Original Link: http://www.counterpunch.org/whitney05262009.html
By MIKE WHITNEY
Collapsing home prices and credit markets continue to put downward pressure on consumer spending, forcing the Federal Reserve to take even more radical action to revive the economy. Last week, Fed chief Ben Bernanke raised the prospect of further monetizing the debt by purchasing more than the $1.75 trillion of Treasuries and mortgage-backed securities (MBS) already committed. The announcement sent shock waves through the currency markets where skittish traders have joined doomsayers in predicting tough times ahead for the dollar. Foreign central banks have been gobbling up US debt at an impressive pace, adding another $60 billion in the last three weeks alone. That's more than enough to cover the current account deficit and put the greenback on solid ground for the time being. But with fiscal deficits ballooning to $3 trillion in the next year alone, dwindling foreign investment won't be enough to keep the dollar afloat. Bernanke will be forced to either raise interest rates or let the dollar fall hard.
Export-led nations are looking for an edge to revive flagging sales by keeping their currencies undervalued. But the strong dollar is making it harder for Bernanke to engineer a recovery. He'd like nothing more than to see the dollar tumble and reset at a lower rate. That would reduce the debt-load for homeowners and businesses and send consumers racing back to the shopping malls and auto showrooms. Perception management is a big part of stimulating the economy. That's why the financial press has been air-brushing articles that focus on deflation and shifting the attention to inflation. It's an effort to kick-start consumer spending by convincing people that their money will be worth less in the future. But deflation is still enemy number one. Rising unemployment, crashing home prices, vanishing equity and tighter credit; these are all signs of entrenched deflation.
Bernanke faces three main challenges to put the economy back on track. He must remove the hundreds of billions in toxic assets from the banks balance sheets, reignite consumer spending to offset the sharp decline in aggregate demand, and fix the wholesale credit-mechanism that provides 40 per cent of the credit to the broader economy. Treasury Secretary Timothy Geithner has taken over the distribution of the remaining TARP funds, and created a new program, the Public-Private Investment Partnership (PPIP), for purchasing toxic mortgage-backed assets. The PPIP will provide up to 94 per cent "non-recourse" government loans for up to $1 trillion of assets which are worth less than half of their original value at today's prices. The Treasury's plan is an attempt to keep asset prices artificially high so that the losses will not be realized until they've been shifted onto the taxpayer. Here's how John Hussman of Hussman Funds summed up Geithner's PPIP:
"From early reports regarding the toxic assets plan, it appears that the Treasury envisions allowing private investors to bid for toxic mortgage securities, but only to put up about 7 per cent of the purchase price, with the TARP matching that amount - the remainder being "non-recourse" financing from the Fed and FDIC. This essentially implies that the government would grant bidders a put option against 86 per cent of whatever price is bid. This is not only an invitation for rampant moral hazard, as it would allow the financing of largely speculative and inefficiently priced bids with the public bearing the cost of losses, but of much greater concern, it is a likely recipe for the insolvency of the Federal Deposit Insurance Corporation, and represents a major end-run around Congress by unelected bureaucrats.
“Make no mistake - we are selling off our future and the future of our children to prevent the bondholders of U.S. financial corporations from taking losses. We are using public funds to protect the bondholders of some of the most mismanaged companies in the history of capitalism, instead of allowing them to take losses that should have been their own. All our policy makers have done to date has been to squander public funds to protect the full interests of corporate bondholders. Even Bear Stearns bondholders can expect to get 100 per cent of their money back, thanks to the generosity of Bernanke, Geithner and other bureaucrats eager to hand out the money of ordinary Americans." (John Hussman, "The Fed and Treasury - Putting off Hard Choices with Easy Money, and Probable Chaos, hussmanfunds.com)
The second part of the Fed's plan is to fix the wholesale credit-mechanism, which means restoring the securitization markets where pools of loans are transformed into securities and sold to investors. Until Bernanke is able to lure investors back into purchasing high-risk debt-instruments comprised of student loans, mortgage securities, auto loans and credit card debt, the credit markets will continue sputter and growth will be flat. Structured-debt creates the asset base which is leveraged though traditional loans or complex derivatives. Credit expansion maximizes profit, inflates asset prices and establishes the structural framework for shifting wealth to financial institutions via speculative asset bubbles. This is the basic financial model that US banks and financial institutions hope to export to the rest of the industrial world to ensure a greater portion of global wealth for themselves and a stronger grip on the political process.
Bernanke's Term Asset-backed Securities Loan Facility (TALF) provides up to $1 trillion in non recourse loans to financial institutions willing to buy AAA-rated debt-instruments backed by consumer and small business loans. So far, the response has been tepid at best. For all practical purposes, the market is still frozen. Bernanke knows that there will be no recovery unless the credit markets are functioning properly. He also knows that the TALF won't succeed unless he provides guarantees for the underlying collateral, which is loans that were made to applicants who have no means for paying them back. Bernanke's guarantees will cost the taxpayer billions of dollars without any assurance that his plan will even work. It's a complete fiasco.
From the Federal Reserve Bank of San Francisco Economic Letter, "US Household Deleveraging and Future consumption Growth" by Reuven Glick and Kevin J. Lansing:
"More than 20 years ago, economist Hyman Minsky (1986) proposed a "financial instability hypothesis." He argued that prosperous times can often induce borrowers to accumulate debt beyond their ability to repay out of current income, thus leading to financial crises and severe economic contractions.
“Until recently, U.S. households were accumulating debt at a rapid pace, allowing consumption to grow faster than income. An environment of easy credit facilitated this process, fueled further by rising prices of stocks and housing, which provided collateral for even more borrowing. The value of that collateral has since dropped dramatically, leaving many households in a precarious financial position, particularly in light of economic uncertainty that threatens their jobs.
“Going forward, it seems probable that many U.S. households will reduce their debt. If accomplished through increased saving, the deleveraging process could result in a substantial and prolonged slowdown in consumer spending relative to pre-recession growth rates. Alternatively, if accomplished through some form of default on existing debt, such as real estate short sales, foreclosures, or bankruptcy, deleveraging could involve significant costs for consumers, including tax liabilities on forgiven debt, legal fees, and lower credit scores. Moreover, this form of deleveraging would simply shift the problem onto banks that hold these loans as assets on their balance sheets. Either way, the process of household deleveraging will not be painless.” (The Federal Reserve Bank of San Francisco Economic Letter, "US Household Deleveraging and Future consumption Growth" by Reuven Glick and Kevin J. Lansing.)
The economy is in the grip of deflation. Commercial banks are stockpiling excess reserves (more than $850 billion in less than a year) to prepare for future downgrades, write-offs, defaults and foreclosures. That's deflation. Consumers are cutting back on discretionary spending; driving, eating out, shopping, vacations, hotels, air travel. More deflation. Businesses are laying off employees, slashing inventory, abandoning plans for expansion or reinvestment. More deflation. Banks are trimming credit lines, calling in loans and raising standards for mortgages, credit cards and commercial real estate. Still more deflation. Bernanke has opened the liquidity valves to full-blast, but consumers are backing off; they're too mired in debt to borrow, so the money sits idle in bank vaults while the economy continues to slump.
In an environment where businesses and consumers are rebuilding their balance sheets and paying off debt, there's only one option; inflation. Bernanke will keep interest rates will stay low while increasing monetary and fiscal stimulus. The ocean of red ink will continue to rise. Still, the systemwide contraction will persist despite the Fed's multi-trillion dollar lending programs, quantitative easing (QE) and Treasury buybacks. The "Great Unwind" is irreversible; the era of limitless credit expansion is over.
David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates, believes that the equities markets have undergone a "gargantuan short-cover rally" and that stocks will retest the March 9th low, which was a 12 year low for the S&P 500 Index. Rosenberg said he doesn't expect the economy to recover in the second half of the year.
"I'm seeing no revival of consumer spending in the second quarter," Rosenberg said. (Bloomberg)
The conditions that supported the explosive growth of the last decade no longer exist. The credit markets are in a shambles, the banking system is hanging by a thread, and the consumer is out of gas. Traders are clinging to the slim hope that the worst is over, but they could be mistaken. There's probably another leg down and it will be more vicious than the last.
Sunday, May 31, 2009
Saturday, May 30, 2009
Waterboard the Fed?
Original Link: http://www.guardian.co.uk/commentisfree/cifamerica/2009/may/25/federal-reserve-bailout-transparency
By Dean Baker
To my knowledge, no one has proposed waterboarding the US Federal Reserve. But the hostile reaction of much of the country's political leadership to suggestions that the Government Accountability Office (GAO) audit the Federal Reserve Board might lead people to think that waterboarding was being called for.
The basic story is straightforward. The US Congress has lent more than $700bn, via the Treasury, to bankers at below market interest rates through the troubled assets relief programme, or Tarp. This was to keep the banks from going belly up. At the same time, the Fed has lent more than $2 trillion to banks and non-financial institutions to maintain liquidity in the financial system.
The congressional oversight panel, led by Elizabeth Warren, has frequently complained that the Treasury has not always been altogether forthcoming in providing information about its lending practices under the Tarp. However, there is at least a public paper trail. We can find out how much money each bank received and under what terms.
By contrast, there is no public paper trail for the Fed's loans, even though it has more than three times as much money outstanding as does the Treasury through the Tarp. The Fed has only provided aggregate information on the amount of loans in each of its various lending programs, and general information on the terms of the loans and the types of collateral received.
However, it is not possible to find out in detail how much money Goldman Sachs borrowed, for example, at what interest rate, and which assets it posted as collateral. The Fed has explicitly refused to make information about specific borrowers public. In fact, the inspector general who has the responsibility for overseeing the Fed told congress that she does not have this information. Apparently the Fed doesn't even trust its inspector general with information on its lending practices.
It is difficult to understand the rationale for this secrecy. There may be times where it is necessary for America's central bank to lend money to a bank without immediately making the information public in order to avoid a panic. However, it is difficult to understand why this information cannot be made available weeks or even months later. After all, this money does not belong to the Fed – it belongs to us.
The proposal for a GAO audit of the Fed is a first step towards reasserting democratic control over this institution. In many respects, the Fed has more direct control over the direction of the economy than the president or congress, yet it carries through its actions largely outside of the public's view.
Furthermore, it is structured so that the banks have a hugely disproportionate influence over the Fed's actions. The Fed's 12 district bank presidents are appointed through a process dominated by the banks within each district. These 12 presidents sit on the Federal Open Market Committee (FOMC), the Fed's key decision-making body on monetary policy, far outnumbering the seven governors who are appointed through the democratic process. (Only five of the 12 bank presidents are voting members of the FOMC. The president of the New York Fed is always a voting member. The other 4 voting positions rotate among the other 11 districts.)
In a democracy, it is difficult to justify a situation in which the most important economic policy making body is, by design, more answerable to the banking industry than democratically elected officials. The Federal Reserve Transparency Act is a step toward making the Fed accountable. It would simply require that the Government Accountability Office audit the Fed's books and report to Congress on the bailout and other issues.
While more than 130 Republican members of the House of Representatives have signed on as co-sponsors of the bill, just over 30 Democratic members are co-sponsors. No one in the Democratic leadership has signed onto the bill. It is difficult to reconcile the Democrats' position with President Obama's often- repeated commitment to transparency. The resistance to transparency at the Fed will only encourage the public to believe that there actually is something to hide.
The Fed bears primary responsibility for the economic collapse. Alan Greenspan failed to take any steps to rein in the housing bubble and arguably even promoted it. It was inevitable that the collapse of an $8tn bubble would lead to a serious downturn of the sort that we are now seeing.
This incredible failure of the Fed should raise fundamental questions about its structure. Certainly it would be a positive step if the Fed were more answerable to democratically-elected officials and less accountable to Wall Street bankers. A GAO audit would be a big step in the right direction.
By Dean Baker
To my knowledge, no one has proposed waterboarding the US Federal Reserve. But the hostile reaction of much of the country's political leadership to suggestions that the Government Accountability Office (GAO) audit the Federal Reserve Board might lead people to think that waterboarding was being called for.
The basic story is straightforward. The US Congress has lent more than $700bn, via the Treasury, to bankers at below market interest rates through the troubled assets relief programme, or Tarp. This was to keep the banks from going belly up. At the same time, the Fed has lent more than $2 trillion to banks and non-financial institutions to maintain liquidity in the financial system.
The congressional oversight panel, led by Elizabeth Warren, has frequently complained that the Treasury has not always been altogether forthcoming in providing information about its lending practices under the Tarp. However, there is at least a public paper trail. We can find out how much money each bank received and under what terms.
By contrast, there is no public paper trail for the Fed's loans, even though it has more than three times as much money outstanding as does the Treasury through the Tarp. The Fed has only provided aggregate information on the amount of loans in each of its various lending programs, and general information on the terms of the loans and the types of collateral received.
However, it is not possible to find out in detail how much money Goldman Sachs borrowed, for example, at what interest rate, and which assets it posted as collateral. The Fed has explicitly refused to make information about specific borrowers public. In fact, the inspector general who has the responsibility for overseeing the Fed told congress that she does not have this information. Apparently the Fed doesn't even trust its inspector general with information on its lending practices.
It is difficult to understand the rationale for this secrecy. There may be times where it is necessary for America's central bank to lend money to a bank without immediately making the information public in order to avoid a panic. However, it is difficult to understand why this information cannot be made available weeks or even months later. After all, this money does not belong to the Fed – it belongs to us.
The proposal for a GAO audit of the Fed is a first step towards reasserting democratic control over this institution. In many respects, the Fed has more direct control over the direction of the economy than the president or congress, yet it carries through its actions largely outside of the public's view.
Furthermore, it is structured so that the banks have a hugely disproportionate influence over the Fed's actions. The Fed's 12 district bank presidents are appointed through a process dominated by the banks within each district. These 12 presidents sit on the Federal Open Market Committee (FOMC), the Fed's key decision-making body on monetary policy, far outnumbering the seven governors who are appointed through the democratic process. (Only five of the 12 bank presidents are voting members of the FOMC. The president of the New York Fed is always a voting member. The other 4 voting positions rotate among the other 11 districts.)
In a democracy, it is difficult to justify a situation in which the most important economic policy making body is, by design, more answerable to the banking industry than democratically elected officials. The Federal Reserve Transparency Act is a step toward making the Fed accountable. It would simply require that the Government Accountability Office audit the Fed's books and report to Congress on the bailout and other issues.
While more than 130 Republican members of the House of Representatives have signed on as co-sponsors of the bill, just over 30 Democratic members are co-sponsors. No one in the Democratic leadership has signed onto the bill. It is difficult to reconcile the Democrats' position with President Obama's often- repeated commitment to transparency. The resistance to transparency at the Fed will only encourage the public to believe that there actually is something to hide.
The Fed bears primary responsibility for the economic collapse. Alan Greenspan failed to take any steps to rein in the housing bubble and arguably even promoted it. It was inevitable that the collapse of an $8tn bubble would lead to a serious downturn of the sort that we are now seeing.
This incredible failure of the Fed should raise fundamental questions about its structure. Certainly it would be a positive step if the Fed were more answerable to democratically-elected officials and less accountable to Wall Street bankers. A GAO audit would be a big step in the right direction.
The Greatest Swindle Ever Sold
Original Link: http://www.tomdispatch.com/post/175075/andy_kroll_six_ways_the_financial_bailout_scams_taxpayers
By Andy Kroll
On October 3rd, as the spreading economic meltdown threatened to topple financial behemoths like American International Group (AIG) and Bank of America and plunged global markets into freefall, the U.S. government responded with the largest bailout in American history. The Emergency Economic Stabilization Act of 2008, better known as the Troubled Asset Relief Program (TARP), authorized the use of $700 billion to stabilize the nation's failing financial systems and restore the flow of credit in the economy.
The legislation's guidelines for crafting the rescue plan were clear: the TARP should protect home values and consumer savings, help citizens keep their homes, and create jobs. Above all, with the government poised to invest hundreds of billions of taxpayer dollars in various financial institutions, the legislation urged the bailout's architects to maximize returns to the American people.
That $700 billion bailout has since grown into a more than $12 trillion commitment by the U.S. government and the Federal Reserve. About $1.1 trillion of that is taxpayer money -- the TARP money and an additional $400 billion rescue of mortgage companies Fannie Mae and Freddie Mac. The TARP now includes 12 separate programs, and recipients range from megabanks like Citigroup and JPMorgan Chase to automakers Chrysler and General Motors.
Seven months in, the bailout's impact is unclear. The Treasury Department has used the recent "stress test" results it applied to 19 of the nation's largest banks to suggest that the worst might be over; yet the International Monetary Fund as well as economists like New York University professor and economist Nouriel Roubini and New York Times columnist Paul Krugman predict greater losses in U.S. markets, rising unemployment, and generally tougher economic times ahead.
What cannot be disputed, however, is the financial bailout's biggest loser: the American taxpayer. The U.S. government, led by the Treasury Department, has done little, if anything, to maximize returns on its trillion-dollar, taxpayer-funded investment. So far, the bailout has favored rescued financial institutions by subsidizing their losses to the tune of $356 billion, shying away from much-needed management changes and -- with the exception of the automakers -- letting companies take taxpayer money without a coherent plan for how they might return to viability.
The bailout's perks have been no less favorable for private investors who are now picking over the economy's still-smoking rubble at the taxpayers' expense. The newer bailout programs rolled out by Treasury Secretary Timothy Geithner give private equity firms, hedge funds, and other private investors significant leverage to buy "toxic" or distressed assets, while leaving taxpayers stuck with the lion's share of the risk and potential losses.
Given the lack of transparency and accountability, don't expect taxpayers to be able to object too much. After all, remarkably little is known about how TARP recipients have used the government aid received. Nonetheless, recent government reports, Congressional testimony, and commentaries offer those patient enough to pore over hundreds of pages of material glimpses of just how Wall Street friendly the bailout actually is. Here, then, based on the most definitive data and analyses available, are six of the most blatant and alarming ways taxpayers have been scammed by the government's $1.1-trillion, publicly-funded bailout.
1. By overpaying for its TARP investments, the Treasury Department provided bailout recipients with generous subsidies at the taxpayer's expense.
When the Treasury Department ditched its initial plan to buy up "toxic" assets and instead invest directly in financial institutions, then-Treasury Secretary Henry Paulson, Jr. assured Americans that they'd get a fair deal. "This is an investment, not an expenditure, and there is no reason to expect this program will cost taxpayers anything," he said in October 2008.
Yet the Congressional Oversight Panel (COP), a five-person group tasked with ensuring that the Treasury Department acts in the public's best interest, concluded in its monthly report for February that the department had significantly overpaid by tens of billions of dollars for its investments. For the 10 largest TARP investments made in 2008, totaling $184.2 billion, Treasury received on average only $66 worth of assets for every $100 invested. Based on that shortfall, the panel calculated that Treasury had received only $176 billion in assets for its $254 billion investment, leaving a $78 billion hole in taxpayer pockets.
