Wednesday, October 28, 2009

Chamber of Horrors

Original Link:

By Eliot Spitzer

The U.S. Chamber of Commerce—the self-proclaimed voice of business in Washington—has been wrong on virtually every major public-policy issue of the past decade: financial deregulation, tax and fiscal policy, global warming and environmental enforcement, consumer protection, health care reform …

The chamber remains an unabashed voice for the libertarian worldview that caused the most catastrophic economic meltdown since the Great Depression. And the chamber's view of social justice would warm Scrooge's heart. It is the chamber's right to be wrong, and its right to argue its preposterous ideas aggressively, as it does through vast expenditures on lobbyists and litigation. Last year alone, the chamber spent more than $91 million on lobbying, and, according to lobby tracker, it has spent more than twice as much on lobbying during the past 12 years as any other corporation or group.

The problem is, the chamber is doing all this with our money. The chamber survives financially on the dues and support of its members, which are most of America's major corporations listed on the stock exchange. The chamber derives its political clout from the fact that its membership includes these corporations. Yet we—you and I—own the companies that support the chamber and permit it to propagate its views. Our passive, permissive attitude toward the management of the companies we own has enabled the chamber to be one of the primary impediments to the reform of markets, health care, energy policy, and politics that we have all been calling for. It is time for that to change.

How, you might ask, do we own these companies? Public pension funds and mutual funds are the largest owners of equities in the market. They are the institutional shareholders that have the capacity to push management—and the boards of the corporations. Yet the mutual funds and pension funds have failed to do so. They have failed to control the management of the companies they own because the actual owners of those mutual funds and pension funds—you and I—have failed to raise our voices. We haven't even asked questions.

Mutual funds, until recently, didn't even disclose how they voted the proxies of shares they owned. When asked why not at a forum I was part of several years ago, the general counsel of one of the largest mutual fund companies tried to explain that it would be too expensive to make such disclosure. The answer was patently ridiculous, and it hid the much more important reason for nondisclosure: Mutual funds rarely if ever want to vote in opposition to management because mutual funds want to be included among the list of 401(k) options the company chooses for its employees. Mutual funds make money by increasing the size of the portfolios they manage, and if management knocks them off the 401(k) list, they will lose that revenue stream. This basic conflict of interest has neutered mutual funds. They are not meaningful checks on corporate mismanagement.

The comptrollers and treasurers who run public pension funds (often elected officials), have also failed to flex their political muscles. The passivity of the publicly elected officials who have the capacity to raise these issues has been a bit surprising.

So what should be done? The issue of passive institutional ownership is one of the most vexing and serious problems in American business. Expecting CEOs and boards to run companies properly without our input is a prescription for failure. But at least on the one issue of corporations playing politics with our money through support of the U.S. Chamber of Commerce, there is an easy answer.

The elected comptrollers and treasurers who agree—as a vast majority will—that the Chamber of Commerce has a distorted view of both economic and political policy should demand that each company in which they own stock drop its membership in the chamber. If the CEO doesn't agree, the public pension funds should pressure the board to drop the chamber membership. If one activist state comptroller begins to build this coalition, the other state pension funds will follow.

In recent weeks, Apple and two energy companies—PG&E and Exelon—have defected from the chamber, objecting to its environmental policies. The Wall Street Journal editorial page of course views this bit of wisdom as heresy and counter to shareholder interest.

If elected comptrollers and treasurers do take a stand against the U.S. Chamber of Commerce, expect a hue and cry from the typical voices. They will complain that elected comptrollers and treasurers are injecting politics into corporate management. To which the answer should be: No, they are trying to take politics out of it! It is corporate leadership, through its support of the chamber, that has injected politics into the corporations that we own. We are reminding corporate leaders that they are our fiduciaries. As long as the chamber and the CEOs who are supposed to be our representatives are using our money to be overtly political, it is our duty to respond. If we are passive, we permit the chamber to hijack our funds and companies to support positions antithetical to our own views. Waking pension funds and mutual funds from their slumber on this relatively easy issue might finally begin the necessary process of fixing mismanaged corporations.

Saturday, October 24, 2009

New Weiner Study Shows 151 Members of House and Senate Get the “Public Option” Now

Original Link:

Weiner Calls on GOP Opponents of the Public Option to Give Up Their Medicare

WASHINGTON, DC—A new study by Representative Anthony Weiner (D – Queens & Brooklyn), member of the Health Subcommittee and Co-Chair of the Caucus on the Middle Class, revealed that 151 members of the House and Senate currently receive government-funded; government-administered single-payer health care - Medicare.

On the list of recipients are 55 Republicans who have steadfastly opposed other Americans getting the public option, like the one they have chosen.

Weiner said, “Even in a town known for hypocrisy, this list of 55 Members of Congress deserve some sort of prize. They apparently think the public option is ok for them, but not anyone else.”

The list of congressional recipients of Medicare who also oppose the public option is below:

Rep. Ralph M. Hall
Rep. Roscoe G. Bartlett
Rep. Sam Johnson
Rep. C.W. Bill Young
Rep. Howard Coble
Sen. Jim Bunning
Sen. Richard G. Lugar
Rep. Don Young
Sen. Charles E. Grassley
Sen. Robert F. Bennett
Rep. Vernon J. Ehlers
Sen. Orrin G. Hatch
Sen. Richard C. Shelby
Rep. Jerry Lewis
Sen. James M. Inhofe
Rep. Ron Paul
Rep. Henry E. Brown
Sen. Pat Roberts
Sen. George V. Voinovich
Sen. John McCain
Rep. Judy Biggert
Sen. Thad Cochran
Rep. Harold Rogers
Rep. Dan Burton
Rep. Howard P. "Buck" McKeon
Rep. Frank R. Wolf
Sen. Christopher S. Bond
Rep. Michael N. Castle
Rep. Joe Pitts
Rep. Tom Petri
Sen. Lamar Alexander
Rep. Doc Hastings
Rep. Cliff Stearns
Rep. Sue Myrick
Rep. John Carter
Sen. Mitch McConnell
Sen. Jon Kyl
Rep. Phil Gingrey
Rep. Nathan Deal
Rep. John Linder
Rep. Kay Granger
Rep. John L. Mica
Rep. Walter B. Jones
Sen. Jim Risch
Rep. Ed Whitfield
Rep. F. James Sensenbrenner
Rep. Virginia Foxx
Sen. Kay Bailey Hutchison
Rep. Ginny Brown-Waite
Sen. Saxby Chambliss
Sen. Michael B. Enzi
Rep. Elton Gallegly
Rep. Donald Manzullo
Rep. Peter T. King
Rep. Ander Crenshaw

Sunday, October 18, 2009

Don’t Let Exceptions Kill the Rule

Original Link:


CONGRESS began the work of reforming our troubled financial system last week, and a bill aimed at regulating derivatives passed the House Financial Services Committee on Thursday.

Derivatives — contracts that theoretically protect buyers from unforeseen financial calamities but more often are used to fuel raw speculation — were, lest we forget, at the heart of the banking crisis.

Credit default swaps, Wall Street-style insurance contracts that let speculators bet against a company or debt issue, propelled the American International Group off the cliff. Those swaps also linked millions of trading partners, creating a web in which one default threatened to produce a chain of corporate and economic failures worldwide.

And derivatives aren’t going away. In the right hands, they help parties manage risk. In the wrong hands, they are among the most destructive financial products ever invented. So reforming the $42 trillion market for credit swaps is crucial if taxpayers are to be protected from future rescues of institutions deemed not only too big but also too interconnected to fail.

The best aspect of the House bill is that it requires many swaps to be traded on exchanges just like stocks, subjecting them for the first time to the light of day. But elsewhere in the bill, known as the Over-the-Counter Derivatives Market Act of 2009, exceptions to this exchange-trading rule undermine its regulatory power.

Derivatives regulation has been on the nation’s financial reform agenda for months. Undoing the Clinton-era law that exempted swaps from oversight is seen as imperative, except perhaps by big banks that deal in the contracts. It’s worth noting that many members of the Clinton economic team, including Lawrence Summers, Timothy Geithner and Gary Gensler, now hold pivotal policy-making positions in the Obama administration.

In August, the White House sent its derivatives proposal to Congress, recommending that all standardized contracts trade on an exchange. But big banks dealing in swaps don’t want exchange trading, where pricing and the identities of participants would be more publicly transparent. Savvier swaps customers would soon pay less on their transactions and bank profits would fall.

