ERRP Fails to Stem Rise in Uninsured

The headline read, "City Workers May Drop Coverage."  San Angelo's early retirees are in the same sinking boat as workers.  Retiree-dependent health insurance premiums soared 34% to 58% for the City of San Angelo, an Early Retiree Reimbursement Program (ERRP) recipient. ERRP is intended to keep health insurance premiums more, not less affordable.

The City came up with $318,000 between Council meetings to cushion the $1 million blow. However, 70% of the cost increase was passed onto workers and early retirees. GoSanAngelo reported new rates for retiree dependents (on a high deductible plan):

                                  2010        2011    Percent Increase
Retiree-Spouse      $377.31    $506.64    34.28%
Retiree-Children    $240.26     $342.63    42.61%
Retiree-Family      $435.58     $691.27    58.70%

The City hemmed and hawed on ERRP, keeping City Council members in the dark and completely mischaracterizing the program as "a lottery."

It's akin to stop-loss coverage, which the City dearly counts on.  ERRP funding is not the least bit questionable.  ERRP began accepting claims for reimbursement the end of October and promised a 30 day turn around time for payment. 

The end result is the City will bank 19 months of ERRP funding before sharing any proceeds, while 51 retiree-dependents struggle to keep health coverage.. 

To maximize ERRP funding, the City would work to keep early retirees in the plan, not drive them away with massive rate increases.

Employee-dependent rates also soared.

Employee-Family plans skyrocketed 48% to 58%.  Human Resources brought CHIP applications to their employee "open enrollment" meetings.  The City suggested government health insurance for those now unable to afford their portion of an employee benefit, 280 employees with some form of dependent coverage. 

Given Texas' budget woes, CHIP insurance premiums will likely soar, as well.  That's if Texas doesn't pull an Arizona and eliminate the plan altogether.

One thing is clear.  Employers continue shifting the burden to struggling individuals.  America's legions of uninsureds will grow until 2014.


Update 12-12-10:  Another retiree expects no help from ERRP.  This one is from GM.

Update 1-12-11:   According to a letter sent Wednesday by HHS Secretary Kathleen Sebelius, Department of Labor Secretary Hilda Solis and Treasury Secretary Timothy Geithner, HHS began making reimbursements late last year and as of Dec. 30 said it had paid out about $1 billion.  Has the City of San Angelo received its first check?

Hospital For-Profiteering & Jeb's Windfall

CNBC reported on Community Health System's takeover bid for Tenet Healthcare.  Tenet snubbed the offer, while their stock soared 53%.

Red Jeb Bush's holdings rose to $1.44 million, while Blue Bob Kerrey's topped $1.38 million.  Both serve on the board of Tenet.

Tenet believes the $6 a share offers is inadequate.  In their "Dear Wayne letter," Tenet cites the value of $1 billion in net operating loss carry forward and an expected $320 million federal payment under the HITECH Act.

A CNBC guest expects more buyout activity on the nonprofit hospital side.  PPACA's three year wait for widely expanded coverage should stress safety net hospitals, enabling for-profiteers to buy them on the cheap. 

Should CHS succeed in buying Tenet at the offer price, corporate debt would soar to $15 billion.  Two prior buyouts, CHS-Triad and KKR-HCA,  added over $2 billion in interest expense to America's health care costs.

PPACA sets the table for more greed in health care.  Extrinsic motivators do severe damage to an intrinsically noteworthy mission of healing.  Ignore the curious history of John Ellis Bush at Lehman Private Equity and his appointment to the Tenet Board.  The decade of mean and greedy leaders is far from over.

Update 1-21-11:  Tenet adopted a "poison pill" strategy to defend against the CHS takeover.  Tenet's NOL carryforward somehow doubled to $2 billion.  Note the bad taste in the poison pill defense, given Tenet's 35 patient deaths in Memorial Medical Center after Hurricane Katrina.  While W. sat on his hands, patients suffered terribly, none of which made the White House Lessons Learned report.  Tenet did lobby the Executive Office of the President on corporate governance changes.  The next new board member added was Jeb Bush.

