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Home Archives for Health Care

The Rise of the Risk Management Industry

As he was leaving office, Dwight Eisenhower felt a responsibility to warn the nation of coming threat from within, “In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex.” These turned out to be words booth wise and unheeded, as our military expenditures now total nearly that of the rest of the combined nations of the world.

I’m seeing a new threat from within, rising and to some extent already risen. The risk management industry, with insurance companies at its core, has wormed its way, insidiously and  in many layers, throughout nearly every industry and organization in these United States. This cancer has grown much deeper, though through much the same mechanism as the military industrial complex; by taking advantage of fear, both that of the general populace and corporate and government entities.

A friend of mine recently posted a saying: “A book is the only thing you can buy that can make you richer”. I would argue that another profitable purchase would be a Congressman. While I do think there are some career fence sitters in office who pretty much just vote in whichever direction offers them the most favors, I like to think most individuals in government feel like they are doing the right thing, though I think getting to that coveted and contested office nearly requires one to be of the opinion that the ends justify the means, and that it would be distasteful to look too closely at how the sausage was made.

Unlike these individuals, organizations, such as corporations, unions, and political parties, are generally run or heavily influenced by committee and legal advisers. The people of these committees see it as their job to do what is in the interest of those they represent. If, for example an industry of large donors made it clear that their donations to a political party would keep coming so long as the party voted in their favor, then it is quite likely that the party would choose to endorse candidates who have agreed to vote accordingly. They justify this by telling themselves that if they don’t go along, then the other party will, and will win, which logically they would see as being a worse choice than taking the support themselves and  then trying to enact their own ideology. The beauty of this situation from the donor’s perspective is that they really can’t lose. All they need to do is give support to both sides and threaten to withdraw it from the one who gives them the least in return.

These days, everyone in business is obsessed with avoiding liability. The blame usually comes down on people who start frivolous lawsuits, but really, the system is designed to encourage such things. There are three main players in this: businesses trying to avoid being bankrupted by a large lawsuit, insurance companies trying to sell coverage without actually having to pay anything out, and the individual or government agencies trying to get money for a perceived violation.

Kaufman’s Law: A policy is a restrictive document to prevent a recurrence of a single incident, in which that incident is never mentioned.

Business will hire people to keep track of regulations and create appropriate policies, and it isn’t just legal regulations they are following. Insurance companies have their own regulations, some of which must be followed to get coverage, and others which will nullify their responsibility to pay if they are not followed. The nature of such preventative policies is that they raise both the cost and the complexity of doing business to the point where it is nearly impossible for a small business to be competitive. The regulations have gotten so thick that no one even knows them all. This is of course fine with government and insurance companies alike, since anyone not knowing they have violated a regulation is still going to end up paying a fine or be denied coverage as a consequence.

The profit motive of insurance companies should not be discounted. If nothing else, the mere fact that they are profitable means that they are an inefficiency in the system, a middleman who increases wait times, and decreases care options. Obamacare pretends to be a cost saver in the system. The early claims were that it wouldn’t raise costs to taxpayers, that the healthy would be made to pay for the sick. I was disgusted to read this piece of economic ignorance on CNN Money:

“Getting subsidy-eligible people to enroll is important for the overall success of the exchanges. The first to sign up are likely those desperate for health insurance, so they are a sicker and costlier population. They’ll pay for insurance with or without subsidies. But they must be balanced out by younger and healthier folks, many of whom are likely to be enticed by subsidies, experts say. The subsidies were expected to be very popular: The Congressional Budget Office projected that 86% of the 7 million people enrolling in the exchanges for 2014 would be eligible.”

The second problem is one of outreach. Many people, particularly among the lower income, don’t know that they are eligible for subsidies or even that they have to sign up for insurance, said Dan Mendelson, chief executive of Avalere Health, an advisory company for insurers.
“This requires aggressive messaging,” he said. “They need to go into these communities and get them to sign up. The president has been spending his time apologizing.”

So first, the healthy were going to be made to pay for the sick. Now the healthy will have money taken out of their taxes and handed back to them, only to be forced to give it to the insurance companies. And then there is this article in Businessweek, showing that there is a provision in the bill making sure that if the insurance companies find their costs to be too high, that the government will backstop their losses, and also that there are cost saving measures set to make everything seem cheaper at the beginning, which fade out after three years.  Combine this with the website problems and various postponements, and it really looks to me like they are trying to stall until the midterm elections and put forward the appearance that things are great and they are just working out a few minor glitches, rather than making a bubble that will lead to bailing out the insurance companies that we have already paid three times over.

