Internet radio giant settles claims it billed consumers without their consent
If you are a Sirius XM Radio customer who was charged for an automatic subscription renewal you didn’t authorize, you may be eligible for a reimbursement under a $3.8 million agreement the New York-based company reached with attorneys generals in 44 states to settle misleading advertisement allegations.
The agreement follows an investigation into Sirius’ billing and marketing practices that was prompted by consumer complaints that the Internet radio giant was charging customers’ credit and debit cards to renew subscriptions without their notice or consent; making it difficult for customers to cancel contracts or obtain refunds; and was jacking up the rates after an initial low introductory price
“Consumers should be able to understand what they are purchasing and exercise their cancellation rights without hassle,” said Ohio Attorney General Mike DeWine, whose office took the lead in the investigation.
As part of the settlement, Sirius will pay the $3.8 million to the states and restitution to consumers who were customers between July 28, 2008 and December 4, 2014.
While Sirius, which has more than 50 million listeners, maintains it disclosed all relevant information about its automatic renewal policies, it agreed to make several changes to its marketing and billing practices. Specifically, the company agreed to:
• More clearly disclose all terms including billing frequency, cancellation policy and automatic renewal procedures.
• Provide advanced notice of upcoming automatic renewals.
• Make it easier for customers to cancel subscriptions.
• Prohibit incentive compensation for customer service representatives that was based on retaining current customers who wanted to cancel subscriptions.
The Chinese economy is slowing. Producer prices in China have been falling for nearly three years. Consumer prices have dropped to a five-year low making the Eurozone’s problems with deflation look tame
In the United States in July of 2008, a litre of gas reached an all-time high of $1.08. I suspected something. I had read earlier articles about shortages in China. In February, there were reported lines at gas stations. The Olympics were to be held in Beijing that year and I did not think that the Chinese wanted to make a bad impression. Interestingly enough, two weeks before the games, the price of gas started to fall. With the addition of the Great Recession, the price fell to $0.42 a litre, a collapse of over 60%. I could never prove it, but I suspected that demand from China pushed the price of gas to its all-time high.
This year the price of oil has dropped 38% since June. Again, I suspect China has something to do with it. The Chinese economy is slowing, but exactly how fast, might be difficult to tell given the Chinese predilection for messing with the numbers. Certainly, the fall of commodities including steel, iron and coal are obvious, because China is the world’s largest consumer.
Oil is a bit different. This is because USA consumes almost twice the quantity of oil as compared to China. China’s consumption has been catching up until now. Since 1999, the rate of China’s demand for oil has been rising. This has recently changed. The forecast for the growth of China’s demand has been lowered five times this year. In fact, imports dropped 22% in October alone and China actually became a net exporter.
The drop in the demand for oil tells you something about the rate of China’s contraction. This is hardly surprising. According to a Chinese research paper, the years of government stimulus resulted in massive inefficient investment and misallocated capital. How much is astonishing. The paper put the level at $6.8 trillion. This level goes a long way to explain the “ghost” cities and the bridges to nowhere. But, since this is China, the estimates are that $1 trillion was simply stolen.
The mis-allocation of capital resulted in excess capacity. Too many competitors producing the same product drives prices and profits down. Without profits, loans can’t be repaid. To just keep up with the interest requires more debt. Without bankruptcy, the cycle repeats.
The producer prices in China have been falling for nearly three years. Consumer prices have dropped to a five-year low making the Eurozone’s problems with deflation look tame.
However, dropping prices in China affect everyone else. All of the commodities that have been driven higher by demand from China including copper have been rapidly falling. The fall in commodity prices temporarily help profit margins for corporations in other countries, but not for long. With lower inputs, prices can fall further, exacerbating and spreading deflation already a problem in Europe and Japan.
On Thursday, the 4th December, a possible market rout was stopped by an unofficial, uncorroborated anonymous report that the European Central Bank would begin QE in January. The report contradicted ECB President Draghi’s statements in his press conference a few hours before. The markets decided to ignore the public official statements and go with an unconfirmed anonymous report. The markets also ignored an article in the fourth largest German national newspaper, Die Welt, that Draghi no longer had a majority on the board. Whether they will be able to ignore falling commodities, slower growth and deflation is yet to be seen.