San Angelo's ERRP Chickens to Hatch

The City of San Angelo is self insured for employee and early retiree health insurance.  It received approval from the federal government for the Early Retiree Reinsurance Program (ERRP).  From June 1, 2010 to December 31, 2011 the City bears the following risk for early retirees:

$15,000 or less--100% of risk
$15,000 to $90,000--20% of the risk (80% ERRP)
$90,000 to $125,000--100% of risk
over $125,000--0% (stop loss coverage)

The City has three cases where claims exceed $125,000, over $375,000 total.  Stop loss coverage kicked in.  If those are early retirees and all claims came after June 1, 2010, Uncle Sam will reimburse the city $180,000. 

Reimbursement could be thirty days away, the promised turnaround time for paying claims.  Senator Jay Rockefeller (D-WV) stated:

"Since October, companies have been able to submit claims to obtain reimbursement for 80 percent of health care claims in the $15,000 to $90,000 range."

The City counts on stop-loss coverage.  It can count on ERRP funding, but chose not to.  Leaders did say they could conduct a mid-year review based on experience and ERRP chickens hatching.  Rates could even be adjusted.  However, retiree spouses and dependents may drop coverage January 1, giving the City fewer egg laying chickens.

Update:  Thanks to General Dynamics Information Technology in Oakton, Virginia for their interest in this topic.  

Cheney's African Graft

Vice President Dick Cheney will not be extradited to Nigeria for trial for crimes occurring while Cheney was Chairman and CEO of Halliburton.  Although bribery charges are associated with Cheney's work prior to serving as Bush's VP, the U.S. will not serve up an ex-Vice President to a foreign country for trial, even to one with an extradition agreement.

Halliburton's facilitating payments policy is at the root of Cheney's trouble.  It stated:

The Company may be required to make facilitating or expediting payments to an official or employee of a government outside the United States, the purpose of which is to expedite or to secure the performance of routine governmental action by such government official or employee. Such facilitating payments may not be illegal under the FCPA and similar Laws of other countries. Nevertheless, it may be difficult to distinguish a legal facilitating payment from an illegal bribe, kickback or payoff. Accordingly, facilitating payments must be strictly controlled and every effort must be made to eliminate or minimize such payments. Facilitating payments, if required, will be made only in accordance with the advance guidance of the Law Department.

Note the difference in directed energy between Julian Assange and Dick Cheney over possible crimes. Oddly, both ordered the release of secret information. "Two crime" Cheney remains free, with his own personal army of Secret Service agents.

Julian sits in a London jail without bail, access to his defense fund or the ability to garner donations. The powerful protect their own, which includes eviscerating challengers.  Assange badly needs help from his friends this holiday season.  Clarence!  Mary!  Zuzu!

If ever deposed, Dick Cheney will plead ignorance, like peers Lord John Browne (BP-Texas City), Tony Hayward (BP-Deepwater Horizon) and Rick Scott (Columbia/HCA-fraudulent billing).  Cheney will settle out of court, like The Carlyle Group and Riverstone Holdings on pension bribery.

The Greed & Graft brothers run in a tight circle.  They have the most amazing comebacks.  Rule #1:  Oligarchs beat blokes.

San Angelo's ERRP: Bank or Lottery?

City Council acted on health insurance coverage.  As a result, early retiree health insurance coverage for dependent spouses will soar from $377 to over $500 per month, at least a 33% increase.

The monstrous burden will occur in 2011, a period when the City of San Angelo will get federal money intended to help early retirees, via the Early Retiree Reinsurance Program (ERRP).  Benefit consultants project ERRP will save retiree plans 25 to 33%.

Why are San Angelo's retiree rates going the opposite direction?  It's the result of a strategic decision to bank ERRP funding for 19 months.  The decision was made outside City Council, given members were unaware of the program.  Human Resources admitted they had not informed elected leaders and City Council minutes bear this out.

