It’s less than a week to go before the end of the year, and there is no agreement in sight that will stop the dreaded “fiscal cliff.” Is the economy doomed?

Well, no. Not necessarily, anyway. If the tax increases and budget cuts go into effect on January 1, we’re not going to wake up in the new year to bread lines and orphans selling apples on the streets. Nor is there likely to be a dramatic stock market crash.  Many market analysts say that most investors have been factoring in the likelihood of going “over the cliff” into their buying and selling decisions for several days already.

Heidi Moore writes for The Guardian that last week U.S. corporations US sold $13 billion worth of bonds. “If investors were truly worried about the effect of the fiscal cliff on corporate earnings in the next few weeks, they would not be buying the bonds of big US companies,” Moore said.

Further, if the year-end deadline is missed, Congress still has some time to act and turn the fiscal cliff into a fiscal speed bump. For example, the increased taxes could be lowered again, retroactive to January 1.

This doesn’t mean we can be complacent, however. Nelson Schwartz writes for the New York Times that “if the deadlock in Washington persists much longer than a few weeks, the consequences will quickly mount, economists warn.”

What consequences? If no deal is reached, payroll and income taxes will go up for everyone. If the increases are not reversed, taxpayers with incomes of $40,000 to $65,000 would see their paychecks shrink about $1,500 next year. Other taxes would impact businesses and investors.

The “cliff” includes $85 billion in cuts to defense and domestic programs. These would not go into effect immediately. However, within a few months the cuts would result in cuts to government contracts as well as many benefit programs. This means lost jobs. Most economists think this would throw the country back into a recession.

The stock market may not react dramatically on January 1, but if the uncertainty continues more people may conclude that America is a risky investment.

Possibly the most dramatic effect would be a whopping 27 percent reduction in Medicare reimbursement rates. If not corrected, this cut could wreak havoc on Medicare, possibly leaving recipients without doctors willing to treat them.This could create terrible hardships for seniors, especially those with severe health challenges like mesothelioma.

How did that happen?

The biggest cause of the cut is that the annual “doc fix” is going unfixed. The “doc fix” refers to a formula for adjusting Medicare payments to doctors that was passed into law in the 1990s. The formula turned out to fall short of keeping up with costs, and so every year for nearly ten years Congress has passed a “doc fix” overriding the formula. The last “fix” runs out at the end of the year. On January 1, several years of deferred Medicare cuts go into effect.

Finally, there’s the price of milk. One of the domestic programs about to end is a dairy industry subsidy that keeps milk affordable. Dairy industry analysts believe that without the subsidy, the price of milk could skyrocket to $6 a gallon.

Of course, it’s possible there will be a last-minute deal that will kick the can down the road. We will look at the possibilities in the next post.

The buzz coming out of Washington today is about “chained CPI” and Social Security as part of the “fiscal cliff” deal. And some Washington watchers are saying that “chained CPI” means “reducing Social Security benefits.” What’s going on?

As you probably know by now,  the fiscal cliff is a collection of tax increases and budget cuts that will go into effect at the end of the year if Congress does not pass a law to stop them. President Obama has been meeting with Speaker of the House John Boehner to negotiate a bill that might get enough votes from both parties to pass.

There are several items under negotiation, but most of the disagreements boil down to budget cuts versus tax rate increases. Very generally — Republicans want to keep tax rates as they are, but they want big cuts in “entitlement” programs such as Medicare and Social Security. Democrats want to keep entitlement programs as they are, but they want to raise marginal tax rates on people making more than $250,000.

According to several news sources, the compromise that is emerging will include an increase in tax rates on incomes over $400,000 instead of $250,000, and federal spending will be cut by $1.22 trillion over 10 years. Many of these cuts would come about because of “chained CPI.”

For Social Security, what this means is that the annual cost of living adjustment for benefits would be calculated in a different way, and that different way would almost certainly mean that benefit adjustments would go up more slowly than they have been.