Not all investors subsidized the struggling banks so heavily while investing in them. The COP report notes that private investors received much closer to fair market value in investments made at the time of the early TARP transactions. When, for instance, Berkshire Hathaway invested $5 billion in Goldman Sachs in September, the Omaha-based company received securities worth $110 for each $100 invested. And when Mitsubishi invested in Morgan Stanley that same month, it received securities worth $91 for every $100 invested.
As of May 15th, according to the Ethisphere TARP Index, which tracks the government's bailout investments, its various investments had depreciated in value by almost $147.7 billion. In other words, TARP's losses come out to almost $1,300 per American taxpaying household.
2. As the government has no real oversight over bailout funds, taxpayers remain in the dark about how their money has been used and if it has made any difference.
While the Treasury Department can make TARP recipients report on just how they spend their government bailout funds, it has chosen not to do so. As a result, it's unclear whether institutions receiving such funds are using that money to increase lending -- which would, in turn, boost the economy -- or merely to fill in holes in their balance sheets.
Neil M. Barofsky, the special inspector general for TARP, summed the situation up this way in his office's April quarterly report to Congress: "The American people have a right to know how their tax dollars are being used, particularly as billions of dollars are going to institutions for which banking is certainly not part of the institution's core business and may be little more than a way to gain access to the low-cost capital provided under TARP."
This lack of transparency makes the bailout process highly susceptible to fraud and corruption. Barofsky's report stated that 20 separate criminal investigations were already underway involving corporate fraud, insider trading, and public corruption. He also told the Financial Times that his office was investigating whether banks manipulated their books to secure bailout funds. "I hope we don't find a single bank that's cooked its books to try to get money, but I don't think that's going to be the case."
Economist Dean Baker, co-director of the Center for Economic and Policy Research in Washington, suggested to TomDispatch in an interview that the opaque and complicated nature of the bailout may not be entirely unintentional, given the difficulties it raises for anyone wanting to follow the trail of taxpayer dollars from the government to the banks. "[Government officials] see this all as a Three Card Monte, moving everything around really quickly so the public won't understand that this really is an elaborate way to subsidize the banks," Baker says, adding that the public "won't realize we gave money away to some of the richest people."
3. The bailout's newer programs heavily favor the private sector, giving investors an opportunity to earn lucrative profits and leaving taxpayers with most of the risk.
Under Treasury Secretary Geithner, the Treasury Department has greatly expanded the financial bailout to troubling new programs like the Public-Private Investment Program (PPIP) and the Term Asset-Backed-Securities Loan Facility (TALF). The PPIP, for example, encourages private investors to buy "toxic" or risky assets on the books of struggling banks. Doing so, we're told, will get banks lending again because the burdensome assets won't weigh them down. Unfortunately, the incentives the Treasury Department is offering to get private investors to participate are so generous that the government -- and, by extension, American taxpayers -- are left with all the downside.
Joseph Stiglitz, the Nobel-prize winning economist, described the PPIP program in a New York Times op-ed this way:
"Consider an asset that has a 50-50 chance of being worth either zero or $200 in a year's time. The average 'value' of the asset is $100. Ignoring interest, this is what the asset would sell for in a competitive market. It is what the asset is 'worth.' Under the plan by Treasury Secretary Timothy Geithner, the government would provide about 92 percent of the money to buy the asset but would stand to receive only 50 percent of any gains, and would absorb almost all of the losses. Some partnership!
"Assume that one of the public-private partnerships the Treasury has promised to create is willing to pay $150 for the asset. That's 50 percent more than its true value, and the bank is more than happy to sell. So the private partner puts up $12, and the government supplies the rest -- $12 in 'equity' plus $126 in the form of a guaranteed loan.
"If, in a year's time, it turns out that the true value of the asset is zero, the private partner loses the $12, and the government loses $138. If the true value is $200, the government and the private partner split the $74 that's left over after paying back the $126 loan. In that rosy scenario, the private partner more than triples his $12 investment. But the taxpayer, having risked $138, gains a mere $37."
Worse still, the PPIP can be easily manipulated for private gain. As economist Jeffrey Sachs has described it, a bank with worthless toxic assets on its books could actually set up its own public-private fund to bid on those assets. Since no true bidder would pay for a worthless asset, the bank's public-private fund would win the bid, essentially using government money for the purchase. All the public-private fund would then have to do is quietly declare bankruptcy and disappear, leaving the bank to make off with the government money it received. With the PPIP deals set to begin in the coming months, time will tell whether private investors actually take advantage of the program's flaws in this fashion.
The Treasury Department's TALF program offers equally enticing possibilities for potential bailout profiteers, providing investors with a chance to double, triple, or even quadruple their investments. And like the PPIP, if the deal goes bad, taxpayers absorb most of the losses. "It beats any financing that the private sector could ever come up with," a Wall Street trader commented in a recent Fortune magazine story. "I almost want to say it is irresponsible."
4. The government has no coherent plan for returning failing financial institutions to profitability and maximizing returns on taxpayers' investments.
Compare the treatment of the auto industry and the financial sector, and a troubling double standard emerges: As a condition for taking bailout aid, the government required Chrysler and General Motors to present detailed plans on how the companies would return to profitability. Yet the Treasury Department attached minimal conditions to the billions injected into the largest bailed-out financial institutions. Moreover, neither Geithner nor Lawrence Summers, one of President Barack Obama's top economic advisors, nor the president himself has articulated any substantive plan or vision for how the bailout will help these institutions recover and, hopefully, maximize taxpayers' investment returns.
The Congressional Oversight Panel highlighted the absence of such a comprehensive plan in its January report. Three months into the bailout, the Treasury Department "has not yet explained its strategy," the report stated. "Treasury has identified its goals and announced its programs, but it has not yet explained how the programs chosen constitute a coherent plan to achieve those goals."
Today, the department's endgame for the bailout still remains vague. Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, wrote in the Financial Times in May that the government's response to the financial meltdown has been "ad hoc, resulting in inequitable outcomes among firms, creditors, and investors." Rather than perpetually prop up banks with endless taxpayer funds, Hoenig suggests that the government should allow banks to fail. Only then, he believes, can crippled financial institutions and systems be fixed. "Because we still have far to go in this crisis, there remains time to define a clear process for resolving large institutional failure. Without one, the consequences will involve a series of short-term events and far more uncertainty for the global economy in the long run."
The healthier and more profitable bailout recipients are once financial markets rebound, the more taxpayers will earn on their investments. Without a plan, however, banks may limp back to viability while taxpayers lose their investments or even absorb further losses.
5. The bailout's focus on Wall Street mega-banks ignores smaller banks serving millions of American taxpayers that face an equally uncertain future.
The government may not have a long-term strategy for its trillion-dollar bailout, but its guiding principle, however misguided, is clear: What's good for Wall Street will be best for the rest of the country.
On the day the mega-bank stress tests were officially released, another set of stress-test results came out to much less fanfare. In its quarterly report on the health of individual banks and the banking industry as a whole, Institutional Risk Analytics (IRA), a respected financial services organization, found that the stress levels among more than 7,500 FDIC-reporting banks nationwide had risen dramatically. For 1,575 of the banks, net incomes had turned negative due to decreased lending and less risk-taking.
The conclusion IRA drew was telling: "Our overall observation is that U.S. policy makers may very well have been distracted by focusing on 19 large stress test banks designed to save Wall Street and the world's central bank bondholders, this while a trend is emerging of a going concern viability crash taking shape under the radar." The report concluded with a question: "Has the time come to shift the policy focus away from the things that we love, namely big zombie banks, to tackle things that are truly hurting us?"
6. The bailout encourages the very behaviors that created the economic crisis in the first place instead of overhauling our broken financial system and helping the individuals most affected by the crisis.
As Joseph Stiglitz explained in the New York Times, one major cause of the economic crisis was bank overleveraging. "[U]sing relatively little capital of their own," he wrote, "[banks] borrowed heavily to buy extremely risky real estate assets. In the process, they used overly complex instruments like collateralized debt obligations." Financial institutions engaged in overleveraging in pursuit of the lucrative profits such deals promised -- even if those profits came with staggering levels of risk.
Sound familiar? It should, because in the PPIP and TALF bailout programs the Treasury Department has essentially replicated the very overleveraged, risky, complex system that got us into this mess in the first place: in other words, the government hopes to repair our financial system by using the flawed practices that caused this crisis.
Then there are the institutions deemed "too big to fail." These financial giants -- among them AIG, Citigroup, and Bank of America -- have been kept afloat by billions of dollars in bottomless bailout aid. Yet reinforcing the notion that any institution is "too big to fail" is dangerous to the economy. When a company like AIG grows so large that it becomes "too big to fail," the risk it carries is systemic, meaning failure could drag down the entire economy. The government should force "too big to fail" institutions to slim down to a safer, more modest size; instead, the Treasury Department continues to subsidize these financial giants, reinforcing their place in our economy.
Of even greater concern is the message the bailout sends to banks and lenders -- namely, that the risky investments that crippled the economy are fair game in the future. After all, if banks fail and teeter at the edge of collapse, the government promises to be there with a taxpayer-funded, potentially profitable safety net.
The handling of the bailout makes at least one thing clear, however: It's not your health that the government is focused on, it's theirs -- the very banks and lenders whose convoluted financial systems provided the underpinnings for staggering salaries and bonuses while bringing our economy to the brink of another Great Depression.
By Andy Kroll
On October 3rd, as the spreading economic meltdown threatened to topple financial behemoths like American International Group (AIG) and Bank of America and plunged global markets into freefall, the U.S. government responded with the largest bailout in American history. The Emergency Economic Stabilization Act of 2008, better known as the Troubled Asset Relief Program (TARP), authorized the use of $700 billion to stabilize the nation's failing financial systems and restore the flow of credit in the economy.
The legislation's guidelines for crafting the rescue plan were clear: the TARP should protect home values and consumer savings, help citizens keep their homes, and create jobs. Above all, with the government poised to invest hundreds of billions of taxpayer dollars in various financial institutions, the legislation urged the bailout's architects to maximize returns to the American people.
That $700 billion bailout has since grown into a more than $12 trillion commitment by the U.S. government and the Federal Reserve. About $1.1 trillion of that is taxpayer money -- the TARP money and an additional $400 billion rescue of mortgage companies Fannie Mae and Freddie Mac. The TARP now includes 12 separate programs, and recipients range from megabanks like Citigroup and JPMorgan Chase to automakers Chrysler and General Motors.
Seven months in, the bailout's impact is unclear. The Treasury Department has used the recent "stress test" results it applied to 19 of the nation's largest banks to suggest that the worst might be over; yet the International Monetary Fund as well as economists like New York University professor and economist Nouriel Roubini and New York Times columnist Paul Krugman predict greater losses in U.S. markets, rising unemployment, and generally tougher economic times ahead.
What cannot be disputed, however, is the financial bailout's biggest loser: the American taxpayer. The U.S. government, led by the Treasury Department, has done little, if anything, to maximize returns on its trillion-dollar, taxpayer-funded investment. So far, the bailout has favored rescued financial institutions by subsidizing their losses to the tune of $356 billion, shying away from much-needed management changes and -- with the exception of the automakers -- letting companies take taxpayer money without a coherent plan for how they might return to viability.
The bailout's perks have been no less favorable for private investors who are now picking over the economy's still-smoking rubble at the taxpayers' expense. The newer bailout programs rolled out by Treasury Secretary Timothy Geithner give private equity firms, hedge funds, and other private investors significant leverage to buy "toxic" or distressed assets, while leaving taxpayers stuck with the lion's share of the risk and potential losses.
Given the lack of transparency and accountability, don't expect taxpayers to be able to object too much. After all, remarkably little is known about how TARP recipients have used the government aid received. Nonetheless, recent government reports, Congressional testimony, and commentaries offer those patient enough to pore over hundreds of pages of material glimpses of just how Wall Street friendly the bailout actually is. Here, then, based on the most definitive data and analyses available, are six of the most blatant and alarming ways taxpayers have been scammed by the government's $1.1-trillion, publicly-funded bailout.
1. By overpaying for its TARP investments, the Treasury Department provided bailout recipients with generous subsidies at the taxpayer's expense.
When the Treasury Department ditched its initial plan to buy up "toxic" assets and instead invest directly in financial institutions, then-Treasury Secretary Henry Paulson, Jr. assured Americans that they'd get a fair deal. "This is an investment, not an expenditure, and there is no reason to expect this program will cost taxpayers anything," he said in October 2008.
Yet the Congressional Oversight Panel (COP), a five-person group tasked with ensuring that the Treasury Department acts in the public's best interest, concluded in its monthly report for February that the department had significantly overpaid by tens of billions of dollars for its investments. For the 10 largest TARP investments made in 2008, totaling $184.2 billion, Treasury received on average only $66 worth of assets for every $100 invested. Based on that shortfall, the panel calculated that Treasury had received only $176 billion in assets for its $254 billion investment, leaving a $78 billion hole in taxpayer pockets.
Not all investors subsidized the struggling banks so heavily while investing in them. The COP report notes that private investors received much closer to fair market value in investments made at the time of the early TARP transactions. When, for instance, Berkshire Hathaway invested $5 billion in Goldman Sachs in September, the Omaha-based company received securities worth $110 for each $100 invested. And when Mitsubishi invested in Morgan Stanley that same month, it received securities worth $91 for every $100 invested.
As of May 15th, according to the Ethisphere TARP Index, which tracks the government's bailout investments, its various investments had depreciated in value by almost $147.7 billion. In other words, TARP's losses come out to almost $1,300 per American taxpaying household.
2. As the government has no real oversight over bailout funds, taxpayers remain in the dark about how their money has been used and if it has made any difference.
While the Treasury Department can make TARP recipients report on just how they spend their government bailout funds, it has chosen not to do so. As a result, it's unclear whether institutions receiving such funds are using that money to increase lending -- which would, in turn, boost the economy -- or merely to fill in holes in their balance sheets.
Neil M. Barofsky, the special inspector general for TARP, summed the situation up this way in his office's April quarterly report to Congress: "The American people have a right to know how their tax dollars are being used, particularly as billions of dollars are going to institutions for which banking is certainly not part of the institution's core business and may be little more than a way to gain access to the low-cost capital provided under TARP."
This lack of transparency makes the bailout process highly susceptible to fraud and corruption. Barofsky's report stated that 20 separate criminal investigations were already underway involving corporate fraud, insider trading, and public corruption. He also told the Financial Times that his office was investigating whether banks manipulated their books to secure bailout funds. "I hope we don't find a single bank that's cooked its books to try to get money, but I don't think that's going to be the case."
Economist Dean Baker, co-director of the Center for Economic and Policy Research in Washington, suggested to TomDispatch in an interview that the opaque and complicated nature of the bailout may not be entirely unintentional, given the difficulties it raises for anyone wanting to follow the trail of taxpayer dollars from the government to the banks. "[Government officials] see this all as a Three Card Monte, moving everything around really quickly so the public won't understand that this really is an elaborate way to subsidize the banks," Baker says, adding that the public "won't realize we gave money away to some of the richest people."
3. The bailout's newer programs heavily favor the private sector, giving investors an opportunity to earn lucrative profits and leaving taxpayers with most of the risk.
Under Treasury Secretary Geithner, the Treasury Department has greatly expanded the financial bailout to troubling new programs like the Public-Private Investment Program (PPIP) and the Term Asset-Backed-Securities Loan Facility (TALF). The PPIP, for example, encourages private investors to buy "toxic" or risky assets on the books of struggling banks. Doing so, we're told, will get banks lending again because the burdensome assets won't weigh them down. Unfortunately, the incentives the Treasury Department is offering to get private investors to participate are so generous that the government -- and, by extension, American taxpayers -- are left with all the downside.
Joseph Stiglitz, the Nobel-prize winning economist, described the PPIP program in a New York Times op-ed this way:
"Consider an asset that has a 50-50 chance of being worth either zero or $200 in a year's time. The average 'value' of the asset is $100. Ignoring interest, this is what the asset would sell for in a competitive market. It is what the asset is 'worth.' Under the plan by Treasury Secretary Timothy Geithner, the government would provide about 92 percent of the money to buy the asset but would stand to receive only 50 percent of any gains, and would absorb almost all of the losses. Some partnership!
"Assume that one of the public-private partnerships the Treasury has promised to create is willing to pay $150 for the asset. That's 50 percent more than its true value, and the bank is more than happy to sell. So the private partner puts up $12, and the government supplies the rest -- $12 in 'equity' plus $126 in the form of a guaranteed loan.
"If, in a year's time, it turns out that the true value of the asset is zero, the private partner loses the $12, and the government loses $138. If the true value is $200, the government and the private partner split the $74 that's left over after paying back the $126 loan. In that rosy scenario, the private partner more than triples his $12 investment. But the taxpayer, having risked $138, gains a mere $37."
Worse still, the PPIP can be easily manipulated for private gain. As economist Jeffrey Sachs has described it, a bank with worthless toxic assets on its books could actually set up its own public-private fund to bid on those assets. Since no true bidder would pay for a worthless asset, the bank's public-private fund would win the bid, essentially using government money for the purchase. All the public-private fund would then have to do is quietly declare bankruptcy and disappear, leaving the bank to make off with the government money it received. With the PPIP deals set to begin in the coming months, time will tell whether private investors actually take advantage of the program's flaws in this fashion.
The Treasury Department's TALF program offers equally enticing possibilities for potential bailout profiteers, providing investors with a chance to double, triple, or even quadruple their investments. And like the PPIP, if the deal goes bad, taxpayers absorb most of the losses. "It beats any financing that the private sector could ever come up with," a Wall Street trader commented in a recent Fortune magazine story. "I almost want to say it is irresponsible."
4. The government has no coherent plan for returning failing financial institutions to profitability and maximizing returns on taxpayers' investments.
Compare the treatment of the auto industry and the financial sector, and a troubling double standard emerges: As a condition for taking bailout aid, the government required Chrysler and General Motors to present detailed plans on how the companies would return to profitability. Yet the Treasury Department attached minimal conditions to the billions injected into the largest bailed-out financial institutions. Moreover, neither Geithner nor Lawrence Summers, one of President Barack Obama's top economic advisors, nor the president himself has articulated any substantive plan or vision for how the bailout will help these institutions recover and, hopefully, maximize taxpayers' investment returns.
The Congressional Oversight Panel highlighted the absence of such a comprehensive plan in its January report. Three months into the bailout, the Treasury Department "has not yet explained its strategy," the report stated. "Treasury has identified its goals and announced its programs, but it has not yet explained how the programs chosen constitute a coherent plan to achieve those goals."
Today, the department's endgame for the bailout still remains vague. Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, wrote in the Financial Times in May that the government's response to the financial meltdown has been "ad hoc, resulting in inequitable outcomes among firms, creditors, and investors." Rather than perpetually prop up banks with endless taxpayer funds, Hoenig suggests that the government should allow banks to fail. Only then, he believes, can crippled financial institutions and systems be fixed. "Because we still have far to go in this crisis, there remains time to define a clear process for resolving large institutional failure. Without one, the consequences will involve a series of short-term events and far more uncertainty for the global economy in the long run."