Some swaps buyers also dislike exchange trading because it would require them to put up a cash cushion — or margin — before a transaction. This is to help prevent counterparty failures, but participants in the market prefer not to pay this freight. They’d rather taxpayers foot the bill for a possible collapse later on, as they did with A.I.G.

Representative Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, dismissed criticism of the bill he is steering along, saying that it would create incentives to make exchange-traded swaps the norm. “We passed the bill to drive most of the swaps onto exchanges,” he said in an interview Friday. “End users will move in that direction to save money.” But Michael Greenberger, a University of Maryland law professor and an expert in derivatives, criticized the House bill. “While I know there was a good-faith effort to improve the regulation, the plain language of the legislation can only be read as a Christmas tree of decorative gifts to the banking industry,” he said. “And this is being done when people acknowledge the unregulated O.T.C. derivatives market was a principal reason for the meltdown.”

A SIGNIFICANT exception in the bill says that if a transaction involves a company that uses a swap to offset its commercial risks — the bill defines this entity as an end user — its trade does not have to be put on an exchange. This was intended to address complaints from swaps customers — like airlines or oil companies that hedge their commercial risks — that their costs would rise unnecessarily under the bill.

The problem is the bill’s lack of specificity about what an end user is. Indeed, what is to stop a hedge fund or private equity firm from setting up companies to meet the “end user” definition so their trades could escape scrutiny?

Another questionable exemption says that if a swap is to be exchange-traded, it must be deemed “clearable” by facilities known as clearinghouses. Some of these are partially owned by banks. If a clearinghouse decides that the swap can be cleared, then it can trade on an exchange.

Gee, do you think the banks might be a tad hesitant to punt a very lucrative line of business onto less profitable exchanges? Do you think they might have an incentive to say that the most profitable swaps simply aren’t clearable?

Conflicts posed by swaps dealers’ stakes in clearinghouses is no small thing. Those on the House committee who amended the bill recognized the problem and decided to restrict swaps dealers’ ownership of clearinghouses to 20 percent; the balance might go to public investors.

To be sure, the House bill is just the first step in what is likely to be a long road to reforming this huge and opaque market. And more oversight is surely better than none. The House Agriculture Committee, which oversees the Commodity Futures Trading Commission, will take up the matter now.

But the stakes for taxpayers who might have to take on yet another wave of financial bailouts in the future are even higher. And allowing the very institutions that imperiled our economy to weaken derivatives reform would be a grave insult to those whose rescue money is being used, even today, to generate bank profits and a recent round of outsize bonuses.

The Rich Have Stolen the Economy

Original Link:


Bloomberg reports that Treasury Secretary Timothy Geithner’s closest aides earned millions of dollars a year working for Goldman Sachs, Citigroup and other Wall Street firms. Bloomberg adds that none of these aides faced Senate confirmation. Yet, they are overseeing the handout of hundreds of billions of dollars of taxpayer funds to their former employers.

The gifts of billions of dollars of taxpayers’ money provided the banks with an abundance of low cost capital that has boosted the banks’ profits, while the taxpayers who provided the capital are increasingly unemployed and homeless.

JPMorgan Chase announced that it has earned $3.6 billion in the third quarter of this year.

Goldman Sachs has made so much money during this year of economic crisis that enormous bonuses are in the works. The London Evening Standard reports that Goldman Sachs’ “5,500 London staff can look forward to record average payouts of around 500,000 pounds ($800,000) each. Senior executives will get bonuses of several million pounds each with the highest paid as much as 10 million pounds ($16 million).“

In the event the banksters can’t figure out how to enjoy the riches, the Financial Times is offering a new magazine--”How To Spend It.”
New York City’s retailers are praying for some of it, suffering a 15.3 per cent vacancy rate on Fifth Avenue. Statistician John Williams ( reports that retail sales adjusted for inflation have declined to the level of 10 years ago: “Virtually 10 years worth of real retail sales growth has been destroyed in the still unfolding depression.”

Meanwhile, occupants of New York City’s homeless shelters have reached the all time high of 39,000, 16,000 of whom are children.

New York City government is so overwhelmed that it is paying $90 per night per apartment to rent unsold new apartments for the homeless. Desperate, the city government is offering one-way free airline tickets to the homeless if they will leave the city. It is charging rent to shelter residents who have jobs. A single mother earning $800 per month is paying $336 in shelter rent.

Long-term unemployment has become a serious problem across the country, doubling the unemployment rate from the reported 10 per cent to 20 per cent. Now hundreds of thousands more Americans are beginning to run out of extended unemployment benefits. High unemployment has made 2009 a banner year for military recruitment.

A record number of Americans, more than one in nine, are on food stamps. Mortgage delinquencies are rising as home prices fall. According to Jay Brinkmann of the Mortgage Bankers Association, job losses have spread the problem from subprime loans to prime fixed-rate loans. At the Wise, Virginia, fairgrounds, 2,000 people waited in lines for free dental and health care.

While the US speeds plans for the ultimate bunker buster bomb and President Obama prepares to send another 45,000 troops into Afghanistan, 44,789 Americans die every year from lack of medical treatment. National Guardsmen say they would rather face the Taliban than the US economy.

Little wonder. In the midst of the worst unemployment since the Great Depression, US corporations continue to offshore jobs and to replace their remaining US employees with lower paid foreigners on work visas.

The offshoring of jobs, the bailout of rich banksters, and war deficits are destroying the value of the US dollar. Since last spring the US dollar has been rapidly losing value. The currency of the hegemonic superpower has declined 14 per cent against the Botswana pula, 22 per cent against Brazil’s real, and 11 per cent against the Russian ruble. Once the dollar loses its reserve currency status, the US will be unable to pay for its imports or to finance its government budget deficits.

Offshoring has made Americans heavily dependent on imports, and the dollar’s loss of purchasing power will further erode American incomes. As the Federal Reserve is forced to monetize Treasury debt issues, domestic inflation will break out. Except for the banksters and the offshoring CEOs, there is no source of consumer demand to drive the US economy.

The political system is unresponsive to the American people. It is monopolized by a few powerful interest groups that control campaign contributions. Interest groups have exercised their power to monopolize the economy for the benefit of themselves, the American people be damned.

Saturday, October 17, 2009

GOP deals death blow by blocking public option

Original Link:

By Dr. Eugene T. Paslov

The “just say no” Congressional Republicans are probably feeling smug and self-righteous. They, and a few Blue Dog Democrats, defeated the public option provision of the insurance reform bill in the Senate Appropriations Committee.

But as the old saying goes, “It ain't over 'til the fat lady sings.” Sen. Reid is a master politician and will be working behind the scenes with the Obama administration to find a way to make affordable health care available to all. Heath care for all is what the majority of Americans want; and it is what we need to be internationally competitive and healthy.

If the Congressional Republicans succeed in blocking health care reform (they claim to be interested in denying Americans health care in an effort to deliver a political defeat to the president), they will literally deal death sentences to citizens and will themselves, as a national party, fall into the depths of obscurity from which they may never return.

Our current system of health care is unsustainable; it is obscenely costly and wasteful. By most international health care measures our system of care is not very effective, except for the few who can afford the very best. We rank with Third World countries in terms of infant mortality and longevity. The only ones who really benefit from our current system are the insurance companies, and they're looking to increase their profits and reduce their risks.

Our morally challenged junior senator, John Ensign, testified at a recent appropriations committee hearing that universal medical care was too costly. He claimed that if such a system were put in place, Congress wouldn't be able to control it. I doubt that. And why wouldn't he want the best health care possible for his constituents?

The League of Women Voters tells us that the House and the administration have health care bills that will (1) provide universal health care for all Americans, and include a public option, (2) control health care costs, (3) improve safety and quality of care, (4) include transparency in plans and coverage, and (5) provide adequate financing.

These bills will not hurt seniors or end Medicare; they will not ration coverage and care; and they will not impose long delays on cancer treatment and vital surgeries.

If the Congressional Republicans will not support universal health care for all Americans, including a public option, I'd say let them rot in Hades, and Blue Dog Democrats as well. Vote them out of office at the first opportunity.

Let's support the administration and the men and women who will help make us a healthy and internationally competitive nation.

