Angelo State's New "Leanness & Meanness"

The Standard Times reported:

Kent R. Hance, chancellor of the Texas Tech University System, told the San Angelo Chamber of Commerce that Angelo State University and other members of the TTUS, will be "running lean and mean" in the wake of state funding cuts to higher education.

Is it lean or mean to:

1.  Say there will be no layoffs, then cut six secretarial positions

2.  Emphasize distance learning, while axing internal resources in that arena

3.  Eliminate web design classes, while emphasizing "real world" skills training

4.  Not renew lecturers with outstanding student evaluation scores, while calling for quality teaching

5.  Tell honors students they get too much money, cut the benchmark program, then temporarily reinstate it.

6.  Double class sizes, while still bragging on the old faculty student ratio.

7.  Have a widespread staff reduction when the University's accreditation is at risk.

8.  Keep budgeted administrative raises, because it's hard to find "good" administrators

To longtime ASU staffers, leaders look more than "lean and mean.  They look "willy and nilly."  ASU threw out their strategic plan, sequestering four Vice President's to make the budget balance.  The Four VP's of ASU's Apocalypse have less than 7 total years ASU.  To take into account tradition, one must first know it.

Leaders get what they want.  Texas legislators set up Governor Rick Perry for a Presidential run with a bone crushing budget.  Hance and ASU President Rallo publicly complied with politicians' wishes.

There are multiple methods for lean and mean weight loss.  Did TTU leaders use a laxative to lose $7 million so quickly?  Fecal matter rolls downhill, even in a West Texas drought.  It just gets a little dusty.

Watch where you step.  There might be an ex-ASU staffer down there.  Give them a hand up, if you get the chance.  Maybe, even help 'em wash up.

City of San Angelo Health Insurance Update: Straight from ...

After meeting with Mayor Alvin New in April and discussing health insurance, I submitted questions to City leaders.  Public Information Officer Ty Meighan and Human Resource/Risk Management Director Lisa Marley kindly responded. Lisa's answers to my questions are below, after which I comment:

1. How much is the city projected to save from 192 people (employees, retirees and dependents) dropping coverage on January 1, 2011?

The City only saves contributions on the employees or retirees who dropped coverage all together. There is no savings when dependents are dropped (except for savings on any claims being submitted). There were 45 who dropped coverage altogether (37 active, 4 pre-65 retirees and 4 post-65 retirees). The annual savings in premiums for those 45 people is $189,603.96, which simply remains in the self-insurance fund and is used to either pay for claims or for new employees who enroll during the year.

Comment:  The City chose not to share any savings from experience in light of dropping 147 dependents. HR states the City is paying premiums to their third party administrator for people who aren't enrolled (by having the $190,000 remain in the insurance fund).  If this is happening, the City improved health insurance funding for employees remaining in the plan.

2.  How much Early Retiree Reimbursement Program (ERRP) funding does the city expect in 2011 and how much are they willing to apply to health insurance cost increases?

The estimates have not changed: low estimate is $91,217, high estimate is $383,915. All of the ERRP money will return to the self-insurance fund. HR will present the funds to City Council and the Council will determine how to use these self-insurance funds.

Comment:  City staff are yet to make a presentation on ERRP to City Council in a public meeting.  Given "the estimates" are from July 2010, a year's experience produced no new data.  After qualifying for ERRP last August, the City has been unable to file a reimbursement claim on its own. Other Texas cities received ample ERRP reimbursement.  COSA sought a bid for filing assistance from its third party administrator (BC/BS of Texas).  The contract may still sit in the legal department.  HR is silent on COSA submitting an ERRP claim., which it may not want to do, should it wish to switch health insurance plans.  This leads to my next question

3. From a meeting with Mayor New, I understand he has a different vision for health insurance,  It's along the lines of pension models, defined contribution vs. the current defined benefit.  I know Town & Country used what's known as a "mini-med" under Alvin New. Does the city plan on switching to a different type of health insurance plan for 2012?

An insurance review committee was appointed by the City Manager in January 2011.  They are working with the Holmes-Murphy Consultant to prepare an RFP that will go out for bids on health insurance on July 1. All plans/models will be considered based on the criteria that will be established by the Committee. RFP is scheduled to close on August 31, 2011. Following the September review of the bids, a recommendation will be made to Council in October, with open enrollment scheduled for November 2011.

Comment: The City sprung draconian health insurance increases for dependents on employees/retirees at the last minute in 2010.  They have a chance to make their thinking clear.  Let's hope leaders are more open and transparent.