The healthier and more profitable bailout recipients are once financial markets rebound, the more taxpayers will earn on their investments. Without a plan, however, banks may limp back to viability while taxpayers lose their investments or even absorb further losses.
5. The bailout's focus on Wall Street mega-banks ignores smaller banks serving millions of American taxpayers that face an equally uncertain future.
The government may not have a long-term strategy for its trillion-dollar bailout, but its guiding principle, however misguided, is clear: What's good for Wall Street will be best for the rest of the country.
On the day the mega-bank stress tests were officially released, another set of stress-test results came out to much less fanfare. In its quarterly report on the health of individual banks and the banking industry as a whole, Institutional Risk Analytics (IRA), a respected financial services organization, found that the stress levels among more than 7,500 FDIC-reporting banks nationwide had risen dramatically. For 1,575 of the banks, net incomes had turned negative due to decreased lending and less risk-taking.
The conclusion IRA drew was telling: "Our overall observation is that U.S. policy makers may very well have been distracted by focusing on 19 large stress test banks designed to save Wall Street and the world's central bank bondholders, this while a trend is emerging of a going concern viability crash taking shape under the radar." The report concluded with a question: "Has the time come to shift the policy focus away from the things that we love, namely big zombie banks, to tackle things that are truly hurting us?"
6. The bailout encourages the very behaviors that created the economic crisis in the first place instead of overhauling our broken financial system and helping the individuals most affected by the crisis.
As Joseph Stiglitz explained in the New York Times, one major cause of the economic crisis was bank overleveraging. "[U]sing relatively little capital of their own," he wrote, "[banks] borrowed heavily to buy extremely risky real estate assets. In the process, they used overly complex instruments like collateralized debt obligations." Financial institutions engaged in overleveraging in pursuit of the lucrative profits such deals promised -- even if those profits came with staggering levels of risk.
Sound familiar? It should, because in the PPIP and TALF bailout programs the Treasury Department has essentially replicated the very overleveraged, risky, complex system that got us into this mess in the first place: in other words, the government hopes to repair our financial system by using the flawed practices that caused this crisis.
Then there are the institutions deemed "too big to fail." These financial giants -- among them AIG, Citigroup, and Bank of America -- have been kept afloat by billions of dollars in bottomless bailout aid. Yet reinforcing the notion that any institution is "too big to fail" is dangerous to the economy. When a company like AIG grows so large that it becomes "too big to fail," the risk it carries is systemic, meaning failure could drag down the entire economy. The government should force "too big to fail" institutions to slim down to a safer, more modest size; instead, the Treasury Department continues to subsidize these financial giants, reinforcing their place in our economy.
Of even greater concern is the message the bailout sends to banks and lenders -- namely, that the risky investments that crippled the economy are fair game in the future. After all, if banks fail and teeter at the edge of collapse, the government promises to be there with a taxpayer-funded, potentially profitable safety net.
The handling of the bailout makes at least one thing clear, however: It's not your health that the government is focused on, it's theirs -- the very banks and lenders whose convoluted financial systems provided the underpinnings for staggering salaries and bonuses while bringing our economy to the brink of another Great Depression.
Nightmare on Cheney Street
Original Link: http://www.fpif.org/fpifzines/wb/6142
By John Feffer
Horror movies usually follow the same script. The monster - whether genetically modified, abused as a child, or flown in from Alpha Centauri - picks off the frightened teenagers one by one. After many thrills and chills, the hero drives a stake through the heart of the beast. Finally, just as we're finishing off the last of our popcorn in relief, the not-quite-dead monster makes one last attempt to dispatch the hero. It fails, but not before we've dumped popcorn all over our laps.
If Wes Craven decided to make a horror movie out of the last year of U.S. politics, he would definitely cast Dick Cheney as the monster that can't be silenced. The former vice president is Leatherface, Jason, and Freddie Krueger all rolled into one: lawless, methodical, and unpredictable with firearms. He's had more sequels than Chucky: White House chief of staff, House minority whip, secretary of Defense, CEO of Halliburton, vice president, and now rogue pundit.
In the last presidential elections, the voters repudiated the Cheney legacy. But like Glenn Close in her final scene in Fatal Attraction, Cheney's not yet down for the count. As the various TV appearances and his speech last week at the conservative think tank American Enterprise Institute (AEI) suggest, he's still got some fight in him.
Frankly, Barton Gellman's book Angler should have KO'd the man politically. Here's a guy who not only stage-managed the vice-presidential search for George W. Bush and then took the position himself, but also extracted confidential information during the search process that he subsequently used against his potential adversaries. Here's a guy who assembled the crack legal team (or was it a legal team on crack?) that provided the constitutional argument for expanding executive power, upending domestic and international law, and justifying torture. Here's a guy who created a real secret team inside the Bush administration that bypassed the State Department, Congress, and all normal procedures.
And yet, like Nixon emerging from the grave of Watergate, Cheney has sought to rebuild his reputation as the national security conscience of his party. "On the question of so-called torture, we don't do torture," he argued in a December interview on ABC. "We never have." He defended the intelligence data that the administration cooked in order to persuade the country to go to war against Iraq. He declared the "global war on terror" still on and Guantánamo still indispensable.
But last week, he went further. At AEI, he attacked The New York Times for uncovering his secret surveillance program that collected untold amount of information about U.S. citizens and should have outraged every privacy-minded conservative in the country. He argued that "enhanced interrogation techniques" provided critical information that prevented the deaths of hundreds of thousands of people. He warned the Obama administration of closing Guantánamo and bringing terrorists "inside the United States" as though President Barack Obama were about to release them on the streets of New York. It was a speech, to quote Cheney himself, that reeked of "recklessness cloaked in righteousness."
The AEI speech, like Cheney's performance as vice president, was rife with misstatements and calculated distortions. As journalists Jonathan S. Landay and Warren P. Strobel point out, the CIA inspector general, FBI director, and director of national intelligence all concur that there is no proof that the information gained through torture thwarted any attacks. The Abu Ghraib abuses were not, as Cheney claimed, the result of a few sadistic guards but the result of orders from top administration officials. Most of those detained in Guantánamo haven't been "ruthless enemies of this country" but innocent people or low-level combatants without any valuable intelligence.
If you don't believe journalists - because you think, as Cheney implies, they don't have the best interests of the country at heart - consider the perspective of the chief U.S. interrogator in Iraq, Matthew Alexander. "Torture and abuse became Al Qaida's number one recruiting tool and cost us American lives," Alexander writes. "Our greatest success in this conflict was achieved without torture or abuse. My interrogation team found Abu Musab Al Zarqawi, the former leader of Al Qaida in Iraq and murderer of tens of thousands. We did this using relationship-building approaches and non-coercive law enforcement techniques."
Of course, Dick Cheney has never been particularly interested in the truth. He wants to achieve his goals. And it appears that he's having some effect.
By rallying the conservative forces and putting pressure on invertebrate Democrats, Cheney has influenced national policy. The Senate refused to appropriate money for the closure of Guantánamo and the transfer of the prisoners held there. Obama has refused to support a truth commission. More ominously, the Obama administration is now working out its own policy of "preventive detention" - indefinitely holding people that can't be charged and tried in U.S. courts - that violates fundamental American legal principles. In his speech at the National Archives last week, Obama defended his important departures from Bush-era policy (end of torture, closure of Guantánamo) but also showed the influence of Cheney in his emphasis on war, "taking the fight to the extremists," and military commissions.
Liberal commentators have generally been enthusiastic about Obama's caution. Just check out The Washington Post's liberal stable: David Broder praised Obama and Cheney for both opposing a truth commission; "Obama has mostly called it right," observes Ruth Marcus; and E.J. Dionne, Jr. is delighted at the resurrection of Cold War liberalism. Cheney makes Obama look good. But he also pulls the president further to the right.
Cheney isn't just fighting for his principles. He's fighting for his career and those of the team that bent the Constitution to their will. No one expects that the villains in horror movies will observe Marquess of Queensberry rules. The same applies to the former vice president. Expect more down-and-dirty fighting from Dick Cheney. This is one nightmare from which we haven't quite woken up.
Nightmare on Kim Jong Il Street
North Korea can't let a U.S. holiday go by without offering its own form of celebration. In 2006, Pyongyang launched a rocket on July 4. This year, on Memorial Day, it decided to test a second nuclear weapon. Or, at least, that's what the seismic data suggests. The first test three years ago was widely held to be a dud. This one might not have been much better.
Dud or not, the United States has to come up with a response. Foreign Policy In Focus contributors Brent Choi and Joowoon Jung argue in A More Expensive Bill for North Korea that the Obama administration should wield a bigger stick and dangle a larger carrot. It should offer to send a high-level envoy to Pyongyang. And it should threaten to redeploy nuclear weapons in South Korea. In North Korea and Malign Neglect, I argue that ignoring North Korea hasn't worked in the past. The Obama administration should instead embark on an authentic policy of engagement as the only way to disempower North Korean hardliners and promote a more sensible agenda in Pyongyang.
Nukes or nice? Follow our debate in Strategic Dialogue: North Korea.
Nightmare on Recession Street
The horror movie that most people are facing these days is joblessness, foreclosure, and poverty. Will China save the global economy by using its own economic growth to pull the world out of recession?
FPIF columnist Walden Bello is skeptical. In Will China Save the World from Depression?, he points out that Beijing is sponsoring a stimulus package that, proportional to its economy, is larger than Washington's. Much of that money is going to the countryside. "A significant portion of Beijing's stimulus package is destined for infrastructure and social spending in the rural areas," Bello writes. "The government is allocating 20 billion yuan ($3 billion) in subsidies to help rural residents buy televisions, refrigerators, and other electrical appliances." But this isn't enough. "Even if Beijing throws in another hundred billion dollars, the stimulus package is not likely to counteract in any significant way the depressive impact of a 25-year policy of sacrificing the countryside for export-oriented urban-based industrial growth," Bello concludes.
Climate change isn't helping matters. The poorest countries in the world will face the near-term consequences of global warming. The UN has created a fund to help these countries make the necessary changes now to deal with this problem. The fund only has about 10% of the funds needed to pay for the first round of changes.
"The United States, as the world's richest country and its biggest emitter of greenhouse gasses, didn't pledge a single cent to this fund over the last eight years under President George W. Bush," writes FPIF contributor Saleemul Huq in Bridging the Climate Gap. "This has left a significant credibility deficit for the United States that Obama and Congress need to address if they wish the United States to claim a leadership role at the global level on climate change."
Where could the money come from? What about the Pentagon? The problem is, the Obama administration is proposing to increase military spending. "Wasting taxpayer money on dangerous, unnecessary, expensive military projects is more of an imposition on our grandchildren than spending money on health care or green energy - especially when the weapons programs don't work properly. The Government Accountability Office has documented massive Pentagon waste. Why is Congress unconcerned?" asks FPIF contributor Steve Cobble in Conservative Hypocrisy on Military Spending.
Speaking of waste, how about that World Bank? FPIF contributor Bea Edwards reports on the lack of safeguards against corruption at the Bank and what we can do about it in World Bank Corruption.
Final Nightmares
Israeli President Binyamin Netanyahu recently dropped in for a White House visit. The Obama administration has demanded that Israel stop building settlements, but Netanyahu is pressing forward on building homes in existing settlements.
The real nightmare scenario in U.S.-Israeli relations is Iran, though. "Netanyahu campaigned on and has continued to escalate his rhetoric threatening military force against Iran, sometimes framing it in the context of 'what Israel will have to do if the United States does not prevent Iran from getting a nuclear weapon,'" writes FPIF contributor Phyllis Bennis in Netanyahu Visits the White House. "Netanyahu demands that the United States agree either to attack Iran if Obama's potential nuclear diplomacy doesn't work, or agree to support an Israeli attack on Iran"
Iran, meanwhile, is gearing up for an election next month. Mahmoud Ahmadinejad is going for a second term, a nightmare possibility in itself. But he faces stiff competition from a couple of moderates. "A reformist comeback would certainly substitute confrontational tactics and volatile rhetoric with moderation and reason," writes FPIF contributor Bernd Kaussler in Iran's Next Leadership? "Although the nuclear position will not shift, the United States will likely be able to engage constructively with a reformist government in Iran. But such a government will also have to deal with a hostile conservative parliament, and may have trouble delivering on the key issues needed internally in order to secure and maintain dialogue with the United States."
FPIF contributor Andre Vltchek recently visited a nightmare: the Kibati refugee camp in the Democratic Republic of Congo. He sends us a Postcard from...Goma that details the horrifying conditions.
And finally, FPIF contributor Tiffany Williams reviews a new book on yet another nightmarish condition: slavery in the United States. "Although the United States abolished slavery officially in 1865, it has never ended in practice," she writes. "In 2009, slaves work in the homes of diplomats in Maryland and in the tomato fields of Southwest Florida. 'There has never been a single day in our America, from its discovery and birth right up to the moment you are reading this sentence, without slavery,' write renowned human trafficking expert Kevin Bales and respected historian Ron Soodalter in their new book The Slave Next Door."
By John Feffer
Horror movies usually follow the same script. The monster - whether genetically modified, abused as a child, or flown in from Alpha Centauri - picks off the frightened teenagers one by one. After many thrills and chills, the hero drives a stake through the heart of the beast. Finally, just as we're finishing off the last of our popcorn in relief, the not-quite-dead monster makes one last attempt to dispatch the hero. It fails, but not before we've dumped popcorn all over our laps.
If Wes Craven decided to make a horror movie out of the last year of U.S. politics, he would definitely cast Dick Cheney as the monster that can't be silenced. The former vice president is Leatherface, Jason, and Freddie Krueger all rolled into one: lawless, methodical, and unpredictable with firearms. He's had more sequels than Chucky: White House chief of staff, House minority whip, secretary of Defense, CEO of Halliburton, vice president, and now rogue pundit.
In the last presidential elections, the voters repudiated the Cheney legacy. But like Glenn Close in her final scene in Fatal Attraction, Cheney's not yet down for the count. As the various TV appearances and his speech last week at the conservative think tank American Enterprise Institute (AEI) suggest, he's still got some fight in him.
Frankly, Barton Gellman's book Angler should have KO'd the man politically. Here's a guy who not only stage-managed the vice-presidential search for George W. Bush and then took the position himself, but also extracted confidential information during the search process that he subsequently used against his potential adversaries. Here's a guy who assembled the crack legal team (or was it a legal team on crack?) that provided the constitutional argument for expanding executive power, upending domestic and international law, and justifying torture. Here's a guy who created a real secret team inside the Bush administration that bypassed the State Department, Congress, and all normal procedures.
And yet, like Nixon emerging from the grave of Watergate, Cheney has sought to rebuild his reputation as the national security conscience of his party. "On the question of so-called torture, we don't do torture," he argued in a December interview on ABC. "We never have." He defended the intelligence data that the administration cooked in order to persuade the country to go to war against Iraq. He declared the "global war on terror" still on and Guantánamo still indispensable.
But last week, he went further. At AEI, he attacked The New York Times for uncovering his secret surveillance program that collected untold amount of information about U.S. citizens and should have outraged every privacy-minded conservative in the country. He argued that "enhanced interrogation techniques" provided critical information that prevented the deaths of hundreds of thousands of people. He warned the Obama administration of closing Guantánamo and bringing terrorists "inside the United States" as though President Barack Obama were about to release them on the streets of New York. It was a speech, to quote Cheney himself, that reeked of "recklessness cloaked in righteousness."
The AEI speech, like Cheney's performance as vice president, was rife with misstatements and calculated distortions. As journalists Jonathan S. Landay and Warren P. Strobel point out, the CIA inspector general, FBI director, and director of national intelligence all concur that there is no proof that the information gained through torture thwarted any attacks. The Abu Ghraib abuses were not, as Cheney claimed, the result of a few sadistic guards but the result of orders from top administration officials. Most of those detained in Guantánamo haven't been "ruthless enemies of this country" but innocent people or low-level combatants without any valuable intelligence.
If you don't believe journalists - because you think, as Cheney implies, they don't have the best interests of the country at heart - consider the perspective of the chief U.S. interrogator in Iraq, Matthew Alexander. "Torture and abuse became Al Qaida's number one recruiting tool and cost us American lives," Alexander writes. "Our greatest success in this conflict was achieved without torture or abuse. My interrogation team found Abu Musab Al Zarqawi, the former leader of Al Qaida in Iraq and murderer of tens of thousands. We did this using relationship-building approaches and non-coercive law enforcement techniques."
Of course, Dick Cheney has never been particularly interested in the truth. He wants to achieve his goals. And it appears that he's having some effect.
By rallying the conservative forces and putting pressure on invertebrate Democrats, Cheney has influenced national policy. The Senate refused to appropriate money for the closure of Guantánamo and the transfer of the prisoners held there. Obama has refused to support a truth commission. More ominously, the Obama administration is now working out its own policy of "preventive detention" - indefinitely holding people that can't be charged and tried in U.S. courts - that violates fundamental American legal principles. In his speech at the National Archives last week, Obama defended his important departures from Bush-era policy (end of torture, closure of Guantánamo) but also showed the influence of Cheney in his emphasis on war, "taking the fight to the extremists," and military commissions.
Liberal commentators have generally been enthusiastic about Obama's caution. Just check out The Washington Post's liberal stable: David Broder praised Obama and Cheney for both opposing a truth commission; "Obama has mostly called it right," observes Ruth Marcus; and E.J. Dionne, Jr. is delighted at the resurrection of Cold War liberalism. Cheney makes Obama look good. But he also pulls the president further to the right.
Cheney isn't just fighting for his principles. He's fighting for his career and those of the team that bent the Constitution to their will. No one expects that the villains in horror movies will observe Marquess of Queensberry rules. The same applies to the former vice president. Expect more down-and-dirty fighting from Dick Cheney. This is one nightmare from which we haven't quite woken up.
Nightmare on Kim Jong Il Street
North Korea can't let a U.S. holiday go by without offering its own form of celebration. In 2006, Pyongyang launched a rocket on July 4. This year, on Memorial Day, it decided to test a second nuclear weapon. Or, at least, that's what the seismic data suggests. The first test three years ago was widely held to be a dud. This one might not have been much better.
Dud or not, the United States has to come up with a response. Foreign Policy In Focus contributors Brent Choi and Joowoon Jung argue in A More Expensive Bill for North Korea that the Obama administration should wield a bigger stick and dangle a larger carrot. It should offer to send a high-level envoy to Pyongyang. And it should threaten to redeploy nuclear weapons in South Korea. In North Korea and Malign Neglect, I argue that ignoring North Korea hasn't worked in the past. The Obama administration should instead embark on an authentic policy of engagement as the only way to disempower North Korean hardliners and promote a more sensible agenda in Pyongyang.
Nukes or nice? Follow our debate in Strategic Dialogue: North Korea.
