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Dennis Byron  

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  • Government wants to cut Medicare Advantage payments by 3.55% [View news story]
    Part C plans get cancelled every year and new ones start up so your problems are not necessarily President Obama's fault. The big changes in Part C in 2014 that I have seen so far because of the Patient Protection and Affordable Care Act is reduced benefits, not higher premiums (e.g., raising the annual OOP limit, raising co-pays). You can expect more of that in 2015 plus higher premiums and more of the restricted networks that are getting some publicity in Connecticut. They way PPACA affected you (more than $150 a month) seems quite rare.
    Feb 25, 2014. 08:18 AM | Likes Like |Link to Comment
  • Government wants to cut Medicare Advantage payments by 3.55% [View news story]
    As I had figured, UnitedHealth and Humana both announced Monday Feb 24 that the "cuts" (which aren't really cuts as explained above) were not as bad as the two insurance companies had originally projected. UNH and HUM said that was because of something in the fine print of the 150 page document (that I didn't see) about getting more money from relatively healthier baby boomers coming onto Medicare in 2015 in even greater numbers (the people born in 1949 plus the people born 1946 to 1948 who deferred Medicare because they kept working until their SS kicked in full). I think they probably mean that the pool is just actuarially getting less costly (but that will only last a few years).

    And as I said Sunday: "The same insurance companies sell both types of policies (and many of them also make money running the Original Medicare program for the government). The insurers make money no matter what happens."
    Feb 25, 2014. 08:12 AM | Likes Like |Link to Comment
  • Government wants to cut Medicare Advantage payments by 3.55% [View news story]
    Anyone making investment decisions based on this article, make sure you understand what is actually going on with the public Part C Medicare Advantage heath plan before you take the plunge.

    This article above says:

    "The Centers for Medicare & Medicaid Services has proposed cutting 2015 base payment rates for the Medicare Advantage program for senior citizens by 3.55%." The negative 3.55% refers only to a change in the National Per Capita Growth Percentage and not to the overall effect -- positive or negative -- on the defined contribution per enrollee that public Part C Medicare Advantage health plans will receive. Many other factors play into that defined contribution.

    The article above says:

    "The proposal is subject to negotiations, with a final decision due in April." There are no explicit negotiations at this time (who know what happens in back rooms among all the Congresspeople of both parties who oppose these cuts and the bureaucrats and the lobbyists). The announcement from Friday 2/21 kicks off a month long comment period after which a final framework and bidding structure will be announced for 2015 plans. Negotiations -- to the extent you call it a negotiation when the CMS tells the insurers what to do -- happens after the bids come in and before the plans and prices are announced in September.

    The article above says:

    "The final cut may be bigger, as the proposed rate doesn't take into account adjustments required by the Affordable Care Act..." According to page 5 of the 148-page CMS announcement of 2/21. the negative 3.55% IS the effect of PPACA. But like I said, it don't matter anyways. There are a lot of moving parts in this process and this is only one (the suggested changes to Part D prescription drug plans are much more serious).

    The article above says:

    "Last year, the government increased 2014 base payments by 3.3% after initially proposing a 2.2% fall, although actual payments are falling 6.7% due to a new Obamacare tax and sequestration." So if all other things were equal (they are not per the points above), the subsidies might be cut by 10% or more per capita in 2014.

    If you are going to invest in an insurance company because of likely changes to the public Part C Medicare Advantage health plan program, remember the following:

    1. About 30% of retired Medicare beneficiaries choose Part C as a supplement to their Original Medicare "policy." 60% choose a privately purchased private Medigap supplement or get a supplement from a former employer. 20% are on Medicaid, a few percent depend on the VA or similar program, and only a percent of (apparently very rich or very stupid) retired Medicare beneficiaries do nothing. ["Retired" is a key adjective in the previous paragraph. Not all Medicare beneficiaries are retired. The percentages add up to more than 100% because some retirees have more than one type of policy.]

    2. The same insurance companies sell both types of policies (and many of them also make money running the Original Medicare program for the government). The insurers make money no matter what happens.