CPI stands for Consumer Price Index. It is a measure of changes in the price of goods and services that is maintained by the U.S. Bureau of Labor Statistics. The government makes many uses of this data. Cost-of-living increases in Social Security are determined by the CPI, meaning that benefits go up as the price of goods and services go up.

However, there are several different ways to determine the CPI. Social Security has been going by CPI-W, which is a measure of prices paid by urban wage-earners. But a lot of Washington “budget hawks” have been pushing to tie Social Security increases to C-CPI-U, or chained CPI. This measure assumes that as the price of a things or services go up, people change their buying habits and substitute something cheaper.

For example, if the price of steaks goes up, people stop buying steaks and eat more chicken. By this measure, the cost of living goes up more slowly than it does according to CPI-W. It is estimated that over three years an average beneficiary would receive $285 less with “chained CPI” than with the way benefits are determined now.

Understandably, many are opposed to changing Social Security at all. Seniors face enough challenges, from loss of income to health issues such as mesothelioma, which is most often diagnosed in older people. Social Security is not part of the general federal budget and is not a cause of the budget deficit.

But Republicans are keen to cut Social Security and other benefit programs. Switching Social Security to chained CPI is seen as one of the least bad concessions the White House can make in order to get Republican votes for a fiscal cliff deal.

Here’s an update on the story about the contaminated steroid injections that caused an outbreak of meningitis. Investigations into the incident have revealed dangerous practices in a largely unregulated part of the pharmaceutical industry. Our medicines may not be as safe as we’d like to think they are.

Earlier this year, hundreds of people in several states developed meningitis after receiving steroid injections to relieve back pain. Nationwide, as many as 36 people have died from the injections. The contaminated steroid medication was traced to a Massachusetts pharmaceutical lab that knowingly was mixing “sterile” medicine in rooms contaminated with mold and bacteria.

The incident shed light on a little-known, and little-regulated, part of the pharmaceutical industry called “compounding pharmacies.” Originally, compounding pharmacies were “special order” suppliers that compounded medicines customized for individual patients. However, over the years — and out of sight of the Food and Drug Administration — many of these medicine suppliers turned into unregulated drug factories. Instead of limiting themselves to individual orders, they are making drugs in bulk that could be given to anyone in the U.S., including you.

Why don’t compounding pharmacies receive the same FDA oversight as other parts of the pharmaceutical industry? The short answer is that the pharmacies are protected by a smart and aggressive trade organization that knows its way around Washington.

Back in 1997, Congress did pass a law that gave the FDA more regulatory authority over the compounding pharmacies. But a group of pharmacies filed a suit against the law, and the Supreme Court overturned it in 2002. This was after four people had died in a 2001 meningitis outbreak from contaminated steroid shots.

The following year, an FDA official testified to a Senate committee that the agency had surveyed medicines from 12 compounding pharmacies, and ten of the 29 sampled drugs failed quality tests.

In the years since, Congress has considered proposals to regulate compounding pharmacies, but lobbyists for the International Academy of Compounding Pharmacists (IACP) obtained the support of key legislators to kill each attempt. In doing so, the IACP followed the path made by other industrial groups — coal mine owners, for example — claiming that regulation would create too many financial burdens and put the industry in jeopardy. So, peoples’ lives are put in jeopardy.

This pattern repeats itself over and over in the U.S. Industries are allowed to sell unsafe products or operate under unsafe conditions for employees, and regulatory agencies are not given the resources or the authority to do anything about it.

Some hazards eventually are regulated, but only after many years. For example, asbestos manufacturers stayed in business for years after it was well known that asbestos exposure causes mesothelioma. Eventually most asbestos mining and manufacturing were eliminated in the U.S., but not all. Many consumer products still contain small amounts of asbestos.

