In April, Spanish police charged a man with a massive distributed denial of service (DDoS) attack on anti-spam watchdog, Spamhaus.  He enlisted help from hacker friends and they slowed big parts of the Internet.  Also in April, LivingSocial said it suffered a cyber attack that exposed names, e-mail names, birth dates, and encrypted passwords for 50 million customers.   Between December 2012 and now, an international crew hacked credit card transaction processers and set up a $45 million cash haul.  Hackers are doing massive damage.

The Internet’s current design leaves us exposed to hacker attack because it allows anyone to assert a false identity, help themselves to information that isn’t theirs, and damage other’s property.  It was designed for open exchange of memos and data among academic researchers at DARPA, not for secured communications.

Major stakeholders are resistant to Internet design changes because their investments were built around today’s flawed design.  For example, even a highly constructive change such as IPv6 (which allows for more Internet destinations) faced foot-dragging.  Design changes that enforce strong identity verification may take several decades, and we can’t just change a few lines of code to flush the hackers from the system.

While we allow hackers to profit and to face inconsequential punishment, they will continue attacking.  Sternly worded speeches on the evils of hacker theft and attacks are worse than useless — they may convince a gullible audience that politicians will handle the problem.  It’s not that easy.   Without redesign, halting attacks depends on the hacker’s identity and protector.

When domestic hackers are arrested, court progress can be delayed by a defense attorney working the motions and appeals processes.  Some even argue that violating “terms of service” agreements are not a crime.  Other gambits claim the perp is a modern day saint – exercising first amendment rights; or have fellow “hactivists” invent socially redeeming intentions for their crimes while relying on the media to downplay the theft and vandalism of other people’s property, or hoping the readers are unaware that there is no first amendment entitlement to vandalize private property.  When convicted, these perpetrators are released or briefly incarceration.

The bitter irony is that hacking victims bear the direct cost of the crime, usually the cost for the perp’s public defender, the cost of incarcerating the perp, and often the cost for post-release welfare payments to the perp.  Until law forces a mandatory sentence of bankruptcy-proof full restitution for court costs and victim damages, the gain from hacking will continue to outweigh the pain from being caught.

It is more difficult to bring offshore hackers to justice.  A foreign commercial hacker who is pursued by U.S. police may attract support from other hackers, nationalist activists or politicians.  A U.S. decision to press forward with arrest has implications for international relations, dragging in the Department of State, muddying up the choice of jurisdiction, and perhaps converting the perp into prisoner exchange fodder.  Attorney costs, incompatible codes of law, and high profile opportunities for political narcissism push “justice” beyond reach.

State-sponsored hackers such as the Iranians and Chinese are beyond the reach of U.S. courts so must be handled differently.  Avoiding media coverage, we need to determine how reliably we can defend against the sovereign hackers and how severe the damage done by the hacking might become.  If we cannot defend against it or cannot tolerate the potential damage, then we should demand an immediate end and threaten painful retaliation (e.g. hobble the sponsor country’s communications, or banking system, etc…).  The big stick is necessary.  Stuxnet was a successful example of a big stick, even though no country has admitted ownership of it.

Letting a hacking sponsor off the hook in return for his promise of future righteous behavior is out of the question — which politician would be crazy enough to rely on the word of a proven sneak capable of harming us lethally?

Taking slack out of the post-arrest treatment for hackers is a useful project.  But redesign of the Internet so that it enforces identity verification is far more productive.

Alan Daley is a retired businessman who lives in Florida and who writes for The American Consumer Institute Center for Citizen Research

As we approach 2014, few of the financial details are emerging, but some background factors are becoming clear.  Total spending on health care grew at 3.5% during 2009-2011, much slower than the 5.9% annual increase over the prior ten years.  This slowdown is welcomed and the CBO quickly seized upon a $382 billion reduction in estimated 10-year federal spending on Medicare and Medicaid.  Causes for the spending slowdown are:

• Belt-tightening due to the 2009-2011 recession (1/3^rd of the  2.4% drop);
• Some employers restructured plans to shunt more cost onto employees (accounts for 1/5^th of the 2.4% drop);
• Fewer medical imaging devices and newfangled drug introductions; and,
• Unspecified other factors.

ACA does not always encourage health coverage.  Employers are expected to reduce scheduled work hours to levels that are exempt from the obligation to offer health coverage, or to discontinue offering health coverage and pay the federally mandated fine.  The employees who lose health benefits might independently buy health insurance, or not.  Just 8% of people will be eligible for federal subsidies.  Some will elect to pay a fine and remain uninsured – knowing they will not be refused care at a local emergency room.

The amount of premiums paid, the total of subsidies, payments for uninsured care, patient morbidity and average charges by providers will determine the premium and out of pocket costs that consumers face under ACA.  These amounts are not revealed publicly yet.  Perhaps politicians are waiting for “the right budget moment” or studying the implications of Oregon.

Many of the Americans receiving subsidies for health coverage will be placed in Medicaid.  Oregon randomly assigned Medicaid or “no coverage” (the control group) to a large number of patients.  After two years, Medicaid patients did slightly better on two measures – hypertension and diabetes but not at a level considered statistically significant. The Medicaid patients were somewhat less depressed, an outcome ascribed to the reduction in financial stress.  There are health interventions that can reduce chronic illness and improve health status, but Oregon’s Medicaid patients either did not find them or did not need them.  Overall, the Medicaid patients did not achieve improvement in physical health.

The Oregon study reveals that “peace of mind” was the main yield from its Medicaid spending spree.  This must be distressing to those who stridently demand Medicaid-like plans for all.  The Oregon study is a strong argument for changing from a fee-for-service model to a fee-for-results model.  Under a fee-for-results model, the lack of any net improvement in physical health would have tightly constrained payments to providers – without limiting the medical interventions needed by those with illness.  Perhaps it is not too late to insist on fee-for-results in federal health care spending – and it is definitely not be too late to do something about “no improvement” designs that cost us hideous amounts.