4. What are the city's budget assumptions for health insurance for 2012?

Budgets for 2012 are still being prepared.  Nothing will be firm on health insurance until the RFP is completed.

Comment:  Nothing should be firm until City Council hears options, considers public input and makes a decision.   At least, I hope that's the case..

Rube Goldberg Health Deform

Nearly two years ago, I offered two predictions.

1.  Reform sets the table for employers to shed that pesky health insurance benefit.

Marketwatch reported 30% of employers will drop health insurance as a benefit when health reform is enacted in 2014.  The Congressional Budget Office's projections for health reform already indicated a seismic shift in responsibility for health care coverage.  How long can safety net hospitals survive in this dire environment, where employers pull back from the table?  That leaves a tapped out Uncle Sam and individual citizens, the likely bag holder.. 

2.  Incentive pay will make things worse

Medicare Chief Dr. Don Berwick once called pay for performance a "toxic daisy chain."  The same poison that infects executive suites and board rooms will suboptimize health care delivery.  Ironically, nearly 30% of executives cheated or by backdating stock options, supposedly the most pure form of pay for performance.  This mendacious leadership behavior occurred over a twelve year period.  Surely, a sizable chunk of doctors and nurses will take the unethical executive route to pay maximization

Customer satisfaction surveys are the means for incentivizing providers to do a good job.  Extrinsic motivators may improve performance in simple tasks under the control of one person, but they do great damage to complex systems requiring collaboration.  It's bad management, in concept as well as application. 

Medicare revealed Rube Goldberg complexification in it proposed rules for accountable care organizations (ACO's).  Providers don't know who their ACO patients are until the plan year is up.  Think of the wooden board with lots of pins.  A ball falls, striking the first pin and bouncing in various directions as it makes it way to the bottom.  Which ACO bucket will it land in?  Who will garner the prize?

Managed care had to reach 40% of a doctors practice to shift provider behavior.  Under that system, they clearly knew who their patients were.  ACO's will have a list of maybe patients, free to go anywhere that accepts Medicare.  The plinking ball will retrospectively assign them to a health care system, rewarding or punishing that provider for their ability to generate savings.

The rules say providers will continue to be paid "fee for service," only Medicare pays by DRG, not discounted, much less full charges.  DRG payment was implemented to address incentive problems with fee for service. 

Providers must save Medicare 2% to be eligible for cost sharing money.  Since Medicare continues paying "fee for service," savings must come from reduced utilization or from allowable costs in the Medicare cost report.  One of those costs is health insurance, which averages 13%,of payroll, but can be as high as-20%..  Health care salaries and benefits run 45% of total costs.

Thus, an ACO could save 5.85% by doing one thing, eliminating the employee health insurance benefit.  Adjusting for the 8% payroll tax for employers dropping their health insurance plans, savings stand at 2.25%, enough to meet Medicare's ACO savings target. 

ACO's also have to submit data to Medicare on 65 quality parameters.  One rule states providers must be in the top 30% on all 65 measures.  While process outcomes are not probability and many of the measures are interdependent, a coin toss came to mind.  What's the likelihood of tossing 65 heads or tails in a row? The same probability that Medicare's extrinsic motivation schemes will make things better.  Find a coin and start tossing.

Lucky citizens will have their safety net hospital survive until 2014.  I wish good health to the rest.

Update 6-8-11:  McKinsey came to the same conclusion I did, only two years later.  McKinsey stated "Our survey found, however, that 45 to 50 percent of employers say they will definitely or probably pursue alternatives to ESI in the years after 2014. Those alternatives include dropping coverage, offering it through a defined-contribution model, or in effect offering it only to certain employees."  What role will their study have in the second wave of the great health insurance tsunami?  Mayor Alvin New of San Angelo told me he wanted to move to a defined contribution model for health insurance.  It remains to be seen how that interest expresses in budget reality.

Update 9-3-11:  DeParle wrote a stinging defense of her health care plan.  She failed to mention her residual private equity, health care stakes, which continued paying off in public office.

Update 2-10-14:  Obama delayed the employer mandate until 2016 for firms with 50-99 employees.

Update 11-20-14:  Incentive pay making things worse is the subject of a NYT op-ed.

Update 11-25-14:  Incentives are based on meeting numbers and people will lie to garner the prize, be it money or acclaim.

