Category Archives: Politics

Priority One: Campaign Finance Reform – A Plan

It should be obvious to all by now that the number one priority for America needs to be an overhaul of our campaign and lobbying processes.  The core objective needs to be to eliminate any and all conflicts of interest that prevent representatives from acting in the interest of their constituents.

Here’s the plan.

  1. Use Wiki technology to perfect language for a constitutional amendment (necessary because it must be able to stand on a par with the First Amendment) that will:
    1. Limit total campaign contributions individuals can make to the political process as a whole in any given year, tying increases over time to increases in the minimum wage.
    2. Allow for substantial public matching funds for campaigns demonstrating an ability to raise money via the small amounts above.
    3. Ban campaign contributions from all sources other than individuals and government matching funds
    4. Eliminate the concept of corporate “personhood” and then subject corporate lobbying to strict limitations
    5. Limit the “revolving door” between regulators and the regulated
    6. Increase the maximum congressional district size to 100,000 citizens and end “gerrymandering”.
  2. Found organizations in all 50 states to promote legislative passage of said amendment among 3/4 of the states
  3. Stage “Solidarity” style demonstrations and general strikes until Congress ratifies
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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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