    3. As long as public Part C Medicare Advantage health plans include annual out of pocket spending limits and Original Medicare and most private Medigap plans do not (which is the current situation), Part C will probably continue to be a better deal for the retired person who really wants true insurance.
    Feb 23, 2014. 11:30 AM | Likes Like |Link to Comment
  • Managing The Medicare Maze In Retirement [View article]
    Dear Sir

    I have provided only facts. I am not sure why anyone would have an opinion about something so straightforward but you're certainly entitled to believe inaccurate information if you like and form false opinions based on it. Just please stop foisting your odd ideas on seniors.

    I repeat the facts I originally stated above:
    1. You or someone doctored an illustration from the booklet "Medicare and You" for whatever reason; the doctoring is inaccurate and misleading to seniors (none of whom are likely to come to SeekingAlpha for Medicare information anyways). Compare your illustration with the illustration in the government document for proof of the doctoring.
    2. Part C is a Part of Medicare (that's why it's called Part C; do you want me to "site" that in any more detail?)
    3. All Parts of Medicare are private in the sense that they are insurance plans administered by private insurance companies but public in the sense that the government is the primary direct payer. This is the way most people's health insurance works in the U.S. before they reach Medicare age except that their employer rather than the government is the primary direct payer. The contractual relationship you describe directly above between private insurers and CMS for Part C works approximately the same way for Parts A, B and D. In my initial reply above I provided a link to the CMS document that explains exactly how that private-public relationship works for each Part of Medicare.
    4. The private-public contractual relationship between private insurers and the government is irrelevant to the Medicare beneficiary (with some rare recourse exceptions noted in my initial reply). What the Medicare beneficiary needs to figure out in making Medicare decisions-- rather than following your directions -- is which of three primary options he or she will employ to supplement Medicare, which is terrible healthcare insurance. The three primary options (retiree ESI vs. Medigap vs. Part C) are explained in my initial post. See MedPAC for explanation of why Medicare is terrible insurance.
    5. Over 90% of Medicare beneficiaries understand this failing of Medicare and choose one of the three options. Less than 10% of Medicare beneficiaries stick with just Medicare (but you almost always need to subscribe to base Medicare to get the supplements). See MedPAC if you question the 90%/10% statistics

    In addition to the errors in the original post, you have introduced additional errors in your latest reply to me (you really shouldn't depend on Wikipedia)
    1. Medicare beneficiaries have always had the option to -- AND NEED TO -- receive healthcare insurance benefits through private insurers; this was not new in 1997 but has been around since the beginning of Medicare
    2. The ability for Medicare beneficiaries to get managed care through private insurers far predates 1997 (since early 1980s at the same time managed care started to become common in the non-Medicare population); what the BBA in 1997 did was change some payment formulas and other rules (such as introducing county-level aspects of the plans)
    3. You might think that CMS's contractual obligation to pay the Plan C sponsor "a fixed amount for your care every month" is "[like a premium]" but it's not; it's a capitation mechanism like any HMO uses and is not directly related to "your care" (as I said above, in Medicare the government is not the insurer; it is the payer, in just the same way IBM is the payer for its employees and certain unions are the payers for their members)

    You may believe the need for seniors to choose adequate supplemental insurance is trivial minutiae but luckily they don't. (I assume you know what MedPAC is.)
    Dec 8, 2011. 10:22 AM | Likes Like |Link to Comment
  • Managing The Medicare Maze In Retirement [View article]
    I don't have any problem going to the DMV to ask questions about the rules relative to getting a driver's license. Again, don't waste your money. This is about healthcare insurance, something we've all been buying for over 40 years by the time we get to Medicare. And IF the CMS volunteer gives you bad information, that's ususally grounds for being able to change your insurance without waiting for the next open enrollment. .
    Dec 8, 2011. 09:12 AM | Likes Like |Link to Comment
  • Managing The Medicare Maze In Retirement [View article]
    Nope. U.S. Medicare does not work outside the U.S. (with some very limited exceptions such as if you are driving through Canada from Alaska to Montana)
    Dec 8, 2011. 09:07 AM | Likes Like |Link to Comment
  • Managing The Medicare Maze In Retirement [View article]
    As I've said twice above, it is highly unlikely that anyone would come to this web site for Medicare advice but...

