Sunday, June 21, 2009

Wide Support for a Public Health Option

The national telephone survey, which was conducted from June 12 to 16, found that 72 percent of those questioned supported a government-administered insurance plan — something like Medicare for those under 65 — that would compete for customers with private insurers. Twenty percent said they were opposed.

The original article is at:
http://www.nytimes.com/2009/06/21/health/policy/21poll.html?hp=&pagewanted=print

Obama’s Make-or-Break Summer

June 21, 2009

THAT First 100 Days hoopla seems like a century ago. The countless report cards it engendered are already obsolete. The real story begins now. With Iran, universal health care, energy reform and the economic recovery all on the line, the still-new, still-popular president’s true tests are about to come.

Here’s one thing Barack Obama does not have to worry about: the opposition. Approval ratings for Republicans hit an all-time low last week in both the New York Times/CBS News and Wall Street Journal/NBC News polls. That’s what happens when a party’s most creative innovations are novel twists on old-fashioned sex scandals. Just when you thought the G.O.P. could never match the high bar set by Larry Craig’s men’s room toe-tapping, along came Senator John Ensign of Nevada, an ostentatiously pious born-again Christian whose ecumenical outreach drove him to engineer political jobs for his mistress, her cuckolded husband and the couple’s son. At least it can no longer be said that the Republicans have no plan for putting Americans back to work.

But as ever, the lack of an adversary with gravitas is a double-edged sword for Obama. It tempts him to be cocky and to coast. That’s a rare flaw in a president whose temperament, smarts and judgment remain impressive. Yet it is not insignificant. Though we don’t know how Obama will fare on all the challenges he faces this summer, last week’s big rollout of his financial reform package was a big punt, an accommodation to the status quo. Given that the economy remains the country’s paramount concern — and that all new polling finds that most Americans still think it’s dire — this timid response was a lost opportunity. It violated the Rahm Emanuel dictum that “you never want a serious crisis to go to waste” and could yet prompt a serious political backlash.

A tip-off to what was coming appeared in a Washington Post op-ed article that the administration’s two financial gurus, Lawrence Summers and Timothy Geithner, wrote to preview their plan. “Some people will say that this is not the time to debate the future of financial regulation, that this debate should wait until the crisis is fully behind us,” they wrote by way of congratulating themselves on taking charge.

Who exactly are these “some people” who want to delay debate on the future of regulation? Not anyone you or I know. Most Americans were desperate for action and wondered why it was taking so long. The only people who Summers and Geithner could possibly be talking about are the bankers in their cohort who helped usher us into this disaster in the first place. Both men are protégés of one of them, Robert Rubin, the former wise man of Citigroup.

There are some worthwhile protections in the Summers-Geithner legislation, especially for consumers, but there’s little that will disturb these unnamed “people” too much. I’ll leave it to financial analysts to detail why the small-bore tinkering in the administration blueprint won’t prevent another perfect storm of arcane derivatives, unchecked (and risk-rewarding) executive compensation and too-big-to-fail banks like Citi. Suffice it to say that the Obama team has not resuscitated the Glass-Steagall Act, the New Deal reform that Summers helped dismantle in the Clinton years and that would have prevented the creation of banking behemoths that held the economy hostage.

A particularly dramatic example of how the old Wall Street order remains intact can be seen by looking at the fate of credit-rating agencies like Moody’s, which gave triple-A grades to some of the cancerous derivatives at the heart of the economic meltdown. As Gretchen Morgenson of The Times reported last year, Moody’s sins during the subprime frenzy included upgrading its rating of securities underwritten by Countrywide Financial, the largest mortgage lender, after Countrywide complained that the ratings were too tough.

Since then, more details have emerged in this unsavory narrative. When the Securities and Exchange Commission charged Countrywide’s former chief executive, Angelo Mozilo, with securities fraud and insider trading this month, it produced e-mails from 2006 in which Mozilo referred to his company’s subprime loan products as “toxic” and “poison.” Mozilo wrote that “we have no way, with any reasonable certainty, to assess the real risk of holding these loans on our balance sheet.” Yet Moody’s didn’t warn the public by downgrading Countrywide’s securities until the summer of 2007. Meanwhile, this supposed watchdog for investors, which, like other credit-rating agencies, is paid by the very companies it monitors, took its own tranche of the bubble. Moody’s profit margins even surpassed Exxon’s.

