Category Archives: economy

Dear President Obama,

I received your e-mail today and there were several things in it that I couldn’t let go without responses.  I understand your desire to have your progressive base be enthusiastic about this bill, but I have to say… if you want us to be enthusiastic, you should try giving us something to be enthusiastic about.  Conservatives may be willing to believe that if their leaders polish a turd it becomes something else, but we progressives know shit when we see shit, and it doesn’t matter how big your smile is when you hand it to us… we still know its shit.

In your e-mail you said this.

We will have beaten back the special interests who have for so long perpetuated the status quo.

No, actually, you did not.  The pharmaceutical companies are one of the two major special interests most responsible for the healthcare crisis and instead of beating them back, you bought them off by promising not to reform them.  When Congress balked at the sweetheart deal you gave them, you protected this special interest with a vigor you didn’t use when it came time to protect their customers.

And you certainly did not beat back the insurance companies.  The insurance companies spent hundreds of millions of dollars campaigning against health reform, and why?  Because it was an investment well worth making because they won!  You handed them 30 million new customers, a trillion dollars of revenue straight from the US Treasury, you walked away from any means of controlling their prices or healthcare costs in general, you left gaping loopholes in the supposed limitation on their administrative costs… lets face it.  The lobbying money they spent this year was a rock solid investment for them.  It paid dividends unlike any investment they have ever made in the past.  And every last dollar of them is coming out of your constituents’ hides.

You said in your e-mail:

Parents will have the security and stability of knowing their insurance can’t be revoked at a moment’s notice.

No, they won’t.  While insurance companies cannot kick people out for getting sick… they have never been able to do that.  What they kick people out for when they get sick is “fraud” which they have been able to define as any little typo, mistake, omission, error, misspelling, smudge, or flyspeck on an application.  And you did nothing to change this.  They will still be able to do this, and they will.  You could have closed this loophole, but you decided to leave it open… and to take credit for fixing a problem you left there.

You said:

And the skyrocketing costs plaguing our small businesses will be brought under control.

Again, no, they won’t.  You allowed Joe Lieberman, apparently without even so much as asking him to explain why let alone pressuring him not to, to eliminate the last vestige of any mechanism to control insurance costs.  Surely you do not think these costs will be brought under control because you want them to be.  If you wanted them to be controlled, you would have insisted that the bill contain some mechanism for controlling them.  But you didn’t, it doesn’t, and they will increase however fast the insurance companies would like them to increase.

The most irritating statement you made is this one.

When you make calls, write letters, organize, this is the change you’re making — a better life for your family and for men and women in every state.

When we made calls, wrote letters, and organized, it was entirely for naught.  We got no change.  We got nothing.  We got a bill that hurts us and helps corporations… exactly what we would have gotten if we’d made these calls during a debate under the Bush administration.  We got zero for our efforts.  We got ignored by you and by the Congress and the insurance and pharmaceutical companies will be laughing at our quaintness for decades to come.

Toward the end of your e-mail you said this.

There is still more to do before I can sign reform into law — a last round of negotiations and final votes in the Senate and the House — and I’m counting on your help every step of the way.

Mr. President, I’m sorry to say… you are on your own on this.  I don’t think you’ll mind since you’ve been acting all along as if you were all alone when you weren’t, but I think most of us are done.  I cannot in good conscience help you any more with this bill.  I don’t support what it has become and I don’t appreciate you taking the Bush stance that we should think something is good because it is good for your presidency, even though it is clearly bad for us.  That is not change, and it isn’t what I was hoping for.

Lastly, you said this, and this is what really stung me the most.

P.S. — Organizing for America supporters are signing a note of appreciation to all the senators who have worked so hard to make this possible. I hope you’ll join them:

Honestly, Mr. President.  Forgive my French, but… are you shitting me?  Right after you said “This isn’t going to hurt a bit” these senators shoved a whole stethoscope up our ass.  The only appreciation I have for them right now is that they left the Sphygmomanometer off when they did it.

Merry Christmas to you, Mr. President, though, and lets hope for a happier New Year than this one has been.

YellaDog

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Healthcare in the Senate: Another Example of the DESPERATE Need for Campaign Finance Reform

Time and again we have seen good ideas to benefit the people by regulating companies emerge from Congress in the form of legislation that does exactly the opposite of what it was intended to do, and amounts to nothing short of massive theft by the very industries that were supposed to be regulated.  That certainly appears to be where healthcare reform is headed.

While all the details have not been released yet, by all accounts the Senate has finally killed off the public option and replaced it with weakened non-profits run by for-profit insurance companies and an opportunity for uninsured people age 55-64 to buy into Medicare.  Many progressives have reacted with jubilation to the Medicare proposal because ultimately they would like to see this concept extended to all citizens.  They should be cautious with their enthusiasm.