Nightmare on Recession Street
The horror movie that most people are facing these days is joblessness, foreclosure, and poverty. Will China save the global economy by using its own economic growth to pull the world out of recession?
FPIF columnist Walden Bello is skeptical. In Will China Save the World from Depression?, he points out that Beijing is sponsoring a stimulus package that, proportional to its economy, is larger than Washington's. Much of that money is going to the countryside. "A significant portion of Beijing's stimulus package is destined for infrastructure and social spending in the rural areas," Bello writes. "The government is allocating 20 billion yuan ($3 billion) in subsidies to help rural residents buy televisions, refrigerators, and other electrical appliances." But this isn't enough. "Even if Beijing throws in another hundred billion dollars, the stimulus package is not likely to counteract in any significant way the depressive impact of a 25-year policy of sacrificing the countryside for export-oriented urban-based industrial growth," Bello concludes.
Climate change isn't helping matters. The poorest countries in the world will face the near-term consequences of global warming. The UN has created a fund to help these countries make the necessary changes now to deal with this problem. The fund only has about 10% of the funds needed to pay for the first round of changes.
"The United States, as the world's richest country and its biggest emitter of greenhouse gasses, didn't pledge a single cent to this fund over the last eight years under President George W. Bush," writes FPIF contributor Saleemul Huq in Bridging the Climate Gap. "This has left a significant credibility deficit for the United States that Obama and Congress need to address if they wish the United States to claim a leadership role at the global level on climate change."
Where could the money come from? What about the Pentagon? The problem is, the Obama administration is proposing to increase military spending. "Wasting taxpayer money on dangerous, unnecessary, expensive military projects is more of an imposition on our grandchildren than spending money on health care or green energy - especially when the weapons programs don't work properly. The Government Accountability Office has documented massive Pentagon waste. Why is Congress unconcerned?" asks FPIF contributor Steve Cobble in Conservative Hypocrisy on Military Spending.
Speaking of waste, how about that World Bank? FPIF contributor Bea Edwards reports on the lack of safeguards against corruption at the Bank and what we can do about it in World Bank Corruption.
Final Nightmares
Israeli President Binyamin Netanyahu recently dropped in for a White House visit. The Obama administration has demanded that Israel stop building settlements, but Netanyahu is pressing forward on building homes in existing settlements.
The real nightmare scenario in U.S.-Israeli relations is Iran, though. "Netanyahu campaigned on and has continued to escalate his rhetoric threatening military force against Iran, sometimes framing it in the context of 'what Israel will have to do if the United States does not prevent Iran from getting a nuclear weapon,'" writes FPIF contributor Phyllis Bennis in Netanyahu Visits the White House. "Netanyahu demands that the United States agree either to attack Iran if Obama's potential nuclear diplomacy doesn't work, or agree to support an Israeli attack on Iran"
Iran, meanwhile, is gearing up for an election next month. Mahmoud Ahmadinejad is going for a second term, a nightmare possibility in itself. But he faces stiff competition from a couple of moderates. "A reformist comeback would certainly substitute confrontational tactics and volatile rhetoric with moderation and reason," writes FPIF contributor Bernd Kaussler in Iran's Next Leadership? "Although the nuclear position will not shift, the United States will likely be able to engage constructively with a reformist government in Iran. But such a government will also have to deal with a hostile conservative parliament, and may have trouble delivering on the key issues needed internally in order to secure and maintain dialogue with the United States."
FPIF contributor Andre Vltchek recently visited a nightmare: the Kibati refugee camp in the Democratic Republic of Congo. He sends us a Postcard from...Goma that details the horrifying conditions.
And finally, FPIF contributor Tiffany Williams reviews a new book on yet another nightmarish condition: slavery in the United States. "Although the United States abolished slavery officially in 1865, it has never ended in practice," she writes. "In 2009, slaves work in the homes of diplomats in Maryland and in the tomato fields of Southwest Florida. 'There has never been a single day in our America, from its discovery and birth right up to the moment you are reading this sentence, without slavery,' write renowned human trafficking expert Kevin Bales and respected historian Ron Soodalter in their new book The Slave Next Door."
Teabags vs. Douchebags
Original Link: http://www.inthesetimes.com/article/4451/teabags_vs._douchebags
By David Sirota
Why this may not be the second coming of the New Deal after all
When Time editors fused Barack Obama’s head on the famous parade photo of Franklin Delano Roosevelt for a November 2008 cover, comparisons between 1932 and the present day were already a shopworn cliche.
If you were a working journalist in Washington worth your weight in banality, you had made at least 10 giddy references to “nothing to fear but fear itself” and the prospects for a “new New Deal.”
The FDR-Obama comparisons seemed so appropriate—here was another Democrat elected during an economic emergency created by decades of conservative mismanagement. But to make such a direct comparison in 2008 meant you didn’t know your ass from your teabag, or, more precisely, the difference between a teabag and a douchebag, and how that difference explains why all the New Deal nostalgia may prove foolish.
Teabaggery takes its name from the Boston Tea Party of 1773. Mythologized high-school history texts tell us that colonists tossed British tea into Boston Harbor in America’s first populist revolt. Today, as evidenced by the April 15 protests, the original Boston Tea Party has become a transcendent icon of pugilistic radicalism—a symbol of patriotic resistance against unresponsive government and elite douchebags.
Which brings us to douchebaggery, defined by the Urban Dictionary as a philosophy “holding that no one other than [oneself] matters in the least bit, and thus that others can and should be treated like excrement for little or no reason.” In Washington, douchebaggery has become synonymous with milquetoast political platforms, soulless candidates and anti-populist Establishmentarian politics. To wit, Comedy Central’s South Park substituted an oversized douchebag (named “Giant Douche”) for John Kerry in an episode about the 2004 presidential campaign.
The birthing of the most famous political periods and the success of their transformative agendas almost always hinge on struggles between Radical Teabaggers and Establishment Douchebags. And typically, the teabaggers of a prior era have defined the next epoch’s politics.
The Manichean history of teabags and douches
It’s easy to think that the revolutionary birth of America materialized from the momentary benevolence and foresight of colonial aristocrats gathered in Philadelphia. But that break from the monarchy of King George III, and the populist Jeffersonian and Jacksonian eras that succeeded it, came from the first of the Manichean struggles between Teabags and Douches that mark American history.
Through pamphleteers like Thomas Paine and rabble-rousers like Samuel Adams, the radical colonial teabaggers who fought the British douches during the Revolutionary War sowed the political terrain for independence, adoption of the Bill of Rights, and then for the (relatively) radical pre-Civil War eras.
Likewise, decades of activism by abolitionists (teabaggers) forced the president to take on the South’s agricultural oligarchy (douchebags) and begin the process of ending the institution of slavery. Teabaggers like William Jennings Bryan, rural populist parties and labor activists railing against “crosses of gold” set the stage for Theodore Roosevelt to break from fellow Republicans and begin trust-busting the corporate douchebags of the early 20th century. And those same teabaggers helped set the stage for Franklin Roosevelt’s transformative douchebag rout in the 1930s.
Though the 30-year period between the two Roosevelts’ presidencies is portrayed as a halcyon era of country club Republican douchebaggery, the decades were also marked by teabaggers organizing on the left. Reactionary forces like the Ku Klux Klan and the right-wing nativists made their presence felt, but the zeitgeist of the period was embodied in militant labor activism, socialist and communist agitation for a bigger welfare state, Bonus Army revolts for veterans benefits, and feminist activism for suffrage and equality.
Thus, when the Great Depression hit, a political infrastructure and ideological ferment had already created the conditions that would channel the cataclysm’s angst through the prism of a progressive economic program. Progressives had laid the groundwork during the 1920s for the kind of political dynamic that moved the debate leftward and led to the New Deal.
Hiding douchebaggery inside a teabag
Progressives remained the dominant rabble-rousing teabaggers from the Great Depression until the 1970s, winning battles not only for the New Deal, but for civil rights legislation and the end of the Vietnam War. Slowly, however, through icons like William F. Buckley, Barry Goldwater and ultimately Ronald Reagan, conservatives figured out how to package their Establishment agenda of tax cuts, deregulation and privatization in the argot of outsider populism. By claiming “extremism is no vice,” railing on “welfare queens,” and insisting “government is the problem,” the Right discovered how to wrap corporate douchbaggery in a teabag.
With the help of conservative think tanks, columnists, television pundits and talk radio hosts, this sleight-of-bag created the politics of perpetual outrage predicated on the contradictions detailed by Thomas Frank in What’s the Matter With Kansas?,: impoverished rural states electing Senators on promises to cut inheritance taxes on millionaires and blue-collar workers supporting lawmakers who back job-killing trade deals—as Frank puts it, a country “nailing itself to that cross of gold.”
Today, Republican congressmen champion a flat tax and embrace anti-immigrant xenophobia, media voices like Glenn Beck infuse their rhetoric with violent themes, and Texas Gov. Rick Perry (R) endorses the concept of secession—all while a so-called “tea party” movement against government is manufactured via Fox News and a team of lobbyists from FreedomWorks, a corporate front group in D.C.
This might be unimportant during times of relative prosperity. But if, as many economists predict, the current financial crisis becomes the second Great Depression, the period between 1980 and today will have been a crucial pre-depression era—the era whose teabaggers, like those of the pre-depression 1900-1932 period, could drive the policies that emerge from the crisis.
The road to Douchedom could be paved with teabags
In terms of tactics, yesterday’s pre-New Deal labor organizers, Bonus Army marchers and communist agitators have become the militias, tax deniers, Ron Paul-followers and Minutemen who populate the right. And these new voices are being amplified by a powerful Fox News/talk radio noise machine that no teabagger ever had before.
The first 100 days of the Obama administration, the main target of the teabaggers ire has been punctuated by persistent establishment douchebaggery. Specifically, the new White House has supported another bank bailout, considered an attempt to undermine autoworkers’ unions, resisted implementing tough Roosevelt-esque financial regulations, and competed with Republicans to see who can float the biggest tax breaks.
Certainly, President Obama’s budget includes some progressive priorities, but the framing and overall direction of the policy debate reflects the pull of right-wing populism. The administration is still trying to out-tax-cut the GOP, still citing defense budget increases as proof of “toughness,” and still laughing off criminal justice reform proposals for fear of losing “tough on crime” battles.
In the lead up to and aftermath of the April 15 tea parties, progressives used their limited media resources (MSNBC programs, Air America shows, blogs, newspaper columns, etc.) to make fun of the conservative protestors. Many voices lamented that in railing on government and demanding more tax cuts, conservatives continue to champion the Establishment’s wish list—not genuine teabag populism.
On its merits that is true. The April tea parties were organized by corporate lobbyists and backed by the same moneyed Republican douchebags that drove the economy into the ground. But with stagecraft defining so much of contemporary politics, and with such a powerful media machine behind the image of conservative teabaggery, the truth doesn’t really matter.
That means until progressives stop spending their time ridiculing teabaggery and start co-opting it through their own brand of full-throated populism, we will continue to be portrayed as the inept douchebags in the Manichean struggle—and we may see any “new New Deal” opportunity pass us by.
By David Sirota
Why this may not be the second coming of the New Deal after all
When Time editors fused Barack Obama’s head on the famous parade photo of Franklin Delano Roosevelt for a November 2008 cover, comparisons between 1932 and the present day were already a shopworn cliche.
If you were a working journalist in Washington worth your weight in banality, you had made at least 10 giddy references to “nothing to fear but fear itself” and the prospects for a “new New Deal.”
The FDR-Obama comparisons seemed so appropriate—here was another Democrat elected during an economic emergency created by decades of conservative mismanagement. But to make such a direct comparison in 2008 meant you didn’t know your ass from your teabag, or, more precisely, the difference between a teabag and a douchebag, and how that difference explains why all the New Deal nostalgia may prove foolish.
Teabaggery takes its name from the Boston Tea Party of 1773. Mythologized high-school history texts tell us that colonists tossed British tea into Boston Harbor in America’s first populist revolt. Today, as evidenced by the April 15 protests, the original Boston Tea Party has become a transcendent icon of pugilistic radicalism—a symbol of patriotic resistance against unresponsive government and elite douchebags.
Which brings us to douchebaggery, defined by the Urban Dictionary as a philosophy “holding that no one other than [oneself] matters in the least bit, and thus that others can and should be treated like excrement for little or no reason.” In Washington, douchebaggery has become synonymous with milquetoast political platforms, soulless candidates and anti-populist Establishmentarian politics. To wit, Comedy Central’s South Park substituted an oversized douchebag (named “Giant Douche”) for John Kerry in an episode about the 2004 presidential campaign.
The birthing of the most famous political periods and the success of their transformative agendas almost always hinge on struggles between Radical Teabaggers and Establishment Douchebags. And typically, the teabaggers of a prior era have defined the next epoch’s politics.
The Manichean history of teabags and douches
It’s easy to think that the revolutionary birth of America materialized from the momentary benevolence and foresight of colonial aristocrats gathered in Philadelphia. But that break from the monarchy of King George III, and the populist Jeffersonian and Jacksonian eras that succeeded it, came from the first of the Manichean struggles between Teabags and Douches that mark American history.
Through pamphleteers like Thomas Paine and rabble-rousers like Samuel Adams, the radical colonial teabaggers who fought the British douches during the Revolutionary War sowed the political terrain for independence, adoption of the Bill of Rights, and then for the (relatively) radical pre-Civil War eras.
Likewise, decades of activism by abolitionists (teabaggers) forced the president to take on the South’s agricultural oligarchy (douchebags) and begin the process of ending the institution of slavery. Teabaggers like William Jennings Bryan, rural populist parties and labor activists railing against “crosses of gold” set the stage for Theodore Roosevelt to break from fellow Republicans and begin trust-busting the corporate douchebags of the early 20th century. And those same teabaggers helped set the stage for Franklin Roosevelt’s transformative douchebag rout in the 1930s.
Though the 30-year period between the two Roosevelts’ presidencies is portrayed as a halcyon era of country club Republican douchebaggery, the decades were also marked by teabaggers organizing on the left. Reactionary forces like the Ku Klux Klan and the right-wing nativists made their presence felt, but the zeitgeist of the period was embodied in militant labor activism, socialist and communist agitation for a bigger welfare state, Bonus Army revolts for veterans benefits, and feminist activism for suffrage and equality.
Thus, when the Great Depression hit, a political infrastructure and ideological ferment had already created the conditions that would channel the cataclysm’s angst through the prism of a progressive economic program. Progressives had laid the groundwork during the 1920s for the kind of political dynamic that moved the debate leftward and led to the New Deal.
Hiding douchebaggery inside a teabag
Progressives remained the dominant rabble-rousing teabaggers from the Great Depression until the 1970s, winning battles not only for the New Deal, but for civil rights legislation and the end of the Vietnam War. Slowly, however, through icons like William F. Buckley, Barry Goldwater and ultimately Ronald Reagan, conservatives figured out how to package their Establishment agenda of tax cuts, deregulation and privatization in the argot of outsider populism. By claiming “extremism is no vice,” railing on “welfare queens,” and insisting “government is the problem,” the Right discovered how to wrap corporate douchbaggery in a teabag.
With the help of conservative think tanks, columnists, television pundits and talk radio hosts, this sleight-of-bag created the politics of perpetual outrage predicated on the contradictions detailed by Thomas Frank in What’s the Matter With Kansas?,: impoverished rural states electing Senators on promises to cut inheritance taxes on millionaires and blue-collar workers supporting lawmakers who back job-killing trade deals—as Frank puts it, a country “nailing itself to that cross of gold.”
Today, Republican congressmen champion a flat tax and embrace anti-immigrant xenophobia, media voices like Glenn Beck infuse their rhetoric with violent themes, and Texas Gov. Rick Perry (R) endorses the concept of secession—all while a so-called “tea party” movement against government is manufactured via Fox News and a team of lobbyists from FreedomWorks, a corporate front group in D.C.
This might be unimportant during times of relative prosperity. But if, as many economists predict, the current financial crisis becomes the second Great Depression, the period between 1980 and today will have been a crucial pre-depression era—the era whose teabaggers, like those of the pre-depression 1900-1932 period, could drive the policies that emerge from the crisis.
The road to Douchedom could be paved with teabags
In terms of tactics, yesterday’s pre-New Deal labor organizers, Bonus Army marchers and communist agitators have become the militias, tax deniers, Ron Paul-followers and Minutemen who populate the right. And these new voices are being amplified by a powerful Fox News/talk radio noise machine that no teabagger ever had before.
The first 100 days of the Obama administration, the main target of the teabaggers ire has been punctuated by persistent establishment douchebaggery. Specifically, the new White House has supported another bank bailout, considered an attempt to undermine autoworkers’ unions, resisted implementing tough Roosevelt-esque financial regulations, and competed with Republicans to see who can float the biggest tax breaks.
Certainly, President Obama’s budget includes some progressive priorities, but the framing and overall direction of the policy debate reflects the pull of right-wing populism. The administration is still trying to out-tax-cut the GOP, still citing defense budget increases as proof of “toughness,” and still laughing off criminal justice reform proposals for fear of losing “tough on crime” battles.
In the lead up to and aftermath of the April 15 tea parties, progressives used their limited media resources (MSNBC programs, Air America shows, blogs, newspaper columns, etc.) to make fun of the conservative protestors. Many voices lamented that in railing on government and demanding more tax cuts, conservatives continue to champion the Establishment’s wish list—not genuine teabag populism.
On its merits that is true. The April tea parties were organized by corporate lobbyists and backed by the same moneyed Republican douchebags that drove the economy into the ground. But with stagecraft defining so much of contemporary politics, and with such a powerful media machine behind the image of conservative teabaggery, the truth doesn’t really matter.
That means until progressives stop spending their time ridiculing teabaggery and start co-opting it through their own brand of full-throated populism, we will continue to be portrayed as the inept douchebags in the Manichean struggle—and we may see any “new New Deal” opportunity pass us by.
Japanese Pay Less for More Health Care
Original Link: http://www.npr.org/templates/story/story.php?storyId=89626309
By T.R. Reid
Japan produces cars, color TVs and computers, but it also produces the world's healthiest people. It has the longest healthy life expectancy on Earth and spends half as much on health care as the United States.
That long life expectancy is partly due to diet and lifestyle, but the country's universal health care system plays a key role, too.
Everyone in Japan is required to get a health insurance policy, either at work or through a community-based insurer. The government picks up the tab for those who are too poor.
It's a model of social insurance that is used in many wealthy countries. But it's definitely not "socialized medicine." Eighty percent of Japan's hospitals are privately owned — more than in the United States — and almost every doctor's office is a private business.
Health Care for Anyone at Anytime
Dr. Kono Hitoshi is a typical doctor. He runs a private, 19-bed hospital in the Tokyo neighborhood of Soshigaya.
"The best thing about the Japanese medical system is that all citizens are covered," Kono says. "Anyone, anywhere, anytime — and it's cheap."
Patients don't have to make appointments at his hospital, either.
The Japanese go to the doctor about three times as often as Americans. Because there are no gatekeepers, they can see any specialist they want.