Compounding pharmacies remain mostly out of reach of the FDA.  They are regulated by states, but the effectiveness of state oversight varies. In the case of the Massachusetts pharmacy responsible for this year’s meningitis outbreak, the Massachusetts Department of Public Health says the company had shipped its product before testing was complete. Whether the pharmacy routinely skipped safety tests is not clear.

The eligibility age for Medicare came under scrutiny in Washington last week, when some pundits and politicians debated raising the eligibility age from 65 to 67. Will they really do this? And if so, why?

You’ve probably heard of the “fiscal cliff,” a combination of tax increases and budget cuts that go into effect on January 1 if Congress does not pass a law to stop it. The White House and top congressional leaders are trying to negotiate a compromise bill that could pass in both the Republican-controlled House and the Democratic-controlled Senate.

By all accounts, these negotiations are not going well. The White House insists that marginal tax rates must go up for the top 2 percent of income earners, but Republicans say they won’t vote for that. Republicans talk about “entitlement reform,” which usually boils down to some privatization of Medicare and Social Security, and Democrats say they won’t vote for that.

To break the impasse, a number of pundits and politicians  proposed raising the eligibility age of Medicare from 65 to 67. They argued that Republicans might be persuaded to accept an increase in marginal tax rates for upper income earners, which Democrats want, in exchange for cutting cost out of Medicare.

We don’t know whether the negotiators are seriously considering a change in Medicare eligibility. But if they are, what are the pros and cons?

Raising Medicare Eligibility Age: Good Idea?

Last year, the Congressional Budget Office estimated that raising the Medicare eligibility age would save the federal government $113 billion over the next decade. This estimate assumes the change in eligibility age would be phased in gradually over 13 years. The Kaiser Family Foundation estimates that $5.7 billion could be saved in 2014 alone. This would go a long way toward keeping Medicare solvent for many more years.

Proponents of this argument say that once “Obamacare” goes fully into effect in 2014, seniors waiting to go on Medicare will be able to get insurance through the health insurance exchanges. Insurers will not be allowed to refuse to insure seniors even if they have severe health problems, even something life-threatening such as mesothelioma.

Raising Medicare Eligibility Age: Bad Idea?

Private insurance, even when purchased through the exchanges, would almost certainly be more expensive than Medicare. What’s more, adding 65- and 66-year-olds to the private insurance risk pool would raise insurance costs for younger folks in the same pool. At the same time, taking 65- and 66-year-olds out of the Medicare risk pool would leave a smaller, and older, pool of Medicare recipients. This means their costs would go up also.

Some seniors will postpone retirement so they can continue to receive employee health benefits. However, this will increase their employers’ insurance costs, because the older folks are likely going to be the most expensive to insure.

Further, as many as 5 million 65- and 66-year-olds would probably go on Medicaid and other programs. Much of this cost would be absorbed by state governments.

When added together, the costs that would be passed on to seniors, employers, and state governments would be just about double what the federal budget would save. In other words, for every dollar saved in the federal budget, 2 dollars will be taken out of the economy elsewhere. Saving the federal government $5.4 billion in 2014 would cost individuals, employers, and states about $11.7 billion in 2014.

Some economists argue that taking that much money out of the economy will hurt the economy more than the large budget deficit. However, it may be a price that has to be paid to get Republican votes for any compromise.

Among all the things American politicians squabble about, the bed tax is relatively new. But you may be hearing more about it in the future.

The bed tax is a way some states raise money for Medicaid. Let’s see how it works.

Medicaid, of course, is a program jointly run by federal and state governments that provides health care for low-income people without insurance. Close to half of Medicaid recipients are children. About 10 percent of recipients are elderly, but these seniors receive 25 percent of the benefits.

The Kaiser Family Foundation estimates that 7 out of 10 nursing home residents are on Medicaid, and most of those patients are seniors. About 70 percent of people over the age of 65 will need long-term care services eventually, and Medicare pays for very little of that. The needs of someone with debilitating illness, such as mesothelioma, would overwhelm many families were it not for Medicaid.