Friday, October 16, 2009

The Sick Business of Health-Care Profiteering

Original Link:

By Matt Kapp

Think Wall Street’s titans are the highest paid C.E.O.’s in the land? Think again. With median annual compensation of more than $12 million, medical moguls take the pay prize, even as the quality of care we receive falls to embarrassing lows. As the debate over health-care reform intensifies, the author catalogues the industry’s unbridled profiteering.

It’s become a national pastime to bash Wall Street’s lavish pay packages, but as we enter the vortex of another health-care showdown, consider these overlooked facts: With median annual compensation of more than $12.4 million, C.E.O.’s at the big health-care companies make two-thirds more than their counterparts in finance and are the highest paid of any industry. The health-care industry’s total annual profit has grown to an estimated $200 billion, and it doled out nearly $170 million in campaign contributions in 2007 and 2008. It now spends more than any other industry lobbying the federal government—$3.5 billion over the past decade and a record $263 million in the first six months of this year. That’s six lobbyists and nearly half a million dollars for each member of Congress. It’s been a good year on K Street, too.

It should come as no surprise, then, that we spend 17 percent of our G.D.P. and more than $7,500 per American per year on health care. That’s 50% more than any other industrialized nation. Meanwhile, the quality of care we get in return has fallen to embarrassing lows. According to the World Health Organization, our health-care system ranks 37th in overall quality and fairness, placing us between Costa Rica and Slovenia. We rank 41st in infant-mortality rates, alongside Slovakia and Serbia, and dead last among 19 leading industrialized countries in preventable deaths. Nearly two-thirds of personal bankruptcies in the U.S. are caused by illness, yet more than three-quarters of those people actually had health insurance when they fell ill. In other words, we’re all getting ripped off.

Health-Insurance Companies

Gambling investors’ money on exotic securities in pursuit of outsize returns may be a dubious profit model, but what could be worse than the health-insurance industry’s core model: screwing sick people to boost margins. President Obama has taken aim at big health-insurance companies and their “record profits.” While it’s true they’ve managed to more than triple their profits over the last eight years, they’ve still only lifted their average margin to 3.4 percent, enough to place 87th out of 215 industries. But they shouldn’t be complaining about lackluster profits when they’re paying their C.E.O.’s and executives as extravagantly as they are. Dishing out this much scratch, it’s a wonder they’re making any profits at all: Aetna C.E.O. Ronald Williams has helped purge millions of members from the company’s rolls; his total annual compensation in 2008 was $24,300,112. Angela Braly, who has promised that WellPoint “will not sacrifice profitability,” also saw a raise, to $9,844,212. Cigna’s Edward Hanway saw his pay cut in half and still hauled in $12,236,740, but he was forced to manage a major P.R. crisis after the company initially refused to approve a liver transplant for a 17-year-old girl, which it said was “outside the scope of the plan’s coverage.” She died just hours after Cigna changed its mind and decided it would pay for a new liver after all. Despite a 75 percent pay drop in 2008, cutting him down to a humiliating $3,241,042, UnitedHealth Group’s Stephen Hemsley put on a brave face for Congress, assuring legislators: “Our mission at UnitedHealth Group is to help people live healthier lives.” UnitedHealth has been fined tens of millions of dollars for claims-processing violations (i.e., stiffing patients and doctors). Hemsley’s predecessor, William McGuire, resigned amid a stock-options backdating scandal in 2006. He still walked away with nearly half a billion dollars in stock options. Hemsley surrendered $190 million in options himself, but with $744,232,068 left over, he should be fine.

Even C.E.O.’s at “not-for-profit” insurance companies (like most state Blue Cross and Blue Shields) collect multi-million-dollar compensation packages, even as their companies pay little in the way of taxes. Blue Cross of Massachusetts’s C.E.O., Cleve Killingsworth, got a 26 percent raise in 2008, to $3.5 million, and Blue Cross of North Carolina’s C.E.O., Bob Greczyn, pulled down nearly $4 million after a 19 percent raise. Gail Boudreaux left Blue Cross of Illinois in December 2007 with $15.3 million. The not-for-profits can be just as freewheeling with expense accounts. In early September, a state audit found that Blue Cross of North Dakota used premiums to pay for a $238,000 sales managers’ retreat in the Cayman Islands and a $34,814 retirement party for an executive.

The bottom line for health-insurance companies is that things like new livers really eat into profits. But it’s not just the expensive life-and-death stuff they’re rejecting. While health-insurance premiums have more than doubled in the past decade, a recent study by the California Nurses Association found that the six biggest insurers in California denied an average of 21 percent of all claims in the first half of 2009, with PacifiCare denying an astonishing 39.6%. The nurses were able to conduct their study, the first of its kind, only because California requires insurance companies to provide detailed records of claims denials. (It’s the only state with such a mandate.)

On August 17, Representative Henry Waxman sent out a letter to 52 health-insurance companies asking for revenue and profit figures over the past five years, a list of employees making more than $500,000 a year, and an itemization of expenses for “all conferences, retreats, or other events held outside company facilities” since 2007. The deadline for responses was September 14. When the details are released, we can expect a collective gasp.

Hospital Operators

The companies that manage hospitals post annual average profit margins of 5 percent, slightly better than the insurers. Hospital Corporation of America, founded by former senator Bill Frist’s father and brother, saw revenues climb 23 percent, to $28 billion, in 2008 with a tidy (if comparatively tiny) profit of $673 million. The Nashville-based company is doing better in 2009, doubling second-quarter revenue over last year. Back in 2002, H.C.A. paid $1.7 billion in fines to settle charges of Medicare and Medicaid fraud, the biggest settlement for an individual corporation in U.S. history at the time. And now H.C.A., whose outgoing chairman, Jack Bovender, made $6.87 million in 2007 and reportedly rides around Nashville in a cherry-red Ferrari, is fighting a class-action lawsuit alleging that “systematic understaffing” at H.C.A. facilities endangered patients.

Tenet Healthcare’s rap sheet is equally impressive. In 1994 the company paid the government $362 million in fines and penalties after pleading guilty to paying bribes and kickbacks for patient referrals. In 1999, Tenet settled lawsuits with 680 former psychiatric patients who claimed the company held them in hospitals against their will. In 2006 it agreed to pay the government $900 million to settle charges it had overbilled Medicare by marking up its prices many times over actual costs. While it’s been a turbulent ride for Tenet’s shareholders lately, C.E.O. Trevor Fetter is still allowed 75 hours’ worth of personal use of the company jet each year and pulled down a cool $9.7 million in 2008.

HealthSouth’s Richard Scrushy used to throw garish fĂȘtes on his 92-foot yacht, the Chez Soiree, and was worth an estimated $300 million at the peak of the party. He’s now serving an 82-month sentence for bribery, conspiracy, and mail fraud; in June, he was ordered to pay $2.87 billion in damages to shareholders. “I have no interest in having money,” Scrushy told the judge when pleading for leniency at his sentencing. “I’m just a pastor.” (Scrushy co-founded a ministry in 2006.) HealthSouth lawyers are still trying to seize the Chez Soiree, now dry-docked in Florida.

Laboratory Testing Companies

The $50 billion medical-lab-testing sector’s average profit margin is a healthy 8.2 percent, putting it just above restaurants and below oil and gas equipment and services. The mother of all lab-test companies, Quest Diagnostics, earned a 9.1 percent margin during the last year, just a hair behind Exxon Mobil. In April, defunct Quest subsidiary Nichols Institute Diagnostics pleaded guilty and paid a $40 million criminal fine for the felony misbranding of a test called the Nichols Advantage Chemiluminescence Intact Parathyroid Hormone Immunoassay. (With names like these, they could just as well charge you for their afternoon coffee and call it Post Meridien Genera Coffea Robusta on your bill.) Another $262 million was paid by Quest to settle other civil allegations. Despite the fines, Quest’s revenues were up 3.5 percent in the second quarter of 2009, to $1.9 billion, and its C.E.O., Surya Mohapatra, pulled down $11,964,632 in compensation last year.

In March, California attorney general Jerry Brown announced a civil lawsuit against seven medical labs, including Quest and LabCorp, for allegedly overcharging the state’s Medi-Cal program by up to 600 percent for routine tests. “In the face of declining state revenues,” he said at a press conference, “these medical laboratories have been ripping off our medical program for our most vulnerable people.” The suit claims that Quest was charging Medi-Cal $8.59 for simple blood-count tests while billing other clients $1.43 for the same test, and that LabCorp was charging Medi-Cal five times what it was charging others for hepatitis C antibody screenings. (Quest dismisses the attorney general’s allegations, noting that “the complaint was originally filed by a small laboratory that competes against our company” and “our services were priced appropriately.”) A little more than a decade ago, LabCorp paid $173 million to settle fraud allegations arising from the Justice Department’s Operation labscam crackdown on fraudulent lab-company billing. LabCorp C.E.O. David King’s pay was $8.2 million in 2008. The company posted a $514 million profit, with a margin of 10.3 percent, just behind AT&T.