Keeping Costs Low
Japanese patients also stay in the hospital much longer than Americans, on average. They love technology such as magnetic resonance imaging; they have nearly twice as many scans per capita as Americans do. A neck scan can cost $1,200 in the United States.
Professor Ikegami Naoki, Japan's top health economist, explains how Japan keeps MRIs affordable.
"Well, in 2002, the government says that the MRIs, we are paying too much. So in order to be within the total budget, we will cut them by 35 percent," Ikegami says.
This is how Japan keeps cost so low. The Japanese Health Ministry tightly controls the price of health care down to the smallest detail. Every two years, the health care industry and the health ministry negotiate a fixed price for every procedure and every drug.
That helps keep premiums to around $280 a month for the average Japanese family, a lot less than Americans pay. And Japan's employers pick up at least half of that. If you lose your job, you keep your health insurance.
An Accommodating Insurance System
Japanese insurers are a lot more accommodating than their American counterparts. For one thing, they can't deny a claim. And they have to cover everybody.
Even an applicant with heart disease can't be turned down, says Ikegami, the professor. "That is forbidden."
Nor do health care plans covering basic health care for workers and their families make a profit.
"Anything left over is carried over to the next year," Ikegami says. If the carryover was big, "then the premium rate would go down."
Perhaps Too Cheap?
So here's a country with the longest life expectancy, excellent health results, no waiting lists and rock-bottom costs. Is anyone complaining?
Well, the doctors are. Kono says he's getting paid peanuts for all his hard work.
If somebody comes in with a cut less than 6 square inches, Kono gets 450 yen, or about $4.30, to sew it up.
"It's extremely cheap," he says.
Kono is forced to look for other ways to make a yen. He has four vending machines in the waiting room. In a part of Tokyo with free street parking, he charges $4 an hour to park at his clinic.
The upside is that virtually no one in Japan goes broke because of medical expenses.
Personal bankruptcy due to medical expenses is unheard of in Japan, says Professor Saito Hidero, president of the Nagoya Central Hospital.
Hospitals Hit Hard
But while the patients may be healthy, the hospitals are in even worse financial shape than the doctors.
"I think our system is pretty good, pretty good, but no system is perfect," he says. "But 50 percent of hospitals are in financial deficit now."
So here's the weakness: While the United States probably spends too much on health care, Japan may be spending too little. In a country with $10-a-night hospital stays, prices just aren't high enough to balance the books.
Hospital prices too low? That's a problem a lot of countries would like.
By T.R. Reid
Japan produces cars, color TVs and computers, but it also produces the world's healthiest people. It has the longest healthy life expectancy on Earth and spends half as much on health care as the United States.
That long life expectancy is partly due to diet and lifestyle, but the country's universal health care system plays a key role, too.
Everyone in Japan is required to get a health insurance policy, either at work or through a community-based insurer. The government picks up the tab for those who are too poor.
It's a model of social insurance that is used in many wealthy countries. But it's definitely not "socialized medicine." Eighty percent of Japan's hospitals are privately owned — more than in the United States — and almost every doctor's office is a private business.
Health Care for Anyone at Anytime
Dr. Kono Hitoshi is a typical doctor. He runs a private, 19-bed hospital in the Tokyo neighborhood of Soshigaya.
"The best thing about the Japanese medical system is that all citizens are covered," Kono says. "Anyone, anywhere, anytime — and it's cheap."
Patients don't have to make appointments at his hospital, either.
The Japanese go to the doctor about three times as often as Americans. Because there are no gatekeepers, they can see any specialist they want.
Keeping Costs Low
Japanese patients also stay in the hospital much longer than Americans, on average. They love technology such as magnetic resonance imaging; they have nearly twice as many scans per capita as Americans do. A neck scan can cost $1,200 in the United States.
Professor Ikegami Naoki, Japan's top health economist, explains how Japan keeps MRIs affordable.
"Well, in 2002, the government says that the MRIs, we are paying too much. So in order to be within the total budget, we will cut them by 35 percent," Ikegami says.
This is how Japan keeps cost so low. The Japanese Health Ministry tightly controls the price of health care down to the smallest detail. Every two years, the health care industry and the health ministry negotiate a fixed price for every procedure and every drug.
That helps keep premiums to around $280 a month for the average Japanese family, a lot less than Americans pay. And Japan's employers pick up at least half of that. If you lose your job, you keep your health insurance.
An Accommodating Insurance System
Japanese insurers are a lot more accommodating than their American counterparts. For one thing, they can't deny a claim. And they have to cover everybody.
Even an applicant with heart disease can't be turned down, says Ikegami, the professor. "That is forbidden."
Nor do health care plans covering basic health care for workers and their families make a profit.
"Anything left over is carried over to the next year," Ikegami says. If the carryover was big, "then the premium rate would go down."
Perhaps Too Cheap?
So here's a country with the longest life expectancy, excellent health results, no waiting lists and rock-bottom costs. Is anyone complaining?
Well, the doctors are. Kono says he's getting paid peanuts for all his hard work.
If somebody comes in with a cut less than 6 square inches, Kono gets 450 yen, or about $4.30, to sew it up.
"It's extremely cheap," he says.
Kono is forced to look for other ways to make a yen. He has four vending machines in the waiting room. In a part of Tokyo with free street parking, he charges $4 an hour to park at his clinic.
The upside is that virtually no one in Japan goes broke because of medical expenses.
Personal bankruptcy due to medical expenses is unheard of in Japan, says Professor Saito Hidero, president of the Nagoya Central Hospital.
Hospitals Hit Hard
But while the patients may be healthy, the hospitals are in even worse financial shape than the doctors.
"I think our system is pretty good, pretty good, but no system is perfect," he says. "But 50 percent of hospitals are in financial deficit now."
So here's the weakness: While the United States probably spends too much on health care, Japan may be spending too little. In a country with $10-a-night hospital stays, prices just aren't high enough to balance the books.
Hospital prices too low? That's a problem a lot of countries would like.
Friday, May 29, 2009
Health-care costs handcuff entrepreneurs
Original Link: http://www.reuters.com/article/smallBusinessNews/idUSTRE54P2RJ20090526
By Andy Sullivan
Countless workers in the United States are trapped in jobs they would like to leave because they cannot get health insurance elsewhere, calcifying innovation and mobility in the world's largest economy.
Daunted by health-care costs, a would-be technology entrepreneur in Texas decides not to start her own business. A communications expert in Washington decides not to strike out on his own. And a freelance magazine editor in Brooklyn decides to take a less satisfying corporate job.
"I would rather be freelancing, no question," said Jessica Tolliver, a former editor who now works in public relations. "I got my work done in less time, because once I finished what I had to do, the time was my own."
Economists call this phenomenon "job lock," and studies suggest that it keeps between 20 percent and 50 percent of workers from leaving their current jobs.
Because health insurance is tied to employment in the United States, workers who leave their jobs can see health bills skyrocket if they strike out on their own or take a position with a company that offers fewer benefits. Workers who would like to retire early stay on, unable to qualify for the government's Medicare program until they turn 65.
And those who have existing health problems may not be able to get coverage at all.
Job lock is difficult to measure because many employees don't like to advertise their unhappiness. But economists and small-business advocates say it takes an enormous toll on productivity.
SLOWING INNOVATION
"We can definitely say that it's slowing down the rate of innovation," said Tim Kane, an economist with the Kauffman Foundation which promoted entrepreneurship.
For Mike, a Washington-based communications professional who did not want to use his last name, health costs may force him to pass up the chance to be his own boss at a time when he could easily pick up several major clients.
With two children at home, Mike said he was reluctant to abandon the generous benefits he gets at the trade group where he currently works. Self-employment would probably mean spending more for fewer benefits.
"I don't want a bad event to knock me and my family out of the box," he said. "It's a real hurdle."
As head of the National Federation of Independent Businesses, Todd Stottlemeyer frequently encountered would-be entrepreneurs who let their ideas go stale and their products languish on the workbench because they did not want to shoulder their own health care costs.
When he asked audiences if health insurance has affected their employment decisions, often half the hands in the room would go up.
"There are lots of factors that go into why somebody starts a business or doesn't start a business: Do I have a good idea, do I have capital, do I have risk tolerance?," said Stottlemeyer, now an executive at a hospital chain. "Being able to get health insurance ... should not be one of those determinant factors."
Making insurance more affordable for the self-employed could lead to a wave of new businesses, one study suggests.
New Jersey saw a 14 to 20 percent rise in entrepreneurial activity due to a 1993 law making it easier for the self-employed to afford health insurance, a study by Philip DeCicca of McMaster University in Hamilton, Ontario found.
Roughly 60 percent of the U.S. population now gets its health coverage through work, but the system is increasingly strained due to rising costs.
Congress is working to overhaul the troubled system. The Democratic majority hopes to pass a law which President Barack Obama can sign by the end of the year. However, employer-based care is likely to remain a bedrock of any new approach.
The link between healthcare and jobs evolved during World War II, when the government imposed wage controls but allowed companies to adopt health-insurance plans to lure employees.
Small-business groups have often complained this unfairly tilts the playing field toward large employers that have the clout to negotiate rates that are 18 percent lower on average, according to the Commonwealth Fund.
Consequently, workers at small firms are much less likely to have health insurance. While 99 percent of companies that employ more than 200 employees offer health coverage, only 49 percent of companies that employ between 3 and 9 workers do so, according to the Henry J. Kaiser Family Foundation.
Part-time workers are also less likely to get benefits than full-time employees, according to Kaiser.
Self-employed workers face a further disadvantage because they cannot deduct health-insurance payments from their income taxes, unlike companies that maintain a payroll.
As a freelancer, Tolliver could work from wherever she and take playground breaks with her daughters. But a $1,200 monthly healthcare bill ultimately led her to take a job where insurance only costs her $200 per month.
"It would be obnoxious to say were struggling to put food on the table. But that said, it was a lot of money."
By Andy Sullivan
Countless workers in the United States are trapped in jobs they would like to leave because they cannot get health insurance elsewhere, calcifying innovation and mobility in the world's largest economy.
Daunted by health-care costs, a would-be technology entrepreneur in Texas decides not to start her own business. A communications expert in Washington decides not to strike out on his own. And a freelance magazine editor in Brooklyn decides to take a less satisfying corporate job.
"I would rather be freelancing, no question," said Jessica Tolliver, a former editor who now works in public relations. "I got my work done in less time, because once I finished what I had to do, the time was my own."
Economists call this phenomenon "job lock," and studies suggest that it keeps between 20 percent and 50 percent of workers from leaving their current jobs.
Because health insurance is tied to employment in the United States, workers who leave their jobs can see health bills skyrocket if they strike out on their own or take a position with a company that offers fewer benefits. Workers who would like to retire early stay on, unable to qualify for the government's Medicare program until they turn 65.
And those who have existing health problems may not be able to get coverage at all.
Job lock is difficult to measure because many employees don't like to advertise their unhappiness. But economists and small-business advocates say it takes an enormous toll on productivity.
SLOWING INNOVATION
"We can definitely say that it's slowing down the rate of innovation," said Tim Kane, an economist with the Kauffman Foundation which promoted entrepreneurship.
For Mike, a Washington-based communications professional who did not want to use his last name, health costs may force him to pass up the chance to be his own boss at a time when he could easily pick up several major clients.
With two children at home, Mike said he was reluctant to abandon the generous benefits he gets at the trade group where he currently works. Self-employment would probably mean spending more for fewer benefits.
"I don't want a bad event to knock me and my family out of the box," he said. "It's a real hurdle."
As head of the National Federation of Independent Businesses, Todd Stottlemeyer frequently encountered would-be entrepreneurs who let their ideas go stale and their products languish on the workbench because they did not want to shoulder their own health care costs.
When he asked audiences if health insurance has affected their employment decisions, often half the hands in the room would go up.
"There are lots of factors that go into why somebody starts a business or doesn't start a business: Do I have a good idea, do I have capital, do I have risk tolerance?," said Stottlemeyer, now an executive at a hospital chain. "Being able to get health insurance ... should not be one of those determinant factors."
Making insurance more affordable for the self-employed could lead to a wave of new businesses, one study suggests.
New Jersey saw a 14 to 20 percent rise in entrepreneurial activity due to a 1993 law making it easier for the self-employed to afford health insurance, a study by Philip DeCicca of McMaster University in Hamilton, Ontario found.
Roughly 60 percent of the U.S. population now gets its health coverage through work, but the system is increasingly strained due to rising costs.
Congress is working to overhaul the troubled system. The Democratic majority hopes to pass a law which President Barack Obama can sign by the end of the year. However, employer-based care is likely to remain a bedrock of any new approach.
The link between healthcare and jobs evolved during World War II, when the government imposed wage controls but allowed companies to adopt health-insurance plans to lure employees.
Small-business groups have often complained this unfairly tilts the playing field toward large employers that have the clout to negotiate rates that are 18 percent lower on average, according to the Commonwealth Fund.
Consequently, workers at small firms are much less likely to have health insurance. While 99 percent of companies that employ more than 200 employees offer health coverage, only 49 percent of companies that employ between 3 and 9 workers do so, according to the Henry J. Kaiser Family Foundation.
Part-time workers are also less likely to get benefits than full-time employees, according to Kaiser.
Self-employed workers face a further disadvantage because they cannot deduct health-insurance payments from their income taxes, unlike companies that maintain a payroll.
As a freelancer, Tolliver could work from wherever she and take playground breaks with her daughters. But a $1,200 monthly healthcare bill ultimately led her to take a job where insurance only costs her $200 per month.
"It would be obnoxious to say were struggling to put food on the table. But that said, it was a lot of money."
Here Come the Big Lies About Health Care Reform
Original Link: http://blog.aflcio.org/2009/05/28/here-come-the-big-lies-about-health-care-reform/
By Mike Hall
We noted a few days ago how the private insurance industry was set to unleash its attack dogs on health care reform to try to kill a public health insurance plan option as part of President Obama’s health care reform initiative.
Those dogs have started to bark.
Yesterday, the fake group, Americans for Prosperity (AFP)—another one of those astroturf names meant to appeal to All of Us—launched a $1.7 million TV ad campaign claiming we may all die if Obama’s health care reform proposals are enacted.
The ads don’t even skirt the neighborhood of the truth, but then, as Robert Borosage wrote last week, the health care industry has a long history of “trying to scare the hell out of Americans” when it comes to health care reform.
The ads conjure up the boogeyman of a “government-run” health care system where patients will die as their cancerous tumors grow to fatal stages while they wait months to receive care. Scary stuff. Phony, but meant to scare us all.
A public health plan option has won the endorsement of major health care groups and many senators and representatives and is a key component of the AFL-CIO’s health care reform principles.
It would provide workers who have private insurance and those without insurance a choice in coverage: Stay with their private plan or choose the public plan option. It would also—which scares the hay out of the private insurance industry—provide some competition for an industry that has secured a near-monopoly of the market and recorded record profits, while we are paying more for less care.
The Wall Street Journal reports that another group, Conservatives for Patients’ Rights, is buying air time for a 30-minute Sunday morning infomercial featuring “horror stories” about the Canadian and British health care systems and warning the U.S. government is about to take over health care here.
Like AFP’s campaign, that message doesn’t even have a nodding acquaintance with the truth. But a key Republican strategist says the truth doesn’t matter when it comes to fighting health care reform. BTW, most Republican lawmakers have decried a public plan option with strikingly similar, and just as phony, arguments.
Think Progress reports that lies about health care reform are not going to go away anytime soon.
In an interview with The New York Times, conservative pollster Frank Luntz admitted that he would continue raising the false specter of a ”Washington takeover” of health care—whether or not that was Obama’s actual proposal. “I’m not a policy person. I’m a language person,” Luntz said.
Click here for a detailed look at the blueprint for the propaganda campaign against health care reform.
The truth may set you free, but a big lie just might protect Big Health Insurance Companies’ big profits.
By Mike Hall
We noted a few days ago how the private insurance industry was set to unleash its attack dogs on health care reform to try to kill a public health insurance plan option as part of President Obama’s health care reform initiative.
Those dogs have started to bark.
Yesterday, the fake group, Americans for Prosperity (AFP)—another one of those astroturf names meant to appeal to All of Us—launched a $1.7 million TV ad campaign claiming we may all die if Obama’s health care reform proposals are enacted.
The ads don’t even skirt the neighborhood of the truth, but then, as Robert Borosage wrote last week, the health care industry has a long history of “trying to scare the hell out of Americans” when it comes to health care reform.
The ads conjure up the boogeyman of a “government-run” health care system where patients will die as their cancerous tumors grow to fatal stages while they wait months to receive care. Scary stuff. Phony, but meant to scare us all.
A public health plan option has won the endorsement of major health care groups and many senators and representatives and is a key component of the AFL-CIO’s health care reform principles.
It would provide workers who have private insurance and those without insurance a choice in coverage: Stay with their private plan or choose the public plan option. It would also—which scares the hay out of the private insurance industry—provide some competition for an industry that has secured a near-monopoly of the market and recorded record profits, while we are paying more for less care.
The Wall Street Journal reports that another group, Conservatives for Patients’ Rights, is buying air time for a 30-minute Sunday morning infomercial featuring “horror stories” about the Canadian and British health care systems and warning the U.S. government is about to take over health care here.
Like AFP’s campaign, that message doesn’t even have a nodding acquaintance with the truth. But a key Republican strategist says the truth doesn’t matter when it comes to fighting health care reform. BTW, most Republican lawmakers have decried a public plan option with strikingly similar, and just as phony, arguments.
Think Progress reports that lies about health care reform are not going to go away anytime soon.
In an interview with The New York Times, conservative pollster Frank Luntz admitted that he would continue raising the false specter of a ”Washington takeover” of health care—whether or not that was Obama’s actual proposal. “I’m not a policy person. I’m a language person,” Luntz said.
Click here for a detailed look at the blueprint for the propaganda campaign against health care reform.
The truth may set you free, but a big lie just might protect Big Health Insurance Companies’ big profits.
Government-Run Health Care?
Original Link: http://www.factcheck.org/politics/government-run_health_care.html
Summary
A group called Conservatives for Patients' Rights began airing a television ad this week that criticizes government-run health care and falsely suggests Congress wants a British-style system here in the U.S.:
The ad neglects to mention that President Obama hasn't proposed a government-run plan and, in fact, has rejected the idea.
It claims that a research council created by the stimulus bill is "the first step in government control over your health care choices." The legislation actually says the council isn't permitted to "mandate coverage, reimbursement, or other policies."
The ad quotes a Canadian doctor who has been critical of his country's system, but leaves out the fact that the doctor has praised other government-funded systems, such as those in Austria and France.
Analysis
Conservatives for Patients’ Rights is, as its name indicates, a conservative group, and it’s also quite obviously not a proponent of government-run health care. Its minute-long ad was launched April 27 with what the group said was a month-long $1 million buy. (We've seen it on CNN several times this week.) CPR was launched this year and is led by Rick Scott, former head of Columbia/Hospital Corporation of America.
