to customers so far.  And then CEO John Stumpt was eventually forced to resign. 

    In response to questions from lawmakers, Wells Fargo wrote it would stand by its arbitration policy but is offering free mediation services for affected customers.  Mandatory arbitration rules inserted into account-opening agreements prohibit customers from joining class actions or suing Wells Fargo. 

    In Apr 2011 a Supreme Court decision validated the practice of mandating arbitration. 

    Mandatory arbitration is beneficial to large enterprises since it:
    • Denies customers legal protection of a court preceding including a right of appeal
    • Helps conceal corporate misconduct from the public and regulators with no documents or hearings becoming public. 
    • Disuades customers with small claims if they have to fund an arbitration lawyer
    • Cases do not set legal precedents
    In 2015 a court dismissed a lawsuit against Wells Fargo because the customers had signed arbitration clauses when they opened their accounts. 

    The CFPB is the Dodd-Frank act's Consumer Financial Protection Bureau. 
    is developing rules to prohibit banks, credit card issuers and other companies from forcing customers to arbitration.   The Trump administration is likely to restrain the CFPB. 





    Apr 2016 NYT E.C.B. Is Worried, but Not Enough to Try 'Helicopter Money'

    Jack Ewing reports with the eurozone is the group of countries within the EU that use the euro currency.  Economic decisions regarding the euro are centralized through the Eurogroup. 
    economy still listless, despite the aggressive stimulus measures being taken by the European Central Bank, economists is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.   at a conference [in Frankfurt] were full of advice on aggressive next steps. 

    E.C.B. officials pushed back against one proposal arguing that helicopter money was a thought experiment by Milton Friedman to apply when conventional policy tools no longer work.  Central banks could print money and toss it out of helicopters to eager citizens who would spend the money and stimulate the economy.   was not even a discussion topic. 

    The central bank acknowledged its deep concerns about the risk to the eurozone's situation.  It recently released a summary that noted it was alarmed that inflation showed a decline even without factoring in energy prices.  "The decline recorded in February was a new element."  "Eurozone growth momentum would be slower and inflation lower for longer than previously anticipated."  The bank does not expect inflation to reach 2% until after 2018. 

    The bank has already taken measures to stimulate the zone including:
    • Printing money to buy bonds issued by corporations
    • Offering to pay banks to lend money. 
    • Penalizing banks for hording cash. 
    Economists doubt the current measures are enough to counteract the global slowdown. 

    Charles Bean, of the LSE, said Britain, arguably, has already distributed helicopter money.  The Bank of England printed money to purchase government bonds, and the government in turn has made tax cuts.  





    Jul 2018 NYT Fed Plays Down Trade Woes and Suggests Rosy Economic Outlook

    Jim Tankersley reports Federal Reserve of 1913 was a response to a series of banking panics with the goal of responding effectively to stresses.  It setup:
    • At least 8 and not more than 12 private regional Federal Reserve banks.  Twelve were setup
    • Federal Reserve Board with seven members to govern the system.  The President appointed the seven, which must be confirmed by Congress.  In 1935 the Board was renamed and restructured. 
    • Federal Advisory Committee with twelve members
    • Single US currency - the Federal Reserve Note. 
    officials presented a rosy economic report card to Congress on Friday, playing down risks to growth from trade tensions and declaring that the financial system is "substantially more resilient than during the decade before the financial crisis." 

    Inflation was high enough that it is no longer seen as indicating a risk, is an assessment of the likelihood of an independent problem occurring.  It can be assigned an accurate probability since it is independent of other variables in the system.  As such it is different from uncertainty. 
    of deflation. 

    The semiannual Monetary Policy Report asserted:

    2008 Mar A fed bailout crosses a line

    NYT Gretchen Morgenson
    Potential consequences of a world in which regulators rescue even the financial institutions whose recklessness and greed helped create the titanic credit mess:
    • Weaker currency
    • Rampant inflation
    • Continuation of the slow bleed we have witnessed at banks and brokerage firms over the last year. 
    Or all of the above?  Morgenson argues we don't need to guess because it will be answered soon, since the Federal reserve by agreeing to guarantee a 28-day credit line to Bear Stearns, by way of J P Morgan Chase, conceded last Friday that no sizeable firm with a book of mortgage securities or loans out to mortgage issuers could be allowed to fail right now.  It was the most explicit sign of the new Fed doctrine which has already forced the marriage of Bank of America and Countrywide

    Morgenson argues that Bear Stearns is ill deserving of help with its winner take all high risk positions that have failed.  However, that is part of the issue - as one of the biggest players in the mortgage securities business on Wall Street, Bear provided munificent lines of credit to public-spirited subprime lenders like New Century (now bankrupt).  It is also the owner of EMC Mortgage Servicing, one of the most aggressive subprime mortgage servicers out there.  Morgenson argues that Bear has ended up in a situation like Drexel Burnham Lambert, which was left to die in the 1980s.  The reason it is being supported is the change in the environment. 

    Morgenson believes that the US has allowed its financial institutions to become so huge that nobody will be allowed to sink beneath the waves.  Otherwise a tsunami would swamp the hedge funds is an investment fund that accepts investments from a limited number of accredited individual or institutional investors.  Hedge funds are able to use investment methods that are not allowed for other types of fund. 
    , banks and other brokerage firms that remain afloat. 

    If Bear Stearns failed, for example, it would result in a wholesale dumping of mortgage securities and other assets onto a market that is frozen and where buyers are in hiding.  This fire sale would force surviving institutions to carrying the same types of securities on their books to mark down their positions, generating more margin calls and creating more failures. 

    As of last Nov 30 Bear Stearns had on its books approximately $46 billion in mortgages, mortgage-backed and asset-backed securities.  Jettisoning such a portfolio onto the mortgage market that is not operative would, it is plain to see, be a disaster. 

    However, Morgenson asks 'who knows what those mortgages are really worth?'  According to Bear Stearns's annual report $29 billion of them were valued using computer models "derived from" or "supported by" some kind of observable data.  The value of the other $17 billion is an estimate based on "internally generated models and methodologies utilizing significant inputs that are generally less readily observable". 

    For the government to print money at the expense of taxpayers as opposed to requiring or going into receivership should be troubling to tax payers and regulators.  The Fed has now crossed the line in a very clear way on 'moral hazard involves responding to a generalized problem by rewarding those who caused the problem. 
    • In health care it includes the over use of subsidized treatments and medicines.  
    • For the US economy it includes using tax revenue to underwrite the losses induced by the reckless behavior of financiers and the politicians and regulators who enabled them. 
    ' because they have opened the door to the view that they are required to save almost any institution through non-recourse loans.  Morgenson says this is hugely problematic since:
    1. The government does not have the money. 
    2. The US systems reputation as the broadest, deepest, most transparent and properly regulated capital is the sum total nonhuman assets that can be owned and exchanged on some market according to Piketty.  Capital includes: real property, financial capital and professional capital.  It is not immutable instead depending on the state of the society within which it exists.  It can be owned by governments (public capital) and private individuals (private capital). 
      market in the world is impacted. 
    Investors have been assured once again by the authorities that nothing was wrong.  Once again these have proved to be hollow claims.  Bear recently put out a press release saying "there is absolutely no truth to the rumors of liquidity problems that circulated today in the market".  The next day Christopher Cox, the chairman of the S.E.C. is the Securities and Exchange Commission.  It was provided with power to regulate the securities industry by the Securities act and Securities Exchange act.   said he was comfortable that the major Wall Street firms were resting on satisfactory capital cushions.  Three days later it was bail out time for Bear Stearns! 

    Morgenson argues that the Fed undermines confidence by underwriting Bear Stearns which she asserts was an architect of the financial crisis. 

    Morgenson wonders how many well capitalized firms remain to provide the bail outs as they occur.  Since Banks don't have the capital she assumes it will eventually come down to the US taxpayer. 

    NYT Analysis - Edmund Andrews
    Andrews argues that with its recent actions, which included assisting JP Morgan Chase in purchasing Bear Stearns in a $2 a share fire sale backed by Fed funds, the FED has put its resources and reputation on the line to rescue Wall Street's biggest institutions from their far reaching mistakes. 

    Over the next few months the Fed will lend hundreds of billions of dollars to banks and investment firms that financed the mountain of debt heading towards default.  The scope of the problem is unknown, so no one knows how much the Fed could lose if the borrowers fail to repay their loans.  The Fed's latest offer of lines of credit to investment banks has no explicit size limit. 