It is really important to remember the core dynamic of health insurance, which is that statistically speaking, young and healthy people pay for more insurance than they consume in healthcare.  As they get older and sicker, they start consuming more healthcare than they pay for.  When insurance is structured this way, young people are essentially forced to save in advance for their future healthcare costs and the net effect is “low” premiums for everyone.  If young people are not included in the insurance pool and the only people with insurance are those who have very high healthcare costs, then the premiums will be very high because the insurance company essentially ceases to spread risk among the population and begins to be just an unnecessary payment processor, but one that has enormous administrative costs and a requirement to generate a profit.

So now look at what is shaping up in the Senate.

The insurance companies have won a mandate for all people to buy insurance from them.  This guarantees that young, healthy people will be in the insurance pool, which will allow companies to do some combination of A) increase the profits they distribute to their shareholders and B) manage the cost of their insurance premiums.  By giving people age 55-64 the ability to buy into Medicare, the insurance companies have also, probably, increased the ease with which they can force people in this age group out of their insurance pool.  So they have brought in millions of young, healthy, highly profitable customers, and they are getting ready to kick out millions of older, sicker, less profitable customers.  You wonder why they have been saying all day that they won?  This is why.  It is good to be them.  They are now essentially getting ready to sell expensive insurance exclusively to people who have no healthcare costs.

Medicare, on the other hand, is being set up to fail because just the opposite is happening to it.  It is being forced to take on millions of new older, sicker, customers with high healthcare costs but it will not get any younger, healthier customers to which they can spread the costs.  So Medicare is becoming more of a “payer” and less of an “insurer”.  This is going to cause Medicare’s average cost per customer to be much, much higher than the average cost of the private insurers.  Because Medicare coverage for this age group is going to be forced to be self-financing, the premiums are going to be very, very high. The effect will be that as people turn 55 they will be forced out of their lower cost private insurance, where young people subsidize them, and into Medicare which will end up having much higher premiums than they’ve been paying.

And when Americans look at the two systems side by side they will see private insurance with low premiums (they’ll forget that private insurance only has healthy customers) and Medicare with high premiums (they’ll forget that Medicare only has older, sicker customers) and they’ll conclude that “government can’t compete”.  Republicans will have a field day.

The single-payer proponents should be in favor of giving a buy-in to people age 55 -64 only if they know that next year it will be extended to people 45-54, the year after that to people 35-44, the year after that to people 25-34, and the year after that to everyone.  To be excited about what is currently on the table now is to be cheering the tsunami that is about to wash them away.

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Pew Research: What Does the Public Know? Not That Much

http://pewresearch.org/pubs/1378/political-news-iq-quiz

Pew Research has released a study, which you can participate in if you’d like, on what the public knows and what it doesn’t know about current events. I’m frankly not sure what to think about the results.

First of all, what I am sure of is what everyone will be sure of, which is that the results are pretty dismal for a democracy.  For example:

  • Only 23% of American adults know that “cap and trade” refers to energy and environmental legislation.
  • 58% of Americans think that Iran and Israel share a border.
  • Only 33% of Americans know that Ben Bernanke is the Chairman of the Federal Reserve Board.
  • Only 33% know that the Dow is in the range of 10,000
  • 82% do not know that Max Baucus is Chairman of the Senate Finance Committee that has been working on healthcare legislation.

Here are some real kickers:

  • Only 40% of Americans know that Glenn Beck is a TV and radio talk show host
  • 44% of American adults do not know that the “public option” has to do with health care

There are also some non-surprises.  Older people know a lot more about current events than younger people, and more educated people know a lot more about current events than less educated people.

What I’m not sure about is whether this changes my world view of politics.

After untold hours of arguing with conservative friends about the entire array of issues and philosophies wrapped up in politics, and having only ever convinced one or two to change their opinion on anything, I’ve come to believe that expending a lot of energy on convincing people of anything is futile.  Calories are far better spent finding the people who already agree and convincing more of them to get their asses off the couch to vote and make phone calls than the other side.  Turn out is everything.

Do these numbers challenge that?  Could it be that if we can explain cap and trade to the 77% of Americans that don’t know what it is before the other side can, we actually have an opportunity to win them over?  Could it be that the 77% of people who think cap and trade has to do with health care, or unemployment, or banking and finance reform can not be convinced otherwise?  Or could it be that the 77% of people who don’t know this are just way more interested in who is winning Dancing with the Stars and they are never going to be an important political force whether they understand or don’t understand because they are never going to vote anyway.  I’m not sure.

Aside from the obvious, as stated above, what do you think this study means for the pragmatic practice of politics?

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Race Captures Media Coverage – Pew Research Center

Race Captures Media Coverage – Pew Research Center.

This is exactly what I was talking about the other day.  We’re being setup by the financial and banking industries to frame the discussion of reform in terms of a race war rather than finance.

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Whatever Happened to Private Mortgage Insurance? [PMI]

How many of you have paid PMI when you bought your first (or second, or third) house?  Remember this?  It is the insurance you pay if you don’t have a big enough down payment and it protects the lender in case you default.