Alan Daley is a retired businessman who lives in Florida and who writes for The American Consumer Institute Center for Citizen Research

To accommodate my outrageous request, an agent would need multiple licenses – one in each state – prohibitively expensive and impractical.  As it is, any insurance company doing business in multiple states incurs the expense per state of separate trainers and agencies, unique policies, claims adjusters, financial portfolio managers, attorneys and regulatory relations personnel.  And each state’s insurance commission must be funded ultimately through fees on consumers or taxes on consumers.  Clearly, that level of upheaval is not warranted by my convenience.

I was left wondering what is so geographically frightening about consumer insurance policies?  Why won’t states trust each other with reciprocal rights?  Does Florida think Colorado is not competent to oversee auto insurance? Does South Carolina think Florida is not competent to oversee fire & casualty insurance on an owner occupied dwelling?  Does Colorado feel South Carolina is incompetent on rental insurance policies?  Let’s answer for them – “of course not.”  Coloradans drive in Florida using Colorado insurance and Floridians rent homes in South Carolina.  We don’t need an insurance “endorsement” to cross state lines.  There is no epidemic of out-of-staters being slaughtered by insurers.

Regulatory commissioners are typically political appointments for the usual non-economic reasons.  These state icebergs have appointee salaries as the visible tip, with a massive bureaucracy below the budget surface.  The more “rules” adopted, the more bureaucrats are needed to enforce conformance with the rules.  But then, harsh rules on businesses can burnish the reputation of populists.

Some states enacted quirky laws such as Florida’s “personal injury protection,” a mandatory auto insurance coverage for bodily injury reimbursement that has been milked by rear-end collision scammers.  Some states chose a “no-fault” approach, lest bad drivers suffer a drop in self-esteem.  But the functionality of auto insurance is always the same – if your health or vehicle is damaged, an insurance company pays (minus deductibles) for it to be restored to the extent possible.

If you strip away marketing frills (e.g. declining deductibles, roadside assistance), insurance policies are conceptually the same in each state.  And each state’s insurance commission has about the same job.  They assure that: insurer finances are adequate; policies conform to the law; policyholders and claimant treatments conform to the law; and that insurance employees know their obligations under the law.  These are important roles.  A commission that does it well in one state has 95% of what’s needed to do it in the adjacent states, and they are certainly smart enough to learn the other 5%.  Indeed, state insurance commissions have enough in common that they have a national association –where they share tactics on handling state issues and where they set a joint stance on federal matters.

If a few states were in budget difficulties and could shed the auto-reflex of appointing buddies to commissions, they could save a lot of taxpayer money by merging and then streamlining their insurance commissions.  That begs the question of why must we duplicate virtually identical state medical boards, state bars, state boards of nursing, state bank supervisors…and so on.

Alan Daley is a retired businessman who lives in Florida and who writes for The American Consumer Institute Center for Citizen Research

The reporter stayed in the courses long enough to grade them.  He gave his MOOCs an A grade for convenience.  He assigned a B grade to professors, assignments, student-to-student interactions, and the overall experience.  Teacher-to-student interactions earned a D grade.  Clearly better teacher access needs to be addressed.

Unionized faculty at all three California higher education systems oppose offering equivalent academic credit for MOOCs – even for students shut out of on-campus classes.  Some professors ridicule MOOCs as suitable to college “autodidacts” but unsuitable for others who need the “small liberal arts institutions that provide convenient social and academic engagement opportunities for students.”  To the contrary, students who lack access to $50,000 per year of someone else’s money will probably learn to thrive in MOOCs.

Constructive critics note that “online courses taught by professors at local universities can cultivate autonomous learning strategies and create opportunities for student-to-student engagement as well as student-to-professor engagement.”  This is already happening and it addresses the teacher-student interaction shortcoming.  A course offered to San Jose State engineering students is “circuits,” a difficult course where only 59% pass the traditional lecture version.  When offered as an MIT-authored MOOC with some traditional classroom time, 91% of students passed.  Children now in K-12 will likely acquire the skills needed to learn from MOOCs.   That should be an important goal for K-12 teachers.

It is unclear whether a MOOC-centric online degree will be seen as competitive in the job market against a bricks and mortar degree.  Professors with stellar reputations and schools with world class resources are investing themselves in MOOCs.  Students who proved they can interact virtually with others and thrive with challenging content online may have an advantage in some industries such as finance, engineering and marketing.

This week, the online education community received a proposal that would allow “any institution that had received state authorization for its online programs, based on certain quality and consumer protection standards, [to] be allowed to enroll students from other states that met the same basic standards and agreed to reciprocity.”  Udacity, EdX and Coursera are all offering proctored exams, and in some cases, certification for transfer credit through the American Council on Education.  Grants of state authority for these “schools” to operate are a financial issue.  States charge online schools more than $10,000 for authorization to operate in 5 nearby states for a few hundred students, up to $5.5 million for a public university to operate in 49 other states.  The state-imposed financial hurdle is inconsistent with keeping courses affordable.

Faculty resentments against MOOCs come from fear of being marginalized – being shunted from their prestigious lectern to a headset in a call-center.   But MOOCs benefit everyone else.  MOOCs can vastly improve access for underserved students of all ages and budgets since MOOCs can reduce the college’s costs and tuition prices.  Cash strapped states will see MOOCs as a budget victory.  Perhaps “big education” will encourage MOOCs evolution, even though it may cost entrenched union jobs.

Alan Daley is a retired businessman who lives in Florida and who writes for The American Consumer Institute Center for Citizen Research