And how have it and its peers in the credit-ratings game fared in the Obama regulation crackdown? Incredibly enough, they can still collect fees from the companies they grade. “It is as if Hollywood studios paid movie critics to review their would-be blockbusters,” wrote Eric Dash in The Times.

Non-Wall Street Americans who signed on to Countrywide’s toxic loans are doing far less well. The White House stood by passively this spring as banking lobbyists mobilized to castrate the administration’s Helping Families Save Their Homes Act. The final version eliminated the key provision that would have allowed judges to lower the principal for mortgage holders whose homes are worth less than their loans. Dick Durbin, the Democratic senator from Illinois, correctly observed in April that the banks are “still the most powerful lobby” in Congress and that “they frankly own the place.”

The banks’ influence at the other end of Pennsylvania Avenue is also conspicuous. The revolving door between the government and Wall Street is as greasy as ever in this White House. It’s all too depressing that the administration enforced its no-lobbyists policy to shun a human-rights advocate, Tom Malinowski, a lobbyist for genocide victims in places like Darfur, but granted Geithner a waiver to appoint a former Goldman Sachs lobbyist, Mark Patterson, as his chief of staff.

Obama is very eloquent in speaking of the “culture of irresponsibility” that led us to the meltdown, but that culture isn’t changing so much as frantically rebranding. A.I.G. is now named A.I.U., and has employed no fewer than four public relations firms, including one whose bipartisan roster of shills ranges from the former Hillary Clinton campaign strategist Mark Penn to the former Bush White House press secretary Dana Perino.

Taxpayers are paying for that P.R., having poured $170 billion-plus into A.I.G. But we still don’t have a transparent, detailed accounting of what was going down last fall when A.I.G. and its trading partners, including Goldman, snared that gargantuan cash transfusion. Perhaps if there had been a thorough post-crash investigative commission emulating the Senate investigation led by Ferdinand Pecora after the crash of 1929, we would now have reforms as thorough as F.D.R.’s. It was because of the Pecora revelations that Glass-Steagall was put in place.

If you watch CNBC, of course, the recovery is already here, and the new regulations will somehow stifle it. The market is up, sort of. Even some bank stocks are back. Unemployment, as Obama reminds us, is a lagging indicator. And so, presumably, are all the other indicators that affect most Americans. One in eight mortgages is now either in foreclosure or delinquent, with the share of new mortgages going into foreclosure reaching a record high in the first quarter of 2009. Credit card debt delinquencies are up 11 percent from last year in that same quarter.

The test for Obama is simple enough. If the fortunes in American households rise along with Wall Street’s, he is home free — even if his porous regulatory fixes permit a new economic meltdown decades hence. But if, in the shorter term, the economic quality of life for most Americans remains unchanged as the financial sector resumes living large, he’ll face anger from voters of all political persuasions. When the Fox News fulminator Glenn Beck says “let the banks lose their tails, they need to,” he illustrates precisely where right-wing populism meets that on the left.

It’s still not too late for course correction. Before rolling out his financial package, Obama illustrated exactly what’s lacking when he told John Harwood on CNBC: “We want to do it right. We want to do it carefully. But we don’t want to tilt at windmills.”

Maybe not at windmills, but sometimes you do want to do battle with fierce and unrelenting adversaries, starting with the banking lobby. While the restraint that the president has applied to the Iran crisis may prove productive, domestic politics are not necessarily so delicate. F.D.R. had to betray his own class to foment the reforms of the New Deal. Lyndon Johnson had to crack heads on Capitol Hill to advance the health-care revolution that was Medicare. So will Obama for his own health-care crusade, which is already faltering in the Senate courtesy of truants in his own party, not just the irrelevant Republicans.

Though television talking heads can’t let go of the cliché that the president is trying to do too much, the latest Wall Street Journal/NBC News poll says that only 37 percent of Americans agree. The majority knows the country is in a crisis and wants help. The issue has never been whether Obama is doing too much but whether he will do the big things well enough to move us forward. Now that the hope phase of his presidency is giving way to the promised main event — change — we will soon find out.

Copyright 2009 The New York Times Company

Saturday, June 13, 2009

The White House needs to fight for healthcare

By Robert Reich

In an interesting piece in Sunday's New York Times Magazine, Matt Bai suggests that the White House has learned the main lesson of Bill Clinton's failed attempt at universal healthcare, which is not to deliver a finished product to Congress but instead give Congress a set of goals and let it decide how to reach them.