How many times over do we need to pay for our health care? Back in the day a patient went to the doctor with an ailment, saw them promptly, made decisions between the two of them and then the patient payed a reasonable fee. Now we pay insurance companies, our doctors and hospitals pay insurance companies, the government pays insurance companies, and in return, the insurance companies make us go to a doctor who is in their network, they decide what care to pay for, and if you have a problem with your bill, they leave you on hold until the creditors show up. And if that weren’t bad enough, we can’t even wash our hands of the whole thing and take care of ourselves. We’re mandated to pay for the care we don’t use.

latest pig flu news

pig-flu

There is a debate raging through the country as to whether the pig flu is a scary plague of DOOM, or merely a bunch of media hype. The answer, I believe, lies in part at one end of the spectrum, and in part at the other. If you watch the media lately, they seem to have switched sides to try to calm the public. This is never a good sign.

The good news is that the pig flu is responding to treatment. It isn’t cutting a swath of death and destruction, now that we know what it is. That’s where the good news ends.

The bad pig flu news is that it is already spreading worldwide. It isn’t just something passed from pigs to people, it also goes from people to people, and likely from bird to bird, bird to human, etc. I really believe it is far past the point of eradication. Due to immune overreaction, it strikes the strong the hardest. Keep in mind that the purple dots on this map are confirmed cases. By the time a case of pig flu is confirmed, it generally has been in a person’s system for a few days, and then after they manage to see a doctor, it tends to take several more days to confirm. What I’m saying is that this map is lagging. This is a snapshot of the pig flu as it existed nearly a week ago. I think it is worth keeping an eye on, because most of us will likely get it, if not this year, then next, or the year after.

Our primary adversary in this isn’t the piggy flu, it is fear, and the overreaction in the populace. It isn’t the media’s fault. We don’t need their help to panic. The worry here isn’t riot, it is economic. If we shut the schools, restaurants, and other workplaces in fear of influenza, the loss of wages will push those who are already teetering in this tough economy over the edge. We need to try to slow the progression by social distancing, without shutting everything down.

What we need the public to understand is that there is a flu going around. We can treat it, but not immunize (yet) against it. It is a nasty flu, but not likely deadly. It is a time to be wary rather than fearful or dismissive.

Latest numbers 06-08-09: 25,288 cases, 139 deaths.

The most recent swine flu map I’ve found.

Good post on The Umlaut about the nature of this type of influenza.

Most recent info from the World Health Organization.

Leo Gerard on the Toyota Republicans

Leo Gerard is the International President of the United Steelworkers Union, the largest union in North America. He holds bachelors degrees in politics and economics.

Gerard wend on Bill Moyers Journal to discuss the future of labor under the Obama administration. Leo Gerard on the Toyota Republicans:

BILL MOYERS:What does it say to you that Obama names Congresswoman Solis, a real advocate of labor, and then he appoints as his nominates for his trade representative the former mayor of Dallas, who was a lobbyist for many of the companies that benefit from NAFTA? Seems to me that he has put two contradictory personalities and philosophies next to each other.

LEO GERARD:To be a bit facetious, I think he made one good decision and one bad decision. But it I think it goes to what he’s always told us. He wants counter-views. He wants to be able to see people debate in front of him. Then he’ll make the choice.

We really don’t end up with a full spectrum of discussion between a NAFTA supporter and a labor advocate, but the point is well taken. This is a big departure from the yes men of the Bush administration. On the state of labor and manufacturing:

BILL MOYERS:But the irony to me is that in this period of time that we’re talking about, the globalization has occurred so that capital goes looking for the cheapest labor it can find. So even if you had the card system over these years, wouldn’t capital still have gone to where it can hire the lowest paid worker? Isn’t that an economic phenomenon, not a political consequence?

LEO GERARD:No, I think it’s a political phenomenon as well as an economic phenomenon. It’s a political environment that’s created in America the ability of jobs to move offshore. If you go to Germany and you want to move a job offshore, there’s a huge economic price.

Everything that you put in from the management or excuse me from the government, all the training assistance and all that infrastructure, you got to put back into the social pot. Here we encourage them. We give them a tax break here to go overseas. And I’m proud of Barack Obama to say he’s going to put an end to that. And these Toyota Republicans that we-

BILL MOYERS:Toyota Republicans?

LEO GERARD:The Toyota Republicans that were prepared to destroy the American auto industry the couple of weeks after they were blind and deaf and dumb to giving away $700 billion that never did what it was supposed to do. They just gave them taxpayer dollars. And you know what? It didn’t do a damn thing. Hasn’t helped one worker get back to work.

BILL MOYERS:But they then turned around, as you wrote recently, and opposed the bailout of the big three in Detroit.

LEO GERARD:Yeah, those Republicans were prepared to bail out the people that showered before they went to work. But they didn’t give a damn about the people who had to shower after work.