Medicaid is jointly funded by the federal government and states. The federal government contributes matching funds to the amount states commit too Medicaid. However, the exact percentage of the “match” varies from state to states. On average, the federal government contributes 57 percent of Medicaid dollars. But in high-income states it might be a 50 percent match, while a state with high levels of poverty might receive a 75 percent match. Even so, if states cut their own Medicaid funds, what the federal government provides goes down also.

Nearly 40 states use a “bed tax” to pay for part of their share of Medicaid. There are several versions of the bed tax, but basically it’s a tax paid by hospitals and nursing homes that goes into the state Medicaid fund. The state funds plus the federal matching dollars are then redistributed to hospitals and nursing homes. States then can pay their share of Medicaid without taking all of the money from general revenue.

Obviously, the hospitals and nursing homes aren’t benefiting as much from the program if they are funding part of it themselves. But it’s better than not getting Medicaid at all. Many states are barely making ends meet as it is.

The bed tax recently has come under fire. Last month, anti-tax crusader Grover Norquist added ending the bed tax to his crusade. Among other thing, he sent a letter to Republicans in the Georgia legislature urging them to not renew Georgia’s bed tax, which is scheduled to expire soon. He didn’t suggest another way to fund Medicaid; he doesn’t want the state to accept federal funds at all.

What would happen when 7 out of 10 of the state’s nursing home residents lose their beds, Norquist doesn’t say.

Now other conservative politicians are talking about the bed tax. For example, this month Sen. Bob Corker (R-Tennessee) called for “ending a massive ‘bed tax’ gimmick the states use in Medicaid to bilk the federal government of billions.”

Others have called the bed tax practice a “ponzi scheme.” They claim hospitals are using the federal matching funds to pay the bed tax, so that the state can then add the federal funds to the state Medicaid fund and use those dollars to get more federal Medicaid money. Round and round and round.

Hospitals are firing back. In Georgia, Children’s Healthcare of Atlanta, Grady Health System in Atlanta, Memorial University Medical Center in Savannah, and an association of rural hospitals sent their own letter to the Georgia legislature. The hospitals asked that the tax be renewed, because without Medicaid funds the burden that would fall on the hospitals and the patients would be catastrophic.  Medicaid remains an essential funding source for many hospitals, even if they are helping to pay for it.

Remember the 2010 BP oil spill into the Gulf of Mexico? This month two BP supervisors were indicted on manslaughter charges connected to the oil rig explosion that killed 11 workers.  Another executive was charged with lying to federal investigators about how much oil was flowing into the Gulf during the disaster.

The federal indictment said the two supervisors were negligent in maintaining safety standards on the Deepwater Horizon oil rig. Last year a White House commission charged with investigating the disaster found that BP suffered from a systemic failure of management. In particular, the commission charged that BP had a pattern of cutting corners on safety to safe time and cost.

“Whether purposeful or not, many of the decisions that BP, Halliburton, and Transocean made that increased the risk of the Macondo blowout clearly saved those companies significant time (and money),” the commission report said.

Where have we heard this before? We’ve heard the same story about coal mine and chemical plant owners and asbestos manufacturers, who risked the lives of employees to accident, poison or mesothelioma rather than spend the money on safety precautions.

This is not the first time a U.S. court has found company executives guilty of manslaughter when workers die on the job. The first case involved an Illinois company called Film Recovery Systems Inc. This company extracted silver from camera and x-ray film. The process involved the use of cyanide.

In 1983, an employee of Film Recovery Systems named Stefan Golab lost consciousness while working near a vat of boiling cyanide. He was taken to a hospital and pronounced dead on arrival. An autopsy revealed Golab had died of cyanide poisoning.

Investigation revealed that most of the Film Recovery System employees involved in the extraction procedure had symptoms of cyanide poisoning. The plant was using 10,000 pounds of sodium cyanide each month, and cyanide gas often escaped from vats. Workers were given only paper masks and cloth gloves to work with the film and cyanide.