The question to my mind is whether the Obama White House has over-learned that lesson. Without strong White House leadership, individual members of Congress are particularly susceptible to the threats and promises of powerful lobbies. A statement of White House goals that leaves the details to Congress will likely result in legislation that superficially meets those goals but whose details undermine them. That's the biggest danger now with the inchoate healthcare legislation.

Fortunately, the White House now intends to get more involved in the emerging healthcare bill. Following are the three biggest issues where powerful lobbies on the other side are working the details to their advantage. The question is how hard the Obama White House will push back.

1. A real public option or a public option in name only? Big Pharma and Big Insurance are dead against, and are pressuring lawmakers. Republicans are also opposed. The president said he wants a public option. But the real question is whether he'll be willing to allow the public option to be watered down into essentially nothing (broken up into regional or state-run plans, or required to charge the same as private insurance, or triggered only if private insurers and Pharma fail to bring down costs and extend coverage). If the president wants Republicans on board even though he doesn't need them (the bill requires only 51 Senate votes), he will have to buy a watered-down version.

2. A requirement that all businesses "pay or play," or a broad exemption for smaller businesses? Most emerging versions of the bill require employers to supply health insurance for workers or contribute to the cost of a plan but exempt small employers. The issue to watch is how "small employers" are defined -- and how many, as a result, won't have to either pay or play. Small business lobbies are all over the Hill arguing for a broad exemption. Republicans agree. The White House will have to push back very hard to include enough businesses to make "pay or play" work.

3. Additional tax revenues from taxing employer-provided benefits on higher incomes or from limiting deductions on higher incomes? Congressional Dems originally nixed the second and haven't supported the first. Organized labor is dead-set against taxing any employer-provided health benefits because it doesn't want to set a precedent that might someday erode all such benefits. Accordingly, the White House is signaling it won't take this route. Yet there's powerful resistance on limiting deductions for higher incomes, from many of the beneficiaries of these deductions (such as big charities and state and local governments). Unless the White House demands that those deductions be limited for all taxpayers earning over $250,000 a year, adjusted for inflation in future years, it won't have enough revenue to support the overall bill.

So the question right now is how hard the president will push to get a real public option, a broad mandate and enough revenues to support universal healthcare. The Republicans are showing remarkable unity, as they did on the stimulus package and the budget. Yet the president seems intent on a bipartisan bill. Meanwhile, Pharma, insurance, charities, state and local governments and labor are all putting maximum pressure on individual Democrats. Yet the president seems wary of twisting arms. What's the result? Keep your eyes on the details.

The healthcare war has officially begun

By Robert Reich

June 12, 2009 | Wednesday the American Medical Association came out against a public option for healthcare. The President has reaffirmed his support for it. The next weeks will show what Obama is made of -- whether he's willing and able to take on the most formidable lobbying coalition he has faced so far on an issue that will define his presidency.

And make no mistake: A public option large enough to have bargaining leverage to drive down drug prices and private-insurance premiums is the defining issue of universal healthcare. It's the only way to make healthcare affordable. It's the only way to prevent Medicare and Medicaid from eating up future federal budgets. An ersatz public option -- whether Kent Conrad's non-profit cooperatives, Olympia Snowe's "trigger," or regulated state-run plans -- won't do squat.

The last president to successfully take on the giant healthcare lobbies was LBJ. He got Medicare and Medicaid enacted because he weighed into the details, twisted congressional arms, threatened and cajoled, drew lines in the sand, and went to war against the AMA and the other giant lobbyists standing in the way. The question now is how much LBJ is in Barack Obama.

The big guns are out and they're firing. All major lobbying firms in Washington -- many of them brimming with ex-members of Congress -- are now crawling all over the Hill. Lots of money is on the table. AMA's political action committee has contributed $9.8 million to congressional candidates since 2000, and its lobbying arm is one of the most formidable on the Hill. Meanwhile, Big Insurance and Big Pharma are increasing their firepower. The five largest private insurers and their trade group America's Health Insurance Plans spent a total of $6.4 million on lobbying in the first quarter of this year, up more than $1 million from the first quarter last year, and are spending even more now. United Health Group spent $1.5 million in the first quarter, up 34 percent from the $1.1 million it spent in the first quarter last year. Aetna spent $809,793 between January and the end of March, up 41 percent from last year. Pfizer, the world's biggest drugmaker, spent more than $6.1 million on lobbying between January and March, more than double what it spent last year. It also spent nearly $3.3 million lobbying in the fourth quarter of 2008. Every one of them is upping their spending.

Some congressional Democrats are willing and able to stand up to this barrage. Many are not. They need cover from the White House.