BILL MOYERS:Let me read you what one Republican senator said during the discussion of the auto industry bailout. This is Jim DeMint of South Carolina telling Fox News, quote, “The take-home pay [of auto workers] is essentially the same. But gold-plated benefits that the unions have negotiated over the years have essentially brought the big three to the brink of bankruptcy. And they will freely admit that the American auto companies that are producing overseas are very competitive because they don’t have to operate under the union agenda.”

LEO GERARD:I think that Senator DeMint is delusional or being deliberately dishonest.

BILL MOYERS:How so?

LEO GERARD: Or absolutely uninformed. The difference is very simple on that issue. Most of the transplants have been here less than 30 years. I think in total they might have 300 retirees.

BILL MOYERS: The transplants being?

LEO GERARD:The Hyundais and Toyotas and the-

BILL MOYERS:The foreign company.

LEO GERARD: The foreign car companies that came into America in the last 30 years.

BILL MOYERS:Mainly in the South, right? Alabama, South Carolina.

LEO GERARD:Mainly in the South. Mainly given huge, huge amounts of taxpayer dollars to get there, in the billions of taxpayer dollars.

BILL MOYERS:By the states giving them subsidies to come there, right?

LEO GERARD:By the states who gave them subsidies. And lots of those subsidies were the flow of federal dollars. Then you end up and you say, okay, the auto industry and the American auto industry, the big three, have over a million retirees that they provide healthcare to. A million. They have pension funds. No one, no one that retires from the auto industry gets rich. They have a decent pension so that they can keep their home, that they can have a bit of comfort in their sort of autumn days. And these Toyota Republicans would want to see that taken away. The fact of the matter is that if we had universal healthcare in America, like most of the rest of the industrialized world, most of the rest of the world, that would not be the burden that’s put on the auto industry. People miss the huge burden on North American manufacturing in the way we provide healthcare in America. It’s a huge competitive disadvantage. I don’t blame General Motors for being decent enough to work with the union to provide healthcare to those retirees. If you ever worked on an assembly line for 25, 30, 40, 45 years or in a steel mill you’re tired when you’re at 60 years of age and 65 years of age. And when you retire, you ought to have some healthcare.

On universal health care:

BILL MOYERS:Is that why you are an advocate of universal healthcare, to take the burden off of companies?

LEO GERARD:I’m an advocate of universal healthcare for a number of reasons. Taking the burden off of employee employers and taking it out of the collective bargaining system is one. But also I think it’s the right thing to do as a human being. It’s the right thing to do as a civil society. It’s the right thing to do as a society that wants to I forget who said the comment. But we ought to be judged by what we do for the weakest among us.

BILL MOYERS:I know that you would like to see the Obama administration start to rebuild our manufacturing base. But what gives you hope that we can resurrect the manufacturing base in this country?

LEO GERARD:I think that we have to go back to a dialogue. And I met with some CEOs yesterday to talk to them about whether they want to get in that fight. We’d have to go back to a dialogue in America that understands that the way you really create wealth in America is by making things that people want to buy, not by creating asset bubbles and credit crunches and that kind of stuff, which has been our experience for the last 40 years.

BILL MOYERS:What do you think America can manufacture now that consumers want and that the world wants?

LEO GERARD:I think we can manufacture cars. And I think that if we had the right focus and we took the healthcare burden off not just the auto industry, all industry in America, the way the rest of the world does, that would increase our global competitiveness. I think if we enforced our trade laws so that, and by the way, when we compete with China, most the time we’re competing against the government, not against the country. So we need to enforce our trade laws. And we need to look at green jobs. We need to look at solar energy. We need to look at fixing our energy grid. We need to retrofit our public buildings. We’ve got kids that are going into buildings that are using air handling systems from the ’40s and ’30s. We need to retrofit our courthouses and our city halls. We need to fix the glass in our buildings so that they’re energy efficient. And we need to do that using American workers and American products.

An Interesting take on things. Gerard obviously is on the job and towing the union line. I’ve got no hope that we can unionize our way out of our manufacturing crisis, quite the opposite, but the concept of government health care as neo-protectionism is an interesting one. One of my problems with tariffs as protectionism, is that over time, as the companies get complacent, tariffs become subsidies, and eventually bailouts by another name. The potential benefit of health care as a competitive advantage, is that it can’t grow. Once the workers are healthy, giving them more health care doesn’t make them more competitive. I’m still on the fence about which system we should be using in this country for our health care. This isn’t my favorite, but it is better than HillaryCare. The full transcript is here.