Giant settlements for lab-billing scams have been commonplace since the 1980s, but Congress has failed to implement any real anti-fraud protections for Medicare: a paltry $756 million is currently devoted to fraud prevention, less than one-fifth of one percent of Medicare’s annual budget. Given the unbridled pillaging going on, it’s little wonder Medicare is projected to become insolvent by 2017. The Government Accountability Office has estimated that 10 cents of every dollar spent on Medicare is lost to fraud, which means that $42 billion is expected to vanish this year. That’s $280 picked from the pocket of every wage-earning American.

Health-Care Real-Estate Investment Trusts
Where the health-care industry really stretches out the profit margins is in Real Estate Investment Trusts (reits). Essentially hospital and health-care-facility landlords, the folks with money in health-care reits are used to seeing double-digit returns. Last year they ranked second, behind only the beverage business, with a 24.6 percent average profit margin. Despite the real-estate doldrums, the bluntly branded Health Care reit, Inc., has recently been called a “hot stock” for basking in net margins of nearly 40 percent. So although C.E.O. George Chapman’s compensation was a meager $5.2 million in 2008, he’s bound to do better in 2009.

The biggest of the health-care reits, Health Care Property Investors, Inc., paid its C.E.O., James Flaherty, $6.54 million last year. The company points out on its Web site that “The healthcare industry is growing and is expected to represent 17.7% of U.S. Gross Domestic Product in 2010,” as if this is good news for everyone, and illustrates in a graph that this percentage is expected to top 20 percent by 2018. Trivia: At this pace, by the year 2300, 100% of our GDP will go to health care. The future indeed looks rosy for reits: aging baby-boomers will drive the growth of long-term-care facilities for years to come.

Big Pharma

With more than $300 billion in annual revenue and nearly $50 billion in profits, Big Pharma is the 800-pound gorilla in the room. The pharmaceutical industry’s share of G.D.P. has more than tripled since 1980, and its average profit margins are now better than 15 percent. The checks forked over to the men at the top of the big drug companies take the cake. Forest Labs’ C.E.O., Howard Solomon, has made an average of $33 million a year over the last six years. (He is 81 years old, so you can adjust for seniority.) Abbot Labs’ C.E.O., Miles White, reeled in $25.3 million last year, with profits up 35 percent, to $4.88 billion. Merck’s Richard Clark and Bristol-Myers Squibb’s James Cornelius each pulled down $17.2 million. Pfizer C.E.O. Jeff Kindler’s pay package was $13.1 million, and Wyeth’s C.E.O., Bernard Poussot, saw a 69 percent raise, to $21.3 million. The two companies merged and purged 19,500 workers (a marriage made possible by tarp money, to make matters worse), which landed Poussot a “change of control” bonus of $24 million. Unlike Tenet’s C.E.O., whose personal aircraft use is capped, Poussot is actually required by the board of directors “when feasible” to use Wyeth’s toys for personal travel, “for security and other reasons.” Somehow this is all news to New York City’s well-heeled mayor, Mike Bloomberg, who said on his radio show last month, “You know, last time I checked, pharmaceutical companies don’t make a lot of money, their executives don’t make a lot of money.”

Given the fact that pharmaceutical-industry innovations have increased the expectancy and quality of life for countless people, most Americans tend to give the drug companies wide moral latitude. And the drug companies have done everything they can to exploit the free pass in pursuit of profit, which occasionally lands them in hot water. In January, Eli Lilly was ordered to pay more than $1.4 billion as part of a civil settlement and plea agreement for their “off-label promotion” of the anti-psychotic drug Zyprexa. In early September, Pfizer paid a record settlement—$2.3 billion—for the unlawful marketing of the painkiller Bextra.

In stark contrast to all this greed, general physicians make about $148,000 on average a year, with heart and nuero surgeons topping the scale at around $550,000. (Who wouldn’t want his surgeon to be making good money?) But even your heart surgeon is making less than 5 percent of what the average health-care C.E.O. earns. No wonder doctors are cranky these days. Their salaries are flat, and they’ve been forced into indentured servitude by the insurance companies, whose reams of unnecessary paperwork clog their offices and cut into their time with patients. After years of double-digit increases, malpractice-insurance premiums have stabilized in many states in the last 12 months or so, but family physicians still pay an average of $12,500 annually. Premiums for specialists like neurosurgeons can run well over $100,000 a year in some states. Patients are cranky, too, having seen their premiums more than double in the last decade.

So why have the Democrats pushing health-care reform been reluctant to draw attention to the profound profiteering going on in the health-care biz? Why won’t they just spit it out: as long as our health-care system is a casino-haven for ambitious M.B.A.’s, Wall Street brokerages, middlemen, and bottom-feeders looking for easy money, it will remain broken for the rest of us. Pointing out how deeply we’re getting our pockets picked, and by whom, would surely rouse umbrage in the insured and uninsured alike.

Politicians deny that the money they get from health-care interests has in any way swayed their opinions on reform, but it sure seems to have flagged their resolve. In the first six months of this year, Senator Blanche Lincoln brought in $325,350 from health-care-industry interests. She recently came out against the public option, the biggest menace to insurance companies because, in theory, it could lure away potential costumers. Senate majority leader Harry Reid, who supports a public option but thinks it ought to be privately run, collected $382,400. Senator Max Baucus, head of the bipartisan “Gang of Six” health-care-reform committee, has brought in $1.5 million since he began holding healthcare hearings in 2007. In May, 13 doctors and nurses were arrested for showing up at Senate hearings to demand that Baucus allow single-payer advocates to be heard. Earlier this summer, the senator charged $2,500 a head to lobbyists and execs wanting his ear during the 10th annual Baucus golf and fly-fishing retreat in Big Sky, Montana, his home state. If your congressman isn’t busy cashing checks, or taking appointments with lobbyists, he’s probably busy getting shouted down at a town hall somewhere.

With the Democrats message dead on arrival, once again the reform-minded are proving to be no match for the cyclopean assault unleashed by the biggest industry in America. Health-care companies have mobilized at least 50,000 of their employees to write letters and attend town-hall meetings, on the premise that their industry faces a grave existential threat. The insurers’ leading lobby, America’s Health Insurance Plans (A.H.I.P.), prepared a “Town Hall Tips” memo, urging them to remain calm and not shout at members of Congress. A.H.I.P.’s president, Karen Ignagni, told The Wall Street Journal that town-hall meetings are an opportunity for industry employees “to strongly push back against charges that we have very high profits.” I wonder how many of them are on the lists of $500,000-a-year-plus employees due on Rep. Henry Waxman’s desk last week.

In his speech to Congress, President Obama sowed the seeds of compromise, delivering a watered-down, three-point plan for health-care reform: 1) compel insurance companies to treat their customers more fairly; 2) create an insurance “exchange” of affordable health plans for individuals and small businesses; and 3) require everyone to carry basic health insurance in the same way car insurance is mandatory.

By making health insurance compulsory for 46 million Americans, Obama’s plan could be a boon to hospitals and hospital-equipment-makers. “The expected spending could positively affect the top-line growth of many healthcare providers” was rating agency Moody’s assessment. Insurance companies also stand to do very well, particularly if a public option doesn’t come to pass. Even if it does, the president reassured the industry that in any event the Congressional Budget Office has estimated that fewer than 5 percent of Americans would sign up for it. The flood of government-compelled premiums could generate $1 trillion in revenue for health insurers over the next decade. Health-insurance stocks spiked the day after Obama’s speech, signaling approval of the direction the White House is steering the conversation. Over the past three months, Humana shares have gone up 26 percent, Aetna’s stock is up 21 percent, and UnitedHealth has gained 7 percent.

