Trade Crude Oil

Damascus, Syria David Rosenberg / The Med – Syria’s turmoil is showing signs of reaching the country’s kitchens as disruptions in transportation and trade sanctions are conspiring to shrink supplies and boost prices at a time when harvests are constrained by poor weather.

The United Nations Food and Agriculture Organization (FAO) has increased its estimate for Syria’s harvests slightly since it last officially published figures in October. But, Mario Zappacosta, economist at the FAO’s Global Information Early-Warning Systems (GIEWS), said the higher figure is unlikely to be enough to prevent a food crisis.

GIEWS now estimates the Syrian production of wheat and barley in the harvest that ended last August at about 4.2 million tons, which is up from slightly less than 4 million tons in its previous estimate. But that still leaves it below the average crop size of the previous five years. Worse still, getting the food to consumers is more difficult than ever as unrest snarls transportation and sanctions have raised the cost of fuel.

“We categorize it as a problem of access. Especially in urban areas that are affected by the security situation, it is very difficult to supply shops in the market. We can imagine a situation where there [farm] products are harvested and stored, but markets aren’t functioning,” Zappacosta told The Media Line.

Cereal crops provide the most important part of the Syrian diet and are the only ones monitored by GEIWS. But other foods, like fruits and vegetables, are even more likely to suffer from the transportation problem because they have such a short shelf life and cannot be stored for as long.

A food crisis would pose a significant challenge to the beleaguered regime of President Bashar Al-Assad, who is coping with international diplomatic and trade isolation, a contracting economy and an opposition more ready than in the past to use arms. The president has struggled to keep the economy afloat and Syrians content, raising deposit rates to support the currency and maintaining subsidies of basic goods at great cost to the treasury.

“All this is an indication to the business community that the Syrian government is floundering on how to cope with economic deterioration,” Ayesha Sabavala, an analyst who follows Syria for the Economist Intelligence Unit (EIU), told The Media Line. “A rapid decline in economy could also cause the army or people in the government to abandon support of Al-Assad. They might see support for him comes at too heavy a price.”

Some analysts say that the disruptions wrought by misguided farm policies and drought were a key factor in pushing Syrians into rebellion. The drought, which struck much of northern and eastern Syria after 2006, forced tens of thousands of farm families to migrate to camps on the outskirts of Syria’s cities in search of work.

The unrest, now in its 11th month, makes it difficult for aid workers and experts to fully assess the situation. GEIWS uses satellite images and uses estimates to arrive at its numbers for output and consumption, but like other organizations it has very little information about conditions inside the country.

Nevertheless, in its latest assessment of global food security, released Feb. 10, the U.N. World Food Program (WFP) put the number of people defined as “food insecure” at 1.4 million since March 2011, when the uprising began. Food insecurity is the most severe in “hotspots” like Homs, Hama, rural Damascus, Dera’a and Idlib, the WFP said.

The official Syrian SANA news agency said two weeks ago that the direct damage to the farm sector caused by what it called “armed terrorist groups” had reached 450 million Syrian pounds ($7.8 million). The General Organization for Consumer Products reported that food worth 250 million pounds ($4.3 million) was stolen from its warehouses in the Homs neighborhood of Baba Amr.

If it happens, crunch time for Al-Assad is likely to occur this spring. That is about the time that the 2011 harvest will have been depleted even if the entire crop reaches Syrian consumers, according to GIEWS estimates.

“In general, the country is not self-sufficient. Domestic production is enough for the first eight months after the harvest [in August] and imports start to take its place in May and June,” Zappacosta said.

GIEWS estimates the country will need to import about four million tons of cereals during the current marketing year, which is down from the 4.6 million tons it estimated in October. But Damascus will have trouble meeting even the smaller shortfall because of trade sanctions.

The European Union’s ban on Syrian oil imports, imposed last September, doesn’t include food. But analysts say it has strained the country’s finances and made traders wary about doing business with it. European traders told The Wall Street Journal last month that a risk premium of around $10 a metric ton was being imposed on all wheat supplied to Syria through the private sector.