    So the Fed has taken on both financial and credibility risk - in the form of "moral hazard involves responding to a generalized problem by rewarding those who caused the problem. 
    • In health care it includes the over use of subsidized treatments and medicines.  
    • For the US economy it includes using tax revenue to underwrite the losses induced by the reckless behavior of financiers and the politicians and regulators who enabled them. 
    " having rescued investors from their mistakes, potentially encouraging others to be more reckless in the future.  Further in doing something unprecedented it has added strategic risk.  And then the reduction of the Fed's rates is certain to assist external inflationary pressures, by undermining the dollar.  The potential for the Fed to need to print more dollars to keep institutions from collapse will add to that risk. 

    If the Fed finds itself sustaining losses on its books it will reduce its payments to the US is the United States of America.   Treasury is the department of the treasury.  it is a federal government executive department created by Act of Congress in 1789 to manage government revenue.  The Secretary of the Treasury is a Cabinet officer.  To support funding of high cost investments: Disaster recovery, Wars, Famines; the treasury can issue debt instruments and manage the national debt. 
    at which point tax payers will have to make up the difference!


    Jun 2016 NYT Time Doesn't Heal Wounds Of Bad Loans

    Gretchen Morgenson reports the U.S. has cleared Angelo Mozilo, but borrowers still seethe.  [In june] the Justice Department told Mr. Mozillo, former [CEO] of Countrywide [] that he is no longer under investigation in connection with civil mortgage fraud.  The government's criminal inquiry into Mr. Mozillo's role in the financial crisis was dropped previously, so he is now in the clear. 

    Morgenson argues that borrowers impacted by Countrywide's reckless lending and abusive foreclosure practices are still angry with Mozillo.  She concludes he flunked as a CEO failing to keep it O.K., maintaining its financial integrity and its reputational integrity. 

    Morgenson concedes that ever since the 2007 collapse of Countrywide and its sale to Bank of America, Mozilo argued that neither he nor Countrywide did anything wrong. 

    But Morgenson recalls the:

    Jul 2018 NYT How It Got Riskier to Own High-Quality Corporate Bonds

    Carla Fried reports bonds issued by [US is the United States of America.  ] companies with strong balance sheets have been delivering the weakest returns of all major American bond categories this year, adding to the headaches of fixed-income investors. 

    Rising interest rates have pushed bond yields higher and prices more significantly lower. 

    High-quality bonds have performed particularly badly, with index funds and E.T.F. is exchange traded fund, which tracks stock and bond indexes, adhering to a set of financial rules.  These methods can be used to track any financial market segment.  They are transparent, and low cost to operate, and invest in.  But their performance is impacted when they are forced by changing conditions to sell assets at a loss (Jul 2018). 
    s of investment grade corporate bonds down significantly.  Government and junk bonds performed better.  The poor performance is due to high-quality bonds high credit & interest rate risk, is an assessment of the likelihood of an independent problem occurring.  It can be assigned an accurate probability since it is independent of other variables in the system.  As such it is different from uncertainty. 
    :
    • Many investment grade rated companies used the low interest rate environment post 2008, to borrow heavily, locking in these rates over a long period. 
    • The longer a bond's maturity the more its price will drop when interest rates rise (high duration)
    • The potential for a recession is high, given the length of the current bull market, but this is not yet reflected in bond prices. 
    • The overall quality of investment grade debt has dropped.  In 2007 27% was rated BBB or lower.  Now 50% is BBB or lower.  Companies have strategically decided to increase leverage.  This can be used in acquisitions: CVS merger with Aetna (Dec 2017), Bayer, AT&T, General Mills;
    • In a recession year 10% of BBB investment grade bonds have historically become junk, causing the funds that track those bonds, such as E.T.F.s to sell them. 






    Sep 2016 NYT This Man Oversees $5 Trillion

    Landon Thomas reports Laurence Fink, once blew $100 million.  Now, as chief of BlackRock, he has changed Wall Street's balance of power. 


    On stage at an investor conference John Cryan, CEO of Deutsche Bank, proposed to Larry Fink that "You are effectively becoming the supplier of liquidity of last resort -- beyond the central banks." 
    The assertion, suggesting BlackRock, with its $5 trillion in assets, is the new guarantor of stability because of its ability to buy and sell stocks and bonds in times of duress.  A role Investment banks performed in the past.  The investment banks argue that the financial system has become riskier because BlackRock and similar firms cannot perform this market-making function.  Fink replied that being a guarantor is not, and will not be, BlackRock's role. 


    Thomas argues that Fink has shifted BlackRock from a bond shop, serving pension funds (CalPERS) and insurance companies into an asset-gathering machine that uses advanced technology to reimagine how investors buy, sell and assess the risks of securities.  BlackRock's $1 trillion in E.T.F. is exchange traded fund, which tracks stock and bond indexes, adhering to a set of financial rules.  These methods can be used to track any financial market segment.  They are transparent, and low cost to operate, and invest in.  But their performance is impacted when they are forced by changing conditions to sell assets at a loss (Jul 2018). 
    s allow it to create liquid markets  in high-yield and corporate bonds, which undermines the business model of banks like Deutsche Bank.  Deutsche and other banks would offer investors individual stocks while BlackRock competes against these sales with its E.T.F.s. 


    Blackrock uses Aladdin to stress-test how securities will respond to certain situations: Sudden rise in interest rates, Donald Trump's election as President; promising to help firms trade, analyze and evaluate compliance of the assets they manage. 
    Thomas explains Aladdin is a network that integrates: code, trades, chat, algorithms and predictive models to highlight vulnerabilities and opportunities connected to the $15 trillion ($5 trillion of BlackRock's and $10 trillion from external customers who want information from Aladdin) in assets the firm tracks. 
    In 1994 General Electric contracted Aladdin to wind down Kidder, Peabody & Co. 
    In a period of severe regulatory scrutiny, the service has become increasingly popular.  Seventy-five firms, including Deutsche Bank's asset management unit and Freddie Mac use the service. 


    BlackRock's stock price has doubled since 2011, out-performing Goldman Sachs and J.P.Morgan Chase.  E.T.F.s and traditional index funds are now more than 30% of mutual fund assets, doubling in size over 10 years. 


    Jul 2017 Forum Sacramento Bee reporter discusses California situation: Revenue instability, CalPERs losses, Single Payer is a health care architecture in which there is a single financing organization.  A state: Vermont (Jan 2014); can use public funds for all health care financing while the delivery of care is provided by non-state organizations.  Analogously Intermountain Healthcare's SelectHealth Share requires organizations to use Intermountain for health care finance (Feb 2016). 


    Key points included:


    Nov 2017 NYT Uwe Reinhardt, 80, Dies; a Listened-to Voice on Health Care Policy

    Sam Roberts reports Uwe Reinhardt, an economist is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.   whose keen, caustic and unconventional insights cast him as what colleagues called a national conscience in policy debates about health care, died [] in Princeton, N.J. He was 80. 

    Reinhardt taught at Princeton's Woodrow Wilson School of Public and International Affairs, economics department.  He died of sepsis is an infection triggered over-reaction by the immune system which causes general inflammation resulting in a cascade of problems: Blood clots, Leaky blood vessels; impeding blood flow to vital organs which can induce septic shock: Blood pressure drops, multiple organ failure, Heart damage and death.  For every hour without antibiotics the probability of death increases 8%.  Most cases start before people are hospitalized.  People over 65, infants under 1 year, people with chronic diseases such as diabetes, or weakened immune systems and healthy people with incorrectly treated infections are most likely to contract sepsis.  Most often the infections are of: lungs, urinary tract, skin, gut or intestines.  Typically such infections were the result of a previous visit to a clinic or hospital.  Symptoms of sepsis include: chills or fever, extreme pain or discomfort, clammy or sweaty skin, confusion or disorientation, shortness of breath and high heart rate.  Dr. Diane Craig noted that sepsis had become the leading cause of death among hospitalized patients.  Using patient matching on: age, symptoms, degree of illness; from the hospital system EHR, Craig identified the blood-lactate test as the key diagnostic that supported early, aggressive treatment of sepsis.  She argued that whenever a patient had two symptoms of significant infection a lactate test be used along with EGDT treatment for patients with lactate counts as low as 2.5 millimoles/liter.  This reduced sepsis mortality to 40% below the national average.  But only half the hospitals in the US followed Craig's recommendations.  Dr. Robert Pearl concludes this is because of the high risk of killing a patient with EGDT treatment, even though the protocol will reduce overall mortality by half.  Doctors don't want to be responsible for killing patients so they opt not to order the lactate test.  In 2017 sepsis is estimated to cost the US health care system more than $20 billion a year.  The C.D.C. is concerned (Sep 2016) with antibiotic resistance generating more sepsis. 