The administration’s plan could also mean a windfall for medical-supply companies, testing labs, and drugmakers. In July, the perennial Harry and Louise returned to the airwaves, but this time they’re bankrolled by Big Pharma and are advocating for reform. Why? Because “drug and insurance companies stand to benefit when tens of millions more Americans have coverage,” as President Obama said in June. The drug companies put a dollar figure on the potential benefit, offering to invest $80 billion in the president’s plan, in the form of Medicare discounts and other concessions over the next decade. Republican senator Olympia Snowe, a member of the Gang of Six and a key figure in the debate, thinks it’s a wise investment. “The savings offered here appear to be more than offset by new drug sales,” she told the Associated Press. In early August, as a worrisome proposal that would allow the government to negotiate drug prices was making the rounds in the House, Big Pharma flexed its muscles, demanding the White House explicitly acknowledge that drug companies wouldn’t be on the hook for anything beyond the agreed-upon $80 billion. The White House obeyed.

Despite the boorish antics of Joe Wilsons everywhere, the American people’s support for fundamental health-care reform remains steadfast. Depending on who’s doing the polling, between two-thirds and three-quarters of Americans support a public option and up to 75% want to see more regulation of insurance companies. With this kind of mandate, the fight is the Democrats’ to lose.

Monday, October 12, 2009

Premiums Would Go Down If Insurance CEOs Took a Pay Cut

Original Link:

By thebagofhealthandpolitics

America’s Health Insurance Plan–the lobbying arm for billionaire insurance CEOs–is beginning to spread disinformation about health care reform. They claim that premiums would go up because the Senate Finance Committee bill would make insurance too affordable for them to provide services at their current levels. Of course keeping things the same means keeping CEOs compensated at obscene levels, spending hundreds of millions of dollars on corporate jets, and continuing to maximize profits by minimizing ill Americans access to the doctor.

Insurers spend up to 40 cents of every dollar (pdf) on “administrative costs.” This bland term hides outrageous compensation, like the $1.1 billion severance package former United Health Care Group CEO Bill McGuire got. It also hides outrageous and immoral practices–like WellPoint’s habit of paying five-figure bonuses to employees who figure out how to stop a cancer patient’s treatment.

Insurers do these things to meet Wall Street’s expectations. Wall Street expects profits to continually grow. They expect bigger dividends and higher stock prices with each passing year. They expect companies to avoid spending money on “uneccessary” items.

But Wall Street has also defined lavish executive salaries and obscene bonuses as “neccessary to retain top talent.” Thus Wall Street sees nothing wrong with a society where the highest earners make 400 times more than the average family.

Of course if these “talented” minds actually felt like earning their paycheck, they’d think about the problems the middle class is having in this economy, and they’d quickly conclude that too much money is going to the top, leaving the middle class–the foundation of our economy–without enough money to meet basic needs. That, in turn, causes the middle class to reduce spending, which causes businesses to reduce production and lay off middle class workers, which causes more middle class people to reduce spending. It’s a sad feedback loop that the economy is stuck in. In short, an economy that lacks a strong foundation will inevitably collapse in on itself.

When applied to health insurance, paying for the salaries and bonuses of “talented” individuals like Bill McGuire means trying to shift the cost of medical care onto the middle class. An insurer in Texas dropped a cancer patient because she failed to disclose a previous case of acne on her insurance application. No insurer in Tennessee would cover a young Lupus patient.

Without the money to continue expensive, life-saving treatments, both of these patients put off proper care. The cancer spread to stage IV, and may ultimately claim the life of Robin Beaton. Nikki White ended up in the hospital where the state spent over a million dollars on 15 surgeries that were done in a desperate efforts to save Nikki’s life. In the end, she died at the age of 32 from what her doctor termed “complications secondary to a failed health care system.”

Tennessee Governor Phil Bredesen (D)–who pushed through health care cuts that had a huge negative impact on Nikki White’s treatment–was an insurance executive before entering politics. He amassed a fortune of between $100 million and $250 million before entering politics. He is now opposing health care reform because he thinks it would cost state governments too much money.

The state-based CEOs of Blue Cross–a company which has been found to tie good performance evaluations to the dropping of high-cost policy holders like Robin Beaton–earn as much as 16 million a year, even when their plan’s income decreases and their membership declines.

Deep down, Karen Ignagni knows that her rent-a-study just defends the sorrid status quo. Insurers and their lackeys on K Street are defending a system in which the coddling of high-powered executives is more important than getting proper, life-saving care to the people who need it. They are defending a system in which small business–who would like to provide insurance and peace of mind to their employees–are priced out of the insurance market.

In short, they’re defending a failed system. And they’re doing that because they profit mightily off of the struggles of small businesses, hard-working American families, and Americans who just need to see the doctor in order to become productive, high-earning citizens. I don’t need to tell you this by now, but the “study” AHIP commissioned isn’t credible.

Sunday, October 11, 2009

Democrats with guts

Original Link:

By Sahil Kapur

Congressman Alan Grayson's fighting talk gave Republicans a taste of their own bitter medicine on healthcare reform

Democratic congressman Alan Grayson beat the Republicans at their own game last week, when he ripped into them for dragging their feet on the American healthcare crisis. On the floor of the House of Representatives, he summarised the Republican healthcare plan as: "Don't get sick, and if you do get sick, die quickly." It has caught Republicans like a deer in the headlights, understandably so because Republicans are not used to Democrats with guts.

Far from surrendering to immediate Republican outrage and demands for apology, Grayson stood firmly by his stance, teasing his opponents that he'll apologise, but "to the dead and their families" for government's failure to improve the system. In fact, Grayson has since stepped up his rhetoric in a recent media blitz, calling Republicans "knuckle-dragging Neanderthals" and "a lie factory" whose only approach to policy is obstructionism. By failing to produce a counter-proposal in the following days, Republicans have effectively proven Grayson's point.

This kind of pugnacious spirit is common among Republicans but very rare among Democrats, which is largely why Democrats so often get trampled in legislative battles where they have the upper-hand politically, intellectually, morally, historically and in opinion polls. Grayson's star power has surged since his remarks. While the GOP has designated him public enemy number one, Grayson has lit up the Democratic base.

What's unique about Grayson is that he's passionate about championing liberal causes, and he forcefully calls out the lies of his Republican opponents and the vapidity of today's conservative movement. With the significant rightward shift of the Democratic party in the last few decades, progressives are hardly represented in American government any longer. Though there are a few notable exceptions, none have quite the determination Grayson showed this week.

In the last 30 years, Republicans have yanked America further to the right than was once conceivable. Democrats have been complicit in this. Many Democrats sat idly by – if not supported – Republicans starting unnecessary and destructive wars, violating the Constitution and international law, redistributing wealth upward from the working poor to the rich, letting tens of millions lose their health care, and actively ignoring the threat of global climate change.

Democrats have effectively allowed Republicans to elide the word "liberal" from an adjective into a smear. This continues today, despite the fact that conservatives have steered America to one of its darkest places yet. President Obama's self-consciously conciliatory approach plays right into this meme. The zeal with which Republicans continue to promote their agenda, despite its immense failures, provides a stark contrast to the tepid Democratic spirit.

This is why Grayson is not a typical Democrat, and why he's exactly what Democrats have needed for a long time. The party dominates the House of Representatives, has a filibuster-proof majority in the Senate, and boasts a popular president – yet continues to get pushed around the bullied by the GOP, which is less popular than ever and has no serious proposals for solving today's problems. What gives? A lack of fortitude.

Capping an era of great political cynicism and unprecedented domination of money in politics, progressives have lost their footing and have tumbled behind conservatives, facing an increasingly steeper mountain to climb as Democrats continue to capitulate to the perpetrators of these quandaries. In an age where campaign contributions from wealthy, narrow interest groups are so critical to political survival, the incentive for ordinary Democrats is to play the game, not change it.

With the Democratic party slowly morphing into a watered-down Republican party, progressives have grown increasingly cynical of politics. Many feel little incentive to vote or participate in the political process. A Grayson-like fervor for liberal causes can help recapture this waning enthusiasm, perhaps eventually motivating Democrats to be real progressives again.

The internet age provides as much potential for political self-harm as it does opportunity, but Grayson seems happy to take the heat. Democrats need representatives who genuinely believe in liberal values, who have the courage to fight for their beliefs, and who won't prioritise political expediency over doing their job the right way. "We need Democrats with guts," Grayson said of the whole matter. He's right.

The Politics of Spite

Original Link:


There was what President Obama likes to call a teachable moment last week, when the International Olympic Committee rejected Chicago’s bid to be host of the 2016 Summer Games.