(William Gamble is president of Emerging Market Strategies. An international lawyer and economist, he developed his theories beginning with his first-hand experience and business dealings in the Russia starting in 1993. Mr Gamble holds two graduate law degrees. He was educated at Institute D'Etudes Politique, Trinity College, University of Miami School of Law, and University of Virginia Darden Graduate School of Business Administration. He was a member of the bar in three states, over four different federal courts and speaks four languages.)
A ProPublica analysis found that many health insurance plans offered in the federal exchange are changing their benefits heading into 2015. Consumers have until 15th December to switch plans before they are automatically re-enrolled
This story was co-published with The New York Times' The Upshot.
At first glance, the 2015 health plans offered by the Ohio nonprofit insurer CareSource look a lot like the ones it sold this year, in the Affordable Care Act's first enrollment season.
The monthly premiums are nearly identical, and the deductibles are the same.
But tucked within the plans' jargon are changes that could markedly affect how much consumers pay for health care. Generic drugs will soon be free, but the cost of expensive specialty medications will increase. Co-payments for visits to primary-care doctors will go down, but those for emergency room trips will be higher.
Millions of people nationwide bought health insurance this year through the federal government's health insurance exchange, often through the website Healthcare.gov.
Now, as they pick plans for next year, they face a complex battery of choices and changes.
They have until Dec. 15 to select a new plan or they'll be re-enrolled automatically in the one they currently have. Or, if that plan no longer exists, they'll be enrolled in another product offered by the same insurer, when available. But even if they get the same plan — of the nearly 2,800 health plans offered in 2014, about 1,700 of them will exist in the same form next year — their benefits may not stay the same.
"You're getting re-enrolled in the same carrier, but there's basically no guarantees that your product looks anywhere near the same as it did last year," said Caroline Pearson, vice president of Avalere Health, a consulting firm.
Much attention has focused on changes to plans' monthly premiums, but changes to other kinds of benefits — affecting the cost of things like doctors' visits and prescriptions — can be trickier to understand and make a huge difference in annual health care costs.
A ProPublica analysis of the 2014 and 2015 plans in 34 states being offered on the exchange shows the adjustments taking place. ProPublica has created a tool that allows users to see, quickly and easily, some significant ways the plans have changed from one year to the next.
Customers of more than 900 plans will see their out-of-pocket maximum for medical bills increase, usually to $6,600 for individuals, the most allowed by law for next year. Only about 250 plans are lowering their out-of-pocket maximums. About 180 plans are being discontinued for at least some customers, and the rest are keeping the same limits.
Members of more than 600 plans will see their medical deductibles increase, while those in about 380 will see their deductibles drop. Consumers of one Illinois plan will see their deductible increase by $4,800. Those re-enrolled in plans offered by Florida Blue face deductibles as much as $3,650 higher than those this year, while other customers of the same company will see deductibles decrease by up to $3,000. Florida Blue did not respond to a request for comment.
More than a quarter of the 2,800 health plans altered the costs of specialty medications for conditions like multiple sclerosis and AIDS, mostly increasing the patients' share.
Some policy changes appear subtle, just a matter of adding or subtracting a few words, but are actually quite significant. This year, many insurers charged members a set fee of a few hundred dollars for emergency room visits. For next year, some of those plans changed the wording of their benefit, adding "co-pay after deductible." That means the insurers won't pay for any portion of an emergency room visit until consumers meet their deductible, spending thousands of dollars.
"Everyone has focused on premiums in the press because premiums are at least easy to understand," Pearson said. People have a harder time detecting the effect of changes to what's called a plan's benefit design. "It's just incredibly hard to do, but I think it's really important."
What ProPublica's analysis suggests is that even those who would be willing to pay higher premiums to keep their current plan may be surprised to learn that substantial details have changed. They should go back to Heatlhcare.gov or to ProPublica's news app to make sure their plan is still the best choice.
Shopping around is essential — and there's little time to delay.
The open enrollment period continues until Feb. 15, and customers who are automatically renewed in their plans can still make changes until that time, but only changes made by Dec. 15 will take effect on Jan. 1.
The Health and Human Services secretary, Sylvia Burwell, has been encouraging consumers to take an active role in the renewal process. But in the first two weeks of open enrollment, fewer than 400,000 consumers actively re-enrolled. "The first deadline is just a couple of weeks away," she said in a news release on Wednesday. "We're encouraging everyone who is already covered through the marketplace to come back and shop because there could be savings."
Everyone's health care needs are different. Some people might do best with a plan that has a higher premium and lower out-of-pocket costs for particular services; others might save money by choosing a plan with a lower premium and higher co-payments.
Those earning less than four times the federal poverty rate ($62,920 for a couple) qualify for subsidies to pay their premiums, and those earning even less may qualify for additional help to lower their out-of-pocket costs once enrolled.
Changes to insurance benefits are hardly exclusive to the Affordable Care Act marketplaces. They happen regularly in health plans offered by employers.
Under the law, insurers are somewhat limited in how they can change their plans.
Products are grouped by tiers: Bronze plans cover about 60 percent of their members' overall health services; silver plans 70 percent; gold plans 80 percent. To stay at those levels from year to year, plans can't just increase all of their charges. If they charge more for some things, that often means charging less for others.
That's what happened at CareSource, the Ohio nonprofit. Officials there said they changed their benefits based on comments from members and conversations with others who are uninsured. "Many didn't understand the value of health insurance," said Scott Streator, vice president of Enterprise Strategy at CareSource. "Therefore, we changed our plan design to make it more simple, more understandable and more preventive, focused on everyday types of health care needs."
That translated into free generic drugs and lower co-pays for physician office visits, Streator said. "If you make these changes, there's trade-offs," he said. "The costs go up somewhere else." In contrast with this year, when members pay $250 for emergency room visits, they will need to meet the plan's deductible next year before their E.R. visits are covered with a co-payment that varies from $250 to $500. And members will now pay 40 percent of the cost of specialty medications, up from 25 percent this year.
CareSource enrolled more than 30,000 people during the 2014 open enrollment cycle and expects to double that amount this time around, Streator said.
Another insurer whose products are changing is Coventry Health Care. One Coventry silver plan in the Kansas City, Kan., region is decreasing the costs of primary care visits to $5 from $10, but is increasing its medical deductible to $2,750 from $2,000, increasing its out-of-pocket maximum to $6,600 from $6,350, and increasing the cost of generic drugs to $15 from $10, among other changes. Premiums are also going up.
A spokesman said the company tries to balance its benefits and costs.
Vantage Health Plan, based in Louisiana, is increasing the medical deductible in its silver plan to $2,900 from $1,800 and is raising its maximum out-of-pocket costs, too. But the company said most of its members won't feel the changes much. That's because about 85 percent of the 8,400 members who enrolled in the last cycle received government subsidies.
Although those without subsidies "are going to get hit, all that was designed so that all those who are getting the subsidy, their blow would be softened because that's where the majority of our business falls," said Billy Justice, Vantage's director of marketing and sales.
Vantage hopes to double its enrollment for next year.
The data analyzed by ProPublica does not include information for states that run their own insurance exchanges, including California and New York. In California, plans are required to offer a standard benefit design, which allows consumers to compare plans more easily. Insurers compete on their brand's reputation, premiums and on the size of their doctor and hospital networks.
"There can be a big difference in the experience of the consumer in terms of what they pay out of pocket if you don't have standardized benefits," said Anthony Wright, executive director of the consumer advocacy group Health Access in California.
The government's plan to automatically re-enroll consumers for 2015 has come under criticism, with some warning that consumers who don't make a choice themselves could end up in a plan with higher costs. As a result, the government is considering a different system for 2017 in which consumers who don't pick their own plan could be shifted to the lowest-cost plan in the market.