    Reinhardt considered the German health system the best available.  He asserted it: blends private health care delivery with unversal coverage and social solidarity.  "It's inexpensive and equitable.  Coverage is portable.  You're never unisured in Germany.  No family goes broke over health care bills." 

    His work influenced aspects of the ACA is the Patient Protection and Affordable Care Act amended by the Health Care and Education Reconciliation Act of 2010 (Obama care).  In part it is designed to make the health care system costs grow slower.  It aims to do this by: increasing competition between insurers and providers, offering free preventative services to limit the development of serious illnesses, constraining patients' use of expensive services, constraining the growth of payments to Medicare providers and piloting new ways for PCPs to manage patient care to keep patients away from costly E.D.s.  It funds these changes with increased taxes on the wealthy.  It follows an architecture developed by Heritage Action's Butler, Moffit, Haislmaier extended by White House OMB health policy advisor Ezekiel Emanuel & architect Jeanne Lambrew.  The Obama administration drafting team included: Bob Kocher; allowing it to integrate ideas from: Dartmouth Institute's Elliot Fischer (ACO).  The ACA did not include a Medicare buy in (May 2016).  The law includes:
    • Alterations, in title I, to how health care is paid for and who is covered.  This has been altered to ensure
      • Americans with preexisting conditions get health insurance cover - buttressed by mandating community rating and
      • That they are constrained by the individual mandate to have insurance but the requirement was supported by subsidies for the poor (those with incomes between 100 & 400% of the federal poverty line).  
      • Children, allowed to, stay on their parents insurance until 26 years of age. 
    • Medicare solvency improvements. 
    • Medicaid expansion, in title II: to poor with incomes below 138% of the federal poverty line; an expansion which was subsequently constrained by the Supreme Court's ruling making expansion an optional state government decision. 
    • Hospital Readmissions Reduction Program (HRRP) which was enforced by CMS mandated rules finalized in 2011 and effected starting Oct 2012.  
    • Medical home models.  
    • Community transformation grants support the transformation of low income stressed neighborhoods to improve their lifestyles and health. 
    • Qualifications for ACOs.  Organizations must:
      • Establish a formal legal structure with shared governance which allows the ACO to distribute shared savings payments to participating providers and suppliers. 
      • Participate in the MSSP for three or more years. 
      • Have a management structure. 
      • Have clinical and administrative systems. 
      • Include enough PCPs to care for Medicare FFS patient population (> 5000) assigned to the ACO. 
      • Be accountable for the quality and cost of care provided to the Medicare FFS patient population. 
      • Have defined processes to promote: Evidence-based medicine, Patient-centeredness, Quality reporting, Cost management, Coordination of care; 
      • Demonstrate it meets HHS patient-centeredness criteria including use of patient and caregiver assessments and individualized care plans.  
    • CMMI Medicare payment experimentation.  
    • Requirements that pharmaceutical companies must report payments made to physicians (Sunshine Act). 
    • A requirement that chain restaurants must report calorie counts on their menus. 
    policy reforms:
    Professor Reinhardt developed Taiwan's single-payer is a health care architecture in which there is a single financing organization.  A state: Vermont (Jan 2014); can use public funds for all health care financing while the delivery of care is provided by non-state organizations.  Analogously Intermountain Healthcare's SelectHealth Share requires organizations to use Intermountain for health care finance (Feb 2016). 
    National Health Insurance program. 

    Dartmouth's Elliot Fisher called Professor Reinhardt "in so many ways the conscience of the U.S. health care system." 


    Apr 2018 NYT For Cancer Centers, Proton Therapy's Promise Is Undercut by Lagging Demand

    Jay Hancock reports Georgetown University Hospital opened a proton therapy irradiates diseased tissues, including cancers, with protons.  The particles destroy the DNA of cells they interact with stopping their reproduction.  The powerful control of the large charged particles allows acute focus and limited exit dosage.  Cyclotrons, synchrotrons and linear accelerators are used to accelerate and control the protons.  A significant drawback is the cost and size of the particle accelerator.  The therapy is viewed as useful in treating children and for tumors that are proximate to sensitive organs such as eyes.  Infrastructure competition driven over-deployment has resulted in business failures for the treatment centers (Apr 2018)
    cancer is the out-of-control growth of cells, which have stopped obeying their cooperative schematic planning and signalling infrastructure.  It results from compounded: oncogene, tumor suppressor, DNA caretaker; mutations in the DNA.  In 2010 one third of Americans are likely to die of cancer.  Cell division rates did not predict likelihood of cancer.  Viral infections are associated.  Radiation and carcinogen exposure are associated.  Lifestyle impacts the likelihood of cancer occurring: Drinking alcohol to excess, lack of exercise, Obesity, Smoking, More sun than your evolved melanin protection level; all significantly increase the risk of cancer occurring (Jul 2016).   unit that is expected to treat about 300 patients a year at premium prices using what its proponents promote as the most advanced radiology for attacking certain tumors. 

    The first proton beam unit was setup at Massachusetts General in 2001.  After a 2013 Yale study found little benefit from use of proton beam treatment for prostate cancer is cancer of the prostate gland.  Genomics detected several common DNA variants associated with increased risk of prostate cancer.  Dr. Francis Collins explains that a cluster of these risk variants lies in a stretch of 1 million DNA base pairs on chromosome 8.  The cluster contains seven or more risk variants, each of which can raise the risk of prostate cancer by 10 to 30%.  The high risk variants occur more frequently in African-American men than European or Asians.  African-Americans die from prostate cancer at more than twice the rate of Europeans.  Research in mice may explain a link between obesity and prostate cancer (Jan 2018).  The average diagnosis is at age 66.  Worldwide in 2012 there were 1.1 million cases from which 307,000 died.  A common life-saving (Feb 2017) treatment is androgen deprivation therapy, but it has worrying side effects.  Various classically defined types of cancer can occur.  The most common is adenocarcinoma associated with the epithelial gland cells that generate seminal fluid.  Epithelial cell differentiation potency makes these significant cancer agents.  Other very rare types of cancer that can start in the prostate are:
    • Sarcomas
    • Small cell carcinomas
    • Neuroendocrine tumors
    • Transitional cell carcinomas
    , insurers reduced coverage.  Doctors consequently hesitate to prescribe it and commercial insurers often do not cover the procedure.  Medicare is a social insurance program that guarantees access to health insurance for Americans aged 65 and over, and younger people with disabilities and end stage renal disease or ALS.  Medicare includes:
    • Benefits
      • Part A: Hospital inpatient insurance.  As of Dec 2013 Medicare pays for home care in only limited circumstances, such as when a person needs temporary nursing care after a hospitalization.  Part A covers 20 days of inpatient rehabilitation at a SNF after discharge from inpatient care at a hosptial. 
      • Part B: Medical insurance
      • Part C: Medicare Advantage 
      • Part D: Prescription drug coverage The MMA prohibits Medicare from directly negotiating drug prices. 
    • Eligibility
      • All persons 65 years of age or older who are legal residents for at least 5 years.  If they or a spouse have paid Medicare taxes for 10 years the Medicare part A payments are waived. 
      • Persons under 65 with disabilities who receive SSDI. 
      • Persons with specific medical conditions:
        • Have end stage renal disease or need a kidney transplant. 
        • They have ALS. 
      • Some beneficiaries are dual eligible. 
      • Part A requires the person has been admitted as an inpatient at a hospital.  This is constrained by a rule that they stay for three days after admission.  
    • Premiums
      • Part A premium
      • Part B insurance premium
      • Part C & D premiums are set by the commercial insurer.  
    does cover proton therapy. 

    But Hancock notes vast sums are still being invested by hospitals and investors in proton beam therapy with little clinical justification for the cost. 

    A third of the 27 existing centers: are losing money: Hampton University Proton Therapy Institute in Virginia, Provision CARES Proton Therapy Center in Knoxville, Tennessee; have defaulted on debt: ProCure; or have had to financially restructure: Maryland Proton treatment center, Scripps California Protons, Seattle Cancer Care Alliance(Fred Hutchinson, Seattle Children's, University of Washington).  Others have closed: Indiana University in 2014.  But more than 20 additional facilities are planned. 