Workers — many of whom were illegal immigrants — also said they were not told what was in the chemicals they used in their jobs. Safety standards were so lax that the workers sometimes heated their lunches in the same equipment that was used to heat cyanide.

In 1985, Film Recovery’s president, plant manager and plant foreman were found guilty of murder. In 1990 an Illinois Court of Appeals overturned the convictions, but the three managers later pleaded guilty to manslaughter to avoid another trial.

What’s the moral here? We want to think well of business owners — they are job creators, after all — and it’s hard to believe some of them would risk their employees’ lives to make a bigger profit. But we see, time and time again, that at least some business owners will take those risks.

The Deepwater Horizon disaster not only took the lives of eleven oil rig workers; it also spilled 206 million gallons of crude oil into the Gulf of Mexico. The environmental damage is still being measured.

BP agreed to pay $4.5 billion in a settlement with the U.S. government. BP also has spent a lot of money on advertising to polish its corporate image. But if history is our guide, somewhere in the oil industry workers still are working in unsafe conditions, because some executives are more keen about squeezing every drop of profit out of their companies than about the lives of employees. And they always think they’ll get away with it.

For all practical purposes, this summer’s Supreme Court decision on the Affordable Care Act, plus the results of this month’s general election, mean that the ACA — Obamacare — will go fully into effect in 2014. But the detractors are not giving up.

As I wrote recently, a number of Republican governors are refusing to have their states create insurance exchanges. As of last week a dozen governors are official Obamacare refusniks. These include Bobby Jindal of Louisiana, John Kasich of Ohio, Scott Walker of Wisconsin, Rick Perry of Texas, and Mary Fallin of Oklahoma. Another dozen Republican governors have not declared what they are going to do.

The insurance exchanges will enable people and small businesses to find the best deals on health insurance. This is going to be vital when the requirement to be insured goes into effect in 2014. The mandate to buy insurance will make it possible to require insurance companies to accept everyone as a customer, regardless of pre-existing conditions. After 2014, no insurance company can refuse to insure you, even if you have a life-threatening condition such as mesothelioma cancer. The insurance exchanges are a key to making this work, and if states don’t set them up, the federal government will do it for them.

Utah’s Republican Governor Gary Herbert is going in a somewhat different direction. Utah has had an insurance exchange in effect since 2009, before Obamacare even was passed into law. However, the Utah exchange doesn’t match federal requirements. It serves only small business, not individuals, and it provides no consumer protection from ripoff policies that provide little coverage.

But Governor Herbert has let it be known Utah isn’t going to change its exchange. In effect, he is daring the Obama Administration to make him comply with Obamacare.

Meanwhile, back in Washington, House Repubicans are still calling for a repeal of Obamacare. Speaker John Boehner is demanding that cuts to the ACA be included in any deal to ward off the “fiscal cliff.” “We can’t afford it, and we can’t afford to leave it intact. That’s why I’ve been clear that the law has to stay on the table as both parties discuss ways to solve our nation’s massive debt challenge,” Boehner said.

The House has voted to repeal Obamacare more than 30 times now. And every time another repeal bill is introduced, Speaker Boehner sends it to the Congressional Budget Office to find out what the repeal bill will do for the federal deficit. And every time, the CBO tells Speaker Boehner that repealing Obamacare would add at least $100 billion to the federal deficit.

That’s right; the ACA/Obamacare contains a great many cost-saving provisions, and if the act is repealed the federal deficit will go way up, not way down. Yet Speaker Boehner and the House Republicans ignore the CBO and continue to shriek that Obamacare must be repealed because we can’t afford it.

But the House Republicans have little political leverage. Most Washington observers believe the White House would prefer to go off the cliff than allow House Republicans to weaken the Obamacare.

The last post explained the “fiscal cliff” you may have heard about in the news. What are the consequences of going over it, and what might be done to stop it?