Meanwhile, the pound has plunged more than 50 percent so that a dollar is now worth about 58 pounds on the official market and 71 pounds on the black market. Most of the depreciation occurred in the final two months of 2011.

All that has made it more expensive to buy food abroad. But the cost of trucking local produce to market and even the cost of growing it have both climbed. Syrian farmers are highly reliant on irrigation, but the pumps rely on every more costly fuel.

Even where there is food, sticker shock is the new norm for the urban consumer. Since the unrest broke out, the price of a 25-liter (6.6 gallon) bottle of cooking gas in Damascus has risen to anywhere between $8.70 and $14 from $4.30, according to IRIN, the news service of the U.N. Office for the Coordination of Humanitarian Affairs. A tray of 30 eggs has increased to between $5.20 and $6.90 from $3.10; and a kilo of potatoes to between $1 and $1.30 from 35 cents.

Syrian inflation is likely to touch 12% this year according to the EIU.

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New York, NY, United States (AHN) – Stocks rallied Tuesday and propelled the Dow above the psychologically important 13.000 level. It was the first time the Dow surpassed the mark since May 2008.

Buoying markets was news that eurozone finance ministers had inked a deal for a second Greek bailout. Industrials lead the broad-based rally

Chevron, Alcoa, McDonalds, Home Depot and Bank of America were among the movers. Just before noon, the Dow had given back some gains, but was still up some 35 points to 12,986.43

The Standard & Poor’s 500 Index and the NASDAQ also advanced, led by energy, materials and consumer staples.

European shares steadied after hitting seven-month highs in the previous session.

Global markets were cheering the Greek deal that staved off what would have been a messy and chaotic default.

With little on the economic calendar for Tuesday, investors traded off the overseas news.

Commodities also enjoyed gains. Oil was up $1.54 to $104.78. Gold soared $31 to $1,756 a troy ounce, platinum jumped $40, palladium gained $15 and silver was up 55 cents.

On Wednesday, traders will be looking at mortgage applications, existing homes sales and a five-year note auction. On Thursday market participants will weigh in on jobless claims, a report on the FHFA home price index. oil inventories and Apple’s shareholder meeting. On Friday, moving markets will be a report on consumer sentiments and new home sales.

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Daytona Beach, FL, United States (AHN Sports) – Bobby Gerhart was in the right place at just the right time and it resulted in his record-setting eighth ARCA win at Daytona on Saturday.

Running fifth in the final turn of the 83-lap Lucas Oil Slick Mist 200, Gerhart skirted past on the outside when race leader Brandon McReynolds and frontrunner Chris Windom ran out of gas just short of the finish line.

Gerhart scored his third straight win at Daytona and gained some redemption after being disqualified from the pole the day before.

“We were certainly disappointed last evening. I think the whole group of us was. What happened there’s no excuse for it and I think the series did the right thing,” Gerhart said. “I learned a long time ago that these things are not over until they’re over. I don’t care if it’s the last lap. A lot of things can happen as it played out tonight.”

The 53-year old native of Lebanon, Pa., won his fifth Daytona ARCA pole Friday but the run was disqualified when the engine of his No. 5 Chevrolet failed the post-race vacuum-leak test in inspection.

At the start of the race Gerhart pitted on the first lap and again on Lap 10 to top off his fuel tank, which proved to be the difference as two of the leaders ran out fuel in the final quarter mile.

The only lap Gerhart led was the one that counted most as the race went an additional three laps of overtime and finished under green-white-checkered conditions.

McReynolds took the lead on Lap 19 and led 62 straight laps before his No. 4 Chevrolet of Turner Motorsports pulled up lame in the race’s final yards of real estate.

With a push from the No. 28 Chevrolet of runner-up Drew Charlson, making just his second ARCA start, Gerhart flew by on the outside for his ninth career ARCA win.