When asked why a portion of ERRP funds were not used to offset retiree increases, Mayor Alvin New and City Manager Harold Dominguez stuck to the "iffy" script on funding?  Councilman Johnny Silvas compared ERRP funding to buying "a lottery ticket." 

For those in the know, ERRP is more akin to a bank.  Uncle Sam is shouldering 80% of claims from $15,000 to $90,000.  Funds are coming, soon.  The question is how much?  In that regard, the city has years of experience, six months are directly reimbursable.  I've never seen a lottery ticket with those attributes.

How many of the City's 51 retiree dependents will drop coverage, unable to pony up more than $500 a month?  The irony is this.  The more retirees the City drives from the plan, the less opportunity for ERRP reimbursement.

Retired spouses may have $377 to spend on lottery tickets in 2011, one option for funding future health care expenses.  It's a high risk strategy, but what alternative do they have?

Update:  KLST noted that a family of four would pay $200 a month more for coverage.   The Standard Times live reported on the meeting.  Neither mentioned, much less investigated, the city's weak ERRP assertions.

San Angelo City Council Kept in Dark on ERRP?

Retired Police Chief Russell Smith brought up the Early Retiree Reinsurance Program during public comment on health insurance increases for employees and early retirees.  After the November 16 meeting, Smith followed up with City Council members, two of whom said they never heard of the program.  How could that be, given San Angelo's ERRP timeline?

City representatives signed the ERRP application on July 7, 2010 

HHS approved San Angelo in the first round of announcements, August 31, 2010 (which I reported on)

Standard Times ran a blurb on ERRP approval, September 19

No city council agendas/minutes mention "Early Retiree" or "ERRP" from July 6 to December 7, 2010 (12 regular meeting opportunities)

I began communicating with the City on this issue on August 31.  A follow up phone call in October muddied the water.  Then I saw Russell Smith lament draconian health insurance increases for early retirees, with his ERRP "pin drop" moment.

That agenda item deserved a thorough and clear ERRP explanation by City representatives.  Instead, staff stammered, hemmed and hawed.

Seeking answers, I formally requested copies of the Holmes-Murphy report and the methodology for applying ERRP savings, required in section E of the federal application. 

Nov. 17--requested copy of report
Nov. 29--City sends ERRP application, minus section E1 which states how funds will be used
Nov. 29 (evening)--requested language submitted in E1
Dec. 3--followed up with City representatives, HR busy--maybe Monday
Dec. 6 (evening)--no E1

Note:  the federal ERRP application is electronic, in PDF form, capable of being moved rapidly via the internet. 

The practical outcome, should it stand, means the City will bank 17 months of ERRP funding, before considering what to do with federal funding.  Who made the decision to set aside federal funds for a rainy day, while hail beats early retirees?  When will Section E1 arrive?  Will it be read in Council Chambers tomorrow morning?

"New" money is available to help early retirees.  I hope an honest conversation about the program occurs in the morning.  It should make interesting television.


Update:  No E1 arrived before the City Council meeting.  It was not read to Council members.  ERRP remained a virtual secret until raised by the public.  The City stuck to their "unsure source of funding" line, despite the program accepting claim submissions the end of October.    City Council members had three weeks since Russell Smith raised ERRP to ask questions.  None did.  They claimed ignorance.  As for the missing E1, staff blamed it on a quirky electronic application.  Odd, HHS required a hard copy be mailed in.  Did the feds want an incomplete hard copy?  There's either one layer of government incompetence or we're facing a fractal.  My E1 request remains unfulfilled.  It's a sad state for knowledgeable citizens, who expect all cards on the table when dealing with difficult issues.