    The industry is attempting to:
    • Reduce the scope and cost of the investments: Georgetown's proton center only has one treatment room & cost 'only' $40 million.  
    • Share: New York's hospitals are partnering to help with patient capture: Memorial Sloan-Kettering, Mount Sinai Health, Montefiore Health; will all use the same large center in East Harlem.  
    • Marketing their way through the crisis. 
    Affected states are trying to legislate in the treatment's use: Virginia, Oklahoma; 







    Oct 2017 Intelligence Squared debate - Is the U.S. Healthcare System Terminally Broken?


    Debators:
    First round summary arguments:
    1. Brownlee:
    2. Emanuel:
    3. Pearl:
    4. Feinberg:
    Second round cross-questioning:
    1. Brownlee:
      • Points of light have always been pushed back by the legacy agents.  Why will it be different this time?
    2. Audience - Is it just the health care system or are there other aspects of this problem?
      • Feinberg:
        • When a community says to get healthy, health care will transform. 
      • Emanuel:
        • Health care costs are taking budget away from state education.  Health costs must be got under control. 
      • Brownlee
        • Health care is taking away money for roads and education. 
        • What is the mechanism for the transfer of money to back to communities?  It won't be venture capital, since they will keep the money they capture back from $1 trillion in waste. 
    3. Audience - How is money flowing back from the profitable private integrated health care companies to their communities?  
      • Feinberg:
        • We are giving food, housing, health literacy;
      • Brownlee:
        • Hospital giving back is a bandaid.  Health care is robing our federal, state & local social services so you can't leave the money in the health care system
      • Feinberg:
        • Kaiser spent 3% of revenue on giving back to communities: Walkways, affordable housing, farmers markets; social determinants. 
      • Pearl:
        • Its legally required too. 
        • Major intervention is needed to drive the system in the right direction.  Show me a hospital thats not expanding & buying high cost technology.  The money is going to silicon valley. 
      • Feinberg:
      • Emanuel:
        • Hospital beds are going down in the US.  Peak of hospitalizations was in 1981 (170 hospitalizations per 1000 -> 109 now).  Getting people out of the hospitals, closing beds
    4. Audience - Isolated solutions to heal health care, but will the overall fix happen soon enough?
    5. Audience - In regard to MACRA is Medicare Access and CHIP Reauthorization Act of 2015 is designed to encourage physicians to move to FFV and to link Medicare payment to quality & value.  It alters the way Medicare pays for part B physician services encouraging physicians and other ECs to conform to one of two value based payment schemes: Advanced APMs (where the EC can become a QP) or MIPS.  MACRA does not apply to hospitals which have their own meaningful use.  MACRA is designed to promote transformation and includes: Data reporting by ECs, New practice models, Changing clinical standards, and Physician evaluations; with hundreds of millions of dollars in penalties and bonuses.  It authorizes CMS to develop and deploy new rules.  It provides for PCPs in PCMHs to qualify as advanced APMs via a special lower risk pathway.  It replaced the problematic physician SGR formula. 
      and other quality metrics, Dr. Pearl said quality will not reduce overall costs.  Why are we spending so much resource to measure it? 
      • Pearl:
        • MACRA is so complex.  People don't understand it.  They do it to reach the metrics they are measured on.  Achieving quality saves lives not costs. 
      • Brownlee:
        • Another problem with the quality metrics is that they are just what we have, not what would matter to patients health.  Todays metrics drive physicians to be counter productive. 
      • Emanuel:
        • We are moving from checklists and process to outcomes.  It is happening (disagreeing with Brownlee).  
    6. Audience - If all the providers become good risk bearing entities and become good at managing risk will it solve the issues with health care?

    Closing statements
    1. Brownlee:
    2. Emanuel:
    3. Pearl:
    4. Feinberg:
      • 25 years ago as a second year fellow in psychiatry, Feinberg learned an important lesson - you have to connect to the patient, giving them information they can understand.  Must make sure they get compassionate care. 
      • A second situation, where a young patient was indicating they were considering suicide and was offered an appointment three weeks later because of special access! This told Feinberg that immediate access is also essential. 
      • Geisinger is people caring for people. Feinberg is 'all in' and would like everyone to come along with him. 

    Emanuel & Feinberg won the debate vote. 



    Sep 2016 NYT Deutsche Bank Denies It Sought Germany's Help in Dispute With U.S.

    Landon Thomas Jr. and Chad Bray report there are sickly European banks and then there is Deutsche Bank
    The US Justice Department is seeking $14 billion in penalties for Deutsche Bank's underwriting of sub-prime mortgages.   This is equal to the current market capitalization of Deutsche Bank.  But John Cryan denied he had asked Chancellor Angela Merkel for assistance arguing Deutsche Bank will meet the challenges on its own.  It is likely the amount the JD is asking for will reduce.  But investors are concerned they will be asked for more cash. 


    Deutsche Bank is Germany's largest financial institution, a crucial lender to the nation's export system. 
    2016 CEO Cryan is arguing that he is shifting to businesses like asset management, but currently its revenues come from trading bonds and derivatives, which are in decline on Wall Street and most of its competitors have already made these moves. 

    It took a huge loss in 2015 year, $5.8 billion on legal costs. 

    Hedge funds is an investment fund that accepts investments from a limited number of accredited individual or institutional investors.  Hedge funds are able to use investment methods that are not allowed for other types of fund. 
    are attacking Deutsche Bank. 
    Investors are rejecting banking models that depend on volatile market activities: Deutsche Bank; preferring banks that are collecting deposits and managing investor accounts: Barclays, J.P. Morgan Chase
    The Fed gave a failing grade on its stress tests to Deutsche Bank's US subsidiary.  Some Fed governors are pushing for a further increase in the stress capital buffer that large banks must now carry. 

    Europe's banking sector is seen as relatively unhealthy (Oct 2016).  While the Single Supervisory Mechanism (S.S.M.) places banking oversight under the ECB is the European Central Bank.  It administers monetary policy for the euro area and supervises the euro area banks.  Its chartered goal is to maintain price stability in the euro area.  , the rules require that bond Investors share in the losses.  But investors are waiting for the S.S.M. to be used on Italian loans or Deutsche Bank: 
    • Italian banks have huge nonperforming loans.  Most investors doubt there is enough cash to deal with the failing assets. 
    • Deutsche Bank has 1.9 trillion euros in assets including a huge derivative pool but its deposit base is only 447 billion euros.  So it must use short-term loans to fund the riskier trading businesses.  That was the power of and problem for Bear Stearns and Lehman Brothers. 



    Sep 2016 NYT Deutsche Bank Has Become the Darling of Short-Sellers

    Landon Thomas reports in a market full of crowded trades, few have become as fashionable as the bet that Deutsche Bank's stock price will keep falling. 
    Pressure is intense:
    Deutsche bank sold Abbey Life, and its part of a large Chinese bank, in September for $1 billion suggesting asset sales may help its finances.  It has already set aside 5.5 billion euros for settlements. 


    Oct 2016 NYT Markets Skittish Over Deutsche's Exposure

    James B. Stewart reports all it took was the threat of a $14 billion fine against Deutsche Bank (Sep 2016) for the word "contagion" to rear its ugly head. 

    Investors worries include: High borrowing Deutsche Bank uses to support its asset base, Difficulty in valuing many of the assets, High risk strategies of its clients;

    Harvard professor Hal Scott disagrees with the high level of worry. 


    He argues "The bottom line is, I think the Deutsche Bank issues will be resolved and there won't be any contagion episode.  But it's a wake-up call.  Are we prepaired if this ever happens again?  The answer is 'no.'" 

    Scott sees contagion as "an indiscriminate run by short-term creditors of financial institutions that can render otherwise solvent institutions insolvent because of the fire sale of assets that are necessary to fund withdrawals and the resulting decline in asset prices triggered by such sales."  Scott agrees that contagion is "the most virulent and systemic risk still facing the financial system today." 

    Scott sees the situation as similar to Arthur Andersen.  "Does the Justice Department - U.S. Department of Justice. 
    understand the risk of contagion? It reminds me of Arthur Andersen.  No one thought an enforcement action would force it into bankruptcy is a legal status for an entity that cannot repay its creditor's loans.  It holds creditor lawsuits in abeyance while the restructuring process proceeds to allow the entity to continue operations.  It also has legal tools for forcing holdout creditors to accept repayments that are lower than the bond sale initially promised. 
    .  I hope there's a global game plan, because that's what it would take.  If Deutsche Bank set off contagion, it would start in Europe.  Who would be next?  This would require global coordination." 