“Cheers erupted” at the headquarters of the conservative Weekly Standard, according to a blog post by a member of the magazine’s staff, with the headline “Obama loses! Obama loses!” Rush Limbaugh declared himself “gleeful.” “World Rejects Obama,” gloated the Drudge Report. And so on.

So what did we learn from this moment? For one thing, we learned that the modern conservative movement, which dominates the modern Republican Party, has the emotional maturity of a bratty 13-year-old.

But more important, the episode illustrated an essential truth about the state of American politics: at this point, the guiding principle of one of our nation’s two great political parties is spite pure and simple. If Republicans think something might be good for the president, they’re against it — whether or not it’s good for America.

To be sure, while celebrating America’s rebuff by the Olympic Committee was puerile, it didn’t do any real harm. But the same principle of spite has determined Republican positions on more serious matters, with potentially serious consequences — in particular, in the debate over health care reform.

Now, it’s understandable that many Republicans oppose Democratic plans to extend insurance coverage — just as most Democrats opposed President Bush’s attempt to convert Social Security into a sort of giant 401(k). The two parties do, after all, have different philosophies about the appropriate role of government.

But the tactics of the two parties have been different. In 2005, when Democrats campaigned against Social Security privatization, their arguments were consistent with their underlying ideology: they argued that replacing guaranteed benefits with private accounts would expose retirees to too much risk.

The Republican campaign against health care reform, by contrast, has shown no such consistency. For the main G.O.P. line of attack is the claim — based mainly on lies about death panels and so on — that reform will undermine Medicare. And this line of attack is utterly at odds both with the party’s traditions and with what conservatives claim to believe.

Think about just how bizarre it is for Republicans to position themselves as the defenders of unrestricted Medicare spending. First of all, the modern G.O.P. considers itself the party of Ronald Reagan — and Reagan was a fierce opponent of Medicare’s creation, warning that it would destroy American freedom. (Honest.) In the 1990s, Newt Gingrich tried to force drastic cuts in Medicare financing. And in recent years, Republicans have repeatedly decried the growth in entitlement spending — growth that is largely driven by rising health care costs.

But the Obama administration’s plan to expand coverage relies in part on savings from Medicare. And since the G.O.P. opposes anything that might be good for Mr. Obama, it has become the passionate defender of ineffective medical procedures and overpayments to insurance companies.

How did one of our great political parties become so ruthless, so willing to embrace scorched-earth tactics even if so doing undermines the ability of any future administration to govern?

The key point is that ever since the Reagan years, the Republican Party has been dominated by radicals — ideologues and/or apparatchiks who, at a fundamental level, do not accept anyone else’s right to govern.

Anyone surprised by the venomous, over-the-top opposition to Mr. Obama must have forgotten the Clinton years. Remember when Rush Limbaugh suggested that Hillary Clinton was a party to murder? When Newt Gingrich shut down the federal government in an attempt to bully Bill Clinton into accepting those Medicare cuts? And let’s not even talk about the impeachment saga.

The only difference now is that the G.O.P. is in a weaker position, having lost control not just of Congress but, to a large extent, of the terms of debate. The public no longer buys conservative ideology the way it used to; the old attacks on Big Government and paeans to the magic of the marketplace have lost their resonance. Yet conservatives retain their belief that they, and only they, should govern.

The result has been a cynical, ends-justify-the-means approach. Hastening the day when the rightful governing party returns to power is all that matters, so the G.O.P. will seize any club at hand with which to beat the current administration.

It’s an ugly picture. But it’s the truth. And it’s a truth anyone trying to find solutions to America’s real problems has to understand.

Thursday, October 8, 2009

Maine protest targets health insurance rate appeal

Original Link:


Demonstrators on Wednesday backed Maine's insurance superintendent for rejecting a request from the state's largest private health insurer seeking an 18 percent rate hike for its individual insurance plans.

Mila Koffman last spring denied Anthem ( ATH - news - people ) Blue Cross and Blue Shield's proposed rate increase as being excessive. She approved a revised request for a 10.9 percent increase, which provided for a zero percent profit margin.

In response, Anthem filed a complaint in Kennebec County Superior Court in August appealing the denial of the higher rate increase. Anthem said a regulatory decision allowing for no profit was unprecedented, inadequate and fundamentally unfair.

An estimated 100 demonstrators gathered outside the Augusta courthouse on Wednesday to protest Anthem's appeal. Organizers said Anthem is in sound financial health, earning annual profits in Maine of $55 million to $100 million from 2004 to 2008.

"This is a perfect example of the problems with our health care system today. They were granted a 10.9 percent rate increase, and that's not enough for them," said Greg Howard of Change that Works, an organization that supports health insurance reform and helped organize the demonstration.

Anthem, a subsidiary of Indianapolis-based WellPoint ( WLP - news - people ) Inc., submitted a request last winter seeking an average 18 percent rate increase for its four individual health care insurance products, affecting about 12,000 policyholders in Maine. In all, Anthem has 400,000 policyholders in Maine for all its health insurance plans.

The rate increase request reflected the medical risks of doing business in Maine, company officials said. In its suit, the company said Maine has high rates of asthma, heart disease, diabetes and other chronic illnesses, high numbers of smokers and a restrictive regulatory environment.

"Unfortunately, the individual market premiums are merely the symptoms of a larger underlying problem in Maine's individual market: rising health care costs," said spokesman Chris Dugan.

In response to Anthem's lawsuit, Attorney General Janet Mills filed a 38-page brief two weeks ago detailing Anthem's revenues, profits and profit margins in Maine. Anthem, she said, can still easily make a profit on the lower rate increase.

In these tough economic times, she said the average individual health plan policyholder pays about $6,000 in premiums each year with deductibles of $7,250.

"They want a guaranteed profit of a certain minimal amount on the backs of ratepayers who are carrying these health insurance plans, mainly small business owners, sole proprietors, restaurant owners, loggers, farmers - the backbone of our economy," Mills said Wednesday.

Oral arguments in the case are expected in November, Mills said.

Sunday, October 4, 2009

Discrimination by Insurers Likely Even With Reform

Original Link:

By David S. Hilzenrath

Any health-care overhaul that Congress and President Obama enact is likely to have as its centerpiece a fundamental reform: Insurers would not be allowed to reject individuals or charge them higher premiums based on their medical history.

But simply banning medical discrimination would not necessarily remove it from the equation, economists and health-care analysts say.

If insurers are prohibited from openly rejecting people with preexisting conditions, they could try to cherry-pick through more subtle means. For example, offering free health club memberships tends to attract people who can use the equipment, says Paul Precht, director of policy at the Medicare Rights Center.

Being uncooperative on insurance claims can chase away the chronically ill. For people who have few medical bills, it is less of a factor, said Karen Pollitz, research professor at the Georgetown University Health Policy Institute.

And to avoid patients with costly, complicated medical conditions, health plans could include in their networks relatively few doctors who specialize in treating those conditions, said Mark V. Pauly, professor of health-care management at the University of Pennsylvania's Wharton School.

By itself, a ban on discrimination would not eliminate the economic pressure to discriminate.

"It would probably increase the incentive for cherry-picking," Pauly said. "I'm strongly motivated to try to avoid you if I'm not allowed to charge you extra."

Cognizant of the threat, lawmakers are trying to neutralize it. For example, the bill advanced by Senate Finance Committee Chairman Max Baucus (D-Mont.) calls for creation of complex mechanisms to essentially raise or lower compensation to insurers, depending on whether they attract disproportionately sick or healthy populations.

The bill assumes the problem would be greatest during the first few years; after that, part of the machinery to compensate for variations would go away.

A straightforward way to reduce gamesmanship is to standardize benefit packages, Precht wrote in a July report. One issue lawmakers must resolve is how much latitude to leave insurers over what they cover and how.

Unless lawmakers tackle the problem effectively, a reformed health-care system could continue to reward insurers for avoiding rather than treating illness. It also could perpetuate existing economic penalties for health plans that do a better job of covering the sickest patients. They tend to attract costlier members, which can force them to raise premiums, fueling a cycle that can make it harder for the severely ill to get affordable coverage.

"In a competitive market, a good-guy insurer is a patsy," Pollitz said. "The race is to the bottom."

America's Health Insurance Plans, a lobbying group for health insurers, has endorsed the idea of guaranteeing individuals access to coverage regardless of their medical history -- if that guarantee is part of a larger plan to help the uninsured pay for coverage and bring everyone into the insurance market.