    Don't go to a broker. Don't waste your money on an expert of any kind that charges money. The Center for Medicare/Medicaid Services certifies thousands of volunteers available in every senior center and similar location throughout the United States to give Medicare beneficiaries advice at no charge. The volunteers receive hours of monthly and annual training from the CMS and have to score 80% or higher on an annual certification exam.
    Dec 7, 2011. 08:45 AM | Likes Like |Link to Comment
  • Managing The Medicare Maze In Retirement [View article]
    @ joe eqcome

    Sorry but let me help you with your facts. I am certified by CMS on this subject. Read my post carefully vis a vis private vs. public and supplemental options.

    In addition, although the chart is sort of "based on" the illustration on page 15 of "Medicare and You," you or someone purposely doctored the illustration in the official booklet and in the process introduced signficant errors. You are confusing seniors with inaccurate information (not that anyone would turn to this web site for information about Medicare).

    I take part of my earlier comment back. I guess you do have a political agenda.
    Dec 5, 2011. 01:54 PM | 1 Like Like |Link to Comment
  • Managing The Medicare Maze In Retirement [View article]
    This article on Medicare is misleading. (I also think it's way off point for an investment site that I used to visit often before I went on Medicare... but that's neither here nor there.)

    In particular the illustration on the "Medicare Maze" above has multiple errors. I agree Medicare is a maze but Medicare Advantage -- at the upper right -- is NOT "private insurance approved by Medicare," as the illustration says. It is actually a full-blown "Part" of Medicare just like A and B. The description "private insurance approved by Medicare" would be better applied to Medigap -- at the lower left although the whole private/public thing is meaningless.

    In fact, all "Parts" of Medicare — A, B, C and D — are public in the sense that they are run by the United States government’s Centers of Medicare and Medicaid Services (C-M-S). And they are private in the sense that the CMS uses private insurance companies to administer them. This should be nothing new to the typical SeekingAlpha reader of Medicare eligibility age. Unless you worked for a very small company or a risk-averse large company or insured yourself and your family directly before you joined Medicare, this is probably the way your health insurance has always been run and administered. Most large employers self insure and hire an insurance company to handle the administration. In the case of all Parts of Medicare, that’s what the U.S. government does.

    But for partisan political reasons in the U.S (which I am not accusing the blog post's author of),, Original Medicare (Parts A and B) are often called public and Medicare Advantage (Part C) and standalone prescription drug plans (Part D) are often called private. It is especially important for seniors and those about to sign up for Medicare not to be confused by this political posturing because there really is no choice between public and private involved. A and B are required for C and most of the time for D.

    In some regions of the country, different private insurers handle Parts A and B enrollment, claims, fraud and abuse investigations, payment processing, and similar insurance company administrative functions. In other geographic regions, one private insurance company handes all the related administrative functions. If you want to really be confused, here is the “simple” 7-page version of an explanation put out by the CMS “as a service to the public and not intended to grant rights or impose obligations” (see

    Rather than the three steps outline above, Medicare beneficiaries do have a choice among three supplemental Medicare options. Nationwide, over 90% of us choose a supplement (mostly one of the following three) because Original Medicare is not very good insurance:

    -- Employer-sponsored health insurance (E-S-I) for retirees – fewer and fewer employers offer ESI to retirees but if your former employer does, it’s typically the best of the three supplemental options. Still the employer will usually require you to sign up for Medicare Parts A and B and — if it hasn’t already done so – the employer might drop its retiree drug coverage so that you will want to sign up for Part D. And the retiree ESI plan might be more expensive than buying supplemental Medicare insurance directly — see next two options — after comparing benefits. Retiree ESI is typically regulated by the state insurance commission where your employer is headquartered.