Update 3-15-15:   Hospitals are using big data to identify high dollar patients.  They put an individual's data into a "predictive model" and out comes a risk score.  Like Wall Street models that imploded, healthcare algorithms come from mining existing data, i.e., after this, therefore because of this.  They may work for segments of the population, like pharma studies done on white males, but they won't apply to, much less benefit everyone.  Sadly, Bloomberg reporters continued the fiction of hospitals being paid fee for service.

Update 3-15-18:   Skyhigh healthcare costs differentiate the U.S. from the rest of the globe.  PPACA's cost curve bent in the wrong direction, acceleration.

Update 3-23-19:   Medical bills contributed to 60% of bankruptcies. 

Update 4-16-20:  A coronavirus pandemic revealed America's broken healthcare system and PPACA's many shortcomings. How many  22 million newly unemployed  can afford the premiums?  How many of these will get COVID-19 and die at home without proper care?  

Update 8-14-20:  Health insurers saw second quarter profits double in the midst of a pandemic.  Rebates anyone?

Update 4-3-22:   The average health insurance premium more than tripled for a family plan since PPACA passed in 2010.  Cost curve bent but in the wrong direction.  Concave went convex.   

Bad Dream: ASU's Allen Hosted Secretarial Apprentice

Let me be clear, this is a dream story, not reality. Normally the host of The Apprentice waits until the end of the competition to say "You're fired!"  That wasn't the case in my nightmare.

The antagonist in my dream was Angelo State University Vice Provost and "Queen of Mean" Nancy Allen.  She stood at a podium before six secretaries, announcing, "Your jobs have been eliminated."

She magically produced a platter of sandwiches and carried them around the room.  The first secretary took a bite and gagged.  "This tastes like dog crap."

"That's because it is," Allen replied before cackling like the Wicked Witch.  "There's good news my sweets.  You can apply for three new office professional jobs, or other positions that may arise."

My dream shifted to The Junell Center/Stephens Arena , the selection site for new office staffers.  ASU's Four Vice Presidents sat with the backs to the candidates ready to go "mano a mano" on a computer keyboard.  Nancy Allen acted as host.  She introduced the first fight pairing, Beverly and Dia.

"In this corner is Beverly, a conscientious office professional with honest intentions and a soothing phone voice, Beverly knows over 10 software programs and has already covered for her worthless boss five hundred times. Originally from Mertzon, she's worked at ASU for twenty years, always looking for that big break, which I assured she never got."

"Her competition is Dia, a 23-year-old office professional from Rowena who is half German and half Czech. Her career aspiration has been a soap opera actress on RamTV, but her considerable typing talents may steer her elsewhere. A life-long bookworm, Dia also writes novels and children's books, which by the way are crap.  She disgusts me!"

Beverly and Dia played a keyboard duet.  Beverly's composure and experience showed early, but it didn't take long for Dia's youthful speed to wow the crowd.  .

Judges used their ear to evaluate candidates, a bad sign given ASU's "tin eared" VP group.  Limbaugh took copious notes.  Blose stared toward the ceiling with a faraway look.  Reid used a spreadsheet with explicit criteria to rate the competitors.  Valerio took IPhone pictures of the younger lady's knees moving nervously in and out.

The keyboards stopped, as did Valerio's flashing.  The crowd roared, until Nancy took control with a "Shut the hell up!"  Allen followed up with a string of invectives.  When things couldn't get more bizarre, Nancy fired Blose and sat in his chair.  Beverly and Dia glanced at each other, joined hands and ran like the wind. I chased them for an interview, but saw the back of their heads as the pair squealed out of the parking lot in a blue convertible. 

My dream made me wonder about the key to future employment at ASU?  Note:  Any similarities between my dream and popular television shows are coincidence.  Fiction has its fractal side.

Vought's $35 Million Agreement Complied with HB 2457

The Houston Chronicle reported:

State lawmakers moved to make two economic-development funds — the Texas Emerging Technology Fund and the Texas Enterprise Fund - more transparent in the wake of a recent audit that was critical of the tech fund's oversight.

The bill says any grant agreements must contain provisions requiring the creation of a minimum number of jobs and deadline for the job creation. Recipients who fail to meet the job creation performance targets will have to repay all or a pro-rated portion of the grant.

The bill awaits the governor's signature. Separately, both programs received all of their unexpected balances and interest earnings for 2012 and 2013. For the Texas Enterprise Fund, about $148.5 million was appropriated for 2012 and $1.5 million for 2013. For the Texas Emerging Technology Fund, about $139.5 million was appropriated for 2012 and $1 million for 2013.

