AOL CEO says ObamaCare adding $7 million to costs

Remember when Democrats sold ObamaCare as a system that “bends the cost curve downward”? Tell that to employers, who face a make or break decision point this year when the employer mandate comes into full force for 2015. Do companies dump health insurance in order to control their costs, or pay the higher costs and pass them along to employees as reductions in compensation? Tim Armstrong explains to CNBC that employers — even one as large as AOL — can’t avoid what is a $7 million question to him (via Daniel Halper):
“We have to look at our benefits programs very seriously,” said Armstrong. “In the CEO chair, let me give you an example of the decisions we have to make as a company: Obamacare is an additional $7.1 million expense for us as a company. So we have to decide whether or not to pass that expense to employees or whether to cut other benefits.”
Speaking of bending cost curves, a lot of people have noticed that their new and supposedly oh-so-much-better insurance has a lot fewer choices when it comes to providers. In Covered California, some have found that they have nearly no choice, for example. The Obama administration and Democrats on Capitol Hill are threatening insurers to restore provider networks, but the insurers say they have no choice if they want to keep premiums low:
Insurers are facing pressure from regulators and lawmakers about plans that offer limited choices of doctors and hospitals, a tactic the industry said is vital to keep down coverage prices in the new health law’s marketplaces.
This week, federal regulators proposed a tougher review process for the doctors and hospitals in plans to be sold next year through HealthCare.gov, a shift that could force insurers to expand those networks. …
A spokesman for America’s Health Insurance Plans, the industry’s main trade group, said narrower provider networks are “one way health plans can help to preserve benefits and mitigate cost increases for consumers” as health-law changes take effect.
Narrower networks can help keep down costs partly because providers agree to lower their fee in exchange for the volume of business they expect with fewer competitors.
Some 70% of new plans under the health law offer relatively narrow networks compared with many current plans, according to a recent report by McKinsey & Co. The consulting firm found that plans with smaller choices of hospitals had significantly lower premiums than similar plans offering a broader choice.
The narrow networks have drawn protests, lobbying and some legal challenges from doctors and hospitals.
Insurer networks are providers who agree to a reimbursement schedule from the insurer. The tighter those reimbursements, the narrower the provider network will become as providers decline to join on those price schedules. In order to make a network broader, insurers would have to offer better reimbursements — which would force premiums to go up. This is nothing more than Risk Pool 101, or even more basically, the law of supply and demand.
It’s also a demonstration of the difference between price and cost. One can easily bend price curves downward, but not without serious distortions to product/service and delivery, and to the larger market overall. And even then, consumers will see very quickly through the illusion of price manipulation, especially since those manipulations are unsustainable.
So far, these disasters have been confined to the individual-plan markets. When they hit the employer-provided group markets, the disaster will amplify exponentially. Either employees are going to get hit with massive increases in insurance costs, or will get kicked out of their group plans altogether. AOL won’t just eat that $7 million, and neither will anyone else’s employers.

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One County Spent Over $5 Million Jailing Homeless People Instead Of Giving Them Homes

A volunteer interviews a homeless Florida man. Laws that make it a crime to live as a homeless person make little sense from a moral vantage point. New data shows they make even less sense from a fiscal standpoint.
Over the past decade, municipalities in Florida’s Osceola County, just southeast of Orlando, have spent more than $5 million to repeatedly jail three dozen homeless people for
quality-of-life offenses.
Rather than major crimes like assault or burglary, nearly every one of these arrests were because of violations of local ordinances prohibiting activities that many homeless people do to survive, such as sleeping in public or panhandling. Laws that criminalize homelessness can lead to an inescapable cycle of poverty.
The data was collected by Impact Homelessness, an advocacy group in central Florida. The organization identified 37 homeless people in Osceola County who were collectively arrested 1,250 times between 2004 and 2013 at a cost of $104 per booking. During that time, these people spent 61,896 days incarcerated at an average cost of $80 per day.
Altogether, Osceola County communities spent $5,081,680 over the past decade to repeatedly jail just 37 homeless people.

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Why Donors Just Spent $25 Million To Support Undocumented Students

A former Washington Post owner, a former Secretary of Commerce, and a philanthropist are just a few of the donors who have launched a $25 million college scholarship fund on Tuesday to ensure that at least 2,500 youths can afford college for the next decade. The prerequisite? The youths have to be undocumented and must have been approved for a 2012 presidential initiative, the Deferred Action for Childhood Arrivals, which granted temporary work authorization and legal presence.
The scholarships, accessible through TheDream.us website, help to fund undocumented youths who are “not eligible to apply for federal financial aid to support a college education” for 12 institutions of higher learning. Due to their legal status, undocumented immigrants are allowed to attend college, but ineligible for any federal and most state sources of aid. Many other scholarships require applicants to be legal immigrants or U.S. citizens. In at least six states, undocumented students are explicitly prohibited from receiving in-state tuition or even enrolling at public institutions. This TheDream.us scholarship would thus give undocumented students more access to the same opportunities as lawful residents.
Scholarships range between $12,000 to $25,000 per year and provide 100 percent funding for tuition, fees, and books. According to the website, students must maintain a cumulative 3.0 GPA and are eligible for an additional $1,000 to $2,000 honors award if they graduate with a GPA of 3.5 or greater.
The partner colleges are located in California, Florida, New York, Texas, and Washington, D.C.
The multi-state fund is one of the largest offered to undocumented students, who are generally unable to shoulder the cost of a higher education due to financial or legal constraints. As it stands, only five to ten percent of undocumented high school graduates pursue a college education. So far, there are a handful of scholarships, but those are limited to students at a particular location — most recently, the University of California system committed a $5 million scholarship fund to undocumented students. Educators at a Brooklyn high school also set up a fund for their students, but they still have not met their $40,000 goal to provide scholarships, which range between $1,000 to $20,000.
According to the College Board, the annual average cost of tuition and fees is $9,037 for a public four-year college in California, $6,336 in Florida, $6,919 in New York, $8,522 in Texas, and $7,255 in Washington, D.C. Meanwhile, the income for an undocumented immigrant generally hovers at $36,000. California, Texas, New Mexico, and Minnesota are the only states that allow undocumented immigrants to apply for financial aid.

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