    Deutsche Bank shares dropped 8% when the $14 billion threat was discovered.  Other European banks with even more fragile balance sheets that include sovereign debt from Europe's weakest economies is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.  , dropped much further.  Investors were concerned that:
    Stewart argues that $4 billion would be a likely settlement given other banks fines, although he does not know the details of Deutsche Banks activities. 

    Should contagion spread to American nonbank institutions, the government has even fewer tools to cope than it did for Lehman Brothers due to Congress placing limits on further bailouts. 


    In his book "Connectedness and Contagion" Professor Scott argues Congress needs to give the Fed the ability to extend deposit guarantees to non banks. 




    Dec 2016 NYT Rush for Deals May Let Banks Save Billions

    Landon Thomas Jr. & Jack Ewing report European banks have rushed to cut deals with prosecutors over longstanding claims that they pushed toxic mortgage securities in the years before the financial crisis. 

    Deutsche Bank and Credit Suisse reported they would pay $13 billion to settle with the US is the United States of America.   DOJ - U.S. Department of Justice. 
    .  The US appears to be discounting the amounts as it tries to complete the agreements before the Trump administration takes over in January 2017. 

    The $7.2 billion Deutsche Bank settlement was good news for the bank's investors who were expecting a larger penalty (Oct 2016).  But the terms are seen as reducing Deutsche Bank's competitiveness relative to Goldman Sachs and J.P. Morgan Chase


    John Cryan is trying to remove the impact of alleged wrong doing by Deutsche Bank: Benchmark Interest rate manipulation, Russian money laundering; and to keep Deutsche Bank a global player. 
    Cryan is also attempting to:
    Deutsche bank's strengths include:
    • Top currency trader with operations in Frankfurt and London.  This may benefit from international company's responding to Brexit constraints.  
    • Ability, as a leading issuer of corporate debt, to leverage growth in the European corporate bond market, as European companies increasingly shift from financing with bank loans to debt markets.  
    • Clients who are wary of US investment banking dominance. 


    Credit Suisse said it would settle for $5.3 billion.  It has also slashed its investment banking organization. 

    Barclays announced they would fight the DOJ in court.  The government argues Barclays sold more than $31 billion in mortgage securities that became 'catastrophic failures.'  They will leverage the legal team from Williams & Connolly that successfully argued to a federal appeals court to overturn a $1.27 billion penalty against Bank of America in May 2016

    UBS and Royal Bank of Scotland are still in talks with the DOJ. 


    Jul 2008 Merrill Lynch struggling to turn around

    The decline of Merrill has been faster and further than any predicted.  Its consecutive fourth quarterly loss of $4.9 billion exceeded the most pessimistic forecasts.  That's a total loss of $19.2 billion over 12 months.  CEO Thain said the credit market was likely to remain a problem for at least a year.  While Thain had moved to increase the capital is the sum total nonhuman assets that can be owned and exchanged on some market according to Piketty.  Capital includes: real property, financial capital and professional capital.  It is not immutable instead depending on the state of the society within which it exists.  It can be owned by governments (public capital) and private individuals (private capital). 
    base of Merrill the continuing losses have undermined the position once again.  And now it will be harder to do more since Thain protected the new investors from any stock dilution.  Hence Merrill is looking to sell assets such as Bloomberg and BlackRock

    Ten days later Merrill stunned Wall Street with the announcement of a further multi-billion dollar write-down (11.1 billion -> $6.7 billion).  It again sold new stock, both to the public and a private investment company in Singapore. 

    The write-down sale of mortgage debt was to Lone Star Funds (which specializes in such distressed assets) which purchased the debt at 22c on the Dollar and required Merrill to provide a $5 billion loan to finance 75% of the purchase.  Merrill has moved the Mortgage debt from its books, but hence still covers the debt up to $5 billion!

    The action should call into question valuations at other holders of sub-prime mortgage debt. 


    May 2016 Bank of America wins appeal against DOJ

    A federal appeal court rejected the DOJ $1.27 billion penalty against Bank of America

    The penalty was instigated for the sale of troubled mortgages to Fanny Mae is the coloquial name for the FNMA which is:
    • The federal national mortgage association, a GSE.  It was made a publically traded company by the HUD act of 1968 to remove its debt from the federal budget.  
    • In 1970 FNMA was authorized to purchase conventional mortgages.  FHLMC was setup to ensure competition for FNMA in this task. 
    • In 1981 FNMA issued its first designated MBS. 
    • In 1992 the Democratic Congress and President Bush established HCDA which gave FNMA affordable housing goals set annually by HUD with Congressional approval.  
    • In 1999 the Clinton administration put pressure on FNMA to expand loans to low and moderate income borrowers.  FNMA took on additional subprime risk. 
    • In 2000 HUD placed anti-predatory lending rules on the affordable housing goals, but these constraints were dropped in 2004.  In effect they just pushed mortgage originators to Wall Street finance. 
    • Once mortgage originators started to use warehouse loans, the GSEs lost visibility and control of origination.  
    • The GSEs purchased AAA mortgages from commercial banks.  Many of these classifications were fraudulent leaving the GSEs with bad debt.  In 2008 to maintain the stability of the global economy the George W. Bush administration seized the GSEs and placed them in conservatorship under the FHFA, ensuring they could not collapse.  
    • In 2010 FNMA's stock was delisted from the NYSE.  They still trade over-the-counter. 
    and Freddie Mac is the Federal home loan mortgage corporation (FHLMC), a GSE.  .  The appeals courts found that prosecutors did not provide sufficient evidence that:
    • Banks Countrywide unit
    • Former Countrywide executives; had committed fraud in a loan program known as "the hustle." 

    The case was argued by a team from Williams & Connolly


    Sep 2008 Merrill Lynch is sold

    Merrill Lynch agreed to sell itself to Bank of America for $50 billion to avert collapse. 



    Feb 2009 700 at Merrill given million dollar bonus as company lost 27 billion

    NYT
    Andrew Cuomo disclosed that Merrill Lynch both
    • Brought forward its annual bonus into December 2008, just before it was to be purchased by Bank of America
    • Distributed it to a group of about 700 staff, out of 39,000.  Each of the 700 got at least $one million. 
    The House financial services committee questioned bankers on the financial collapse.  Barney Frank commented 'there is in the country a great deal of anger is an emotion which protects a person who has been cheated by a supposed friend.  When the exploitation of the altruism is discovered, Steven Pinker explains, the result is a drive for moralistic aggression to hurt the cheater. 
    about the financial institutions, including those represented here,' but Franks went on to say it would be impractical to scrap the entire financial system and start anew.  'We have no option if we are to get credit flowing in this country other than to work with the existing institutions.' 

    Thain was later ordered to give more details to Attorney General Cuomo.  Thain has argued that he is bound by Bank of America to keep the information on Bonuses confidential.  Bank of America argues that the information is both critical for the competitive position of the company and private to the individuals!  The attorney general's inquiry has focused on $36 billion in bonuses that Merrill paid that the end of 2008, even as Merrill was struggling to survive and agreed to be taken over.  Since neither Merrill nor Bank of America disclosed Merrill's financial problems before the merger closed Cuomo is expected to broaden his enquiries. 

    Typically Bonus payments do not occur until the Bank's books have been closed for the year.  At Merrill that would have been on Dec 21st, but it paid the bonuses on the 8th.  Thain said that at the time Merrill and Bank of America were using an estimated pre-tax loss that was less than actually occurred.  When asked if the worsened results would have altered the bonus payments Thain avoided the question.  Thain argued that the financial loss was unrelated to the performance and retention goals that drove the bonuses. 