House Bill 2457 purports to fix longstanding holes in Governor Perry's Texas Enterprise Fund.  Only it doesn't address one of Rick Perry's most egregious cases.

The Carlyle Group's Vought Aircraft Industries promised Texans 3,000 new jobs in 2004 in return for $35 million from the Texas Enterprise Fund.  Vought shelved plans to move operations from Nashville and Florida to Dallas.  Then they located Boeing 787 Dreamliner production in South Carolina.  They failed to meet their promises by December 31, 2009.  Over the five year period Vought cut 35 Dallas jobs, a $1 million incentive per job lost. The agreement had a clawback or repayment plus interest provision

Vought refunded Texas $900,000 per their SEC filing, while the Governor's report credited Vought with a $970,000 repayment.  That's far short of $3.5 million plus interest owed to Texas taxpayers.

What happened?  Governor Perry renegotiated the agreement in secret as Carlyle put Vought up for sale.  Perry fabricated results by claiming Vought's 3,000 existing jobs were new jobs and adding an economic impact column using a job multiplier. Vought's CEO admitted an internal liquidity crisis  in ramping up 787 production, so Texas' $35 million in financing came in handy.  TEF is pubic money incentivizing jobs.  It's not intended to carry an employer through tight cash flow periods.  That's what Rick Perry did for at least one Carlyle affiliate.

HB 2457 is silent on the Governor's ability to renegotiate TEF contracts in secret and contains no punishment for fictional results.  Problems with Perry's pet funds remain.

(click on the image above to make it larger)

Texas May Divert DSH/UPL Funds

Senate Bill 23 has the state seeking a Medicaid waiver.  It's clear the intent is to offer a lesser benefit to citizens, while leveraging more federal money.  SB23 dumps state sponsored kids coverage on the CHIP program, which receives federal funds.

The bill sets up the Health Opportunity Pool Trust Fund.  The executive commissioner may use Medicaid disproportionate share and/or Upper Payment Limit money in the waiver. 

Safety net hospitals receive DSH & UPL payments to make up for Medicaid being such a poor payer.  These funds could be in jeopardy,  Shannon Medical Center received $15.5 million in DSH/UPL funding in 2010, according to Fitch Ratings.  What happens is if a portion, say half, gets diverted?

The state says it wants to reduce the number of people without health coverage and maintain and enhance the community public health infrastructure provided by hospitals.  These words ring hollow for anyone watching Legislators ignore the plight of the uninsured for over a decade while hospitals cost shift to make up for Medicaid's woeful reimbursement. Other payors ensure hospitals survive.  Many would close if Medicaid was their only source of business.

Texas safety net hospitals have to survive until 2014, when the only real help from PPACA arrives.  They may negotiate SB 23 minefields in the interim, thanks to the legislature living within its meanness.

Update 6-9-11:  The special session is entertaining SB 7.  It is yet to take up SB 23.

Texas to Dump 6,500 Families from State Sponsored Health Insurance?

The Texas Legislature's Special Session agenda includes Senate Bill 23.  Section Four of SB23 calls for Texas to eliminate the State Kids Insurance Program within the Employees Retirement System of Texas.  Should the bill pass nearly 6,500 families would be impacted.   Dumping dependent children from state health insurance rolls saves money, but the ka-ching comes from shifting kids to CHIP, which is federally funded.

Abolishing the SKIP program and enrolling eligible children in CHIP is estimated to have a net savings of $2.9 million in All Funds in fiscal year 2012 and $3.0 million in All Funds in fiscal year 2013 and subsequent fiscal years; estimated savings to General Revenue Funds ($13.0 million in fiscal year 2012, $13.2 million in fiscal year 2013 and subsequent fiscal years) are higher due to the federal matching rate for CHIP, which results in a smaller proportion of funding from General Revenue Funds in CHIP than in SKIP.

Gov. Rick"Say No to Washington" Perry will happily milk $20.3 million from Uncle Sam.  Texas may join the City of San Angelo in shifting the burden of dependent coverage from the employer to a tapped out Uncle Sam.  City Human Resources passed out CHIP applications to staff facing draconian premium increases for dependents.

Poser Perry postures as anti-Washington, but his track record shows otherwise.  He pandered to 1001 Pennsylvania Avenue, home of The Carlyle Group.  The occupants owed Texas taxpayers nearly $35 million, until Perry renegotiated the deal and Carlyle sold Vought Aircraft Industries.  That pool of money won't return to help reduce the stress.  Kids must pay, so adults can play with their spoils.