The President can't do this alone. You must weigh in and get everyone you know to weigh in, too. Bombard your senators and representatives. Organize and mobilize others. And let the White House know how strongly you feel. This is one of those battles that define a presidency. But more importantly, it's one of those battles that define the state of American democracy.

AMA Opposition to Obama Public Health Plan Echoes Group’s Decades-Long Resistance to Healthcare Reform

Amy Goodman & Democracy Now -

On Monday, President Obama is scheduled to address the American Medical Association, the nation’s largest doctors’ group with 250,000 members. They have expressed strong opposition to a government-run plan. We take a look at how the AMA has fought almost every major effort at healthcare reform over the past seventy years. [includes rush transcript]

Guest:

Mark Hannay, director of the Metro New York Health Care for All Campaign and co-chair of the National Universal Health Care Action Network. He also co-hosts the show Health Action on Pacifica radio station WBAI.


(For link to transcript see link at: http://www.democracynow.org/2009/6/12/ama_opposition_to_obama_public_health

The Rise of Single-Payer Health Care

Health care reform plans are being drafted and passed around on both sides of Capitol Hill, but the plan with the greatest number of Congress members behind it was first introduced as a bill six years ago. With two new co-sponsors having just signed on, Congressman John Conyers's single-payer health care plan, HR 676, now has 80 Congress members supporting it.

A House committee held a hearing on single-payer health coverage on Wednesday, and a Senate committee included single payer in a hearing on Thursday. Many opponents of single payer, including President Barack Obama and House Speaker Nancy Pelosi, say it would be the ideal solution if it were possible.

A single-payer or "Medicare for all" system that eliminates for-profit health insurance and simply pays for everyone's treatment by private doctors and hospitals of their choosing is also the only solution consistently favored by a majority of Americans in polls. The proposal, already in place in most of the world's wealthy nations, is raised at every health care town-hall forum that Congress members or President Obama speak at, including the one Obama held on Thursday in Green Bay, Wisconsin.

The president always rejects single payer on the grounds that some Americans are too fond of their health insurance companies to part with them. A report by Fairness and Accuracy in Reporting last week found that the corporate media still virtually bans coverage of single payer. A Senate bill being championed by Sen. Chris Dodd in place of ailing Sen. Edward Kennedy, does not include single payer (which is supported by only one US senator, Bernie Sanders). The Kennedy-Dodd bill, at least in its initial draft, does not even include a "public option," that is a Medicare-like program to exist alongside the private insurance companies. The House bill is being drafted by one current and two former co-sponsors of HR 676, Congressmen George Miller, Henry Waxman and Charles Rangel, but it avoids single payer, championing a public option instead. Other competing Senate bills are expected to complicate things further.

The approach taken by the Kennedy-Dodd bill and considered for the House bill is, rather than eliminating health insurance companies, expanding them by making insurance mandatory and subsidizing its purchase. While this approach is favored by the insurance companies, which have been among the primary participants in White House and Congressional health care forums this year, it is not supported by other corporations that would rather not be required to provide health insurance to employees. If anything has emerged on Capitol Hill this week, it is a chaotic lack of consensus except around the idea that something must be done to address a health care system that is damaging Americans' health and economy. Whether the growing chaos opens the door to single payer remains to be seen, and that possibility appears much more real in the House than in the Senate.

In the House, the progressive Caucus has declared that, while it would prefer single payer, it will back no bill without a public option; the Black, Hispanic and Asian caucuses have also backed a public option; and Speaker Nancy Pelosi has said that no bill without a public option will pass. This should mean that, as the debate advances, the House will be more likely to back single payer than any other solution. Or, rather, it would be if it could create laws without having to get them through the Senate as well.

(For remainder of article fromTruthout - see Comments below:)

Friday, June 12, 2009

This next eight weeks is going to be critical....

The whole town hall conversation. It's worth reading. If you read only thing from Obama this month, this is it.

President Obama on reforming health care now

11 June 2009

This next eight weeks is going to be critical, though. And you need to be really paying attention and putting pressure on your members of Congress to say, there's no excuses. If we don't get it done this year, we're probably not going to get it done. And understand, even if you're happy with your health care right now, if you look at the trends, remember what I said: Your premiums are going up three times faster than your wages and your incomes. So just kind of extrapolate, think about what does that mean for you five years from now or 10 years from now? If nothing changes, then you, essentially, are going to be going more -- deeper and deeper into your pocket to keep the health care that you've got. And at some point your employers may decide, we just can't afford it. And there are a lot of people where that's happened, where their employers suddenly say, either you can't afford it or you've got to pay a much bigger share of your health care.