The ad states that government-run health care systems, in particular those in Britain and Canada, take control away from patients and ration health care. CPR is certainly entitled to state its own view. But the ad implies that the U.S. Congress wants to implement a health system like those in Britain and Canada. That's contrary to what President Obama and Democratic leaders in Congress have said.
Obama hasn’t called for such a government-run plan, also called a “single-payer" plan. In fact, he has flatly rejected it. The administration has said on the White House’s “Health Care” Web page (and previously on its transition site) that “President Obama and Vice President Biden believe” that government-run health care is “wrong.” And they also believe, the administration says, that the other extreme, “letting the insurance companies operate without rules,” is wrong. (The White House redesigned its health care page on April 30; a cached page with the quoted language is attached to this article.)
Obama has long said he would allow individuals or small businesses to buy insurance through a public plan – like the one now available to members of Congress. But nobody would be forced to drop his or her current insurance, and private plans would exist as they do now. This was the health care plan he promoted as a presidential candidate.
As we pointed out several times during the campaign, Obama's proposal was mischaracterized as a Canadian-style plan by his opponents. In Canada and Britain, all citizens have health care coverage, provided by the government and paid for with taxes. Only two Democrats ran for president on a single-payer platform: Rep. Dennis Kucinich, who called for "Medicare for all," and former Sen. Mike Gravel. Clarification, May 1: Gravel has called his plan a “single-payer Health Care Voucher plan,” paid for by the government. But advocates have said it’s not a true single-payer plan, since private insurance would still play a role.
More recently, single-payer advocates have felt shunned by the White House and Congress as the debate over changing the U.S. system has begun. In early March, no single-payer advocate was invited to a White House summit on health care, leading reporter Russell Mokhiber to suggest that Obama's message to such groups was to "drop dead." A day before the summit, the White House extended invitations to the president of Physicians for a National Health Program (which had been planning to protest the event), and government-health-care-backer Rep. John Conyers. The Wall Street Journal noted that they were but two out of more than 100 attendees.
Furthermore, some of the CPR ad’s assertions are misleading.
Recycled Stimulus Claims
In the ad, Scott, chairman of CPR, speaks to the camera, saying that "Congress buried an innocent-sounding board" in the stimulus bill, called the Federal Coordinating Council for Comparative Effectiveness Research. He says "it’s the first step in government-control over your health care choices." Actually, the stimulus legislation gives this council no authority to dictate insurance or medical policies.
We’ve written about the stimulus-created council before – and similar claims being made about it. The council is charged with supporting and coordinating comparative effectiveness research (something the government has funded since the late ‘70s). It is scientific research into which medical treatments are most effective and, in some studies, which are most cost-effective. Research may compare different drugs or different types of treatment; it can look at medical benefits, or benefits and costs.
To be sure, this type of research has its supporters and critics (see our previous article for more on that), but saying it will lead to “government control” over health care is Scott’s opinion. The stimulus legislation specifically says the council won’t issue any kind of health care requirements. At the end of the section describing the council, the legislation says:
American Recovery and Reinvestment Act of 2009: Nothing in this section shall be construed to permit the Council to mandate coverage, reimbursement, or other policies for any public or private payer. ... None of the reports submitted under this section or recommendations made by the Council shall be construed as mandates or clinical guidelines for payment, coverage, or treatment.
The support CPR sent us for the ad also includes a press release from the Department of Health and Human Services that states: "The council will not recommend clinical guidelines for payment, coverage or treatment."
The group's public relations representative told us that while some critics of the ad have said the law prevents the council from limiting health care choices based on costs, the acting director of NIH had said the opposite. But NIH Acting Director Raynard Kington didn't say anything about putting cost-based restrictions on anyone's health care. Kington told the House Appropriations Committee that "if we receive high-quality applications that meet the definition for comparative effectiveness research that include cost we will fund them." Funding research into which treatments give the best results for the least money is one thing, and it is a big leap from there to a government decree restricting care. Anyway, NIH has been backing "cost-effectiveness research" for years. In a breakdown of funding categories, NIH estimates that it specifically supported about $50 million in such research in both 2007 and 2008.
In the House committee hearing (held March 26), Rep. Todd Tiahrt of Kansas expressed concern that such research would "lead to rationed health care." Kington, a physician, responded: "I certainly understand the concern that any policy effort might severely restrict choices in whatever way. But comparative effectiveness research doesn't necessarily lead to that. Comparative effectiveness research can provide useful information to clinician, to patients and providers that make better decisions about what works under what circumstances for which patients and might actually complement the movement that you noted toward personalized medicine."
A National Health Board?
In the ad, Scott also says the federal council is “modeled after the national board that controls Britain’s health system.” That’s not quite right.
Britain does have a board that conducts comparative effectiveness research. It’s called the National Institute for Health and Clinical Excellence (NICE), and it “produces guidance on public health, health technologies and clinical practice.”
But NICE is a part of the National Health Service. And it is that larger board that actually controls the British system.
NICE also has much broader powers than the comparative research council created by the stimulus bill: For instance, NICE issues guidance for prevention efforts and treatment, and it approves drugs for use.
CPR's support for these claims is an editorial from the conservative Investor's Business Daily. The opinion piece repeats several false claims about the stimulus bill that we previously debunked. For one, it states that the federal council will "decide which treatments you should get," despite the fact that the law specifically forbids this.
Suspect Testimony
The CPR ad quotes two health experts from countries with national health care, Britain and Canada, criticizing the way their governments run the health care systems.
Dr. Brian Day, a Canadian surgeon who was president of the Canadian Medical Association last year, is quoted in the ad saying that "patients are languishing and suffering on wait lists" and "actually dying as they wait for care." Day is certainly not a fan of nationalized health care as it's practiced in his country, arguing that it's inefficient and doesn't provide enough care. But he's no fan of the U.S. system, either. "I do not profess to know how to reform the US system other than to opine that, in terms of value for money spent, yours is the only one in the free world that is worse than ours," Day told us. In a statement on his Web site, Day praises the health care systems of countries like Switzerland, Austria, France, Belgium and Germany, all of which have nationalized health care. The quotes CPR uses in its ad accurately reflect Day's opinion of Canadian health care, but the context implies that he opposes national health care in general. In fact, he believes that national health care as it's practiced in Canada needs serious reforms – reforms that will make it more universal, not less.
Britain's Dr. Karol Sikora, who is also quoted in the ad, has written several columns taking issue with the health care system in his country, too. He told us in an e-mail message that the ad was "fine by me."
Footnote: In the ad, Dr. Day correctly refers to a 2005 Canadian Supreme Court case, Chaoulli v. Quebec, in which the court found that "delays in the public health care system are widespread, and that, in some serious cases, patients die as a result of waiting lists for public health care." The United States also has preventable health-care-related deaths, though not necessarily from delays. A Commonwealth Fund study found the U.S. leading 19 industrialized countries in the number of deaths that could have been prevented by better health care – 110 deaths per 100,000 people, versus 103 in the U.K. and 77 in Canada. For more on U.S. versus Canadian health care speed and quality, see our Ask FactCheck on the subject.
– by Lori Robertson and Jess Henig
Update, May 1: CPR has posted a response on its Web site, which the group has also sent to us, claiming that parts of this article are "blatantly erroneous" and adding, "Accordingly, we request that you remove this article from the ‘Fact Check’ site and issue any retractions to other media outlets as necessary."
We think that's nonsense. We don't remove or retract any of our criticism of this group's very misleading ad.
CPR argues that its ad does not claim that Congress or Obama were trying to adopt any specific country’s health care system, but merely “points out the pitfalls of government-run health care.” We invite readers to look at the ad and judge the credibility of that for themselves. We said this ad suggests and implies that Congress is moving toward adopting a Canadian- or British-style system of government-run health care, and we think that judgment puts matters mildly.
CPR then goes on to argue that Congress and Obama really do favor a single-payer system after all. But those claims fall short as well. CPR says "several" members of Congress support single-payer health care and mentions one bill that it says attracted 76 House cosponsors. That’s still a minority of Democrats, and this same bill died quietly in committee in the last Congress. The current bill hasn’t moved from committee since late January when it was introduced. Sen. Max Baucus, who is spearheading the health care effort, has said that “single-payer is not going to get even to first base in Congress.”
CPR further states that Obama "has previously voiced support for a government single payer plan." That was true six years ago, but once again is not the whole story. Obama said at a 2003 AFL-CIO forum that he was “a proponent of a single-payer health care program,” adding, “that’s what I’d like to see. And as all of you know, we may not get there immediately.” His stated position has changed over the years, however. He said in a 2007 magazine interview that he’d favor single-payer only if “starting from scratch” and that managing a transition from the current system to a single-payer system "would be difficult to pull off." And the fact remains, as we said in our article, the proposal he campaigned on was not a single-payer plan, and the administration recently said a government-run system is “wrong."
Correction, May 6: We originally wrote that PNHP had said Obama’s message to single-payer advocates was to “drop dead.” But the phrase was used in an article by Russell Mokhiber of the Corporate Crime Reporter newsletter; PHNP had posted his article on its site. We have changed the attribution above.
Summary
A group called Conservatives for Patients' Rights began airing a television ad this week that criticizes government-run health care and falsely suggests Congress wants a British-style system here in the U.S.:
The ad neglects to mention that President Obama hasn't proposed a government-run plan and, in fact, has rejected the idea.
It claims that a research council created by the stimulus bill is "the first step in government control over your health care choices." The legislation actually says the council isn't permitted to "mandate coverage, reimbursement, or other policies."
The ad quotes a Canadian doctor who has been critical of his country's system, but leaves out the fact that the doctor has praised other government-funded systems, such as those in Austria and France.
Analysis
Conservatives for Patients’ Rights is, as its name indicates, a conservative group, and it’s also quite obviously not a proponent of government-run health care. Its minute-long ad was launched April 27 with what the group said was a month-long $1 million buy. (We've seen it on CNN several times this week.) CPR was launched this year and is led by Rick Scott, former head of Columbia/Hospital Corporation of America.
The ad states that government-run health care systems, in particular those in Britain and Canada, take control away from patients and ration health care. CPR is certainly entitled to state its own view. But the ad implies that the U.S. Congress wants to implement a health system like those in Britain and Canada. That's contrary to what President Obama and Democratic leaders in Congress have said.
Obama hasn’t called for such a government-run plan, also called a “single-payer" plan. In fact, he has flatly rejected it. The administration has said on the White House’s “Health Care” Web page (and previously on its transition site) that “President Obama and Vice President Biden believe” that government-run health care is “wrong.” And they also believe, the administration says, that the other extreme, “letting the insurance companies operate without rules,” is wrong. (The White House redesigned its health care page on April 30; a cached page with the quoted language is attached to this article.)
Obama has long said he would allow individuals or small businesses to buy insurance through a public plan – like the one now available to members of Congress. But nobody would be forced to drop his or her current insurance, and private plans would exist as they do now. This was the health care plan he promoted as a presidential candidate.
As we pointed out several times during the campaign, Obama's proposal was mischaracterized as a Canadian-style plan by his opponents. In Canada and Britain, all citizens have health care coverage, provided by the government and paid for with taxes. Only two Democrats ran for president on a single-payer platform: Rep. Dennis Kucinich, who called for "Medicare for all," and former Sen. Mike Gravel. Clarification, May 1: Gravel has called his plan a “single-payer Health Care Voucher plan,” paid for by the government. But advocates have said it’s not a true single-payer plan, since private insurance would still play a role.
More recently, single-payer advocates have felt shunned by the White House and Congress as the debate over changing the U.S. system has begun. In early March, no single-payer advocate was invited to a White House summit on health care, leading reporter Russell Mokhiber to suggest that Obama's message to such groups was to "drop dead." A day before the summit, the White House extended invitations to the president of Physicians for a National Health Program (which had been planning to protest the event), and government-health-care-backer Rep. John Conyers. The Wall Street Journal noted that they were but two out of more than 100 attendees.
Furthermore, some of the CPR ad’s assertions are misleading.
Recycled Stimulus Claims
In the ad, Scott, chairman of CPR, speaks to the camera, saying that "Congress buried an innocent-sounding board" in the stimulus bill, called the Federal Coordinating Council for Comparative Effectiveness Research. He says "it’s the first step in government-control over your health care choices." Actually, the stimulus legislation gives this council no authority to dictate insurance or medical policies.
We’ve written about the stimulus-created council before – and similar claims being made about it. The council is charged with supporting and coordinating comparative effectiveness research (something the government has funded since the late ‘70s). It is scientific research into which medical treatments are most effective and, in some studies, which are most cost-effective. Research may compare different drugs or different types of treatment; it can look at medical benefits, or benefits and costs.
To be sure, this type of research has its supporters and critics (see our previous article for more on that), but saying it will lead to “government control” over health care is Scott’s opinion. The stimulus legislation specifically says the council won’t issue any kind of health care requirements. At the end of the section describing the council, the legislation says:
American Recovery and Reinvestment Act of 2009: Nothing in this section shall be construed to permit the Council to mandate coverage, reimbursement, or other policies for any public or private payer. ... None of the reports submitted under this section or recommendations made by the Council shall be construed as mandates or clinical guidelines for payment, coverage, or treatment.
The support CPR sent us for the ad also includes a press release from the Department of Health and Human Services that states: "The council will not recommend clinical guidelines for payment, coverage or treatment."
The group's public relations representative told us that while some critics of the ad have said the law prevents the council from limiting health care choices based on costs, the acting director of NIH had said the opposite. But NIH Acting Director Raynard Kington didn't say anything about putting cost-based restrictions on anyone's health care. Kington told the House Appropriations Committee that "if we receive high-quality applications that meet the definition for comparative effectiveness research that include cost we will fund them." Funding research into which treatments give the best results for the least money is one thing, and it is a big leap from there to a government decree restricting care. Anyway, NIH has been backing "cost-effectiveness research" for years. In a breakdown of funding categories, NIH estimates that it specifically supported about $50 million in such research in both 2007 and 2008.
In the House committee hearing (held March 26), Rep. Todd Tiahrt of Kansas expressed concern that such research would "lead to rationed health care." Kington, a physician, responded: "I certainly understand the concern that any policy effort might severely restrict choices in whatever way. But comparative effectiveness research doesn't necessarily lead to that. Comparative effectiveness research can provide useful information to clinician, to patients and providers that make better decisions about what works under what circumstances for which patients and might actually complement the movement that you noted toward personalized medicine."
A National Health Board?
In the ad, Scott also says the federal council is “modeled after the national board that controls Britain’s health system.” That’s not quite right.
Britain does have a board that conducts comparative effectiveness research. It’s called the National Institute for Health and Clinical Excellence (NICE), and it “produces guidance on public health, health technologies and clinical practice.”
But NICE is a part of the National Health Service. And it is that larger board that actually controls the British system.
NICE also has much broader powers than the comparative research council created by the stimulus bill: For instance, NICE issues guidance for prevention efforts and treatment, and it approves drugs for use.
CPR's support for these claims is an editorial from the conservative Investor's Business Daily. The opinion piece repeats several false claims about the stimulus bill that we previously debunked. For one, it states that the federal council will "decide which treatments you should get," despite the fact that the law specifically forbids this.
Suspect Testimony
The CPR ad quotes two health experts from countries with national health care, Britain and Canada, criticizing the way their governments run the health care systems.
Dr. Brian Day, a Canadian surgeon who was president of the Canadian Medical Association last year, is quoted in the ad saying that "patients are languishing and suffering on wait lists" and "actually dying as they wait for care." Day is certainly not a fan of nationalized health care as it's practiced in his country, arguing that it's inefficient and doesn't provide enough care. But he's no fan of the U.S. system, either. "I do not profess to know how to reform the US system other than to opine that, in terms of value for money spent, yours is the only one in the free world that is worse than ours," Day told us. In a statement on his Web site, Day praises the health care systems of countries like Switzerland, Austria, France, Belgium and Germany, all of which have nationalized health care. The quotes CPR uses in its ad accurately reflect Day's opinion of Canadian health care, but the context implies that he opposes national health care in general. In fact, he believes that national health care as it's practiced in Canada needs serious reforms – reforms that will make it more universal, not less.
Britain's Dr. Karol Sikora, who is also quoted in the ad, has written several columns taking issue with the health care system in his country, too. He told us in an e-mail message that the ad was "fine by me."
Footnote: In the ad, Dr. Day correctly refers to a 2005 Canadian Supreme Court case, Chaoulli v. Quebec, in which the court found that "delays in the public health care system are widespread, and that, in some serious cases, patients die as a result of waiting lists for public health care." The United States also has preventable health-care-related deaths, though not necessarily from delays. A Commonwealth Fund study found the U.S. leading 19 industrialized countries in the number of deaths that could have been prevented by better health care – 110 deaths per 100,000 people, versus 103 in the U.K. and 77 in Canada. For more on U.S. versus Canadian health care speed and quality, see our Ask FactCheck on the subject.
– by Lori Robertson and Jess Henig
Update, May 1: CPR has posted a response on its Web site, which the group has also sent to us, claiming that parts of this article are "blatantly erroneous" and adding, "Accordingly, we request that you remove this article from the ‘Fact Check’ site and issue any retractions to other media outlets as necessary."
We think that's nonsense. We don't remove or retract any of our criticism of this group's very misleading ad.
CPR argues that its ad does not claim that Congress or Obama were trying to adopt any specific country’s health care system, but merely “points out the pitfalls of government-run health care.” We invite readers to look at the ad and judge the credibility of that for themselves. We said this ad suggests and implies that Congress is moving toward adopting a Canadian- or British-style system of government-run health care, and we think that judgment puts matters mildly.
CPR then goes on to argue that Congress and Obama really do favor a single-payer system after all. But those claims fall short as well. CPR says "several" members of Congress support single-payer health care and mentions one bill that it says attracted 76 House cosponsors. That’s still a minority of Democrats, and this same bill died quietly in committee in the last Congress. The current bill hasn’t moved from committee since late January when it was introduced. Sen. Max Baucus, who is spearheading the health care effort, has said that “single-payer is not going to get even to first base in Congress.”
CPR further states that Obama "has previously voiced support for a government single payer plan." That was true six years ago, but once again is not the whole story. Obama said at a 2003 AFL-CIO forum that he was “a proponent of a single-payer health care program,” adding, “that’s what I’d like to see. And as all of you know, we may not get there immediately.” His stated position has changed over the years, however. He said in a 2007 magazine interview that he’d favor single-payer only if “starting from scratch” and that managing a transition from the current system to a single-payer system "would be difficult to pull off." And the fact remains, as we said in our article, the proposal he campaigned on was not a single-payer plan, and the administration recently said a government-run system is “wrong."
Correction, May 6: We originally wrote that PNHP had said Obama’s message to single-payer advocates was to “drop dead.” But the phrase was used in an article by Russell Mokhiber of the Corporate Crime Reporter newsletter; PHNP had posted his article on its site. We have changed the attribution above.
How Stupid Do They Think You Are?