    Aug 2013 NYT Behavioral Hazard




    NYT Aug 11 2013 Sendhil Mullainathan's economic view on Behavioral hazard is Sendhil Mullainathan, Katherine Baicker and Josh Schwartzstein's name for patients underuse of highly effective drugs so they can avoid constraining copayments.   and copayments is a fixed payment for a covered service after any deductible has been met.  It is a key strategy of the ACA to make subscribers aware of the costs of treatment and to put pressure on high cost health services.  As such suppliers and providers are keen to undermine the copayment: value based health insurance, Paying the copayment (Oct 2015), Place on the USPSTF list of preventative services (Sep 2016);
    :

    Brigham & Women's Hospital and Harvard Medical School's Niteesh Choudry studied 6000 patients who had suffered a heart attack is an AMI. It can induce cardiac arrest.  Blocking the formation of clots with platelet aggregation inhibitors, can help with treating and avoiding AMI.  Risk factors include: taking NSAID pain killers (May 2017).  There is uncertainty about why AMI occur.  Alternative hypotheses include:
    • Plaques started to gather in the coronary arteries and grew until no blood flow was possible.  If this is true it makes sense to preventatively treat the buildup with angioplasty. 
    • Plaques form anywhere in the body due to atherosclerosis and then break up and get lodged in the coronary artery and start to clot.  If this is true it makes sense to preventatively limit the buildup of plaques with drugs like statins or PCSK9 inhibitors. 
    and were to be prescribed drugs known to reduce the chance of another -- statins, beta-blockers, angiotensin-converting-enzyme inhibitors or angiotensin-receptor blockers. 

    Half had their copays for these drugs waived; the other half paid the usual fee.  As expected, more people in the zero copay group took the drugs, and their health improved.  Those in the zero copay group were 31% less likely to have a stroke is when brain cells are deprived of oxygen and begin to die.  750,000 patients a year suffer strokes in the US.  85% of those strokes are caused by clots.  There are two structural types: Ischemic and hemorrhagic.  Thrombectomy has been found to be a highly effective treatment for some stroke situations (Jan 2018). 
    , 11% less likely to have another major "vascular episode" and 16% less likely to have a myocardial infarction or unstable angina.  
    None of the benefits came at a cost.  The insurers did not spend more in total.  By some measures they spent less.  

    The New England Healthcare Institute estimates that $290 billion could be saved each year if patients did not execute behavioral hazard. 

    Since moral hazard involves responding to a generalized problem by rewarding those who caused the problem. 
    • In health care it includes the over use of subsidized treatments and medicines.  
    • For the US economy it includes using tax revenue to underwrite the losses induced by the reckless behavior of financiers and the politicians and regulators who enabled them. 
    is reduced by constraining copayments Choudry argues a targeted approach should be taken to reducing behavioral hazard.  Take drugs that are shown to be of very high benefit to some people, and make those drugs free for them. 
    Additionally: 

    NYT Sep 2013 Percentage of doctors accepting new Medicare patients is rising

    HHS is the U.S. Department of Health and Human Services.   analysts reviewing seven years of federal survey data found the percentage of doctors accepting new Medicare is a social insurance program that guarantees access to health insurance for Americans aged 65 and over, and younger people with disabilities and end stage renal disease or ALS.  Medicare includes:
    • Benefits
      • Part A: Hospital inpatient insurance.  As of Dec 2013 Medicare pays for home care in only limited circumstances, such as when a person needs temporary nursing care after a hospitalization.  Part A covers 20 days of inpatient rehabilitation at a SNF after discharge from inpatient care at a hosptial. 
      • Part B: Medical insurance
      • Part C: Medicare Advantage 
      • Part D: Prescription drug coverage The MMA prohibits Medicare from directly negotiating drug prices. 
    • Eligibility
      • All persons 65 years of age or older who are legal residents for at least 5 years.  If they or a spouse have paid Medicare taxes for 10 years the Medicare part A payments are waived. 
      • Persons under 65 with disabilities who receive SSDI. 
      • Persons with specific medical conditions:
        • Have end stage renal disease or need a kidney transplant. 
        • They have ALS. 
      • Some beneficiaries are dual eligible. 
      • Part A requires the person has been admitted as an inpatient at a hospital.  This is constrained by a rule that they stay for three days after admission.  
    • Premiums
      • Part A premium
      • Part B insurance premium
      • Part C & D premiums are set by the commercial insurer.  
    patients rose to 90.7 percent in 2012 from 87.9 percent in 2005.  The percentage of doctors accepting new Medicare patients in recent years was also slightly higher than the percentage accepting new privately insured patients. 
    Medicare patients had comparable or better access to medical services than the access reported by privately insured individuals aged 50 to 64. 
    Around 9,500 doctors opt out of Medicare compared with 735,000 who participate. 



    Dec 2013 NYT Growth in U.S. Health Care Spending Slows

    Nationally, spending on health care is growing at the slowest rate ever recorded.  Annual spending on health care was growing at greater than 10% during the 70s and 80s.  It started falling in the early 2000 and is now under 4 percent. 

    More people now have high deductables (greater than $1000) that limit the amount that they use health care services.  And because of the recession businesses did not respond to health care pressure by raising wages.  This means that most individuals feel that health care costs are growing significantly. 

    Jul 29, 2015 NYT Health Spending Is Expected to Rise as Slowdown Ends

    Federal actuaries project the US spending on health care will rise to 5.8% per year through 2024 vs current 4%.  The large increase in the number of people now using the health system due to the ACA is the Patient Protection and Affordable Care Act amended by the Health Care and Education Reconciliation Act of 2010 (Obama care).  In part it is designed to make the health care system costs grow slower.  It aims to do this by: increasing competition between insurers and providers, offering free preventative services to limit the development of serious illnesses, constraining patients' use of expensive services, constraining the growth of payments to Medicare providers and piloting new ways for PCPs to manage patient care to keep patients away from costly E.D.s.  It funds these changes with increased taxes on the wealthy.  It follows an architecture developed by Heritage Action's Butler, Moffit, Haislmaier extended by White House OMB health policy advisor Ezekiel Emanuel & architect Jeanne Lambrew.  The Obama administration drafting team included: Bob Kocher; allowing it to integrate ideas from: Dartmouth Institute's Elliot Fischer (ACO).  The ACA did not include a Medicare buy in (May 2016).  The law includes:
    • Alterations, in title I, to how health care is paid for and who is covered.  This has been altered to ensure
      • Americans with preexisting conditions get health insurance cover - buttressed by mandating community rating and
      • That they are constrained by the individual mandate to have insurance but the requirement was supported by subsidies for the poor (those with incomes between 100 & 400% of the federal poverty line).  
      • Children, allowed to, stay on their parents insurance until 26 years of age. 
    • Medicare solvency improvements. 
    • Medicaid expansion, in title II: to poor with incomes below 138% of the federal poverty line; an expansion which was subsequently constrained by the Supreme Court's ruling making expansion an optional state government decision. 
    • Hospital Readmissions Reduction Program (HRRP) which was enforced by CMS mandated rules finalized in 2011 and effected starting Oct 2012.  
    • Medical home models.  
    • Community transformation grants support the transformation of low income stressed neighborhoods to improve their lifestyles and health. 
    • Qualifications for ACOs.  Organizations must:
      • Establish a formal legal structure with shared governance which allows the ACO to distribute shared savings payments to participating providers and suppliers. 
      • Participate in the MSSP for three or more years. 
      • Have a management structure. 
      • Have clinical and administrative systems. 
      • Include enough PCPs to care for Medicare FFS patient population (> 5000) assigned to the ACO. 
      • Be accountable for the quality and cost of care provided to the Medicare FFS patient population. 
      • Have defined processes to promote: Evidence-based medicine, Patient-centeredness, Quality reporting, Cost management, Coordination of care; 
      • Demonstrate it meets HHS patient-centeredness criteria including use of patient and caregiver assessments and individualized care plans.  
    • CMMI Medicare payment experimentation.  
    • Requirements that pharmaceutical companies must report payments made to physicians (Sunshine Act). 
    • A requirement that chain restaurants must report calorie counts on their menus. 
    is a major cause of the increased projection. Spending on prescription drugs also jumped due mainly to the introduction of very effective and expensive treatments, such as Sovaldi (sofosbuvir) is Gilead Sciences hepatitis-C drug.  It is the first effective cure with acceptable side effects.  Sofosbuvir was originally developed by Pharmasset which sold the rights to Gilead for $11 billion.  In 2014 Sovaldi costs $84,000 for a typical course of treatment. 
    , for hepatitis-C is a virus which destroys the liver during infection.  In 2016 it affects 185 million people worldwide.  Once the virus genome was sequenced in 1989 Dr. Bartenschlager and Dr. Rice worked to replicate the virus in the laboratory.  Rice realized the genome sequence was missing details that stopped the lab replication.  Bartenschlager was then successful at replicating the virus in cells in his laboratory.  The replication technique allowed Pharmasset's Dr. Sofia to develop a new hepatitis C drug, by enhancing an RNA-polymerase inhibitor with a coat that allowed the drug to enter the liver, where the coat was destroyed and the polymerase inhibitor was activated.  With high concentrations of the drug, sofosbuvir, in the liver it could eradicate the hepatitis C virus.   Sovaldi was the first sofosbuvir approved by the F.D.A. 