So don't think that somehow just by standing still, just because you're doing okay now, that you're going to be doing good five years from now. We've got to catch the problem now before it overwhelms our entire economy. (Applause.)

Wednesday, June 10, 2009

Senate Committee Releases Draft Health Care Reform Bills

You can find it here at the Senate's Health, Education, Labor and Pensions committee's web site.
http://help.senate.gov/

House Releases Draft Health Reform Outline

The Public Health Insurance Option is in the House's draft.

http://www.dailykos.com/storyonly/2009/6/9/740501/-House-Releases-Their-Health-Reform-Starting-Point

http://edlabor.house.gov/newsroom/2009/06/house-committees-brief-members.shtml

UNITED STATES CONGRESS
Prepared by the House Committees on Ways and Means, Energy and Commerce, and Education and Labor

Key Features of the Tri-Committee Health Reform Draft Proposal in the U.S. House of Representatives
June 9, 2009

President Obama’s Commitment:
The Tri-Committee bill fulfills the President’s commitment to health care reform via legislation that:

• Reduces costs;
• Protects current coverage and preserves choice of doctors, hospitals and health plans; and
• Ensures affordable, quality health care for all.

Plan Overview:

• Maintains the ability for people to keep what they have and minimizes disruption;
• Invests in health care workforce to improve access to primary care;
• Invests in prevention and public health programs;
• Creates a new national health Exchange that permits States the option of developing a State or regional exchange in lieu of the national Exchange;
• Establishes shared responsibility among individuals, employers, and government;
• Offers sliding scale credits to ensure affordability for low and middle-income individuals and families;
• Jump starts health care delivery system reforms to reduce costs, maintain fiscal sustainability, and improve quality; and
• Expands authority to prevent waste, fraud and abuse.

Workforce Investments:

• Expands the National Health Service Corps;
• Boosts training of primary care doctors and expands pipeline of individuals going into health professions, including primary care, nursing and public health;
• Supports workforce diversity efforts; and
• Expands scholarships and loans for individuals in needed professions and shortage areas.

Prevention and Wellness:

• Expands Community Health Centers;
• Waives cost-sharing for preventive services in benefit packages;
• Creates community-based programs to deliver prevention and wellness services;
• Targets community-based programs and new data collection efforts to better identify and address racial, ethnic and other health disparities; and
• Strengthens state, local, tribal and territorial public health departments and programs.

Insurance Market Reforms:

• Ensures availability of coverage by prohibiting insurers from excluding pre-existing conditions or engaging in other discriminatory practices;
• Prohibits rating based on gender, health status, or occupation and strictly limits premium variation based on age;
• Establishes a new Health Insurance Exchange to create a transparent marketplace for individuals and small employers to comparison shop among private insurers and a new public health insurance option; and
• Introduces administrative simplification and standardization to reduce administrative costs across all plans and providers.

Ensuring Affordability and Access:

• Includes sliding scale affordability credits in the Exchange to support individuals and families with incomes between Medicaid eligibility levels and 400% of the federal poverty level (FPL); (NOTE: The average cost of family coverage today is 14% of a family’s income at 400% of poverty.)
• Expands Medicaid for the most vulnerable, low-income populations and improves payment rates to enhance access to primary care under Medicaid; and
• Caps total out-of-pocket spending in all new policies to prevent bankruptcies from medical expenses.

Public Health Insurance Option:

• Enhances transparency and accountability by creating a new public health insurance option within the Exchange to offer choice and ensure competition;
• The public health insurance option is self-sustaining and competes on "level field" with private insurers in the Exchange; and
• When individuals "enter" the Exchange, whether on their own or as employees of a business that is purchasing in the Exchange, they are free to choose among available public and private options.

Benefits:

• Independent public/private advisory committee recommends benefit packages based on standards set in statute;
• Guarantees choice and fair, transparent competition by creating various levels of standardized benefits and cost-sharing arrangements, with additional benefits available in higher-cost plans; and
• Phases-in requirements relating to benefit and quality standards for employer plans.

Shared Responsibility:

• Once market reforms and affordability credits are in effect to ensure access and affordability, individuals are responsible for having health insurance with an exception in cases of hardship;
• Employers choose between providing coverage for their workers or contributing funds on behalf of their uncovered workers;
• Government is responsible for ensuring affordability of insurance through new affordability credits, insurance market and delivery system reforms and oversight of insurance companies; and
• Protects small businesses by exempting small low-wage firms and providing a new small business tax credit for firms providing health coverage.