    -- MediGap – MediGap is highly CMS-regulated but not officially a Part of Medicare. There are as few as two and as many as 10 types of MediGap insurance available depending on the state you live in. You have to sign up for Medicare Parts A and B and because MediGap policies do not include drug coverage, you shoud sign up for a D plan.

    -- Part C — Medicare Part C, also called Medicare Advantage, is effectively a bundle of a MediGap and a D plan, usually but not always implemented as an HMO. As I said, Part C is just as much a Part of Medicare as Original Medicare Parts A and B, and both A and B are required before you can sign up for a C plan. The government providing Part C as a choice to Medicare beneficiaries is similar to your former employer providing an HMO as an alternative to a traditional health insurance plan before you became a Medicare beneficiary. Twenty five percent of Medicare beneficiaries currently choose C plans. The downside is that most have the perceived disadvantages of any HMO (limited geographic coverage and networked providers).

    (NOTE: There are also some legal primary/secondary recourse aspects of the terms private and public but it is highly unikely that those aspects wil matter to you — as the Medicare beneficiary. If you are concerned about this sort of thing because you have a complex Medicare situation, read the fine print and contact the relevant insurer and/or Medicare. Or contact your local senior center and ask for Medicare help.)
    Dec 5, 2011. 08:55 AM | 2 Likes Like |Link to Comment
  • Private Healthcare Spending in the U.S.: Already High and Heading Higher [View article]
    The problem with these oft "repeated" numbers:

    -- The OECD countries don’t measure the cost of long term healthcare consistently; the OECD posts this warning prominently on its related website. We know that about 33% of the US number is for long term healthcare but we don't know if all the other numbers are apples to apples (and given the OECD warning they most likely are not)
    -- The OECD uses an exchange rate-purchase/parity comparative mechanism that translates costs into US$. I am not sure how this affects the statistics but I would think unfavorably vs. the heydays of US$ hegemony
    -- Most of these counties have homogenous populations. Vs. the US, I doubt if any of the other countries has such a percentage of its population made up of citizens of the other countries (not just the ones shown but the countries in the entire set that makes up the often-quoted OECD average)

    Or maybe the US thinks it's healthcare is better and doesn't mind paying for it.
    Feb 11, 2011. 08:31 AM | Likes Like |Link to Comment
  • 'Death of the PC' Is Premature Prediction [View article]
    I haven't done the math lately and I am on the road but look at the 10-K and make sure you include both classes of shares. Even if it's "only" 80% these days, my opinion is the same. But I think EMC still owns close to 100% of the voting power of VMW

    -- Dennis Byron
    Dec 17, 2010. 01:32 PM | 1 Like Like |Link to Comment
  • Is Red Hat Just Like IBM, Microsoft, Oracle, Salesforce and SAP? [View article]

    Sorry you are wrong on a lot of fronts but particularly on the statement that the "author has not researched" the subject. In fact it is my research that is quoted on the Linux Foundation web site comparing Vista and Fedora 9 as noted in my November 2008 blog post on my IT Investment Research website (see www.linux-foundation.o.../ referencing my post at Fedora 9 from two years ago became RHEL 6 last week I assume (although I admit I didn't call Red Hat to confirm that).

    The point is that real-people investment research (as opposed to open source propaganda) clearly shows that from the demand side, Red Hat's sharing of development costs with IBM, HP, etc. via the Linux Foundation and similar organizations these leading enterprise software suppliers fund, administer and populate with programmers is not a business model, just a good tactic for all involved (now including even Microsoft vis a vis Apache as our 2006 research indicated would happen). Red Hat depends on the tactic more than the others but that is not a business model.

    Hopefully you are not an investor Aviso so no harm, no foul. Real investors, beware of this propaganda and make sure you are getting the facts.

    Nov 17, 2010. 10:37 AM | 1 Like Like |Link to Comment
  • Red Hat Is Last Man Standing in Open Source Market [View article]
    Thanks for the comment, zman58

    Open source zealots simply say something like "so and so is a moron." You clearly do not fall into that category. Your reasoned comment deserves a response.