Original Link: http://blogs.tnr.com/tnr/blogs/the_treatment/archive/2009/04/28/how-stupid-do-they-think-you-are.aspx
By Jonathan Cohn
When we last saw Conservatives for Patients Rights, they were trying to derail health reform by making wildly misleading arguments about health care abroad. Now the group is back and they are...still trying to derail health reform making wildly misleading arugments about health care abroad.
But this time, they really goofed. And Politico's Ben Smith has the goods.
As Smith explains here, CPR's new ad features Dr. Brian Day, former head of the Canadian Medical Association, complaining about waiting times and shortages in his county. But it seems Dr. Day has given some other interviews, as well. And, in one of them, he makes clear that he's no fan of American health care, either.
On the contrary, as Smith observes, when Day argues for changing the Canadian system, "one of his central talking points seems to be that he's not--gasp--suggesting some sort of 'two-tiered, American-style medical care.' "
This, by the way, is not unusual. Every nation's health care system has flaws, in some cases serious flaws. Ask anybody in these countries--be they academics, health professionals, or just plain old citizens--and you'll get an earful about what's wrong. But very few of these people would swap what they have for what we have here in the U.S.
By Jonathan Cohn
When we last saw Conservatives for Patients Rights, they were trying to derail health reform by making wildly misleading arguments about health care abroad. Now the group is back and they are...still trying to derail health reform making wildly misleading arugments about health care abroad.
But this time, they really goofed. And Politico's Ben Smith has the goods.
As Smith explains here, CPR's new ad features Dr. Brian Day, former head of the Canadian Medical Association, complaining about waiting times and shortages in his county. But it seems Dr. Day has given some other interviews, as well. And, in one of them, he makes clear that he's no fan of American health care, either.
On the contrary, as Smith observes, when Day argues for changing the Canadian system, "one of his central talking points seems to be that he's not--gasp--suggesting some sort of 'two-tiered, American-style medical care.' "
This, by the way, is not unusual. Every nation's health care system has flaws, in some cases serious flaws. Ask anybody in these countries--be they academics, health professionals, or just plain old citizens--and you'll get an earful about what's wrong. But very few of these people would swap what they have for what we have here in the U.S.
United States spends more per capita than any other system and not by a small amount
Original Link: http://scienceblogs.com/denialism/2009/05/are_patients_in_universal_heal.php
By MarkH
A dishonest campaign has started against healthcare reform in this country and the first shot has come from Conservatives for Patients Rights (CPR), a group purporting to show that patients in universal health systems suffer from government interference in health care. To bolster their argument, they have a pile of anecdotes from people around the world who have suffered at the hands of evil government-run systems. The problem, of course, is that anecdotes are not data, it is impossible to determine the veracity or reasonableness of these claims, and there is no way, ethically or practically, to respond to claims against doctors in these systems.
And should we be surprised? Every other country in the industrialized world has universal healthcare. Some are government run, single payer systems, others are mixtures of private and public funding to guarantee universal coverage. I would be shocked if you couldn't find a few people to provide testimonials about how they're angry at their coverage. After all, Michael Moore made an entire movie about such testimonials against our system.
So what do we do? How do we find out the truth when the ideologues and financially interested parties have started a campaign to muddy the water with anecdotal attacks?
We look at the data of course. And surprise, surprise it doesn't support CPR's assertions that our system couldn't stand some improvement.
During the next couple of weeks, I think we should talk about what healthcare looks like here in the US and around the world. Rather than a few horror stories, let's take an in-depth look at what's happening in universal systems, and whether or not we should consider a change.
Let's start with an examination of some data from the literature on different experiences people have with these healthcare systems.
The usual complaints levied against the universal systems are that they will ration care, you have long waiting times for doctors, and quality of care then suffers. It seems to be a given that in the United States with our private system that we have better access, better quality, and fewer mistakes. But what do the data show?
Let's start with the Health Affairs article Toward Higher-Performance Health Systems: Adults' Health Care Experiences In Seven Countries, 2007[1], a survey on healthcare experiences in the US, versus the universal healthcare systems in the UK, the Netherlands, Germany, Australia, New Zealand and Canada. These systems are highly varied, and I hope to write about their benefits and drawbacks in the next few days. But briefly,
the US is a non-universal patchwork of public and private spending, drugs and procedures may be subsidized by insurance
the UK is completely single-payer with private care as an option, all drugs and procedures are paid for
Canada is single-payer with provinces deciding how health care is spent and strict limits on private care, prescription drugs are heavily subsidized,
Australia has a public baseline access to physicians with subsidization of private insurance and option of private care, prescription drugs are heavily subsidized,
New Zealand has universal public health care, primary care and prescription drugs are subsidized with some cost sharing, and private care is an option
the Netherlands has a system of obligatory private health insurance (like a nationwide Massachusetts system), premiums have a flat rate for all citizens, with subsidies for poorer people who can't afford insurance premiums. Individuals pay for about half, and employers pay for about half, with government making up the difference.
Germany has a system of mandatory insurance with purchase of access to one of several hundred "sickness funds" paid for by employers, there is a private option for those who afford it, and those who cannot or are unemployed are subsidized by government.
Each of these systems is very complex, most are a mixture of public and private hospitals, and public and private insurance. Universal health insurance, it should be clear does not mean we have to have a single-payer system like Canada, or like Britain as the anti-reform ads would suggest.
In their first figure, this table is a comparison of the per-capita costs of the different healthcare systems.
Note the United States spends more per capita than any other system and not by a small amount. We spend almost twice as much as the next nearest spender, Canada, and this without covering all of our citizens. We also spend more of our GDP than any other country, almost twice as much as any other country. Note, most other countries have a high percentage of patients enrolled with electronic medical records, a system that makes sharing of information between facilities (currently a major cause of redundancy in expenses) more efficient. Note also that universal doesn't require primary care providers be the gatekeepers. Other systems exist that allow self-referral to specialists.
The Commonwealth Fund, which sponsored this study, has a figure in one of their online chartbooks of health data that summarizes how we spend nicely.
The entire presentation is fascinating and worth a look if you have time. Almost universally we pay more for less. We pay more per capita for fewer hospital beds, we pay more per capita for fewer ICU beds, and pay more for ICU stays despite patients staying for fewer days, we have far fewer long term stay facilities, we spend more on fewer practicing physicians per capita, and for all that we perform worse in indices of mortality, and control of chronic disease.
But are people happy with these systems? Not surprisingly, no one is ever really happy with their healthcare:
Almost all systems have a high number of citizens who think it needs significant changes, although only the US system has a 34% rate of people desiring it to be completely rebuilt, almost twice that of any other country. For the most part, the belief that their medical systems will provide high-quality, expert care, is similar across these countries. This table addresses another critic complaint though. What about wait times? Some countries do have a clear problem with elective wait times for surgery. Canada and the UK are the worst in this regard, but several universal systems have wait times that appear to rival or surpass those in the US. Worse, US citizens complain more of access problems than any other country, with 37% of respondents forgoing care, not seeing the doctor or filling prescription because of issues of cost
Now, on the issue of access, despite claims to the contrary, in most of these systems access to a doctor is rapid, with appointments available in the same day:
In fact, aside from Canada, we were least likely to be able to get an appointment on the same day, and most places could provide access to a doctor in an ER faster than in the US. So is access really worse in universal systems? It would appear that in most universal systems, doctors in clinics and the ER are more available than in the US.
The remainder of the data compares perceived quality of care, and coordination of care between primary care and specialists, and for the most part, the systems are equivalent according to the subjective experience of those surveyed. In the US, there were more complaints about expense of prescription medications, and poor coordination of care - I suspect due to poor penetrance of the electronic medical record.
So, after seeing some data on more than the few horror stories from health systems around the world, are you convinced that universal systems will mean longer wait times? Poorer care? More expensive care? I believe the data suggests more people around the world in these systems experience less of these problems than those of us in the US. We spend more, almost twice as much as any other country. Despite that, our wait times for physicians are worse, we pay far more out of pocket for prescriptions and copays than any other system, we spend more on administration of health care than any other country, we have more people who avoid seeing the doctor for fear of costs, and we are more likely to say we want our system scrapped. In an update to this analysis [2] the Commonwealth fund found that in deaths which were amenable to health care interventions the US performed worse than the other 18 industrialized countries to which it was compared. If we performed as well as one of the top three countries, we would eliminate about 100,000 excess deaths a year. Which is the real horror story?
The plural of anecdote is anecdotes, not data, so don't believe the horror stories, look at the total experience in these systems to find a better approximation of the truth.
By MarkH
A dishonest campaign has started against healthcare reform in this country and the first shot has come from Conservatives for Patients Rights (CPR), a group purporting to show that patients in universal health systems suffer from government interference in health care. To bolster their argument, they have a pile of anecdotes from people around the world who have suffered at the hands of evil government-run systems. The problem, of course, is that anecdotes are not data, it is impossible to determine the veracity or reasonableness of these claims, and there is no way, ethically or practically, to respond to claims against doctors in these systems.
And should we be surprised? Every other country in the industrialized world has universal healthcare. Some are government run, single payer systems, others are mixtures of private and public funding to guarantee universal coverage. I would be shocked if you couldn't find a few people to provide testimonials about how they're angry at their coverage. After all, Michael Moore made an entire movie about such testimonials against our system.
So what do we do? How do we find out the truth when the ideologues and financially interested parties have started a campaign to muddy the water with anecdotal attacks?
We look at the data of course. And surprise, surprise it doesn't support CPR's assertions that our system couldn't stand some improvement.
During the next couple of weeks, I think we should talk about what healthcare looks like here in the US and around the world. Rather than a few horror stories, let's take an in-depth look at what's happening in universal systems, and whether or not we should consider a change.
Let's start with an examination of some data from the literature on different experiences people have with these healthcare systems.
The usual complaints levied against the universal systems are that they will ration care, you have long waiting times for doctors, and quality of care then suffers. It seems to be a given that in the United States with our private system that we have better access, better quality, and fewer mistakes. But what do the data show?
Let's start with the Health Affairs article Toward Higher-Performance Health Systems: Adults' Health Care Experiences In Seven Countries, 2007[1], a survey on healthcare experiences in the US, versus the universal healthcare systems in the UK, the Netherlands, Germany, Australia, New Zealand and Canada. These systems are highly varied, and I hope to write about their benefits and drawbacks in the next few days. But briefly,
the US is a non-universal patchwork of public and private spending, drugs and procedures may be subsidized by insurance
the UK is completely single-payer with private care as an option, all drugs and procedures are paid for
Canada is single-payer with provinces deciding how health care is spent and strict limits on private care, prescription drugs are heavily subsidized,
Australia has a public baseline access to physicians with subsidization of private insurance and option of private care, prescription drugs are heavily subsidized,
New Zealand has universal public health care, primary care and prescription drugs are subsidized with some cost sharing, and private care is an option
the Netherlands has a system of obligatory private health insurance (like a nationwide Massachusetts system), premiums have a flat rate for all citizens, with subsidies for poorer people who can't afford insurance premiums. Individuals pay for about half, and employers pay for about half, with government making up the difference.
Germany has a system of mandatory insurance with purchase of access to one of several hundred "sickness funds" paid for by employers, there is a private option for those who afford it, and those who cannot or are unemployed are subsidized by government.
Each of these systems is very complex, most are a mixture of public and private hospitals, and public and private insurance. Universal health insurance, it should be clear does not mean we have to have a single-payer system like Canada, or like Britain as the anti-reform ads would suggest.
In their first figure, this table is a comparison of the per-capita costs of the different healthcare systems.
Note the United States spends more per capita than any other system and not by a small amount. We spend almost twice as much as the next nearest spender, Canada, and this without covering all of our citizens. We also spend more of our GDP than any other country, almost twice as much as any other country. Note, most other countries have a high percentage of patients enrolled with electronic medical records, a system that makes sharing of information between facilities (currently a major cause of redundancy in expenses) more efficient. Note also that universal doesn't require primary care providers be the gatekeepers. Other systems exist that allow self-referral to specialists.
The Commonwealth Fund, which sponsored this study, has a figure in one of their online chartbooks of health data that summarizes how we spend nicely.
The entire presentation is fascinating and worth a look if you have time. Almost universally we pay more for less. We pay more per capita for fewer hospital beds, we pay more per capita for fewer ICU beds, and pay more for ICU stays despite patients staying for fewer days, we have far fewer long term stay facilities, we spend more on fewer practicing physicians per capita, and for all that we perform worse in indices of mortality, and control of chronic disease.
But are people happy with these systems? Not surprisingly, no one is ever really happy with their healthcare:
Almost all systems have a high number of citizens who think it needs significant changes, although only the US system has a 34% rate of people desiring it to be completely rebuilt, almost twice that of any other country. For the most part, the belief that their medical systems will provide high-quality, expert care, is similar across these countries. This table addresses another critic complaint though. What about wait times? Some countries do have a clear problem with elective wait times for surgery. Canada and the UK are the worst in this regard, but several universal systems have wait times that appear to rival or surpass those in the US. Worse, US citizens complain more of access problems than any other country, with 37% of respondents forgoing care, not seeing the doctor or filling prescription because of issues of cost
Now, on the issue of access, despite claims to the contrary, in most of these systems access to a doctor is rapid, with appointments available in the same day:
In fact, aside from Canada, we were least likely to be able to get an appointment on the same day, and most places could provide access to a doctor in an ER faster than in the US. So is access really worse in universal systems? It would appear that in most universal systems, doctors in clinics and the ER are more available than in the US.
The remainder of the data compares perceived quality of care, and coordination of care between primary care and specialists, and for the most part, the systems are equivalent according to the subjective experience of those surveyed. In the US, there were more complaints about expense of prescription medications, and poor coordination of care - I suspect due to poor penetrance of the electronic medical record.
So, after seeing some data on more than the few horror stories from health systems around the world, are you convinced that universal systems will mean longer wait times? Poorer care? More expensive care? I believe the data suggests more people around the world in these systems experience less of these problems than those of us in the US. We spend more, almost twice as much as any other country. Despite that, our wait times for physicians are worse, we pay far more out of pocket for prescriptions and copays than any other system, we spend more on administration of health care than any other country, we have more people who avoid seeing the doctor for fear of costs, and we are more likely to say we want our system scrapped. In an update to this analysis [2] the Commonwealth fund found that in deaths which were amenable to health care interventions the US performed worse than the other 18 industrialized countries to which it was compared. If we performed as well as one of the top three countries, we would eliminate about 100,000 excess deaths a year. Which is the real horror story?
The plural of anecdote is anecdotes, not data, so don't believe the horror stories, look at the total experience in these systems to find a better approximation of the truth.
Rick Scott: Fighting For Health Reform Without A Clue
Original Link: http://mediamattersaction.org/factcheck/200904210002
On April 21, 2009, the Politico interviewed Conservatives for Patients' Rights' founder Rick Scott. Secretly funded by big business, "Conservatives for Patients' Rights" is intent on preserving the insurance industry's ability to hold Americans hostage. As a former health care CEO, Rick Scott demonstrates that the conservative movement's opposition to health care reform is out of touch with the needs and desires of everyday American patients.
Scott: We Should Have Health Reform Without Changing The Whole System
Scott: "My whole goal is I believe we ought to have health care reform. But my belief is let's don't change our whole system; let's deal with the issues at hand. What can we do that helps health care costs go down? What can we do to make sure we deal with the uninsured? Those are the big issues. Let's don't change the whole system for people that are happy with their existing coverage." [Politico, 4/21/09]
Scott Clearly Has No Idea What Americans Want:
The Majority Of Americans Want An Overhaul Of The Health Care System. According to a poll conducted by Lake Research:
60% of Americans favor "providing access to affordable, quality health care for all Americans even if it means raising taxes."
71% of Americans favor "providing access to affordable, quality health care for all Americans even if it means a major role for the federal government."
73% of Americans prefer "having a choice of private health insurance or a public health insurance plan." [Lake Research poll, 01/09]
More Than 70% Of Americans Polled Want An Increased Governmental Role In Health Care. According to CNN, "seventy-two percent of those questioned in a recent CNN/Opinion Research Corporation survey say they favor increasing the federal government's influence over the country's health care system in an attempt to lower costs and provide health care coverage to more Americans, with 27 percent opposing such a move. Other recent polls show six in 10 think the government should provide health insurance or take responsibility for providing health care to all Americans." [CNN.com, 3/5/09]
Scott: People Making $50,000 A Year Can Afford Health Insurance
Politico: "How would you cover the uninsured?"
Scott: "It depends on who you are dealing with. There are 40 percent of the people who make more than $50,000, so is that an issue? They can afford insurance." [Politico, 4/21/09]
In Scott's World, Using More Than 25% Of Your Income To Buy Health Insurance Is "Affordable." According to the Kaiser Commission on Medicaid and the Uninsured it costs $12,680 to provide a family with health insurance for one year - and that's with the benefit of being part of an employer-based group policy. [KFF.org, accessed 1/14/09]
On April 21, 2009, the Politico interviewed Conservatives for Patients' Rights' founder Rick Scott. Secretly funded by big business, "Conservatives for Patients' Rights" is intent on preserving the insurance industry's ability to hold Americans hostage. As a former health care CEO, Rick Scott demonstrates that the conservative movement's opposition to health care reform is out of touch with the needs and desires of everyday American patients.
Scott: We Should Have Health Reform Without Changing The Whole System
Scott: "My whole goal is I believe we ought to have health care reform. But my belief is let's don't change our whole system; let's deal with the issues at hand. What can we do that helps health care costs go down? What can we do to make sure we deal with the uninsured? Those are the big issues. Let's don't change the whole system for people that are happy with their existing coverage." [Politico, 4/21/09]
Scott Clearly Has No Idea What Americans Want:
The Majority Of Americans Want An Overhaul Of The Health Care System. According to a poll conducted by Lake Research:
60% of Americans favor "providing access to affordable, quality health care for all Americans even if it means raising taxes."
71% of Americans favor "providing access to affordable, quality health care for all Americans even if it means a major role for the federal government."
73% of Americans prefer "having a choice of private health insurance or a public health insurance plan." [Lake Research poll, 01/09]
More Than 70% Of Americans Polled Want An Increased Governmental Role In Health Care. According to CNN, "seventy-two percent of those questioned in a recent CNN/Opinion Research Corporation survey say they favor increasing the federal government's influence over the country's health care system in an attempt to lower costs and provide health care coverage to more Americans, with 27 percent opposing such a move. Other recent polls show six in 10 think the government should provide health insurance or take responsibility for providing health care to all Americans." [CNN.com, 3/5/09]
Scott: People Making $50,000 A Year Can Afford Health Insurance
Politico: "How would you cover the uninsured?"