At a more nuts-and-bolts level, AHIP has been trying to shape the legislation in ways that could help insurers attract the healthy and avoid the sick, though it has given other reasons for advancing those positions. In a recent letter to Baucus, AHIP President Karen Ignagni said benefit packages "should give consumers flexible options to meet diverse needs."

There are myriad ways health plans can attract healthier members, from the messages they advertise to the overall level of coverage they provide and the smallest enticements they add to their benefits packages.

Anthem Blue Cross markets a line of insurance called Tonik that is explicitly aimed at young adults. "You're young. You're healthy. You're in shape," the Tonik Web site says, addressing its target market. Tonik policies bear such names as "Part-Time Daredevil" and "Thrill-Seeker." The latter is for people who "live life on the edge, and happily go over it," says the Web site, whose graphics and color scheme bring to mind an ad for the Apple iPod.

At the other end of the age spectrum, ads for private health plans serving senior citizens on Medicare seldom feature people who are sick, said Tricia Neuman, who has studied the ads for the Kaiser Family Foundation. Many of the plans have offered benefits such as health club memberships, help buying eyeglasses, and preventive dental care, which may be more likely to sway healthy seniors than seniors who have severe and complex medical needs.

Some private Medicare plans have offered relatively inexpensive enticements while requiring members to pay more out of pocket than they would under conventional Medicare for major expenses, said the Medicare Rights Center's Precht. In 2008, a quarter of the private Medicare plans charged members more out of pocket for Part B medications, which include chemotherapy drugs for cancer patients, according to a March study for the AARP Public Policy Institute.

The government has been cracking down on those practices. As a Medicare official put it in a March 2008 letter to health insurers, charging beneficiaries more out of pocket than conventional Medicare for Part B drugs, dialysis and time spent in skilled nursing facilities "may be considered discriminatory."

In response to questions about the risk of continued cherry-picking under his legislation, Baucus provided a statement that "the difference in the market will be like night and day" compared with today's "wild West." But he also offered a qualification.

"These regulations are the first step to a market where consumers can be confident in the coverage they purchase," he said.

Revealed: millions spent by lobby firms fighting Obama health reforms

Original Link:

By Chris McGreal

Six lobbyists for every member of Congress as healthcare industry heaps cash on politicians to water down legislation.

America's healthcare industry has spent hundreds of millions of dollars to block the introduction of public medical insurance and stall other reforms promised by Barack Obama. The campaign against the president has been waged in part through substantial donations to key politicians.

Supporters of radical reform of healthcare say legislation emerging from the US Senate reflects the financial power of vested interests ‑ principally insurance companies, pharmaceutical firms and hospitals ‑ that have worked to stop far-reaching changes threatening their profits.

The industry and interest groups have spent $380m (£238m) in recent months influencing healthcare legislation through lobbying, advertising and in direct political contributions to members of Congress. The largest contribution, totalling close to $1.5m, has gone to the chairman of the senate committee drafting the new law.

A former member of Bill Clinton's cabinet says fears that the industry could throw its money behind the populist rightwing backlash against public insurance have scared the Obama White House into pulling back from the most significant reforms in return for healthcare companies not trying to scupper the entire legislation.

Drug and insurance companies say they are merely seeking to educate politicians and the public. But with industry lobbyists swarming over Capitol Hill ‑ there are six registered healthcare lobbyists for every member of Congress ‑ a partner in the most powerful lobbying firm in Washington acknowledged that healthcare firms' money "has had a lot of influence" and that it is "morally suspect".

Reform groups say vast spending, and the threat of a lot more being poured into advertisements against the administration, has helped drug companies ensure there will be no cap on the prices they charge for medicines ‑ one of the ways the White House had hoped to keep down surging healthcare costs.

Insurance companies have done even better as the new legislation will prove a business bonanza. It is not only likely to kill off the threat of public health insurance, which threatened to siphon off customers by offering lower premiums and better coverage, but will force millions more people to take out private medical policies or face prosecution.

"It's a total victory for the health insurance industry," said Dr Steffie Woolhander, a GP, professor of medicine at Harvard University and co-founder of Physicians for a National Health Programme (PNHP).

"What the bill has done is use the coercive power of the state to force people to hand their money over to a private entity which is the private insurance industry. That is not what people were promised."

PNHP blames a political process it says is corrupted by millions of dollars poured into the election campaigns of members of Congress and influencing the discourse about health reform by funding advertising campaigns, supposedly independent studies and patients rights organisations that press the industry's interests.

A primary target of criticism is Senator Max Baucus, the single largest recipient of health industry political donations and chairman of the finance committee that drafted the legislation criticised by Woolhander.

The committee this week twice voted against including public insurance in the legislation, with Baucus opposing it both times.

Baucus took $1.5m from the health sector for his political fund in the past year. Other members of the committee have received hundreds of thousands of dollars. They include Senator Pat Roberts, who last week tried to stall the bill by arguing that lobbyists needed three days to read it.

Baucus holds dinners for health industry executives at which they pay thousands of dollars each to be at the table, and an annual fly-fishing and golfing weekend in his home state of Montana that lobbyists pay handsomely to attend. They have included John Jonas, who represents healthcare firms for Patton Boggs, widely regarded as the top lobbying firm in Washington. Jonas, who formerly worked on the congressional staff, acknowledges that political contributions are intended to buy influence and says it works.

"It would be very naive to say they're not influenced. The contributors certainly hope they're influencing and the recipients probably ultimately are influenced," he said. "I think it's a morally suspect practice, and then you have to look at its application to see if it's morally bankrupt ... I think what's bad about the system is it's got more and more lax over time.

"When I started in this practice you did not talk issues at a fundraiser. It was impolite. And then with this need for money, the system has got coarser over time so that they go around the room asking what issues you're interested in, much more of a linkage of dollars to a discussion of the issues now."

The health industry permeates the process in other ways. At Baucus's side, drafting much of the wording of the reform, was Liz Fowler, a senate committee counsel whose last position was vice-president of the country's largest health insurer, Wellpoint, which stands to be a principal beneficiary of the new law.

Health companies and their lobby firms also recruit heavily among congressional staffers as a means of maintaining influence.

Baucus declines to discuss political donations but told Montana's Missoulian newspaper earlier this year that "no one gets special treatment".

Robert Reich, the labour secretary in the Clinton administration, says the Obama White House, mindful of how the health industry killed off Clinton's attempts at reform, has grown so fearful of industry money that it has quietly reached agreement to pull back from price caps and public health insurance.

"The White House made a Faustian bargain with big pharma and big insurance, essentially scuttling both of these profit-squeezing mechanisms in return for these industries' agreement not to oppose healthcare legislation with platoons of lobbyists and millions of dollars of TV ads."

The pharmaceutical companies are apparently pleased enough that they are now putting $120m into advertising supporting the emerging legislation.

Jonas described the bill emerging from the Senate as "in realm of what is politically possible".

"Is the bill overly distorted by money? I don't think it actually is," he said. "It's a good bill in the sense that it's a net improvement in the system ... [but] it's a bad bill if you think it's supposed to be a comprehensive solution to the US healthcare problems."

Friday, October 2, 2009

The Powell Memo and the Teaching Machines of Right-Wing Extremists

Original Link:

By Henry A. Giroux

Paul Krugman, the Nobel Prize-winning economist, echoing the feelings of many progressives, recently wrote in The New York Times about how dismayed he was over the success right-wing ideologues have had not only in undercutting Obama's health care bill, but also in mobilizing enormous public support against almost any reform aimed at rolling back the economic, political, and social conditions that have created the economic recession and the legacy of enormous suffering and hardship for millions of Americans over the last 30 years.[1] Krugman is somewhat astonished that after almost three decades the political scene is still under the sway of what he calls the "zombie doctrine of Reaganism," - the notion that any action by government is bad, except when it benefits corporations and the rich. Clearly, for Krugman, zombie Reaganism appears once again to be shaping policies under the Obama regime. And yet, not only did Reaganism with its hatred of the social state, celebration of unbridled self-interest, its endless quest to privatize everything, and support for deregulation of the economic system eventually bring the country to near economic collapse, it also produced enormous suffering for those who never benefited from the excesses of the second Gilded Age, especially workers, the poor, disadvantaged minorities and eventually large segments of the middle class. And yet, zombie market politics is back rejecting the public option in Obama's health plan, fighting efforts to strengthen bank regulations, resisting caps on CEO bonuses, preventing climate-control legislation, and refusing to limit military spending. Unlike other pundits, Krugman does not merely puzzle over how zombie politics can keep turning up on the political scene - a return not unlike the endless corpses who keep coming back to life in George Romero's 1968 classic film, "Night of the Living Dead" (think of Bill Kristol who seems to be wrong about everything but just keeps coming back). For Krugman, a wacky and discredited right-wing politics is far from dead and, in fact, one of the great challenges of the current moment is to try to understand the conditions that allow it to once again shape American politics and culture, given the enormous problems it has produced at all levels of American society, including the current recession.