Whatever happened to that money?  There have to be hundreds of billions of dollars of PMI premiums collected over the decades.  Where has it been going?

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Next up: A Race War Instead of Banking Reform

The health care debate is over.  The money has spoken.  The people have spoken.  The population has been counted and counted and counted. The calculus has been done. The lawmakers know where their electorate stands.  They know that 77% of voters want a public option and nearly 50% want Medicare for all, and they know how many votes all those health insurance campaign contributions can buy them.  The door is closed to the people on this debate now.  It rests in the hands of the power brokers and the deal makers.  All we can do is hope.

The next thing we should do is a ground-up, constitutional amendment based overhaul of campaign finance strictly and severely limiting the role of corporate money of any sort in the political process.  But the next thing we are going to do is fail to reform banking and finance.

They’ve already called their play.  Here it is.

  1. Bankers have just been banking all along.  They haven’t done anything wrong.
  2. They were forced to make bad loans (they weren’t) by “the Clinton’s” (it was Bush I) to eliminate redlining (discriminating against African Americans and Hispanics).
  3. Obama paid off the banks to hide this fact and to keep them quiet and because he’s a “n word” (a word you’ll hear more before this Christmas than you’ve heard in the last 20 years)
  4. What we really need to do is get rid of welfare,  affirmative action, extra police presence in high crime neighborhoods, desegregation and especially busing
  5. The last thing we should do is ruin the American banking industry, that keeps Americans first in blah blah blah, instead of fixing the real problem which is, of course, all ‘dem (n word)
  6. Obama is effectively neutralized because A) he desperately doesn’t want to get into the race war B) the nuts can discount anything he says because he has a “conflict of interest”.

The networks are already geared up on both sides.  Is it a coincidence that the debate has just recently switched to racism?  I don’t like Joe Wilson anymore than anyone, but it’s a stretch to say that his outburst was race related.  Really, the seething against the Obama’s is not really any more pronounced, although it is better organized, than the seething was against the Clintons.  Is it a surprise that Rush Limbaugh blatantly called a school bus incident a symptom of “Obama’s (ie. a n-word) America”?

We’re heading into a full fledged race war, the flames of which will be fanned by the usual suspects on the right, executed on the ground by the same ad agencies and PR firms that have done so well at the health care war, and paid for by Goldman Sachs, Bank of America, Citibank, Credit Suisse, etc.

And we’re already behind.  We need to start our planning RIGHT NOW.

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UnitedHealth $7 billion more than Medicare to pay less than 10% of Medicare’s bills.

In 2007 UnitedHealth Group made a net profit of $4.65 billion on revenues of $75.43 billion.  6.2%, which sounds reasonable and fair.  That’s NET profit of course.  UnitedHealth Group also paid $2.6 billion in income tax.  Now, they don’t have a choice in this last bit, but the fact remains that a government run alternative would save the profit and the income tax UHG takes out of the healthcare system and which amounts to 9.8% of the insurance premiums they collect.

But that’s just the beginning. I’m not here to make a case that the government should run businesses solely because it doesn’t have a profit motive.  We have good reason to believe that in lots of cases that’s a bad idea.

United Health’s 2007 Cost of Goods Sold (their actual insurance payouts) were $56.2 billion or, 74.5% of their $75.43 billion of revenues.  We know that of the remaining $25.5% is $7.3 billion in tax and profit.  Now, as it turns out, UH wrote off $796 million in depreciation and amortization which the government also does in its own way, which left it with $10.583 billion in operating expenses, or 14% of gross revenue.  This 14% is where the REAL pain is.

A large portion of this goes to doing their damndest to not insure people who might need insurance and to cut them off from insurance in the instance that they ever do.  So, this really is the heart of our healthcare issue, which is that insurance companies make money by NOT paying for healthcare costs people pay them to pay for.  But the heart of the problem isn’t the only problem.

The other problem with the 14% (and actually, lets go ahead and make it the whole 25.5% again) is that the comparable cost for the combined Medicare and Medicaid program is… are you ready?  2.6%.  That’s right.  Medicare and Medicaid expect to pay out $709 billion of medical payments covering healthcare for 95 million Americans (about 1 in 3) with administrative overhead of $18.6 billion.  Actually, a lot of this 2.6% covers fraud and abuse prevention and loss accounts, quality improvement programs, research, and grants to states for various things.  The actual program administration costs are one half of one percent.  That’s right.  0.5%

Another way to look at it is that if Medicare had a similar cost structure to United Healthcare, it would spend $180 billion on administration and profit to provide services to all those people instead of the $18 billion it actually spends.  Or, if UnitedHealth were as efficient as Medicare, its overhead would be less than $2 billion.

Sources:

United Health Group 2007 Financial Statements.

Centers for Medicare and Medicaid Performance Budget for FY 2009.

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