Toyota Republicans

 

Recently on the McLaughlin Group, Pat Buchanan coined a new term for a faction of the Republican party: Toyota Republicans. The phrase is an odd one because it is far more subtle and complicated than it seems. Under the watch of the Bush administration we saw outsourcing become the norm. We didn’t slowly lose a difficult battle to China, we eagerly gave them the plans and asked them to take over our manufacturing. The Alabama foreign car manufacturers Pat referred to are an interesting case. When we can’t even lead in our own industry in our own country selling to our own people, we have failed. It isn’t about patriotism and buying American. I’ll buy American when faced with a tough choice, but in the end I’m going with the better product, as should we all. We don’t need to bail out the failures, we need to create successes. These foreign plants on U.S. soil aren’t entirely a bad thing, although they are still sending our money overseas.

An interesting point has been made about who pays the cost of medical care. If the American auto makers are saddled with responsibility for the health care of their workers, and the foreign competitors aren’t, because the government takes care of that, then we didn’t fire the first shot in the coming Cold War Race to Socialism, they did.

As Pat puts it: “America faces nationalistic trade rivals who manipulate currencies, employ nontariff barriers, subsidize their manufacturers, rebate value-added taxes on exports to us and impose value-added taxes on imports from us, all to capture our markets and kill our great companies.“

How should we respond? Pat wants us to “produce ourselves the guns and ships to defend the republic and the necessities of our national life so we could stand alone against the world.“ He suggests we do this by putting tariffs on imports in order to level the playing field. This isn’t a wise step forward in the new global economy; it leads to foreign retaliation, reducing our exports.  When you are only selling things to yourself, you don’t earn any money. It would work well here in the U.S. Until the industries got lazy and corrupt. We already can see the results of such tactics in the corn industry. The reason everything we eat is packed with corn syrup is that we tax the import of sugar and subsidize the growing of corn. What we need is to be lighter on our feet. We need small specialized manufacturers.

Pat Buchanan puts the blame on neocons for removing tariffs imposed by Reagan:

“When an icon of American industry, Harley-Davidson, was being run out of business by cutthroat Japanese dumping of big bikes to kill the “Harley Hog,” Reagan slapped 50 percent tariffs on their motorcycles and imposed quotas on imported Japanese cars. Message to Tokyo. If you folks want to keep selling cars here, start building them here.“

Alabama is now home to several automotive plants:

  • Mercedes-Benz: Headquarted in Germany
  • Honda: Headquartered in Japan
  • Hyundai: Headquartered in South Korea
  • Toyota: headquartered in Japan

These U.S. plants make a total of more than 700,000 vehicles a year and employ over 11,000 workers.  This would all be a good thing if these vehicles were being shipped out, but they are built here to be sold here. To follow the money: You buy a Toyota. Part of that money goes to the workers in the Toyota plants in Alabama and elsewhere in the US; another part goes to Japan. To some extent it is nice to have foreign industry in our country; it gives them incentive to be nice to us so they can retain their factory. On the other hand, if we are making the product in our country with our labor and selling it to our people, we could do without sending the profits to Japan.

Pat is afraid that if we don’t do whatever it takes to keep the big three in business, that these foreign owned manufacturers will take over their market share.

Agreements like NAFTA aren’t really free trade, they are managed trade. In the end, under NAFTA, manufactuuring and agriculture find advantage in moving to Mexico. This includes companies like Toyota. The question is, are these Toyota republicans opposing the bailout on strong free trade principles, or are southern politicians trying to remove the competing U.S. manufacturers in Detroit to better their own foreign owned manufacturing?

From here on I will be using the term ‘Toyota Republican’ to describe the NAFTA loving portion of the party that is partially responsible for outsourcing and the exodus of  industry.

 

Update: Leo Gerard, the president of the United Steelworkers Union, went on Bill Moyers Joural with his take on the auto bailout and the Toyota Republicans.

Mandated Gambling – Insurance and Sin

According to The Economic Times, the Islamic Fiqh Academy has decided that health insurance is a form of gambling, and thus is illegal under Islamic law. I find this to be a deplorable insult to gambling houses everywhere. Gambling generally has much better odds, and I think is likely a less corrupt industry. Let us compare and contrast:

  1. Gambling preys on the hopes of the poor.  Insurance preys on the fears of the poor.
  2. Gambling is fun. Insurance: not fun.
  3. Money lost to insurance goes to corrupt old white guys, Money lost to gambling goes to corrupt old white guys, or Indians.
  4. Gambling is optional. Insurance is sometimes optional, but getting less so every day.

A note on number four; the academy stated that if the insurer was under legal constraints, it might be ok  to purchase insurance.  So if the government institutes mandated gambling, it isn’t a sin? What about mandating other sins? I find it interesting that an all powerful deity that will punish me in the afterlife would be nice enough to leave me a legal loophole. I guess Muslims can vote for Hillary after all.

The above was written before Obama was elected and passed Hillarycare under his own name, and Hillary ran again for president. The stranglehold of the insurance companies has grown ever stronger, and their mandate has had the side effect of putting them in a position to essentially be regulators, as they have conditions for coverage that is mandated.

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