Friday, May 30, 2014

Shinseki resigns

WASHINGTON >> Veterans Affairs Secretary Eric Shinseki apologized in public and then resigned in the privacy of the White House on Friday, driven from office by a mushrooming scandal over the agency's health care system that serves millions of the nation's former warriors.

President Barack Obama said he accepted the resignation "with considerable regret," and appointed Sloan Gibson, the agency's No. 2 official, as temporary secretary. Obama also said that the Justice Department would determine if any illegality had occurred, and that a top White House aide who has been detailed to the Veterans Affairs Department would remain there for the time being,

As for Shinseki, Obama said, "I regret that he has to resign under these circumstances." He lavished praise on the Vietnam veteran and former Army chief of staff for his decades of service. He said the Cabinet officer had told him "he does not want to be a distraction" from the need to repair the agency, a task the president said pointedly could well require Congress to approve additional money.

A lifetime of service, in uniform and out, wasn't enough to save Shinseki's career, though, after agency investigators reported widespread problems in its sprawling hospital system. They reported that 1,700 veterans seeking treatment at the Phoenix facility alone were consigned to limbo because they had never been added to official wait lists.

Saturday, May 24, 2014

Why Every State Will Ultimately Expand Medicaid

Bottom Line: Medicaid expansion remains a politically charged topic, evidenced by Republican led states making up the majority of those choosing not to expand at this point. However, in this note we lay out some of the arguments and considerations that we believe will ultimately drive all states to expand Medicaid.

Admittedly, timing is difficult to predict although we would expect pressure to heat up post mid-term elections. Incremental news of greater state expansion, particularly in FL and TX, would bode well for the entire publicly traded hospital/provider sector (most positive for HCA and CYH) as well as selective managed care companies (CNC and MOH) with greater exposure to those states.

Funding Argument: Simply put, the gov't is funding 100% of Medicaid expansion through 2016, scaling down to 90% in 2020+. While the initial ACA backlash may have provided cover for states not to expand, we believe it may be increasingly difficult to continue to defend not taking the federal money to insure a significant population base within each respective state.

Access Argument: Given the laws of the ACA, most states that choose not to expand are leaving a significant coverage gap. This happens because subsidies on the exchange are available down to 100% (and up to 400%) of FPL, but not below that level. This leaves a low-income population paying significantly more for healthcare coverage. We provide examples below and believe that better understanding of these dynamics will fuel further political pressure on states from various constituencies and advocacy groups.

TX Example: In an example in Texas, an individual making $18,000 a year has access to $0 premium health insurance, while someone making $10,000/yr (below 100% FPL) would have a $150/month or $1,800/year premium (18% of gross salary). Another way to look at this example is that someone making ~$30,000 in TX has access to cheaper healthcare coverage than someone making $10,000.

FL Example: Florida provides a more magnified example where someone making $21,000 would have access to a $0 premium plan while someone making $10,000 (below 100% FPL) would have to pay $177/month or $2,100/year, and would pay more for healthcare than someone making up to $34,500. Additionally in the FL example, someone making $15,000 could access a zero premium Silver tier health insurance plan as opposed someone making $10,000 that would have to pay $240/month or $2,874/year for the same exact plan.

-- R. Giacobbe, Credit Suisse First Alert, May 21, 2014

Hawaii minimum wage raised

Gov. Neil Abercrombie on Friday signed a minimum-wage increase into state law, couching the pay raise for low-income workers in Hawaii's proud, and often forgotten, history of labor activism.

At a signing ceremony at the state Capitol auditorium, the governor dedicated the law to the late Dave Thompson, a revered activist with the International Longshore and Warehouse Union, and others who have strived for worker rights.

Abercrombie said he has always disliked the label of a minimum wage because, he said, "it has the connotation, ‘What's the least we can do to let you survive?' I always thought it wasn't a minimum wage; it was a survival wage.

"And in today's world, that minimum wage is not a survival wage — certainly not in Hawaii and almost anywhere else, as well."

The state's $7.25-an-hour minimum wage will gradually climb to $10.10 an hour by January 2018. The 25-cent tip credit, the amount businesses can deduct from workers who earn tips, will expand to 75 cents. But businesses will not be able to deduct the tip credit unless workers earn at least $7 an hour above the minimum wage, up from 50 cents.

While the new law is an election-year policy victory for Demo­crats, who have highlighted income inequality as a theme in Hawaii and across the nation, passing a minimum-wage increase was a two-year struggle at a Legislature controlled by majority Demo­crats.

Hawaii's minimum wage has not been increased since 2007.

Just 2.2 percent of the state's labor force earns the minimum wage. Yet the low wage floor has disappointed labor and social-service advocates given the state's high cost of living and the 6.2 percent of workers who hold multiple jobs to make ends meet.

Abercrombie has called for a minimum-wage increase for the past two years. President Barack Obama has also sought to raise the federal minimum wage to $10.10 an hour, yet Hawaii lawmakers only agreed to $10.10 after the persistence of state Sen. Clayton Hee and state Rep. Mark Naka­shima, the main negotiators on the bill.