Reforming the Health Care Delivery System and Ensuring Sustainability:

• Uses federal health programs (Medicare, Medicaid and the new public health insurance option) to reward high quality, efficient care, and reduce disparities;
• Adopts innovative payment approaches and promotes better coordinated care in Medicare and the new public option through programs such as accountable care organizations; and
• Attacks the high rate of cost growth to generate savings for reform and fiscal sustainability, including a program in Medicare to reduce preventable hospital readmissions.

Modernizing, Improving and Preserving Medicare:

• Replaces the currently flawed Sustainable Growth Rate (SGR) formula that determines physician pay rates in Medicare;
• Increases reimbursement for primary care providers, improves the Part D program, and implements many other MedPAC recommendations;
• Extends solvency by eliminating overpayments to Medicare Advantage plans, and refining payment rates for certain services;
• Creates new consumer protections for Medicare Advantage beneficiaries;
• Improves low-income subsidy programs to ensure Medicare is truly affordable and accessible for those with lower incomes; and
• Eliminates cost-sharing for all preventive services.

Saturday, June 6, 2009

Bankruptcy: The healthcare connection

Americans filed for bankruptcy at a rate of 6,020 per day in May, reports Credit Slip's Bob Lawless. That's the first time the 6,000-per-day mark has been broken since the passing of the 2005 bankruptcy law, which made it hard for Americans to seek relief from their debts.

In related bankruptcy news, the results of a study to be published in the August issue of the American Journal of Medicine show that "medical problems contributed to nearly two-thirds (62.1 percent) of all bankruptcies in 2007." More strikingly -- "between 2001 and 2007, the proportion of all bankruptcies attributable to medical problems rose by 49.6 percent." (Found via Mark Thoma.

The authors of the study cite their findings as yet more evidence that the healthcare system in the United States is broken.

Dr. Deborah Thorne, associate professor of sociology at Ohio University and study co-author, stated: "American families are confronting a panoply of social forces that make it terribly difficult to maintain financial stability -- job losses and wages that have not kept pace with the cost of living, exploitation from the various lending industries, and, probably most consequential and disgraceful, a health care system that is so dysfunctional that even the most mundane illness or injury can result in bankruptcy. Families who file medical bankruptcies are overwhelmingly hard-working, middle-class families who have played by the rules of our economic system, and they deserve nothing less than affordable health care."

We don't know what factors directly accounted for 2009's swelling bankruptcies -- obviously, you don't need the impetus of a serious medical problem to push you into bankruptcy when you've lost your job and your home because of a cratering economy. But it's also safe to assume that a significant number of people who might have been able to afford their healthcare no longer can, given the current economic circumstances. So I think Thoma is right to wonder "how much a health care plan that protects people from losing everything when serious illness hits would have helped to soften the economic crisis."

Report concludes uninsured are costly for all

WASHINGTON — Health insurance premiums for an average family are $1,000 a year higher because of costs of health care for the uninsured, a new report finds.

And private coverage for the average individual costs an extra $370 a year because of the cost-shifting, which happens when someone without medical insurance gets care at an emergency room or elsewhere and then doesn’t pay.

The report was released Thursday by advocacy group Families USA, which said the findings — which it calls a “hidden tax” — support its goal of extending coverage to all the 50 million Americans who are now uninsured. Congress and the Obama administration are working on a plan to do that.

Families USA contracted with independent actuarial consulting firm Milliman Inc. to analyze federal data to produce the findings.

“As more people join the ranks of the uninsured, the hidden health tax is growing,” said Ron Pollack, Families USA executive director. “That tax hits America’s businesses and insured families hard in the pocketbook, and they therefore have a clear financial stake in expanding health care coverage.”

The report found that, in 2008, uninsured people received $116 billion in health care from hospitals, doctors and other providers. The uninsured paid 37 percent of that amount out of their own pockets, and government programs and charities covered another 26 percent.

That left about $43 billion unpaid, and that sum made its way into premiums charged by private insurance companies to businesses and individuals, the report said.

The major government insurance programs — Medicare for the elderly and Medicaid for the poor — are structured in a way that doesn’t easily allow payments to insurers to adjust upward. And somebody has to pay.

In the case of people who are covered through their employers — most insured people under 65 are — the extra costs from the uninsured would be spread between the employer’s health plan contribution and what the employee pays, but the report didn’t attempt to quantify that division.