Below the Surface

Sunday morning shows discussed the impact of WikiLeaks, citing government efforts to control and limit information. Fareed Zakaria's GPS hosted diplomat Richard Haas and Harvard's Niall Ferguson.  Ferguson suggested history could be lost, if diplomats ceased to reduce important things to writing.  Haas noted a similar thing happened under Nixon.  Secretary of State Henry Kissinger used circuitous communication methods, with very little official record keeping.

Ferguson compared U.S. debt to Greece, kneecapping Uncle Sam.  It sounded like a line from the latest Bilderberg script, calling for "a new sustainable economic world order, with less sovereignty."  The IMF intervened in Greece and Ireland, imposing draconian debt restructuring.  Given the slate of countries with debt problems, where will the U.S. fall in the global restructuring cycle?

I noted the irony of Haas, Ferguson and Zakaria attending Bilderberg Society meetings.   As the three lamented a loss of history, they participated in secretive, globe manipulating Bilderberg meetings.  Did the three give the secret handshake after the show?  Did they break for lunch, going together for a juicy, rare Bilderberger, piled high with green onions?  We won't know, as the information is on ice.  Chatham House rules.

Bitter Chill Aimed at San Angelo's Early Retirees

The City of San Angelo faces a political blue norther.  City Council promised to pass 100% of health insurance increases to employees and early retirees at the November 16 Council meeting.  Mayor Alvin New stated there "is no new money," despite the City's qualifying for Early Retiree Reinsurance Program (ERRP) funding on August 31.  When challenged by Retired Police Chief Russell Smith, City leaders' lips froze.  Council will revisit the topic December 7, agenda item #10:

a. Authorizing the City to make the appropriate premium adjustments approved by City Council for January 1, 2011 through December 31, 2011 plan year with Blue Cross/Blue Shield and The Hartford

b. Authorizing the City to discontinue health and prescription coverage for employees/retirees who fail to satisfy monthly premium payments and who are in arrears in excess of sixty (60) days

c. Authorizing the City Manager to execute related contract agreement regarding the January 1, 2011 through December 31, 2011 plan year renewal with Blue Cross/Blue Shield of Texas

(Presentation by Human Resources Director Lisa Marley)

Given the intense public comment during the last meeting, one could expect more information in the packet.  One might expect an explanation of ERRP, its projected funding and intended use.  Hardly, the packet included one memo:

Date: 12/2/10
To: Mayor and Councilmembers
From: Lisa E. Marley, Director of Human Resources
Subject: Agenda Item for December 7, 2010 Council Meeting
Contact: Lisa E. Marley, Director of Human Resources, (325) 657-4221
Caption: Regular Item
Consideration of the following items related to Health Benefits (items a-c listed above):

Summary: At the November 16, 2010 City Council meeting, staff was instructed to meet with
employees to review the health insurance. On December 1, 2, and 3, 2010, a total of four meetings were held. Staff has several options for premium adjustments for the 2011 plan year as well as a recommendation on making necessary plan changes for employees/retirees who fail to satisfy monthly premium payments.

History: In July 2009, RFP# HR 02-09 was issued for proposals on health insurance benefits and RFP# HR 01-10 for pharmacy benefits. With council approval, the City elected coverage
through Blue Cross / Blue Shield of Texas for the 2009 plan year, with subsequent renewals
for three years.
History on item B – The City currently drops employees/retirees who fail to pay monthly premiums from their current plan to the Employee/Retiree Low coverage plan, primarily because the low coverage plan is at no cost to the employee/retiree and further past due premiums will no longer accumulate. The City then goes through the process of collecting past due premiums, many times unsuccessfully, while claims under the low coverage plan continue to be paid by the City.
Financial Impact: Please refer to presentation.
Other Information/Recommendation: There will be no recommended benefit changes to the current low, medium and high health plan coverage. Recommendations will be strictly for premium adjustments.
Additionally, it is recommended that the City drop health and prescription coverage for members that fail to satisfy monthly premiums payments and how are in arrears in excess of 60 days.
Attachments: None.
Reviewed by Service Area Director: Lisa E. Marley, Director of Human Resources, 12/2/10.