According to the Congressional Budget Office (CBO), the resulting tax hikes and spending cuts would reduce the federal budget deficit by about $560 billion. However, the CBO says, the shock to the economy would send the economy into a severe recession, cutting GDP by four percentage points in 2013. An estimated two million jobs would also be lost.

Some of the “solutions” being discussed in Washington could cause about as much damage. For example, attempting to reduce the deficit without raising taxes would require huge cuts in government spending that would result in layoffs and steep cuts in services. This could set off a chain reaction of reduced consumer spending, which hurts business and causes more layoffs.

Many lawmakers want to squeeze the Medicare budget as a way to reduce the deficit. There is a very real possibility a deal to avoid the cliff will include raising the Medicare eligibility age to 67.  Needless to say, this could create great hardship for uninsured seniors. Although it ought to be easier for them to get private insurance after the Affordable Care Act goes into effect in 2014, such insurance is bound to be more expensive than Medicare. As it is, doctors report that some of their older patients are barely hanging on, avoiding medical care until they are 65 and can sign up for Medicare. Postponing medical treatment for heart disease or mesothelioma cancer can be fatal.

In a press conference this week, President Obama repeated a promise that the Bush tax cuts would not be extended for people who make more than $250,000 a year. He was willing to consider many other compromises, but not that. Congressional Republicans insist they won’t agree to any deal that doesn’t include an extension of all Bush tax cuts. So we appear to be at an impasse.

Washington watchers believe one of three things will happen. Economist Robert Reich, who served as President Clinton’s Secretary of Labor, predicts that Congress and the White House will kick the can down the road. They will agree on a short-term patch to keep things as they are for two or three more months and give the new Congress a chance to work on it.

Others predict the President would prefer to let the “fiscal cliff” deadline expire and then get a deal out of the new Congress that would be retroactive to the beginning of the year. This would minimize the damage and give the President more leverage to force congressional Republicans to compromise.

Finally, there is always a chance that Congress and the White House will agree on a new tax-and-spending package that will pull us away from the fiscal cliff. Of the three possibilities, however, this one is the least likely.

Have you been hearing about the “fiscal cliff”? The “fiscal cliff” refers to a package of tax increases and budget cuts that will go into effect on January 1, 2013, unless Congress can agree to change them. Now that the election is over, expect Congress and the White House to fight over alternative bills to help us avoid the cliff..

Although they are not included in the “fiscal cliff” cuts, some politicians may want cuts in programs like Medicare, Medicaid, veterans’ benefits, and Social Security as part of a deal to not go over the cliff. The eventual solution may be hard on seniors, especially those who depend on Medicaid to pay for nursing care and those with serious illnesses, such as mesothelioma, and who depend on Medicare. However, other politicians say that they would rather go “over the cliff” than touch these essential programs.

To understand how we got to this point, we must go back to the early years of the George W. Bush administration. In 2001 and 2003, Congress passed two very large tax cut bills at President Bush’s urging. Because support for the bills in the Senate was weak, the Senate passed the bills under a process called “reconciliation” that limits debate and prevents bills from being filibustered.

The reconciliation process cannot be used if the bill would add to the federal deficit after ten years. And independent analysis of the bills said they would add to the federal deficit quite a bit. To work around the rules, the bills were set to expire at the end of 2010.

When the 2010 expiration date was near, President Obama and most Democrats in Congress wanted to allow the cuts for people who earn more than $250,000 a year to expire, but keep them for everyone else. But Republicans wouldn’t hear of it, and fought to extend all the tax cuts. Eventually the warring factions worked out a deal — the tax cuts would be extended two more years in exchange for an extension of unemployment benefits, payroll tax cuts, and other forms of relief for working and unemployed Americans.

Then in 2011 came the debt ceiling crisis. The “debt ceiling” is a sort of accounting procedure than began about a hundred years ago. The Treasury Department needs authorization from Congress to borrow money to pay bills. To save time, Congress passes blanket authorizations that allow the Treasury to borrow up to a certain point — the “debt ceiling” — before asking for another authorization.