Part of the answer to the enduring quality of such a destructive politics can be found in the lethal combination of money, power and education that the right wing has had a stranglehold on since the early 1970's and how it has used its influence to develop an institutional infrastructure and ideological apparatus to produce its own intellectuals, disseminate ideas, and eventually control most of the commanding heights and institutions in which knowledge is produced, circulated and legitimated. This is not simply a story about the rise of mean-spirited buffoons such as Glenn Beck, Bill O'Reilly and Michael Savage. Nor is it simply a story about the loss of language, a growing anti-intellectualism in the larger culture, or the spread of what some have called a new illiteracy endlessly being produced in popular culture. As important as these tendencies are, there is something more at stake here which points to a combination of power, money and education in the service of creating an almost lethal restriction of what can be heard, said, learned and debated in the public sphere. And one starting point for understanding this problem is what has been called the Powell Memo, released on August 23, 1971, and written by Lewis F. Powell, who would later be appointed as a member of the Supreme Court of the United States. Powell sent the memo to the US Chamber of Commerce with the title "Attack on the American Free Enterprise System."

The memo is important because it reveals the power that conservatives attributed to the political nature of education and the significance this view had in shaping the long-term strategy they put into place in the 1960's and 1970's to win an ideological war against liberal intellectuals, who argued for holding government and corporate power accountable as a precondition for extending and expanding the promise of an inclusive democracy. The current concerted assault on government and any other institutions not dominated by free-market principles represents the high point of a fifty-year strategy that was first put into place by conservative ideologues such as Frank Chodorov, founder of the Intercollegiate Studies Institute; publisher and author William F. Buckley; former Nixon Treasury Secretary William Simon, and Michael Joyce, the former head of both the Olin Foundation and the Lynde and Harry Bradley Foundation. The Powell Memo is important because it is the most succinct statement, if not the founding document, for establishing a theoretical framework and political blueprint for the current assault on any vestige of democratic public life that does not subordinate itself to the logic of the alleged free market.

Initially, Powell identified the American college campus "as the single most dynamic source" for producing and housing intellectuals "who are unsympathetic to the [free] enterprise system."[2] He was particularly concerned about the lack of conservatives on social sciences faculties and urged his supporters to use an appeal to academic freedom as an opportunity to argue for "political balance" on university campuses. Powell recognized that one crucial strategy in changing the political composition of higher education was to convince university administrators and boards of trustees that the most fundamental problem facing universities was "the imbalance of many faculties."[3] Powell insisted that "the basic concepts of balance, fairness and truth are difficult to resist, if properly presented to boards of trustees, by writing and speaking, and by appeals to alumni associations and groups."[4] But Powell was not merely concerned about what he perceived as the need to enlist higher education as a bastion of conservative, free market ideology. The Powell Memo was designed to develop a broad-based strategy not only to counter dissent, but also to develop a material and ideological infrastructure with the capability to transform the American public consciousness through a conservative pedagogical commitment to reproduce the knowledge, values, ideology and social relations of the corporate state. For Powell, the war against liberalism and a substantive democracy was primarily a pedagogical and political struggle designed both to win the hearts and minds of the general public and to build a power base capable of eliminating those public spaces, spheres and institutions that nourish and sustain what Samuel Huntington would later call (in a 1975 study on the "governability of democracies" by the Trilateral Commission) an "excess of democracy."[5] Central to such efforts was Powell's insistence that conservatives nourish a new generation of scholars who would inhabit the university and function as public intellectuals actively shaping the direction of policy issues. He also advocated the creation of a conservative speakers bureau, staffed by scholars capable of evaluating "textbooks, especially in economics, political science and sociology."[6] In addition, he advocated organizing a corps of conservative public intellectuals who would monitor the dominant media, publish their own scholarly journals, books and pamphlets, and invest in advertising campaigns to enlighten the American people on conservative issues and policies. The Powell Memo, while not the only influence, played an important role in convincing a "cadre of ultraconservative and self-mythologizing millionaires bent on rescuing the country from the hideous grasp of Satanic liberalism"[7] to match their ideological fervor with their pocketbooks by "disbursing the collective sum of roughly $3 billion over a period of thirty years in order to build a network of public intellectuals, think tanks, advocacy groups, foundations, media outlets, and powerful lobbying interests."[8] As Dave Johnson points out, the initial effort was slow but effective:

In 1973, in response to the Powell Memo, Joseph Coors and Christian-right leader Paul Weyrich founded the Heritage Foundation. Coors told Lee Edwards, historian of the Heritage Foundation, that the Powell Memo persuaded him that American business was "ignoring a crisis." In response, Coors decided to help provide the seed funding for the creation of what was to become the Heritage Foundation, giving $250,000. Subsequently, the Olin Foundation, under the direction of its president, former Treasury Secretary William Simon (author of the influential 1979 book "A Time for Truth"), began funding similar organizations in concert with "the Four Sisters" - Richard Mellon Scaife's various foundations, the Lynde and Harry Bradley Foundation, the Olin Foundation and the Smith Richardson Foundation - along with Coors's foundations, foundations associated with the Koch oil family, and a group of large corporations[9].

The most powerful members of this group were Joseph Coors in Denver, Richard Mellon Scaife in Pittsburgh, John Olin in New York City, David and Charles Koch in Wichita, the Smith Richardson family in North Carolina, and Harry Bradley in Milwaukee - all of whom agreed to finance a number of right-wing think tanks, which over the past thirty years have come to include the Lynde and Harry Bradley Foundation, the Koch Foundation, the Castle Rock Foundation and the Sarah Scaife Foundation. This formidable alliance of far-right-wing foundations deployed their resources in building and strategically linking "an impressive array of almost 500 think tanks, centers, institutes and concerned citizens groups both within and outside of the academy.... A small sampling of these entities includes the Cato Institute, the Heritage Foundation, the American Enterprise Institute, the Manhattan Institute, the Hoover Institution, the Claremont Institute, the American Council of Trustees and Alumni, [the] Middle East Forum, Accuracy in Media, and the National Association of Scholars, as well as [David] Horowitz's Center for the Study of Popular Culture."[10]

For several decades, right-wing extremists have labored to put into place an ultra-conservative re-education machine - an apparatus for producing and disseminating a public pedagogy in which everything tainted with the stamp of liberal origin and the word "public" would be contested and destroyed. Commenting on the rise of this vast right-wing propaganda machine organized to promote the ideal that democracy needs less critical thought and more citizens whose only role is to consume, well-known author Lewis Lapham writes:

The quickening construction of Santa's workshops outside the walls of government and the academy resulted in the increased production of pamphlets, histories, monographs and background briefings intended to bring about the ruin of the liberal idea in all its institutionalized forms - the demonization of the liberal press, the disparagement of liberal sentiment, the destruction of liberal education - and by the time Ronald Reagan arrived in triumph at the White House in 1980 the assembly lines were operating at full capacity.[11]

Any attempt to understand and engage the current right-wing assault on all vestiges of the social contract, the social state and democracy itself will have to begin with challenging this massive infrastructure, which functions as one of the most powerful teaching machines we have seen in the United States, a teaching machine that produces a culture that is increasingly poisonous and detrimental not just to liberalism, but to the formative culture that makes an aspiring democracy possible. This presence of this ideological infrastructure extending from the media to other sites of popular education suggests the need for a new kind of debate, one that is not limited to isolated issues such as health care, but is more broad-based and fundamental, a debate about how power, inequality and money constrict the educational, economic and political conditions that make democracy possible. The screaming harpies and mindless public relations "intellectuals" that dominate the media today are not the problem; it is the conditions that give rise to the institutions that put them in place, finance them and drown out other voices. What must be clear is that this threat to creating a critically informed citizenry is not merely a crisis of communication and language, but about the ways in which money and power create the educational conditions that make a mockery out of debate while hijacking any vestige of democracy.