Ronald A. Williams, chairman and chief executive of Aetna Inc., gave the example of a local community hospital that provides care to someone without insurance who arrives at the emergency room. When it’s not paid for, the hospital has to raise its rates to insurance companies, and they pass that on in higher premiums, Williams said.

“Our members then say, ‘Well, why is health insurance so expensive?’” Williams said in an interview. “And the answer is because you’re paying for your own care as well as for the care of some of the uninsured in the community.”

Aetna was not involved in writing or funding the report but Williams appeared at a news conference Thursday with Families USA officials to release its findings.

Kennedy bill would make employers provide care

WASHINGTON – Employers would be required to offer health care to employees or pay a penalty — and all Americans would be guaranteed health insurance — under a draft bill circulated Friday by Sen. Edward M. Kennedy's health committee.

The bill would provide subsidies to help poor people pay for care, guarantee patients the right to select any doctor they want and require everyone to purchase insurance, with exceptions for those who can't afford to.

Insurers would be supposed to offer a basic level of care and would be required to cover all comers, without turning people away because of pre-existing conditions or other reasons. Insurance companies' profits would be limited, and private companies would have to compete with a new public "affordable access" plan that would for the first time offer government-sponsored health care to Americans not eligible for Medicare, Medicaid or other programs.

It all adds up to sweeping changes in how America's health care system operates and aims to achieve President Barack Obama's goal of holding down costs and extending health coverage to 50 million uninsured Americans.

It's already been known that Kennedy's health committee was planning to pursue most of the concepts outlined in the draft of the bill, called the "American Health Choices Act." But it's the first actual bill language to circulate since Congress began working on Obama's health care overhaul.

Congressional and interest groups officials cautioned that the language in the document was not final.

"It's a draft of a draft. HELP Democrats are still actively talking amongst themselves and their Republican colleagues," said Anthony Coley, spokesman for the Health, Education, Labor and Pensions Committee that's chaired by Kennedy, D-Mass.

Kennedy's committee is scheduled to begin voting on legislation later this month, as is the Senate Finance Committee, which has jurisdiction over tax issues. The House also will get to work soon to meet Obama's goal of passing legislation through both chambers by August, so the president can sign a bill in fall.

The draft bill sets up a system of state-level "exchanges," where people would go to shop for insurance plans and which would also oversee the marketplace. The federal-state Medicaid program for the poor would be greatly expanded.

Insurers would be required to pay for preventive care, and a new Medical Advisory Council would make recommendations on required health care benefits that would take effect unless Congress rejected them all at once — similar to how military base closures are handled.

The draft doesn't address how this would all be paid for. That remains a major sticking point.

The bill language became public on the eve of the kickoff of a national campaign to rally support for health care legislation that's being orchestrated by Obama's campaign team. Thousands of community events are scheduled around the nation Saturday where tens of thousands of people are supposed to discuss health care issues with their neighbors and create a groundswell for congressional action.

Yet many hurdles remain. Republicans are strongly opposed to a new public plan, especially the way Kennedy's bill designs it. Under Kennedy's bill the "affordable access plan" would pay providers 10 percent over Medicare rates, which would make it cheaper for patients, but harder for private insurers to compete with. Private insurers fear such a construct would drive them out of business, and there's even division within Democratic ranks.

That was underscored Friday in the House, as the liberal Congressional Progressive Caucus released a set of principles for how the public plan should operate that directly contradicted principles released Thursday by the Blue Dog Coalition of conservative Democrats.


Friday, June 5, 2009

Credit Default Swaps, The Poison in the System

By MIKE WHITNEY

In a little more than a decade, Credit Default Swaps (CDS) trading ballooned into a lucrative multi-billion dollar industry which has changed the fundamental character of the financial system and increased systemic risk by many orders of magnitude. CDS, which were originally created to reduce potential losses from defaulting bonds, has turned into a cash cow for the big banks, generating mega-profits. In the case of insurance giant AIG, losses from CDS transactions has already cost the American people $150 billion, and yet, there still has been no serious effort in Congress to ban them once and for all. Even worse, CDS is the root-cause of systemic risk which connects hundreds of financial institutions together in a lethal daisy-chain.