    But you are missing a key part of my blog post above. This is an investment research web site and the investment research assignment I described involving finding investment opportunities among non-public software companies in 2007. Your response was to name a dozen long-public, non-software companies that use open source software terms and conditions (of which there are dozens in addition to the Ts&Cs that the FOSS people call open source) along with all kinds of other software license terms and conditions in conducting their non-software businesses. You mention Amazon, eBay, google, Epson, etc. for example.

    In addition to not meeting the non-public, software-company criteria, there is a bigger research problem with your suggested approach. For example, if I should consider Google part of the "open source market" (I don't believe there is an "open source market" as I say in the post but I do not write the headlines), should I also consider Google part of the database software market because it uses Oracle RDBMS to run its business? (Of course, when someone pays me to measure the open source market even though I don't believe there is one, I do count Google open source licensed products.) I haven't thought your water analogy completely through but I am not sure if counting the tolls paid at locks would be useful to investors thinking of investing in Poland Springs.

    Closer to my software-related investment research topics, where would Linux and Apache be without IBM, HP, Microsoft, etc.? These are the companies that have funded the development of these and most other prevalent open source software. That was the second important point of my blog post.

    (As an aside, you must have one hell of a wired home if you save thousands because you buy only Linux-based consumer electronics.)

    Thanks again,

    Nov 9, 2010. 11:09 AM | Likes Like |Link to Comment
  • Is Red Hat Just Like IBM, Microsoft, Oracle, Salesforce and SAP? [View article]
    Thanks. There are a lot of good comments here, so much so that I might do a future post. But I just want to repeat my warning to casual readers that very little of this is actionable IT-investment-related research, just a philosophical debate (that is pretty much over) among certain software developers. That is the reason some of the commenters are arguing with each other, and not relating the issue of open source terms and conditions to investing.

    In particular, there is an argument that Red Hat is somehow better than IBM for some philosophical reasons only understood by the debaters somewhat tied to support for open source development communities and culture--as opposed to terms and conditions. There is no doubt that Red Hat is demonstrably 100% so tied (hence the term "gotcha" in my original post) but in absolute numerical support for open source (man years or dollars), no one comes close to IBM.

    Oct 27, 2010. 02:06 PM | 1 Like Like |Link to Comment
  • Is Red Hat Just Like IBM, Microsoft, Oracle, Salesforce and SAP? [View article]

    Thanks for the thoughtful comment. Yes, I do "narrow it down to the actual transaction of money and service." This is an investment-research web site, after all.

    However, I make that determination based on extensive demand-side research that says that no one buys software because of the open source philosophy. That's the reason that Red Hat is the last man standing after the acquisition of MySQL, Zimbra, etc. etc. and even Sun (making a stretch I don't even agree with myself but a lot of people wanted to call Sun an "open source" company before Oracle acquired it).

    From an investment perspective, open source is simply a set of about 100 license terms and conditions (that number and the wide restricitive-permissive spread of those Ts&Cs is part of the problem for investors). Almost all the software-market leaders make software available under one or more of these diverse Ts&Cs and all of them adhere to such Ts&Cs in their own development efforts.

    Of course Red Hat allows "a clone, like CentOS, to coexist." That's part of the Ts&Cs it chose, effectively no different than what IBM does with Gluecode, Progress does with Fuse, etc. Are their business models different?

    When you say "Red Hat... honour(s) the mindset of open-source. I don't know of any actions by Red Hat that have worried the open-source community...", it implies that you are not interested in the investment aspects of these different companies' strategies, but only philosophical issues.

    That's OK. Open source is like the Elks or the Moose or the Shriners. A great fraternity (and it does still appear to be a fraternity) but that has little to do with why someone should invest in those companies that use its Ts&Cs.

    That's why "I reject 'open source' as an enterprise-software business model or sales model category." From an investment point of view, it's just legalities.

    (Over 1000 pieces of my research on this subject -- open source from an investment perspective -- are available on line if you want to dig deeper.)

    Oct 22, 2010. 12:26 PM | 1 Like Like |Link to Comment