These debt ceiling hikes usually pass automatically, but in 2011 House Republicans staged a showdown and balked at raising the debt ceiling. They told constituents they were keeping the nation from going into more debt. However, the raise was needed to pay for things Congress had already bought, and not raising the debt ceiling would put the United States in default on our bills, which has never happened before.

Congress could not reach an agreement on anything, and the deadline for the debt ceiling was looming. The resolution was the Budget Control Act of 2011. This was a very complicated bill intended to force Congress to agree, or else.

Very simply, the bill established a mechanism by which huge spending cuts and budget caps will automatically go into effect on January 1, 2013, unless Congress can come to some other agreement. Some programs, such as Medicare, Medicaid, Social Security, and veterans benefits, were excluded. But there would be big cuts in many other domestic programs and also cuts to the defense budget.

So there is the fiscal cliff — the automatic expiration of the Bush tax cuts plus the automatic cuts called for i the Budget Control Act of 2011, both of which go into effect on January 1, 2013. Unless Congress can do something about it before the end of the year, on January 1, 2013, nearly everyone’s taxes will go up and a whole lot of programs people rely on will be cut.

In the next post we’ll look at what’s likely to happen and why it might not be too awful if we did go over the cliff.

At first glance, the 2012 general election doesn’t seem to have changed much. President Obama was re-elected. Democrats will retain control of Congress, and Republicans will retain control of the House.  What might we expect to happen in Washington in the next two years?

For one thing, this election insures that the Affordable Care Act (ACA), or Obamacare, will go fully into effect in 2014. Even if a majority of the House wants it to go away, a Democratic majority in the Senate would never pass a repeal bill. And even if they did, President Obama would never sign it.

A number of Republican governors now find themselves in a pickle. The ACA calls for establishing statewide insurance exchanges, which will be insurance marketplaces one can access online. Individuals and small businesses can use the exchanges to find affordable health insurance policies.

If you have ever had to purchase an individual health insurance policy, you will appreciate the exchanges. It can be difficult just to find out what is available in your state, and if you do online searches much of the “hits” you get will be scams.

With the exchanges, you will be able to find every legitimate health insurance policy offered in your state in one place, and you will be able to compare them easily. The policies offered through the exchanges must meet certain federal guidelines to protect consumers from buying the ripoff insurance that somehow never covers whatever medical problem you have. It is hoped the exchanges will drive competition among insurance companies so consumers can get better deals.

The exchanges are being set up to help people comply with the individual mandate requirement. Beginning in 2014, most citizens will be required to have health insurance or pay a penalty. This will make it possible to require insurance companies to accept customers even if they have a preexisting condition. In 2014, no matter what condition your health is in — even if you have a life-threatening disease such as mesothelioma — the insurance companies cannot refuse to sell a policy to you.

How are the Republican governors in a pickle? The ACA requests that states set up their own exchanges. If they fail to do that, the federal government will step in and do it for them.

Several governors, mostly Republicans, have refused to even think about the exchanges. They weren’t going to comply with federal demands, period. Several of their states even filed lawsuits against the ACA to have it declared unconstitutional, but last summer the Supreme Court upheld the health care law.

Then, they believed President Obama would be defeated in the general election, and that Republicans would take back the Senate, and then Obamacare would be repealed. (He wasn’t, they didn’t, and it won’t be. )

On November 7, the day after the election, governors looked at their calendars and saw a deadline looming — November 16, 2012, the due date for state plans for the new insurance exchanges. The governors who thumped their chests and dared the federal government to make them comply now knew that if they didn’t submit a plan, the federal government would do it for them.

Then the governors got a reprieve. On Friday, the Obama Administration announced that states could take until December 14 to file their plans. And if they want to run exchanges “in partnership” with the federal government, they have until February 15. But one way or another, the exchanges will be in business beginning January 1, 2014.