In the course of a year a few things come up that require only a brief mention and occasionally an addendum to a previous column seems appropriate. As usual I try to address them in my year-end article.

A good friend, and prominent actuary, offered comments on one of my recent columns on health care (“Not Every Haystack Has A Needle”). He pointed out that I did not address one of the major areas of cost shift and one that will become increasingly important as the baby boomers become eligible for Medicare. Specifically he referred to the gap that exists between “billed charges” and what Medicare allows or pays.

To use an example from my own file–Medicare was billed $1,159.22 for a service provided for my wife. Medicare approved $418.85, paid $335.08, and my supplement paid the remaining $83.77. Who paid the $740.37 that was disallowed?

Obviously, if this represented a legitimate request for reimbursement by the provider, those funds must come back to the provider one way or another. The path most often taken is by shifting such costs to insured patients, thereby causing insurance premiums to rise. No wonder premiums for health insurance are high, and as the percentage of the population that is eligible for Medicare rises, the increases will become even more difficult to bear for the generation following the boomers. This will be difficult to solve–but the issue must be addressed.

On another note, a syndicated financial columnist recently wrote that as the financial markets continue to be in turmoil, investors are retreating to Treasury bills and bonds as a secure investment haven. Treasury bills and bonds are an IOU from the U.S. government. They are not backed by a mortgage or any piece of government property or any other security device. The bills and bonds are backed solely by the full faith of the U.S. government and as such are considered the ultimate in safety.

It is, I believe, interesting to note that other government IOU’s with exactly the same guarantee are not afforded the same level of prestige. Specifically I am referring to the Social Security trust funds which are invested in government IOU’s. Such funds have exactly the same backing as Treasury bills and bonds and yet some people still refer to the IOU’s owned by the trust funds as worthless pieces of paper. If that were true then the same might be said of the Treasurys, so prized as a “safe haven.” Nonsense! I still have faith in our government despite the problems we continue to encounter.

One other point on this subject. Critics rightly point out that ultimately our own income taxes will provide the funds to redeem the IOU’s owed to the trust funds. But that is also true of marketable Treasury bills and bonds as they become due, and in this case not all the claimants are U.S. taxpayers. The IOU’s owned by the Social Security trust funds are not marketable so the debt is always internal rather than external. None of the foregoing makes allowances for what the proceeds of any of the government IOU’s are used for. That is a matter of fiscal policy and a much broader subject for discussion.

The Nov. 19, 2007 issue of U.S. News and World Report contained an interesting article by Nikki Schwab, titled, “A National Crisis of Confidence.” The article dealt primarily with the notion that Americans have been steadily losing confidence in their leaders since 2005. The article cites polling by Yankelovich and others that indicate 51% believe we are falling behind other parts of the world, and 80% feel that unless we have better leadership things will get worse.

The report also offered a breakdown on the level of confidence in various categories. Overwhelmingly, it’s the nation’s military leaders who earn the highest level of confidence with a 40% rating. At the bottom of the list is Congress at 9%, the media at 8% and the entertainment industry at 7%. Reasons for this disparity were not given but it seems to me that one cause is quite obvious. The three at the bottom have, in recent times, been engaged in extensive “blamepointing,” to use one of the new buzzwords. All three have been vociferous in finding fault and blaming the world’s ills on other leaders. The military on the other hand has been focused upon its mission and goes about it without shifting blame for shortcomings to others. Americans love doers and view naysayers and faultfinders with suspicion.

Schwab’s article does end on a positive note in that 59% of the people believe that we will have better leaders 20 years down the road. I hope so.

One of the most important aspects of leadership is understanding the mission of the organization. Most military leaders have no problem with that, which no doubt accounts for their effectiveness. In that connection, I do have a concern with the leadership of the National Association of Insurance and Financial Advisors. NAIFA is a federation of local and state associations. It has no individual members. Lately most of the pronouncements coming out of that organization have been directed at its “individual members,” of which it technically has none. This is the kind of talk that got them in trouble with the IRS years ago in a battle over unrelated business income.

NAIFA’s primary vision mission is to nurture its member local and state associations–not bypass them. NAIFA will regain its strength only as its member associations are revived and restored to their former status.

Have a great 2008. “Accentuate the positive and eliminate the negative.”