    The actuaries argue that the economic is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.   slowdown after 2008 caused the drop in health care spending and as the economy speeds up again it will increase.  However they do not expect spending to reach the 9% per year high levels that occurred before the recession. 

    Charles Roehrig of Altarum Institute which studies health spending argued that the actuaries had over-estimated the trajectory since he feels the trajectory prior to the recession already had steadily declining excess growth. 


    Mar 2016 NYT Rents and Medical Costs Drive Inflation Up

    Reuters reported that underlying inflation in the [US is the United States of America.  ] increased more than expected in February as rents and medical costs maintained their upward trend.  This and other factors kept the FED from raising short term interest rates. 

    Medical care costs rose 0.5% after advancing by the same margin in January.  Prescription drug prices rose 0.9%, while the cost of hospital services increased 0.5%. 


    Mar 2016 NYT Newest Policyholders Under Health Law Are Sicker and Costlier to Insurers

    Robert Pear reports people newly insured under the [ACA is the Patient Protection and Affordable Care Act amended by the Health Care and Education Reconciliation Act of 2010 (Obama care).  In part it is designed to make the health care system costs grow slower.  It aims to do this by: increasing competition between insurers and providers, offering free preventative services to limit the development of serious illnesses, constraining patients' use of expensive services, constraining the growth of payments to Medicare providers and piloting new ways for PCPs to manage patient care to keep patients away from costly E.D.s.  It funds these changes with increased taxes on the wealthy.  It follows an architecture developed by Heritage Action's Butler, Moffit, Haislmaier extended by White House OMB health policy advisor Ezekiel Emanuel & architect Jeanne Lambrew.  The Obama administration drafting team included: Bob Kocher; allowing it to integrate ideas from: Dartmouth Institute's Elliot Fischer (ACO).  The ACA did not include a Medicare buy in (May 2016).  The law includes:
    • Alterations, in title I, to how health care is paid for and who is covered.  This has been altered to ensure
      • Americans with preexisting conditions get health insurance cover - buttressed by mandating community rating and
      • That they are constrained by the individual mandate to have insurance but the requirement was supported by subsidies for the poor (those with incomes between 100 & 400% of the federal poverty line).  
      • Children, allowed to, stay on their parents insurance until 26 years of age. 
    • Medicare solvency improvements. 
    • Medicaid expansion, in title II: to poor with incomes below 138% of the federal poverty line; an expansion which was subsequently constrained by the Supreme Court's ruling making expansion an optional state government decision. 
    • Hospital Readmissions Reduction Program (HRRP) which was enforced by CMS mandated rules finalized in 2011 and effected starting Oct 2012.  
    • Medical home models.  
    • Community transformation grants support the transformation of low income stressed neighborhoods to improve their lifestyles and health. 
    • Qualifications for ACOs.  Organizations must:
      • Establish a formal legal structure with shared governance which allows the ACO to distribute shared savings payments to participating providers and suppliers. 
      • Participate in the MSSP for three or more years. 
      • Have a management structure. 
      • Have clinical and administrative systems. 
      • Include enough PCPs to care for Medicare FFS patient population (> 5000) assigned to the ACO. 
      • Be accountable for the quality and cost of care provided to the Medicare FFS patient population. 
      • Have defined processes to promote: Evidence-based medicine, Patient-centeredness, Quality reporting, Cost management, Coordination of care; 
      • Demonstrate it meets HHS patient-centeredness criteria including use of patient and caregiver assessments and individualized care plans.  
    • CMMI Medicare payment experimentation.  
    • Requirements that pharmaceutical companies must report payments made to physicians (Sunshine Act). 
    • A requirement that chain restaurants must report calorie counts on their menus. 
    ] were sicker, used more medical care and had higher medical costs than those who already had coverage, the Blue Cross and Blue Shield Association said in a new study of its policyholders. 

    The study examined the use of medical services by 4.7 million people who enrolled in its plans before and after major provisions of the ACA took effect in 2014. 

    People in individual plans in 2014 and 2015 had higher rates of: hypertension is high blood pressure.  It is directly associated with death rate due to pressure induced damage to the left ventricle and in general to cardiovascular diseases.  Treated with antihypertensives: Diuretics, Calcium channel blockers, Angiotensin receptor blockers or Beta blockers.  , diabetes is the leading cause of blindness, limb amputations and kidney failure.  Insulin and glucose levels are regulated by the pancreas, liver, muscle, brain and fat.  Diabetes occurs when the insulin level is insufficient to regulate the glucose in the system.  Increased fat levels in obesity demand more insulin overloading the pancreas.  Persistent high glucose levels are also toxic to the pancreas beta cells.  High glucocorticoid levels have been associated with type 2 diabetes.  There are genetic risk factors since siblings of someone with the disease have three times the baseline risk (about 50% of the risk of getting type 2 diabetes is genetic).  The inheritance is polygenic.  More than 20 genes have been identified as risk factors, but that is too few to account for the 50% weighting so many more will be identified.  Of those identified so far many are associated with the beta cells.  The one with the strongest relative risk is TCF7L2.  The disease can be effectively controlled through a diligent application of treatments and regular checkups.  Doctors are monitored for how under control their patients' diabetes is (Sep 2015).  Treatments include:
    • Metformin - does not change the course of pre-diabetes - if you stop taking it, it is as if it hasn't been taken. 
    • Diet
    • Exercise
    (*2), depression is a debilitating state which is facilitated by genetic predisposition - for example genes coding for relatively low serotonin levels; and an accumulation of traumatic events.  There is evidence of shifts in the sleep/wake cycle in affected individuals (Dec 2015).  The affected person will experience a pathological sense of loss of control, prolonged sadness, irritability, sleep disturbances, loss of appetite, and inability to experience pleasure.  Michael Pollan concludes depression is fear of the past.  It affects 12% of men and 20% of women.  It appears to be associated with androgen deprivation therapy treatment for prostate cancer (Apr 2016).  Chronic stress depletes the nucleus accumbens of dopamine, biasing humans towards depression.  Depression easily leads to following unhealthy pathways: drinking, overeating; which increase the risk of heart disease.   It has been associated with an aging related B12 deficiency (Sep 2016).  During depression, stress mediates inhibition of dopamine signalling.  There is an association between depression and particular brain regions: Hippocampal dendrite and spine number reductions, Dorsal raphe nucleus linked to loneliness, Abnormalities of the ACC.  Childhood adversity can increase depression risk by linking recollections of uncontrollable situations to overgeneralizations that life will always be terrible and uncontrollable.  Treatments include: CBT, UMHS depression management.  As of 2010 drug treatments take weeks to facilitate a response & many patients do not respond to the first drug applied, often prolonging the agony.   Genomic predictions of which treatment will be effective have not been possible because: Not all clinical depressions are the same, a standard definition of drug response is difficult;, coronary artery disease, HIV is human immunodeficiency virus, an RNA retrovirus which causes AIDS.  It infects T-lymphocytes destroying the host's immune system. 
    (*3) and hepatitis C is a virus which destroys the liver during infection.  In 2016 it affects 185 million people worldwide.  Once the virus genome was sequenced in 1989 Dr. Bartenschlager and Dr. Rice worked to replicate the virus in the laboratory.  Rice realized the genome sequence was missing details that stopped the lab replication.  Bartenschlager was then successful at replicating the virus in cells in his laboratory.  The replication technique allowed Pharmasset's Dr. Sofia to develop a new hepatitis C drug, by enhancing an RNA-polymerase inhibitor with a coat that allowed the drug to enter the liver, where the coat was destroyed and the polymerase inhibitor was activated.  With high concentrations of the drug, sofosbuvir, in the liver it could eradicate the hepatitis C virus.   Sovaldi was the first sofosbuvir approved by the F.D.A. 
    (*2) than people who were already covered. 

    Hospital admission rates were 84% higher. 