“That’s got to be heartbreaking. To sit in a spot like he did and he led a lot of laps,” Charlson said of McReynolds. “I feel for him but that’s just the way it goes.”

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Chonburi, Thailand (AHN Sports) – Yani Tseng wasted no time getting down to business in the final round of the Honda LPGA Thailand championship on Sunday.

The world’s No. 1 player eagled the first hole of the day, tied for the lead then went on to add two more birdies to build a four-shot lead after nine holes. That enabled Tseng to go on and finish with a 66 and a 19-under par winning total of 269, one better than runnerup Ai Miyazato.

Tseng stumbled a bit on the back nine with bogeys at the 10th and 13th holes but another birdie at the 15th kept her in the lead. Both players birdied the 17th then Tseng closed the door when her approach shot to the 18th hole stopped inches from the hole for a tap-in birdie.

She needed it because Miyazato birdied the final two holes for 68 but came up a shot short. Jiyai Shin let her presence be known as well. She shot 67 and finished solo third at 17-under par.

But Tseng was too strong for both. “I had a one-shot lead and I was thinking maybe make par and win,” Tseng said, recalling the final hole at the Siam Country Club. “But after I saw Ai hit it close, I knew I had to make birdie to win it.”

Tseng hit the splendid approach and captured her first win of 2012. It was her 13th LPGA title and 21st title world-wide. She said she still feels pressure to win, especially after her 12 international victories in 2011.

“I feel much more pressure coming into this year,” she admitted afterward. “Last year when I started, I was nothing. I was just in the top five in the world. After last year, I have the world no. 1 ranking and I had 12 wins and that pressure kept going on and on.”

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Daytona Beach, FL, United States (AHN Sports) – It was 1995 and Bobby Gerhart had finished poorly in the ARCA 200 for the third straight year.

The difference with this most recent finish (37th) was it cost him an overnight stay at Halifax Health hospital.

After being driven back to Daytona International Speedway the next day his late mother, Anne, who passed away in 1997, gave him the kind of straight talk that only a mother can deliver.

“I’ll never forget it. She turned around and said, “You’ve got to work on this. You have got to start up front. If you’re going to win the races they’re going to come from the pole,’ ” Gerhart said. “That pretty much started a big boost, or a big effort, for us to make these cars runs faster a couple laps.”

Friday, despite being 12th-fastest in practice the day before, Gerhart turned a lap of 183.479 mph at Daytona International Speedway to win the pole before his engine failed post-race inspection and he was relegated to a 42nd starting spot in the Lucas Oil Slick Mist 200.

It would’ve been Gerhart’s record-setting fifth pole here and first since 2006 when he won four straight. He will make his 25th consecutive start here from the back with the 182.633 mph of Sean Corr will be on the pole.

“When I was growing up watching the ARCA Series Bobby Gerhart was right up there with Frank Kimmel and those top drivers,” Corr said.

Gerhart, for all intents and purposes, has been the man to beat here since that pep talk from his late mother.

He scored his first of a record-setting seven ARCA 200 wins in 1999 and has won here the last two years straight.

“When we learned to (win poles) we learned how to keep the speed in them and what made them driveable after that,” Gerhart said. “What started the whole thing was kind of a special day here for me.”

Gerhart led the race’s final 61 laps en route to the win here last year when he stretched his fuel mileage to the brink of empty.

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New Brunswick, NJ, United States (AHN) – Johnson & Johnson has been plagued by product recalls, and on Friday a unit of the pharmaceutical giant issued another one.

McNeil Consumer Healthcare said it is recalling some 574,000 bottles of a grape-flavored version of its liquid infant Tylenol because of problems with the device on the bottle that helps measure dosage.

The bottles come with a syringe and have a protective cover, or flow restrictor, at the top to help measure the right dose. McNeil says the restrictor has been pushed into the bottle in some cases when the syringe is inserted.

McNeil is one of three business segments for New Brunswick, NJ-based J&J. The latest recall is among about two dozen recalls issued in more than two years.

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New York, NY, United States (AHN) – U.S. stocks opened mixed to higher Thursday fueled by lower than expected jobless claims and impressive earnings from General Motors.

Just after the open on Wall Street, the Dow Jones Industrial Average was up 15 points. The Standard & Poor’s 500 Index and the NASDAQ were both nearly unchanged.

Investors were buoyed by the a report from the Labor Department that showed initial jobless claims fell to a near four-year low.

Also giving stocks momentum was an earnings report from General Motors. GM reported the largest annual profit in its history on Thursday, even as losses in Europe were a drag on fourth quarter earnings.

The auto maker said it earned a quarterly profit of $472 million, or 28 cents a share. It was the eight consecutive quarterly profit for the car maker, which strategically cleared up much of its debt in bankruptcy a few years ago. For all of 2011, GM earned $7.6 billion, most of it from North America.

In early morning trading, shares of GM climbed almost 5 percent, and were last changing hands at $26.15 per share.

Holding stocks back were continued worries over Greece’s ability to secure a second bailout. Investor sentiment was further dampened after rating agency Moody’s put 17 global banks and 114 European financial institutions on review for possible downgrades.

Gold fell as Greece’s woes hurt the euro. The precious metal tumbled $16.40 to $1,711.80 a troy ounce. Oil was flat at $101.67 a barrel.

Ringing the opening bell on the NYSE was Westminster’s Best in Show, Malachy, a petite, composed and well manicured Pekinese.

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Washington, DC, United States (KaiserHealth) – Across the national airwaves and on the Republican campaign trail, the Massachusetts health law that many now call “Romneycare” is routinely trashed. Here’s Texas Governor Rick Perry in a debate last October.

“Romneycare has driven the cost of small business insurance premiums up by- percent over the national average in Massachusetts.” And from former Senator Rick Santorum last month we heard, “it (Romneycare) was the basis of Obamacare and it was an abject failure.”

So you might think this drubbing would rub off on Massachusetts residents, about two-thirds of whom have consistently endorsed the state’s coverage plan since it passed in 2006. Not so.

In the latest WBUR poll, 62 percent support the law and 33 percent oppose it. Steve Koczela is president of the Mass, Inc. polling group, which conducted the poll.

“Even with all the attention the Massachusetts law has gotten nationally,” said Koczela, “it really hasn’t driven down support among voters here in Massachusetts.”

The difference between national and local opinions about the law is part politics, part misinformation, and partly a difference of experience, says Robert Blendon, a professor at Harvard Kennedy School. Massachusetts residents are living with the law. Opinions outside the state are based on speculation.

“A substantial share of Americans believe that the national law will fail and they assume that the Massachusetts law, which in their minds is related to this, is not working well either,” Blendon said.

That’s the case, said Blendon, even when he presents evidence to audiences outside Massachusetts that a strong majority of residents in the Commonwealth are happy with the state law.

“People are convinced,” laughed Blendon, that “[the poll] can’t be right.”

In Massachusetts, most residents in the WBUR poll (68 percent), see former Governor Mitt Romney’s opposition to the national law as an effort to win votes in his presidential campaign. Only 25% see his opposition as a disagreement based on principle.

“Taking that, in concert with the level of influence people thought the state law had on the national law, at least suggests there’s some difficulty distancing yourself from what happened nationally to what happened here at home,” says pollster Koczela.

That dynamic may translate into problems for Republican Sen. Scott Brown, who, like Romney, supports the state law but hopes to repeal the national law.

Robert D’Ambrosio is one of the WBUR poll respondents who said he likes the state health care law and is not sure whom he supports in the Senate race. D’Ambrosio finds Brown’s position confusing.

“I don’t understand why he doesn’t bother the same with the national as he does with the state,” says D’Ambrosio, who lives in Malden, a suburb just north of Boston. “If you like one, how can you not like the other?”

Many residents polled say they want to know how Brown and the leading Democratic contender Elizabeth Warren would control health care costs. Paula Zindler from Cummington in western Massachusetts, is another undecided voter. She says the state law, which both Brown and Warren support, has forced up the cost of her health coverage.

“We had to switch to a different carrier, because my insurance, I was told, was inadequate,” explains Zindler. “So I either had to change my insurance or pay a fine, and I’m not happy with that.”

While health care is expected to be a key issue in the U.S. Senate race in Massachusetts, there are at least two major, yet to be determined, factors that will shape this debate. One is whether the US Supreme Court will let all or part of the federal Affordable Care Act stand. Two is who the Republican presidential nominee will be. But health care will also play into the standard practice of US political races, says Professor Blendon.

“Even though they (Brown and Warren) have a truce on how each side will describe each other, there will be an effort to put one far on the left and one far on the right and health care examples will be very prominent in that effort,” explains Blendon.

By “truce,” Blendon refers to the agreement Warren and Brown reached a few weeks ago to donate half the cost of any political ad funded by an outside organization to charity. Several residents in the WBUR poll praise this deal and say watching whether it holds will be one of the most interesting parts of this year’s Senate race.

– Provided by Kaiser Health News.

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Juba, South Sudan (IRIN) – South Sudan, one of the poorest countries in the world, reliant on oil for 98 percent of its revenues, in January took the drastic step of halting crude production, as a row with former civil war foe Sudan over transit fees hit a deadlock.

Even with oil revenue, the challenges facing world’s youngest country are monumental: more than two decades of conflict prevented any significant infrastructural development; agricultural output falls far short of needs and with food aid funding insufficient to make up the difference there is a real danger of a major food crisis; the state security services have been unable to quell inter-communal conflict, notably in Jonglei, South Sudan’s largest and most populous state; tens of thousands of Sudanese civilians have sought refuge in South Sudan from borderland clashes between the Sudanese army and rebels with strong historical ties to South Sudan’s leadership; and hundreds of thousands of people of Southern origin living in Sudan may have to leave for lack of residency rights.

As Sudan and South Sudan meet for another round of African Union-brokered talks in Ethiopia, IRIN offers this briefing on the oil situation:

How much oil production has been stopped?

The South’s secession in July 2011 deprived Sudan of three-quarters of its output, about 350,000 barrels a day. Between July and December 2011 production was worth US$3.2 billion. The oil is piped northwards to marine terminals in Sudan, making an as-yet elusive agreement on how to share revenue and costs crucial to post-war relations between the two states.

This production was halted after South Sudan complained that Sudan was levying transit fees of US$38 per barrel – considerably above international norms – and had “stolen” $815 million of crude. South Sudan says it will only resume production after this sum is paid back.

Sudan says it confiscated the oil as “payment in kind” for unpaid transit fees. The two nations signed a non-aggression pact on the first day of fresh talks in the Ethiopian capital Addis Ababa on 10 February, after leaders of both countries warned of a real prospect of a return to war.

How quickly could output be resumed?

The two-week process of halting production involved flushing viscous crude from pipelines with water. Resuming flow would take no more than “two or three days”, according to Hago Bakheed Mahmoud, field operations manager for Petrodar, a Chinese-Malaysian consortium working in Upper Nile state.

Independent industry analysts said fully resuming exports could take up to a month or more. “Any decision on restarting production rests with the North. The main processing plants are not in South Sudan, so you’d have to start all that up as well,” said Egbert Wesselink, director of the European Coalition on Oil in Sudan.

Aside from oil, relations between the neighbors remain strained over border demarcation, the alleged use of proxy forces in armed conflicts on both sides of the frontier, and on the future status of the Abyei region.

South Sudan has inked agreements with Kenya to build a 2,000-kilometer pipeline to the future port of Lamu, and to build another through Ethiopia to Djibouti’s Red Sea port, in a bid to gain “economic independence” from its northern neighbor.

The Kenyan pipeline would take at least 18 months – some analysts say three years – and $3 billion to construct.

How will the government adjust to the loss of oil revenue?

South Sudan’s government, by far the country’s biggest employer, depends on oil money to pay its public sector workers and its vast and growing army (SPLA), which consumes an estimated 40 percent of the national budget. South Sudan’s defense budget is estimated by security analysts at 2.1 billion South Sudanese pounds ($600m), 80 percent of which is spent on salaries.

The finance ministry has announced plans to increase, within six months, non-customs fiscal revenue from the current 13m South Sudanese pounds ($3.7m) a month to 40m pounds ($11.4m) through more stringent implementation of tax legislation and clamping down on widespread illegal taxation and tax dodging.

“That’s still only 5 percent or less of pre-shutdown monthly expenditures by the government, but it’s enough for some essential services”, said Finance Minister Kosti Manibe.

Exactly what these “essential services” are remains unclear. The government has said the SPLA, which won significant pay rises in April 2011, will not be affected by any cuts.

In addition, the migrants who make up the bulk of traders in South Sudan’s urban centers have been banned from sending home money in dollars and instructions to this effect have been given to companies such as Western Union.

The government has also announced it would implement a series of “austerity measures,” but few details of any specific cuts have emerged.

How will the shutdown affect the population?

There are fears that some of the 300,000 people now thought to work in the army, police and wildlife service could present a considerable security risk to civilians if their salaries dry up, and that internal divisions along ethnic lines, and between veteran troops and former rebels newly recruited as part of peace deals, could degenerate into fresh revolts. Unpaid soldiers would also be even less effective than they are now at intervening in inter-communal clashes such as those in Jonglei.

Outside the capital, Juba, and other major urban centers, there is little, if any, sign of oil money improving living conditions or basic services.

But humanitarians worry that withdrawal of this revenue could still make things considerably worse for the population.

Without oil revenue, “many people will feel the effects. Humanitarian needs will inevitably increase and the combined efforts of the government, the aid community and the donors will not be sufficient. The scope of this crisis cannot be ignored,” UN Emergency Relief Coordinator Valerie Amos said during a recent visit to Juba.

“The situation in the country as a whole is extremely precarious, and the risk of a dangerous decline is very real,” she warned.

The UN and its partners have appealed for $763m for South Sudan in 2012. Amos warned of “dire consequences” if the capacity of both the government and the humanitarian community was not boosted, and if supplies were not in place before the rainy season.

Because of conflict, falling production, rising demand and soaring prices, some 4.7 million people in South Sudan are now food insecure, up from 3.3 million in 2011, according to an assessment carried out by the World Food Program and the Food and Agricultural Organization.

The assessment warned that the number now considered “severely” food insecure could double to two million if conflict continued to displace people in large numbers.

Demand will increase considerably if hundreds of thousands of people of southern origin now living in Sudan are made to return after an April deadline imposed by Khartoum and if conflict in the Sudanese states of Blue Nile and South Kordofan leads to a sharp rise in refugees crossing the border.

The cereal deficit for 2012 is estimated at more than 470,000MT – almost half the country’s total consumption requirements for the year.

In addition to the poor harvest, food supplies have been constrained by the closure of the border with Sudan, the bad roads, rising fuel prices and currency depreciation.

The rising cost of living has already sparked protests and riots by students.

Aid agencies’ already heavy caseloads may increase once government cuts kick in, and uncertainty also surrounds some programs, such as education, where donor funding depends on government contributions. But any decisions about how to adapt to the new situation will have to wait until the specifics of the austerity measures are announced.

hm/am/mw

– Provided by Integrated Regional Information Networks.

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Boston, MA, United States (KaiserHealth) – Voters are hearing a lot about health care this year. Republicans want to make the 2012 elections a referendum on the health care law that President Obama signed two years ago.

That law was largely based on one that then-Gov. Mitt Romney signed into law nearly six years ago in Massachusetts.

Romney is now a GOP presidential contender, and that has made the Massachusetts universal health care law a political football. Romney’s rival Rick Santorum recently called it “an abject failure.”

But “Romneycare,” as Santorum and others call it, isn’t controversial in its home state. And a lot of people there don’t call it Romneycare because it took the support of a lot of other people — Democratic legislators, business leaders, insurers, hospitals and doctors, consumer groups — to get it passed.

But it’s true that Romney got the ball rolling. When I interviewed him in 2006, Romney said he got the idea from talking to Massachusetts business leaders.

“The key insight was this: People who don’t have insurance nonetheless receive health care — and it’s expensive,” Romney said.

Romney saw a state fund set up to provide free care — paid for by a growing surcharge on private insurance premiums — was spending a billion dollars a year.

“My question was, could we take that billion dollars and help the poor purchase health insurance — let them pay what they could afford? We’d subsidize what they can’t,” Romney said.

And he proposed a requirement that people buy private health insurance if they’re able. That’s the “individual mandate” that has become a curse word in Republican politics these days.

“We’re going to say, ‘Folks, if you can afford health care, then, gosh, you’d better go get it,’ ” Romney said back in 2006. ” ‘Otherwise you’re just passing on your expenses to someone else.’ That’s not Republican, that’s not Democratic, that’s not Libertarian — that’s just wrong.”

Flash forward to 2012. Romney’s successor, Democrat Deval Patrick, says the health plan Romney launched is no abject failure — it’s working.

“I think it’s just been a terrific success,” Patrick said in an interview. “And [it's] a statement of value — about our values here, about how people aren’t all on their own, that we are in this together.”

Patrick says no state can match Massachusetts’ record of getting more than 98 percent of its citizens insured for health care — and virtually every last child. And, he boasts, “It has cost the state about 1 percent in additional new state spending.”

The Massachusetts law has had strong and steady support — and little opposition. Last year, an attempt to repeal the “individual mandate” — the part that requires most people to have insurance — couldn’t get enough signatures. Last week, only 39 people had “liked” its Facebook page.

To get an idea of how it’s working at the ground level, I stopped by the office of Dieufort Fleurissaint, a self-employed Haitian-American businessman. He has a tax prep and insurance business. He’s also an evangelical minister who worked with the group Greater Boston Interfaith Organization, which helped get the health law passed.

“Close to 500,000 people didn’t have health insurance,” Fleurissaint says. “Now, because of the passing of the law, they have health insurance.”

And one of them, it turns out, is Fleurissaint. He used to be a mortgage broker, but his business crashed in 2008. He couldn’t pay his health insurance premiums.

But under the new law, Fleurissaint qualified for state-subsidized insurance.

“My premium … dropped from $1,200 on a monthly basis [to] $770 for the same coverage for the same family of four,” he says. And when his income dropped again during the recession, so did his health insurance costs.

“The law has been extremely good for me,” he says, but he admits that not all his business colleagues like the law.

“They complained that they were forced, basically obligated to purchase health insurance,” Fluerissaint says. “So I explained to them that it’s much better to have health insurance than not having it.”

In fact, despite some initial grumbling, more Massachusetts businesses of all sizes have begun offering insurance.

When I called the Massachusetts Restaurant Association, it said it didn’t know of any members that don’t offer coverage. That was surprising, since restaurant owners have been among the most opposed to health laws like this one.

Similarly, Bill Vernon, who heads the Massachusetts office of the National Federation of Independent Businesses, says the law “works for Massachusetts.” The NFIB is a plaintiff in one of the lawsuits challenging the constitutionality of the Obama health plan that will be argued later this month before the U.S. Supreme Court.

But in Massachusetts, Vernon says, “my guess is that we would probably be pretty much split on the issue of whether to repeal the law or not. That suggests repeal is not something we would favor. And I don’t think it’s politically realistic, either.”

Likewise, the individual mandate has not met with nearly the resistance that many predicted.