Scott: "It depends on who you are dealing with. There are 40 percent of the people who make more than $50,000, so is that an issue? They can afford insurance." [Politico, 4/21/09]
In Scott's World, Using More Than 25% Of Your Income To Buy Health Insurance Is "Affordable." According to the Kaiser Commission on Medicaid and the Uninsured it costs $12,680 to provide a family with health insurance for one year - and that's with the benefit of being part of an employer-based group policy. [KFF.org, accessed 1/14/09]
When Cooking The Books, Rick Scott Only Likes His Own Recipe
Original Link: http://mediamattersaction.org/factcheck/200904240002
On the evening of April 23, 2009, The Hill posted a letter written by Rick Scott regarding health care reform titled "Healthcare reform in reality is dreadful 'stealthcare' plan." Evidently, Rick Scott is under the impression that his executive experience as leader of a hospital company that paid billions to settle a government fraud investigation makes him an expert on the future of the health care industry.
Scott Would Have Taxpayer Money Sent To Fund Research Without A Dedicated Board To Disburse The Funds
Scott: "Health reform radicals howl when it's pointed out that the board's true mission is to determine which treatments are 'cost-effective,' claiming that language in the law prohibits them from making specific recommendations based on cost. But that's just smoke and mirrors designed to distract Americans from the truth: the board controls a $1.1 billion budget and will recommend how to direct future research dollars. Clearly, cost-effectiveness is the primary metric the board will measure." [The Hill, 4/23/09]
No Matter How You Frame It, Comparative Effectiveness Research (CER) Is A Necessary Project Of ANY Health Care System
CER Supplements Physicians' Knowledge To Ensure The Best Treatment Is Provided To The Patient. David Dale, MD of the American College of Physicians testified in a House Ways and Means Committee hearing: "The availability of valid, comparative effectiveness data supplemented by the physician's clinical experience and professional knowledge, helps ensure that an effective treatment choice is made-one that meets the unique needs and preferences of the patient." [American College Of Physicians' Statement for the Record, 6/12/07]
Without CER, Medical Procedures May Be Used Without Thorough Trials. According to a December 2007 report released by the Congressional Budget Office titled Research on the Comparative Effectiveness of Medical Treatments: "Medical procedures, which account for a much larger share of total spending on health care than drugs and devices to [sic] , can achieve widespread use without extensive clinical evaluation." [CBO.gov, 12/07]
CER Studies Examine Both The Treatments and Diagnoses Of Diseases. According to a December 2007 report released by the Congressional Budget Office titled Research on the Comparative Effectiveness of Medical Treatments: "studies can examine not only treatments for health problems but also different procedures to screen for the presence of a disease. [CBO.gov, 12/07]
Would Scott Trust Sensitive Clinical Trials To Biased Private Firms?
Scott: "Four hundred million dollars went to the Department of Health and Human Services, another $400 million to the National Institutes of Health, and finally $300 million more to yet another nest of bureaucrats you've never heard of called the Agency for Health Care Research and Quality. In all, $1.1 billion has been budgeted for 'comparative effectiveness research.'" [The Hill, 4/23/09]
An Impartial Third Party Conducts The Most Accurate Comparative Effectiveness Research
Conducting Research Trials Is Not Always Financially Beneficial For Private Companies. According to a December 2007 report released by the Congressional Budget Office titled Research on the Comparative Effectiveness of Medical Treatments: "For drug manufacturers, the costs of conducting additional trials to demonstrate safety and efficacy for a broader set of patients or conditions may outweigh the benefits from the increased sales that would result; in particular, the potential gains from finding a favorable result for a different population would have to be weighed against the risk that safety and efficacy could not be demonstrated conclusively." [CBO.gov, 12/07]
Private Companies Only Compare Two Different Drugs When Required By The FDA. According to a December 2007 report released by the Congressional Budget Office titled Research on the Comparative Effectiveness of Medical Treatments: "Clinical trials of new drugs must compare them to alternative medications only when the manufacturer wants to make a claim of superiority in its FDA-approved marketing materials or when giving trial participants a placebo would be unethical (for example, in the case of a study of AIDS drugs)." [CBO.gov, 12/07, parenthesis original]
"Comparative Trials Can Be Risky For Manufacturers To Conduct." According to a December 2007 report released by the Congressional Budget Office titled Research on the Comparative Effectiveness of Medical Treatments: "A trial of two statin drugs, which was sponsored by the maker of one of those drugs, found that its competitor's product was more effective both at lowering cholesterol levels and at reducing the risk of mortality - illustrating the point that comparative trials can be risky for manufacturers to conduct." [CBO.gov, 12/07]
Funding Comparative Effectiveness Research Is Not A New Practice
NIH Had A Budget Of $335 Million For Comparative Effectiveness Research Last Year. According to Steven Pearlstein of the Washington Post, "there's nothing particularly new about comparative effectiveness research -- the National Institutes of Health, along with the Agency for Healthcare Research and Quality, have been doing it for years, with a budget last year of about $335 million." [Washington Post, 2/13/09]
"Congress Has Aggressively Expanded" Medicare - A True Statement, If Scott Is Referring To The Republican Congress
Scott: "There have been other steps toward socialized medicine as well. Congress has aggressively expanded the funding and relaxed the rules of eligibility for Medicare, Medicaid and the State Children's Health Insurance Program, which already provided government healthcare to children and adults alike who are above the poverty level and arguably could afford private coverage." [The Hill, 4/23/09]
The "Socialism" Taunt Is Getting Old
"Inaccurate Rhetoric About Socialized Medicine And Government-Run Health Care Is A Distraction" From The Policy Debate. According to a report on socialized medicine issued by the Urban Institute, "the core issue in health reform is not specifically the role of government, but what policies yield the best possible consequences for the American public. Such results include the number of people with health coverage, individuals' access to quality care, curbing cost growth, and consumers' ability to make choices about their health care and health coverage. Inaccurate rhetoric about socialized medicine and government-run health care is a distraction from these much more fundamental concerns." [Urban.org, 4/2008]
But While We're On The Subject, George W. Bush And His Republican Friends In Congress Greatly Expanded Medicare Benefits And Thus The Government's Role In Public Health
Bush Asked Congress For "The Biggest Expansion Of Government Health Benefits Since The Great Society." The Economist reported that in 2003 Bush was "urging Congress to expand state health care for the elderly to cover some of the costs of prescription drugs--an action President Clinton's Medicare adviser says would be 'the biggest expansion of government health benefits since the Great Society.' In all, the Bush administration in its first three years increased government spending by 21%. " [The Economist, 11/8/03, emphasis added]
Bush Campaigned for Re-election on Largest Expansion of Medicare in 38 years. Going into the 2004 presidential election, the New York Times reported that Bush advisers "say the president will campaign as having already delivered the biggest expansion of Medicare in 38 years, adding prescription drug benefits for the elderly, and can thus be trusted to improve the health care system for all. 'The question now is who has the track record,' a Bush campaign adviser said." [New York Times, 1/14/04, emphasis added]
Scott Apparently Is Unaware That Most Americans Think All Children Should Have Health Coverage
More Than 80% Of Americans Want All American Children To Have Health Care. A poll "commissioned by First Focus, a bipartisan children's advocacy organization," found that Americans widely support "a renewal of the State Children's Health Insurance Program (SCHIP) by a margin of 82-10 percent." [FirstFocus.net, 12/18/08, bold original]
When Cooking The Books, Scott Only Likes His Own Recipe
Scott: "Translation: 'Cook the books.' When CBO's array of supercomputers can't make the math work, the Senate plans to just ram government healthcare down America's throat no matter what -- even if it means inserting healthcare reform into the budget reconciliation process, which only requires a simple majority as opposed to support from 60 senators normally needed for all other legislation." [The Hill, 4/23/09]
Under Scott's Leadership, The Columbia/HCA Hospital System Was Investigated For Medicare Fraud
HCA Investigated For Medicare Fraud. According to the New York Times: "Officials at a number of Federal agencies began investigating whether Columbia hospitals engaged in practices such as fraudulently overstating their expenses to increase their compensation from Medicare, and regularly conducting unnecessary blood tests. Last week, law enforcement agents raided Columbia offices and hospitals in seven states, seizing documents related to business practices." [New York Times, 7/26/97]
Evidence Collected In HCA Investigation Included Documents "Stamped With Warnings That They Should Not Be Disclosed To Medicare Auditors." According to the New York Times: "The investigation of HCA's cost reporting began in 1993, when James Alderson, a former chief financial officer of one of its former hospitals, filed a whistle-blower suit contending that the expense documents were rife with fraud. The government began a civil investigation and obtained critical evidence: second sets of cost reports and worksheets maintained at HCA hospitals that contained significantly lower expenses than in reports submitted to the government. Some of those documents were stamped with warnings that they should not be disclosed to Medicare auditors." [New York Times, 12/18/02]
Columbia "Hospitals Were Knowingly Inflating The Numbers Reported To The Government." The New York Times reported: "In particular, these people said, investigators are examining accusations of significant differences between the cost reports submitted by certain Columbia hospitals to the Government and separate reports -- known as reserve cost reports -- that were kept at hospitals. Investigators were said to believe that these second reports, along with work sheets prepared by analysts working with the company, provided evidence that at least some hospitals were knowingly inflating the numbers reported to the Government in the cost report to improperly raise total compensation." [New York Times, 7/17/97, emphasis added]
HCA Paid "More Than $1.7 Billion In Civil And Criminal Penalties." The New York Times reported that a settlement was reached in the HCA fraud investigation: "Under the terms, HCA would pay $630 million in fines and penalties to resolve all outstanding civil litigation with the Justice Department. An additional $250 million would be paid by HCA to the Medicare program to resolve expense claims submitted by the company to the government...Combined with previous settlements HCA has negotiated with the government involving fraud accusations -- including its agreement in 2000 to plead guilty to 14 felonies -- the company will be paying a total of more than $1.7 billion in civil and criminal penalties, by far the largest amount ever secured by federal prosecutors in a health care fraud case." [New York Times, 12/18/02, emphasis added]
On the evening of April 23, 2009, The Hill posted a letter written by Rick Scott regarding health care reform titled "Healthcare reform in reality is dreadful 'stealthcare' plan." Evidently, Rick Scott is under the impression that his executive experience as leader of a hospital company that paid billions to settle a government fraud investigation makes him an expert on the future of the health care industry.
Scott Would Have Taxpayer Money Sent To Fund Research Without A Dedicated Board To Disburse The Funds
Scott: "Health reform radicals howl when it's pointed out that the board's true mission is to determine which treatments are 'cost-effective,' claiming that language in the law prohibits them from making specific recommendations based on cost. But that's just smoke and mirrors designed to distract Americans from the truth: the board controls a $1.1 billion budget and will recommend how to direct future research dollars. Clearly, cost-effectiveness is the primary metric the board will measure." [The Hill, 4/23/09]
No Matter How You Frame It, Comparative Effectiveness Research (CER) Is A Necessary Project Of ANY Health Care System
CER Supplements Physicians' Knowledge To Ensure The Best Treatment Is Provided To The Patient. David Dale, MD of the American College of Physicians testified in a House Ways and Means Committee hearing: "The availability of valid, comparative effectiveness data supplemented by the physician's clinical experience and professional knowledge, helps ensure that an effective treatment choice is made-one that meets the unique needs and preferences of the patient." [American College Of Physicians' Statement for the Record, 6/12/07]
Without CER, Medical Procedures May Be Used Without Thorough Trials. According to a December 2007 report released by the Congressional Budget Office titled Research on the Comparative Effectiveness of Medical Treatments: "Medical procedures, which account for a much larger share of total spending on health care than drugs and devices to [sic] , can achieve widespread use without extensive clinical evaluation." [CBO.gov, 12/07]
CER Studies Examine Both The Treatments and Diagnoses Of Diseases. According to a December 2007 report released by the Congressional Budget Office titled Research on the Comparative Effectiveness of Medical Treatments: "studies can examine not only treatments for health problems but also different procedures to screen for the presence of a disease. [CBO.gov, 12/07]
Would Scott Trust Sensitive Clinical Trials To Biased Private Firms?
Scott: "Four hundred million dollars went to the Department of Health and Human Services, another $400 million to the National Institutes of Health, and finally $300 million more to yet another nest of bureaucrats you've never heard of called the Agency for Health Care Research and Quality. In all, $1.1 billion has been budgeted for 'comparative effectiveness research.'" [The Hill, 4/23/09]
An Impartial Third Party Conducts The Most Accurate Comparative Effectiveness Research
Conducting Research Trials Is Not Always Financially Beneficial For Private Companies. According to a December 2007 report released by the Congressional Budget Office titled Research on the Comparative Effectiveness of Medical Treatments: "For drug manufacturers, the costs of conducting additional trials to demonstrate safety and efficacy for a broader set of patients or conditions may outweigh the benefits from the increased sales that would result; in particular, the potential gains from finding a favorable result for a different population would have to be weighed against the risk that safety and efficacy could not be demonstrated conclusively." [CBO.gov, 12/07]
Private Companies Only Compare Two Different Drugs When Required By The FDA. According to a December 2007 report released by the Congressional Budget Office titled Research on the Comparative Effectiveness of Medical Treatments: "Clinical trials of new drugs must compare them to alternative medications only when the manufacturer wants to make a claim of superiority in its FDA-approved marketing materials or when giving trial participants a placebo would be unethical (for example, in the case of a study of AIDS drugs)." [CBO.gov, 12/07, parenthesis original]
"Comparative Trials Can Be Risky For Manufacturers To Conduct." According to a December 2007 report released by the Congressional Budget Office titled Research on the Comparative Effectiveness of Medical Treatments: "A trial of two statin drugs, which was sponsored by the maker of one of those drugs, found that its competitor's product was more effective both at lowering cholesterol levels and at reducing the risk of mortality - illustrating the point that comparative trials can be risky for manufacturers to conduct." [CBO.gov, 12/07]
Funding Comparative Effectiveness Research Is Not A New Practice
NIH Had A Budget Of $335 Million For Comparative Effectiveness Research Last Year. According to Steven Pearlstein of the Washington Post, "there's nothing particularly new about comparative effectiveness research -- the National Institutes of Health, along with the Agency for Healthcare Research and Quality, have been doing it for years, with a budget last year of about $335 million." [Washington Post, 2/13/09]
"Congress Has Aggressively Expanded" Medicare - A True Statement, If Scott Is Referring To The Republican Congress
Scott: "There have been other steps toward socialized medicine as well. Congress has aggressively expanded the funding and relaxed the rules of eligibility for Medicare, Medicaid and the State Children's Health Insurance Program, which already provided government healthcare to children and adults alike who are above the poverty level and arguably could afford private coverage." [The Hill, 4/23/09]
The "Socialism" Taunt Is Getting Old
"Inaccurate Rhetoric About Socialized Medicine And Government-Run Health Care Is A Distraction" From The Policy Debate. According to a report on socialized medicine issued by the Urban Institute, "the core issue in health reform is not specifically the role of government, but what policies yield the best possible consequences for the American public. Such results include the number of people with health coverage, individuals' access to quality care, curbing cost growth, and consumers' ability to make choices about their health care and health coverage. Inaccurate rhetoric about socialized medicine and government-run health care is a distraction from these much more fundamental concerns." [Urban.org, 4/2008]
But While We're On The Subject, George W. Bush And His Republican Friends In Congress Greatly Expanded Medicare Benefits And Thus The Government's Role In Public Health
Bush Asked Congress For "The Biggest Expansion Of Government Health Benefits Since The Great Society." The Economist reported that in 2003 Bush was "urging Congress to expand state health care for the elderly to cover some of the costs of prescription drugs--an action President Clinton's Medicare adviser says would be 'the biggest expansion of government health benefits since the Great Society.' In all, the Bush administration in its first three years increased government spending by 21%. " [The Economist, 11/8/03, emphasis added]
Bush Campaigned for Re-election on Largest Expansion of Medicare in 38 years. Going into the 2004 presidential election, the New York Times reported that Bush advisers "say the president will campaign as having already delivered the biggest expansion of Medicare in 38 years, adding prescription drug benefits for the elderly, and can thus be trusted to improve the health care system for all. 'The question now is who has the track record,' a Bush campaign adviser said." [New York Times, 1/14/04, emphasis added]
Scott Apparently Is Unaware That Most Americans Think All Children Should Have Health Coverage
More Than 80% Of Americans Want All American Children To Have Health Care. A poll "commissioned by First Focus, a bipartisan children's advocacy organization," found that Americans widely support "a renewal of the State Children's Health Insurance Program (SCHIP) by a margin of 82-10 percent." [FirstFocus.net, 12/18/08, bold original]
When Cooking The Books, Scott Only Likes His Own Recipe
Scott: "Translation: 'Cook the books.' When CBO's array of supercomputers can't make the math work, the Senate plans to just ram government healthcare down America's throat no matter what -- even if it means inserting healthcare reform into the budget reconciliation process, which only requires a simple majority as opposed to support from 60 senators normally needed for all other legislation." [The Hill, 4/23/09]
Under Scott's Leadership, The Columbia/HCA Hospital System Was Investigated For Medicare Fraud
HCA Investigated For Medicare Fraud. According to the New York Times: "Officials at a number of Federal agencies began investigating whether Columbia hospitals engaged in practices such as fraudulently overstating their expenses to increase their compensation from Medicare, and regularly conducting unnecessary blood tests. Last week, law enforcement agents raided Columbia offices and hospitals in seven states, seizing documents related to business practices." [New York Times, 7/26/97]
Evidence Collected In HCA Investigation Included Documents "Stamped With Warnings That They Should Not Be Disclosed To Medicare Auditors." According to the New York Times: "The investigation of HCA's cost reporting began in 1993, when James Alderson, a former chief financial officer of one of its former hospitals, filed a whistle-blower suit contending that the expense documents were rife with fraud. The government began a civil investigation and obtained critical evidence: second sets of cost reports and worksheets maintained at HCA hospitals that contained significantly lower expenses than in reports submitted to the government. Some of those documents were stamped with warnings that they should not be disclosed to Medicare auditors." [New York Times, 12/18/02]
Columbia "Hospitals Were Knowingly Inflating The Numbers Reported To The Government." The New York Times reported: "In particular, these people said, investigators are examining accusations of significant differences between the cost reports submitted by certain Columbia hospitals to the Government and separate reports -- known as reserve cost reports -- that were kept at hospitals. Investigators were said to believe that these second reports, along with work sheets prepared by analysts working with the company, provided evidence that at least some hospitals were knowingly inflating the numbers reported to the Government in the cost report to improperly raise total compensation." [New York Times, 7/17/97, emphasis added]
HCA Paid "More Than $1.7 Billion In Civil And Criminal Penalties." The New York Times reported that a settlement was reached in the HCA fraud investigation: "Under the terms, HCA would pay $630 million in fines and penalties to resolve all outstanding civil litigation with the Justice Department. An additional $250 million would be paid by HCA to the Medicare program to resolve expense claims submitted by the company to the government...Combined with previous settlements HCA has negotiated with the government involving fraud accusations -- including its agreement in 2000 to plead guilty to 14 felonies -- the company will be paying a total of more than $1.7 billion in civil and criminal penalties, by far the largest amount ever secured by federal prosecutors in a health care fraud case." [New York Times, 12/18/02, emphasis added]
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