    May 2016 NYT OP-ED How to Contain Health Care Costs

    In their article UC Berkeley professor of health economics is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.   and public policy Richard Scheffler and New York University Robert Wagner Graduate School of Public Service Dean and professor Sherry Glied argue the architects of the [ACA is the Patient Protection and Affordable Care Act amended by the Health Care and Education Reconciliation Act of 2010 (Obama care).  In part it is designed to make the health care system costs grow slower.  It aims to do this by: increasing competition between insurers and providers, offering free preventative services to limit the development of serious illnesses, constraining patients' use of expensive services, constraining the growth of payments to Medicare providers and piloting new ways for PCPs to manage patient care to keep patients away from costly E.D.s.  It funds these changes with increased taxes on the wealthy.  It follows an architecture developed by Heritage Action's Butler, Moffit, Haislmaier extended by White House OMB health policy advisor Ezekiel Emanuel & architect Jeanne Lambrew.  The Obama administration drafting team included: Bob Kocher; allowing it to integrate ideas from: Dartmouth Institute's Elliot Fischer (ACO).  The ACA did not include a Medicare buy in (May 2016).  The law includes:
    • Alterations, in title I, to how health care is paid for and who is covered.  This has been altered to ensure
      • Americans with preexisting conditions get health insurance cover - buttressed by mandating community rating and
      • That they are constrained by the individual mandate to have insurance but the requirement was supported by subsidies for the poor (those with incomes between 100 & 400% of the federal poverty line).  
      • Children, allowed to, stay on their parents insurance until 26 years of age. 
    • Medicare solvency improvements. 
    • Medicaid expansion, in title II: to poor with incomes below 138% of the federal poverty line; an expansion which was subsequently constrained by the Supreme Court's ruling making expansion an optional state government decision. 
    • Hospital Readmissions Reduction Program (HRRP) which was enforced by CMS mandated rules finalized in 2011 and effected starting Oct 2012.  
    • Medical home models.  
    • Community transformation grants support the transformation of low income stressed neighborhoods to improve their lifestyles and health. 
    • Qualifications for ACOs.  Organizations must:
      • Establish a formal legal structure with shared governance which allows the ACO to distribute shared savings payments to participating providers and suppliers. 
      • Participate in the MSSP for three or more years. 
      • Have a management structure. 
      • Have clinical and administrative systems. 
      • Include enough PCPs to care for Medicare FFS patient population (> 5000) assigned to the ACO. 
      • Be accountable for the quality and cost of care provided to the Medicare FFS patient population. 
      • Have defined processes to promote: Evidence-based medicine, Patient-centeredness, Quality reporting, Cost management, Coordination of care; 
      • Demonstrate it meets HHS patient-centeredness criteria including use of patient and caregiver assessments and individualized care plans.  
    • CMMI Medicare payment experimentation.  
    • Requirements that pharmaceutical companies must report payments made to physicians (Sunshine Act). 
    • A requirement that chain restaurants must report calorie counts on their menus. 
    ] counted on competition in the health insurance market to keep costs down and quality high.  While the law has accomplished many of its goals, its vision of a more competitive insurance market seems to be fading. 

    Scheffler and Glied argue that while mergers of Anthem with Cigna, and Aetna with Humana, will control 35% of the health insurance market leaving the market with fewer competitors their research identifies a path to success for the legislation and regulation.  They compared the operation of the health insurance markets in New York state and California.  The ACA allows state flexibility in design of their marketplaces.  They might allow all insurers to participate or limit the number:
    • New York State of Health allowed all to participate
      • It permitted insurers to offer alternative plans with different cost-sharing and benefit designs. 
    • Covered California (May 2014)
      • Selected 12 of the 32 insurers who initially showed interest.  This allowed the market place to use its leverage to keep premiums low.  Covered California calculated how high premiums would need to be to cover the risks of its covered population while generating a 2% profit for the insurers.  They also added a constraint -- only those accepted in the first year could offer plans for three years.  
      • Standardized coverage in its plans requiring that within each coverage level all insurers offer the same deductibles and cost-sharing, and cover identical benefits.  This reduced the opacity of the offers. 
    Scheffler and Glied compared the markets in the two states and found the effect of insurer competition differed greatly:
    • Areas with more hospitals had lower premiums. 
    • New York's areas with fewer insurers had higher premiums.  Insurers were able to convert power into price increases. 
    • California's areas with fewer insurers had lower premiums.  With enough profit and effective competition insurers were encouraged to limit premiums. 
    Scheffler and Glied conclude regulation and competition can work together effectively. 



    Jun 2016 NYT Spirited Debate Over U.S. Health Care Costs Has Its Cheerleaders: Actuaries

    Robert Pear reports the Geisinger Health Plan, run by one of the nation's top-rated health care organizations, forsees medical costs increasing next year by 7.5 percent for people buying insurance under the [ACA is the Patient Protection and Affordable Care Act amended by the Health Care and Education Reconciliation Act of 2010 (Obama care).  In part it is designed to make the health care system costs grow slower.  It aims to do this by: increasing competition between insurers and providers, offering free preventative services to limit the development of serious illnesses, constraining patients' use of expensive services, constraining the growth of payments to Medicare providers and piloting new ways for PCPs to manage patient care to keep patients away from costly E.D.s.  It funds these changes with increased taxes on the wealthy.  It follows an architecture developed by Heritage Action's Butler, Moffit, Haislmaier extended by White House OMB health policy advisor Ezekiel Emanuel & architect Jeanne Lambrew.  The Obama administration drafting team included: Bob Kocher; allowing it to integrate ideas from: Dartmouth Institute's Elliot Fischer (ACO).  The ACA did not include a Medicare buy in (May 2016).  The law includes:
    • Alterations, in title I, to how health care is paid for and who is covered.  This has been altered to ensure
      • Americans with preexisting conditions get health insurance cover - buttressed by mandating community rating and
      • That they are constrained by the individual mandate to have insurance but the requirement was supported by subsidies for the poor (those with incomes between 100 & 400% of the federal poverty line).  
      • Children, allowed to, stay on their parents insurance until 26 years of age. 
    • Medicare solvency improvements. 
    • Medicaid expansion, in title II: to poor with incomes below 138% of the federal poverty line; an expansion which was subsequently constrained by the Supreme Court's ruling making expansion an optional state government decision. 
    • Hospital Readmissions Reduction Program (HRRP) which was enforced by CMS mandated rules finalized in 2011 and effected starting Oct 2012.  
    • Medical home models.  
    • Community transformation grants support the transformation of low income stressed neighborhoods to improve their lifestyles and health. 
    • Qualifications for ACOs.  Organizations must:
      • Establish a formal legal structure with shared governance which allows the ACO to distribute shared savings payments to participating providers and suppliers. 
      • Participate in the MSSP for three or more years. 
      • Have a management structure. 
      • Have clinical and administrative systems. 
      • Include enough PCPs to care for Medicare FFS patient population (> 5000) assigned to the ACO. 
      • Be accountable for the quality and cost of care provided to the Medicare FFS patient population. 
      • Have defined processes to promote: Evidence-based medicine, Patient-centeredness, Quality reporting, Cost management, Coordination of care; 
      • Demonstrate it meets HHS patient-centeredness criteria including use of patient and caregiver assessments and individualized care plans.  
    • CMMI Medicare payment experimentation.  
    • Requirements that pharmaceutical companies must report payments made to physicians (Sunshine Act). 
    • A requirement that chain restaurants must report calorie counts on their menus. 
    ]. 

    Geisinger is not alone.  Insurers have proposed premium increases averaging 23.6% for individual coverage for 2017.  Texas Blue Cross and Blue Shield have requested increases of 60% catalysing a fire storm of complaints from Donald Trump.  It is assumed that people who were unable to get health care are now using the system.  It is hoped they will get healthier and then increases will tail off.  Kevin Counihan CEO of the Federal insurance marketplace acknowledgesd that "pent-up demand for health care is greater than people expected and is lasting longer than expected." 

    Obama administration officials argue that proposed insurance rates are set in a multi transaction process which will protect consumers:
    • State officials may reduce the proposed rates
    • Federal subsidies will typically rise along with premiums offsetting much of the additional cost. 
    • Consumers can switch to cheaper policies. 
    UHC has pulled out of many of the insurance markets for 2017 (Nov 2015)




    Aug 2015 NYT Conventional Wisdom Clashes With Data on Health Care Savings



    Does prevention save money?  There are various aspects:




    Jul 2016 NYT Spending on Health To Hit High This Year

    Robert Pear reports national health spending will average more than $10,000 a person this year for the first time, the Obama administration said [], a milestone that heralds somewhat faster growth in health spending after several years of exceptionally low growth (2013 - 2015). 

    The administration reported in Health Affairs: