How Should Americans' Health Care be Paid For?

[donheff]

It's a difficult subject for the US since we're plagued with do-gooders who think US patented drugs should be available to outsiders for whatever price they can either afford to pay or, more likely, want to pay.

I have wondered why drug companies sell stuff overseas for less. I have heard that volume negotiations are the culprits. The one thing I can't believe has a bearing on how drug companies price common drugs in places like Europe and Canada is the opinions of US do-gooders.

 

[M Paquette]

For me, the biggest reason why health care is so expensive in the US is that the government hasn't woken up to the powerful purchasing position it is in. Prescription meds, for example, are way cheaper in France than the US, because the French national insurance system goes to the manufacturers and tells them how much it's prepared to pay.

You'll love this.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 prohibits the Federal government from negotiating discounts with drug companies.

No, really. Stop laughing at us, please. This is serious.

The theory that supporters of this operate under is that negotiating prices would deprive the drug companies of their rightful profits, some of which (a bit less than they spend on TV and print ads) might be spent on research and development.

See, we're supposed to go out and shop around, and that's OK, but the biggest customer of the pharmaceutical companies with the new Part D coverage is supposed to pay full list and like it.

 

[samclem]

If this poll is representative and 40% of people want a government single-payer solution, that's a really big market--over a hundred million people. They don't need the government, they could just start their own "everybody join our co-op and pay the same fixed price and we'll have a really big pool and all get 'free' medical care" group. There would be some adverse selection, but that would be significantly offset if they choose to exclude the expensive-to-care-for old folks (they are already on Medicare) and they could require physical exams for those who qualify for Medicaid (same reasoning--the taxpayers are already paying for them). No constitutional issues, no objections about "government intrusion," just all the joy of getting resources from a "common." Rules to contain costs could be set by the agreement of the majority, maybe a big "shareholder vote" every year. Set up any rules they want (waiting period, etc) to prevent buying insurance just as the ambulance arrives, etc.

This would assure the uninsured could buy insurance, this voluntary arrangement does not run afoul of the Constitution, and everyone gets the level of treatment that the group decides is fair. The only possible "undesirable" feature is that government force won't be available to compel some to pay for the care of others.

 

[donheff]

If this poll is representative and 40% of people want a government single-payer solution, that's a really big market--over a hundred million people. They don't need the government, they could just start their own "everybody join our co-op and pay the same fixed price and we'll have a really big pool and all get 'free' medical care" group. There would be some adverse selection, but that would be significantly offset if they choose to exclude the expensive-to-care-for old folks (they are already on Medicare) and they could require physical exams for those who qualify for Medicaid (same reasoning--the taxpayers are already paying for them). No constitutional issues, no objections about "government intrusion," just all the joy of getting resources from a "common." Rules to contain costs could be set by the agreement of the majority, maybe a big "shareholder vote" every year. Set up any rules they want (waiting period, etc) to prevent buying insurance just as the ambulance arrives, etc.

This would assure the uninsured could buy insurance, this voluntary arrangement does not run afoul of the Constitution, and everyone gets the level of treatment that the group decides is fair. The only possible "undesirable" feature is that government force won't be available to compel some to pay for the care of others.

That would be great if you could organize the 100M, somehow enforce mandatory enrollment (otherwise you would need to permit companies to bar people for pre-existing conditions), cover payments during periods when people are unemployed/disabled, etc. Seems like a job for Government.

 

[Independent]

Why do they have to shop around at that point?

Nvestysly was saying that he wanted a lot less government involvement in health care/health insurance. But he felt the government should provide some "framework". I wanted to know how his framework impacted access to health insurance. I provided some examples:

Suppose I buy private insurance and then get cancer. My insurer will see that the rationale profit seeking decision is to refuse to renew my insurance.
Or, suppose I get my insurance through employer group and my employer goes out of business or decides to drop group insurance. I'd like to continue my coverage at normal rates, but the insurer wants to drop me.
Or, suppose I'm a young person with a congenital problem. I've aged out of normal "family" coverage and my parents' insurer doesn't want to continue my coverage.

These are cases where I want to buy health insurance, but there's no private market where I can "shop around" because nobody knows how to make a profit by selling to me. Did he have some ideas of how/whether his framework would deal with these cases?

The general background is that some people think the best fix to our system is "free markets". My problem with that is health care/health insurance have too many characteristics that don't fit "efficient" markets. In this case, switching costs are prohibitive.

 

[Independent]

If this poll is representative and 40% of people want a government single-payer solution, that's a really big market--over a hundred million people. They don't need the government, they could just start their own "everybody join our co-op and pay the same fixed price and we'll have a really big pool and all get 'free' medical care" group. There would be some adverse selection, but that would be significantly offset if they choose to exclude the expensive-to-care-for old folks (they are already on Medicare) and they could require physical exams for those who qualify for Medicaid (same reasoning--the taxpayers are already paying for them). No constitutional issues, no objections about "government intrusion," just all the joy of getting resources from a "common." Rules to contain costs could be set by the agreement of the majority, maybe a big "shareholder vote" every year. Set up any rules they want (waiting period, etc) to prevent buying insurance just as the ambulance arrives, etc.

This would assure the uninsured could buy insurance, this voluntary arrangement does not run afoul of the Constitution, and everyone gets the level of treatment that the group decides is fair. The only possible "undesirable" feature is that government force won't be available to compel some to pay for the care of others.

Lots of insurance companies started as co-ops (mutuals). They discovered that "some adverse selection" will sink them.

 

[samclem]

That would be great if you could organize the 100M, somehow enforce mandatory enrollment (otherwise you would need to permit companies to bar people for pre-existing conditions), cover payments during periods when people are unemployed/disabled, etc. Seems like a job for Government.

Or an "evil corporation". It could be a nonprofit if that takes the sting out of it. It shouldn't need mandatory enrollment--40% of respondents have said they want to pile into the boat with all their fellow citizens, this is their chance to do that. Or, will they only get in the boat if everyone is forced into the boat, including those who can be forced to row a lot more than they can? As mentioned, the government plans are already handling most of the very sickest people (the old and indigent), so they can be excluded. Everyone else can join up during the formative period, then when kids turn 18. No one can be refused. It's a big decision, and those not choosing wisely will have a hard time getting aboard. If they decide together that premiums should be paid for those who lose their jobs, then they can raise their premiums to cover that (I can buy private insurance of several types that does this today).

To the degree that this idea is found wanting because the rich aren't forced into the plan to carry the weight of others, I think we can see the reason that "single payer" is popular: people want the "single payer" to be somebody other than themselves.

 

[dex]

Nvestysly was saying that he wanted a lot less government involvement in health care/health insurance. But he felt the government should provide some "framework". I wanted to know how his framework impacted access to health insurance. I provided some examples:

Suppose I buy private insurance and then get cancer. My insurer will see that the rationale profit seeking decision is to refuse to renew my insurance.
Or, suppose I get my insurance through employer group and my employer goes out of business or decides to drop group insurance. I'd like to continue my coverage at normal rates, but the insurer wants to drop me.
Or, suppose I'm a young person with a congenital problem. I've aged out of normal "family" coverage and my parents' insurer doesn't want to continue my coverage.

These are cases where I want to buy health insurance, but there's no private market where I can "shop around" because nobody knows how to make a profit by selling to me. Did he have some ideas of how/whether his framework would deal with these cases?

The general background is that some people think the best fix to our system is "free markets". My problem with that is health care/health insurance have too many characteristics that don't fit "efficient" markets. In this case, switching costs are prohibitive.

OK - Those are some very specific issues that could be handled by legislation instead of a government plan - e.g. a high risk pool for those with pre-existing conditions similar to high risk drivers that some states have.

 

[youbet]

I have wondered why drug companies sell stuff overseas for less. I have heard that volume negotiations are the culprits.

I believe in the case of Canada, low prices paid for US patented drugs are more related to gov't mandated prices than "negotiations." If the drug company can cover manufacturing expenses at the offered price, they accept the offer and count on higher prices in the US to cover profit, research expenses, etc.

However, I don't doubt that if a supplier simply refused to supply at the gov't mandated price that some "negotiation" would occur.

I also think you under estimate the power of do-gooders in our country. Especially when those do-gooders are Congresscritters or ex-presidents on a mission. But that's a different discussion we shouldn't blend in here.......

 

[Independent]

OK - Those are some very specific issues that could be handled by legislation instead of a government plan - e.g. a high risk pool for those with pre-existing conditions similar to high risk drivers that some states have.

Yes. At times I think that high risk pools are the only thing we need to make our private insurance system work for middle class people*. But, the pools don't work without the government supporting them with tax dollars and making rules about what's covered and what isn't. I was trying to see if the poster who wanted "very little" gov't in health care saw the problem of underwritten health insurance and was willing to accept some level of gov't involvement to deal with that problem.


* But I voted for tax-funded universal catastrophic insurance as the best for everyone.

 

[Texas Proud]

Now that we have just over 100 votes....


I want to point out that only 2 have voted for the current law that was passed...

so even though a lot of people would like some kind of gvmt run program... they do not like what was passed...

and the poeple who do not want a gvmt run program do not like what was passed....

So, how long before it is overturned because of so little support and a lot of people against it...

 

[donheff]

Now that we have just over 100 votes....


I want to point out that only 2 have voted for the current law that was passed...

so even though a lot of people would like some kind of gvmt run program... they do not like what was passed...

and the poeple who do not want a gvmt run program do not like what was passed....

So, how long before it is overturned because of so little support and a lot of people against it...

Unless the courts overturn it on Constitutional grounds I don't believe it will be overturned. I think we will complain and tweak the thing and get some marginal improvements. I, for one, would not vote to go back to the status quo in lieu of Obamacare -- but that's another poll - I will post it.

 

[M Paquette]

Now that we have just over 100 votes....


I want to point out that only 2 have voted for the current law that was passed...

so even though a lot of people would like some kind of gvmt run program... they do not like what was passed...

and the poeple who do not want a gvmt run program do not like what was passed....

That's interesting, in that this peculiar group (ER and company) still produces results that are broadly similar to what nationwide polls show.

 

[modhatter]

I don't like to offend, but can't help myself on this particular subject. I can not help but feel people opposed to some form of universal health insurance are either incredibly selfish or very uninformed.

Perhaps reading a few good books on the health insurance industry in this country like Wendell Potter's new book Deadly Spin might answer a few questions as to why it has been almost impossible for the last century to get any form of health care past despite the efforts of numerous Presidents. The massive insurance companies NO WAY are going to give up those mega profits without a fight on a scale few could imagine.

In addition pharmaceutical drug reform is also needed. It is not right that America only be made to support R&D when so many other industrial countries enjoy the fruits of their labors for a much lessor cost. These costs should be shared and supported by many. But nothing will change unless America becomes outraged. And I fear that not enough of the population have experienced the pain yet to feel sufficient outrage. The same applies to health care. When costs become so unsustainable (whether to individuals, companies or the government) and everyone starts screaming from their windows " I'm angry, and I'm not going to take it anymore.", Only then might we reconsider one of the more economical approaches to health insurance that we should have adapted decades ago.

 

[samclem]

I don't like to offend, but can't help myself on this particular subject. I can not help but feel people opposed to some form of universal health insurance are either incredibly selfish or very uninformed.

"People who don't agree with me are selfish or ignorant." I think you'll agree that's not likely to gain many converts.

The main issue is how we tackle all the issues (increasing medical costs as % of GDP, increasing medical costs to individuals, inefficient labor market caused by linking health care to an employer, controlling government spending, providing quality medical care in a timely fashion, etc). Very few people are arguing that they think what we've got now is the best we can do.

 

[M Paquette]

I don't like to offend

Um...

Perhaps reading a few good books on the health insurance industry in this country like Wendell Potter's new book Deadly Spin might answer a few questions as to why it has been almost impossible for the last century to get any form of health care past despite the efforts of numerous Presidents. The massive insurance companies NO WAY are going to give up those mega profits without a fight on a scale few could imagine.

+1 on the book. Deadly Spin is excellent for a behind the scenes peek. There's some good insight into the recent insurance driven [-]grass-root[/-] astroturf movement. The industry can't be that bad off if William McGuire managed to collect goodies from UHC worth 1.6 billion. Not saying he was a bad CEO or anything. Heck, they had a net profit of 3 billion his last year. He only got one of every $700 in premiums paid to UHC.

In addition pharmaceutical drug reform is also needed. It is not right that America only be made to support R&D when so many other industrial countries enjoy the fruits of their labors for a much lessor cost. These costs should be shared and supported by many. But nothing will change unless America becomes outraged. And I fear that not enough of the population have experienced the pain yet to feel sufficient outrage. The same applies to health care. When costs become so unsustainable (whether to individuals, companies or the government) and everyone starts screaming from their windows " I'm angry, and I'm not going to take it anymore.", Only then might we reconsider one of the more economical approaches to health insurance that we should have adapted decades ago.

Good luck with that. There are folks who believe that it is our obligation and burden to pay more than anyone else so that a small portion of that revenue can go to funding pharmaceutical R&D. A bit less than goes to marketing such as those print and TV ads for important medical information.

Sadly, most Big Pharma R&D goes to reformulation, moving drugs between injectable, topical, and oral mixes, coming up with new carriers and dosing options, and so forth. Patentable changes. Most basic research is still in the universities and institutes. You remember those. Those educational institutions that state and local taxes support? The ones getting funding cuts? The research teams funded by Health and Human Services over at NIH and CDC? (Watch their budget next year.)

 

[modhatter]

I'd like to hear more ideas of how we CAN achieve a more affordable plan with coverage for all citizens. Can we go forward from where we are and pick apart the current plan, and get rid of the bad while bringing in the good (with it still making financial sense)?

I apologize if my statement appeared too strong, but I have experienced on countless occasions attempted exchanges with people opposed to any kind of health care reform who lack real knowledge of facts on the subject, but still argue with such passion (though not on a substantive issue bases usually.). I can not help feel their passion is driven by political party as opposed to actual issue, and I find this very sad.

Though I lean more to the progressive side, I don’t always walk in lock step with every Democratic platform. I do for instance agree that government has been very ineffective in many departments mostly because of unaccountability and sheer size. But that is not to say they do nothing right.

The truth is they do a much better job at Medicare than the insurance company does for its policy holders on every level. If they can develop a system to better minimize fraud, I’d say they are doing a bang up job. The only problem is they are given the old, sick and dying with little in the way of premium upside, and the private insurance companies get the younger and healthier and the profit.


The one most effective means of truly controlling costs is utilizing very large buying pools and the bigger the better. So whether that is at a federal, state or even a collective bargaining level, unity in numbers is paramount. I agree all issues must be addressed, which includes costs, quality, waste and adequate coverage. Until we achieve all factors, the fix will not be complete.

And as costs savings must be addressed on every level, taking the profit and corporate responsibility to shareholders out of the equation should be the first avenue of attack. If government oversight is so distasteful to so many as it appears to be, than some non profit or at least near nonprofit organization or union to represent citizens must be set up to negotiate price, service and monitor the system. If given a choice whether a medical procedure is necessary or not, who is going to object first - the impartial party or the insurance company who needs to maintain a very costly overhead and show increased profits every quarter? Who would you rather decide for you, if someone must decide? Where do you think you will get the best bang for your buck? From a Medicare type system that takes out 3% for all administrative costs or an insurance companies who take 25% to 40% for administrative costs, exhorbinante salaries, leer jets, advertising and let’s not forget the shareholders. (They are now fighting the new 20% max limit, and want to have it repealed) Who’s going to help them?

I am afraid it is too late to look to private industry to create competition as an answer to lowering costs. Only a few insurance companies control 80% of the market and in years to come what smaller insurance companies are left will either be pushed out of business or be bought out by one of the big three. Monopolies in health care, wall street and banking is alive and well, and nobody in Washington dares to take them on (if they want to stay in office)

I so wish this health care issue could be brought out of the political arena and viewed in a united manner. As long as insurance companies and their paid for politicians can keep us divided, we will always fail to have meaningful reform.

I guess my rant is a call to stop the political bicker, get informed and get united. You all know nothing in Washington will get done in any meaningful manner unless we make them. And the longer they can keep us politically divided, the longer nothing will get done. Insurance companies have been very successful in making this a political issue in order to keep us divided.

Their worst nightmare would be if Americans decided this is not a political issue, but a moral as well as economical issue effecting every citizen of this country, young, old, rich , poor Republican and Democrat. There are real solutions if we don’t allow sides to be drawn based on what your party (insurance company) tells you. To me solving the problem of affordable and quality health care for all does not have a D or a R in front of it.

Sorry for long post.

 

[FinanceDude]

I apologize if my statement appeared too strong, but I have experienced on countless occasions attempted exchanges with people opposed to any kind of health care reform who lack real knowledge of facts on the subject, but still argue with such passion (though not on a substantive issue bases usually.). I can not help feel their passion is driven by political party as opposed to actual issue, and I find this very sad.

What about those of us who ARE knowledgeable about the HealthCare Bill, and don't like it at all, how are we to be labeled?

The truth is they do a much better job at Medicare than the insurance company does for its policy holders on every level. If they can develop a system to better minimize fraud, I’d say they are doing a bang up job. The only problem is they are given the old, sick and dying with little in the way of premium upside, and the private insurance companies get the younger and healthier and the profit.

A bangup job? Surely you are joking. Also, a LOT of folks that are on Medicare are NOT sick and dying..........

I am afraid it is too late to look to private industry to create competition as an answer to lowering costs. Only a few insurance companies control 80% of the market and in years to come what smaller insurance companies are left will either be pushed out of business or be bought out by one of the big three. Monopolies in health care, wall street and banking is alive and well, and nobody in Washington dares to take them on (if they want to stay in office)

No, the private sector is the perfect pace to create competition, they just need a little "push" from Congress. To start with, let me be able to put as much into an HSA as I want, then I can control my healthcare costs for ME. Also, allow me to be able to buy from any health insurance company in any state, in other words, 100% reciprocity for all 50 states. This would get rid of "regional pricing" and lower the cost for all. I worked for a company that was based in Missouri, and was able to buy health insurance from the same provider (BC/BC) for 25% less premiums than BC/BS in Wisconsin........that should not be.........

 

[DeborahB]

When I worked for federal court (yes, you can lose a federal job!), I had access to a lot of private insurance plans. The system was pretty good. The interesting part was that there is a NATIONAL Blue Cross for fed employees. That gets rid of the many variances in coverage depending where you live, which always make me lose my mind.

If we want to stay private, I think this system could be expanded for everyone - just ramp up the size and scale. However, it's an enormous change, not liked at ALL by insurance companies.

However now Medicare and many health insurance plans reimburse at less than doctors' and hospitals' actual costs, which seems unfair.

I think everyone would be better off with universal healthcare - either single payer (my preference) or private plans. But coverage for all. We are so slow to do this compared to other industrialized nations. It is appalling. I worked for a non-profit health system (hospitals, clinics & doctors) for 12 years and heard heartbreaking stories there, and other places, of people who couldn't get medical treatment.

Change is so hard for some people and certainly for industry.

 

[Independent]

I guess my rant is a call to stop the political bicker, get informed

Maybe a couple facts would help.
Say A = (total private insurer's profits) / (total US healthcare spending),
and B = (total private insurer's retention - that is the difference between premiums collected and benefits paid) / (total US healthcare spending).

Do you have numbers for A and B?

 

[dex]

Maybe a couple facts would help.
Say A = (total private insurer's profits) / (total US healthcare spending),
and B = (total private insurer's retention - that is the difference between premiums collected and benefits paid) / (total US healthcare spending).

Do you have numbers for A and B?

I don't, but this might help.

Health Insurance Industry's Profit Margins Rank #86 - Seeking Alpha

As the table above of Profit Margins by Industry shows (click to enlarge, data here for the most recent quarter), the industry "Health Care Plans" ranks #86 by profit margin (profits/revenue) at 3.3%. Measured by profit margin, there are 85 industries more profitable than Health Care Plans (included Cigna (CI), Aetna (AET), WellPoint (WLP), HealthSpring (HS), etc.).

 

[M Paquette]

Maybe a couple facts would help.
Say A = (total private insurer's profits) / (total US healthcare spending),
and B = (total private insurer's retention - that is the difference between premiums collected and benefits paid) / (total US healthcare spending).

Do you have numbers for A and B?

Profits... profits... Now, that's a tricky one. Nominally, that is revenue less expenses. Revenue is pretty well understood. Expenses, though... Operating expenses. One time charges. Bonuses. Recapture. Carry-forward. Shareholder distributions... I'm pretty sure a good executive team could figure out a way to pass out lots of cash, while holding 'profit' close to zero. That IS the goal, for tax purposes anyway.

So...
A ~= 0
B ~= (total private insurer's retention - that is the difference between premiums collected and benefits paid) / 2,300,000,000,000 (2.3 trillion for 2008)

Total private insurer's retention is fairly hard to get a good number for. Not all insurers seem to publish this information. (Surprise, surprise, surprise...) The lobbyists at America's Health Insurance Plans (AHIP) say the medical loss ratio (your benefits to premiums ratio) is 87%. Reed Abelson in the New York Times reports that in 2008 large employer plans had a ratio of 84%, small employer plans had a ratio of 80%, and individual plans had a ratio of 74%. The US Senate collected numbers that showed some plans with loss ratios at 66 cents on each dollar of premiums going to doctor and hospital bills.

Note also that a bit over half the care comes through a government plan such as Medicare, Medicaid, TriCare, VA programs, or SCHIP.

All that spending breaks down as follows:

Summary of Findings - Employer Health Benefits 2008 Summary


Trends in Health Care Costs and Spending, March 2009 - Fact Sheet

 

[dex]

Profits... profits... Now, that's a tricky one.

All of that is available - see my previous posts.

Total private insurer's retention is fairly hard to get a good number for. Not all insurers seem to publish this information. (Surprise, surprise, surprise...) The lobbyists at America's Health Insurance Plans (AHIP) say the medical loss ratio (your benefits to premiums ratio) is 87%. Reed Abelson in the New York Times reports that in 2008 large employer plans had a ratio of 84%, small employer plans had a ratio of 80%, and individual plans had a ratio of 74%. The US Senate collected numbers that showed some plans with loss ratios at 66 cents on each dollar of premiums going to doctor and hospital bills.

There is no mystery in numbers and I'm sure a good auditor and financial analyst could figure it all out.

e.g. 80% spent on paying claims
+Federal, state, city taxes
+Federal, state, city mandated costs - e.g. some states require insurance costs paid by hospitals for the uninsured.
+ Capital costs etc.
+ Profits

 

[samclem]

Can we go forward from where we are and pick apart the current plan, and get rid of the bad while bringing in the good (with it still making financial sense)?

Is there some particular reason that the existing legislation should serve as a starting point? In addition to all the practical flaws with the law and the underlying approach, it isn't even supported by the present Congress or the public. Is that a good place to begin?

From a Medicare type system that takes out 3% for all administrative costs . . .

This is extremely misleading, and typical of the kind of argumentation you have said you oppose.
In a nutshell: That very low Medicare admin cost number only counts the cost of the bureaucrats who send out the checks, it does not count the many other admin costs that are typically bundled into the %ages when looking at insurance companies. A fairly good apples-to-apples comparison would be the administrative costs of "regular" Medicare plans and Medicare Advantage plans. If you'd like more info on this issue, please take a look at this post by Martha and the several posts that follow.

The one most effective means of truly controlling costs is utilizing very large buying pools and the bigger the better.

I don't know why you would say this. A bigger buying pool, in itself, does nothing to lower costs. Example: The US government buys more airplane tickets than any private company, and pays more per ticket and per mile than just about anybody. The US government buys more commercial vehicles than any private business, and they do not get a good price.
What drives down prices is competition. That's the only proven way to do it--any other means (e.g. government caps on what can be charged for services) only serves to make a given good or service scarce. We don't want medical care to be scarce: that's inconvenient at best, deadly at worst.

Competition works in every other area of our lives to improve the quality and value of services. It's a tremendous power for good. Health care is different from many other services in important ways, but it is not so unique that we need to throw away competition.

I so wish this health care issue could be brought out of the political arena and viewed in a united manner.

Your post and the thousands of others on this subject by all of us clearly indicate that there's disagreement on some very important fundamentals. If the government is going to be involved with solving the problem, then of course it will be a political issue. How else could it be solved? That's the means by which we address big problems in this country. Often, when folks say "I wish we could just leave politics out of it", what they really mean is "I wish people would just do things my way".

 

[donheff]

I don't know why you would say this. A bigger buying pool, in itself, does nothing to lower costs. Example: The US government buys more airplane tickets than any private company, and pays more per ticket and per mile than just about anybody. The US government buys more commercial vehicles than any private business, and they do not get a good price.
What drives down prices is competition.

Wait a second. GSA buys 50,000 cars a year and gets better prices than anyone in the universe. In multiple competitions over the years no private sector company could touch the US fleet costs. Federal airfare is as cheap as any big corporation and has no penalty for change in flights.