“The sky did not fall,” says Andrew Dreyfus, president of Blue Cross Blue Shield of Massachusetts, the state’s largest insurer. “And by the way, we have much stronger penalties around the individual mandate than the national law has, and despite that, the sky did not fall.”

The penalty for not buying insurance can be on the order of $1,200 a year for a 37-year-old single person in Boston. But only about 1 percent of taxpayers end up paying any penalty.

Meanwhile, a new study in the journal Health Affairs shows that more Massachusetts citizens are seeing a doctor regularly, fewer are going to emergency rooms for care, and the percentage who rate their own health as “good” or “excellent” is going up.

But that doesn’t mean everything about Massachusetts health care is wonderful.

The 2006 law didn’t do anything about controlling the state’s health costs, which were already among the nation’s highest.

So now the conversation in Massachusetts has turned to cost control. And some very interesting things are beginning to happen.

They didn’t happen overnight. When Patrick took over the governor’s office in 2007, he called together top insurers, hospital executives and doctors to talk about controlling costs. He says it was an exercise in frustration.

“I finally lost my patience,” Patrick says. “Because they’d sit around the table and everyone would start their response the same way — ‘Well, governor,’ they’d say, ‘it’s complicated.’ “

Patrick says the insurers would point to the hospitals, the hospitals would point to the doctors, the doctors would say it’s malpractice suits or red tape or the imaging center down the street.

Patrick says he got fed up. “I understand it is complicated,” he says. “But the point is, we have to stop being defeated by that complexity.”

So, two years ago, the governor directed his insurance commissioner to exercise a little-used power to turn down a requested rate increase because it was excessive. Not every state has this power.

Insurance companies were outraged. But Dreyfus of Blue Cross Blue Shield now says it was a pivotal point.

“It sent a message to the entire health care community and the business community that we had to change,” Dreyfus says.

And change seems to be happening. Insurers have torn up their contracts with hospitals calling for annual reimbursement increases of 8 percent and 10 percent, and negotiated agreements providing for 3 percent, 2 percent and even zero percent increases.

Blue Cross Blue Shield has persuaded some of the state’s biggest hospitals, and thousands of doctors, to accept a new kind of payment. Instead of getting paid every time they do something — a venerable system called fee-for-service that encourages them to provide more and more services — they’re paid a fixed amount each month for each patient.

That was tried in the 1990s, and it failed, largely because of backlash over its incentive to stint on care. The new wrinkle is that this time hospitals and doctors have to meet 60-some different quality measures to show they’re not cutting back on care.

Dreyfus says a third of his company’s 2.8 million subscribers are now on these so-called “global payment” plans, and he’s hopeful that most of the state will be on this kind of reimbursement within the next two to three years.

The various steps seem to be working to moderate Massachusetts’ historically high health care inflation rates. “We’ve got some more work to do here,” the governor says, “but average premium increases were almost 17 percent two years ago. They are less than 2 percent right now.”

But he doesn’t trust that it will automatically go on that way. Patrick and many others, inside and out of government, say Massachusetts now needs some legislation to lock in these changes and go further — cut down on administrative costs, reform the malpractice system and other innovations.

The big idea you often hear these days is to hold total Massachusetts health spending to a target tied to the state’s overall economic growth.

“I want to assure … that it’s sustainable,” Patrick says, “that we don’t continue to have increases above the rate of growth in the economy.” Otherwise, he says, health care will “eat up everything else.”

Legislators, who are wary of tampering with a health sector that accounts for 20 percent of the state’s economy, are expected to come up with their own proposals this spring.

But significantly, no one is talking about repealing the 2006 law. Not even businessmen like Fred Difinis, who runs a small business selling parts for playground equipment. He’s unhappy with the Massachusetts health plan because it requires him to buy coverage for prescription drugs, which he says he doesn’t need.

“I’m not sure I necessarily want to see the law repealed,” he says. “What I want to see is some balance on the cost side of the equation.”

If Massachusetts can do that, it might become a national model — again.

– Provided by Kaiser Health News.

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