San Angelo will bank 19 months of ERRP funding before considering any break to early retirees.  Will Christmas 2011 be as cold?

Retirees had to wonder why Council had the resources to approve a new holiday, Veterans Day, but not a penny for increased medical costs.  What will the next North wind bring those on a fixed income?  So far, it's not honesty or complete information on federal funds for early retirees.  God bless us, everyone!"

BP's Early Lies Help it Tell Another

Attorney Jamie Gorelick continued her risk management crusade on behalf of BP, the world's best polluter.  Chron reported:

BP is challenging the government's estimate that its damaged Macondo well gushed 4.9 million barrels of oil into the Gulf of Mexico last summer, adopting a strategy that could save it billions of dollars in federal fines for the offshore spill.

The London-based oil giant, contending that the government's numbers are "highly unreliable," is poised to argue that as little as half that amount ultimately flowed into the Gulf.

The government estimates "rely on incomplete or inaccurate information, rest in large part on assumptions that have not been validated and are subject to far greater uncertainties than have been acknowledged," BP said in a white paper delivered to the presidential commission investigating the Deepwater Horizon disaster. "BP is confident that a complete, comprehensive and rigorous analysis of the flow issue will show that less — and possibly far less — oil was discharged from the Macondo well."

The government and BP worked hand in hand to manipulate the public on spill size.  BP's early risk management, along with government compliance, set the stage for BP's latest risk management move.  It's Disaster Queen Jamie Gorelick's chess game.  Someone call Tony Hayward to the stand.  That's if he's willing to testify and can fly out of frozen European airports.

Florida's Royal Couple: Scott & Rhee

"Pay for Performance" Queen Michele Rhee joined "Incentive Pay" King Rick Scott in revamping Florida education. Roll back to the 1990's, when Rick Scott turned Columbia/HCA into a giant Skinner Box.  Employees lied, cheated or stole to avoid the shock or garner the pellet.  That's why HCA paid billions in settlement money for fraudulent billing.

Who got Scott off the hook? Michael Chertoff, of Katrina and naked body scanning machine fame. If Scott was a felon, he would not be Florida's Governor.

Pizza Hut's reading program offered pizzas for books read.  It produced many fat kids who don't like to read, Alfie Kohn's early prediction.

Get ready to hear from students and workers, "pay me."  Watch them loathe learning and reluctantly perform (what was once an intrisically motivating job).  See what Scott's education got him.



The Good Lord would be proud of the Royal couple's education reform..

San Angelo's Marley Chains Early Retirees

San Angelo's Human Resources Director Lisa Marley held a meeting on health insurance changes for employees and early retirees.  Of the attendees, all but two were early retirees.  Retired Police Chief Russell Smith raised ERRP, the Early Retiree Reinsurance Program.  Marley said any monies would not be available until 2012 and that the Council would decide their use.

The timing and use are within the purview of the City Council today.  City leaders agreed to pass 100% of cost increases to employees and early retirees.  Mayor Alvin New stated there "was no new money."   City Manager Harold Dominguez and HR's Veronica Sanchez hemmed and hawed when Smith raised ERRP at the November 16 Council meeting.  The City will bank 19 months of ERRP's new money, before considering how to use the funds.

IPBTax.com's Employee Benefit Insider stated:

While reimbursements may be used to reduce either participant or employer costs, it is not clear whether at least some participant cost reduction is required. The preamble states that HHS “encourage[s]” employers to use reimbursements to offset both kinds of costs. 

I believe the City wants to combine employer and early retiree health plans, allowable under ERRP. Given their firm stance of not sharing proceeds until 2012, I believe the City wants to use the funds to cover their portion of future health increases.

What's clear?  The federal government gives, the City takes and not one early retiree gets a break in 2011. Who'd have thought such a thing could happen?

First Jacob, now Lisa.  Add a link to the Marley chain.