CDS contracts are not cleared on a centralized exchange nor are they government regulated. That means that no one really knows whether issuers of CDS can pay off potential claims or not. It's a Ponzi-insurance racket of the first order. AIG is a good example of a company that gamed the system and then walked away with millions for its efforts. They sold more CDS than they could cover and then -- the debts started piling up around their eyeballs -- they trundled off to the Fed for a multi-billion dollar bailout. Fed chief Bernanke later said that he was furious over the AIG fiasco, but it didn't stop him from shoveling the losses onto the public ledger and making the taxpayer the guarantor for all AIG's bad bets. Keep in mind, that AIG was selling paper that had zero capital backing, an activity is tantamount to counterfeiting. Still, no one has been indicted or prosecuted in the affair. Defrauding clients and then sticking it to Joe sixpack has become de rigueur on Wall Street.

CDS have spider-webbed their way into every corner of the financial system, lashing together banks and other financial institutions in a way that if one defaults the others go down too. This is what's really meant by "too big to fail"; a euphemism which refers to the tangle of counterparty deals which has been allowed to spread -- regardless of the risk -- so that a handful of banksters can rake in obscene profits. CDS has become the bank cartel's golden goose; a no-risk revenue-generating locomotive that accelerates the transfer of public wealth to high-stakes speculators. If it wasn't for the turbo-charged profits from derivatives transactions, many of the banks would have already gone belly up.

From Dr. Ellen Brown:

"Credit default swaps are the most widely traded form of credit derivative. They are bets between two parties on whether or not a company will default on its bonds. In a typical default swap, the ‘protection buyer’ gets a large payoff if the company defaults within a certain period of time, while the ‘protection seller’ collects periodic payments for assuming the risk of default...

“In December 2007, the Bank for International Settlements reported derivative trades tallying in at $681 trillion - ten times the gross domestic product of all the countries in the world combined."
("Credit Default Swaps: Evolving Financial Meltdown and Derivative Disaster Du Jour", Dr. Ellen Brown, globalresearch.ca)

The numbers boggle the mind, but they are real just the same, as are the losses, which will be eventually shifted onto the taxpayer. That much is certain.

Treasury Secretary Geithner recently sounded the alarm for more regulation, but it's just another public relations stunt. Geithner is an industry rep whose sole qualification for the job as Treasury Secretary is his unwavering loyalty to the banking establishment. He has no intention of increasing oversight or tightening supervision. All the blather about change is just his way of mollifying the public while he tries to sabotage congressional efforts to re-regulate the derivatives market. In the next few weeks, Geithner will probably roll out a whole new product-line of reforms accompanied with the usual claptrap about free markets, innovation and "protecting the public's interest". It's all fakery. Fortunately, sad sack Geithner is the world's worst pitchman, which means that every word he utters will be parsed by scores of bloggers trying to figure out what he really means. That will make it especially hard to for him to pull the wool over the public's eyes again.

Swaps originated in the 1980s as a way for financial institutions to hedge against the risk of sudden price movements or interest rate fluctuations. But derivatives trading took an ugly turn after congress passed the Clinton-era Commodity Futures Modernization Act of 2000. The bill triggered a sea-change in the way that CDS were used. Industry sharpies figured out how to expand leverage via complex instruments balanced on smaller and smaller morsels of capital. It's all about maximizing profits with borrowed money. CDS provided the perfect vehicle; after all, with no regulators, it's impossible to know who's got enough money to pay off claims. Besides, gambling on the creditworthiness of bonds for which one has no "insurable interest" can be fun; like taking out an insurance policy on a rival’s home and waiting for it to burn down.

Still, cleaning up the financial system doesn't necessarily mean a complete ban on all CDS. There is a solution to this mess, and it's not complicated. There needs to be strict regulatory oversight of all issuers of CDS to make sure they are sufficiently capitalized, and there needs to be a central clearing-platform for all trades. That's it. (Note: There are serious questions about the IntercontinentalExchange, or ICE, due to its close connection to the banks) Geithner is trying to torpedo the nascent reform effort by proposing bogus fixes that preserve the banks’ monopoly on the derivatives issuance. He's the banks main water-carrier. Now we can see why the financial industry is consistently the largest contributor of any group to political campaigns.

"Too big to fail" is a snappy PR slogan, but it's largely a myth. No financial institution is too big for the government to take into conservatorship; to put the bad assets up for auction, replace the management and restructure the debt. It's been done before and it can be done again without damaging the broader system. The real problem is separating healthy financial institutions from insolvent ones now that the whole system is stitched together in a complex net of counterparty deals. Credit default swaps form the bulk of those counterparty transactions, which makes them the main source of systemic risk. To fix the problem, current contracts must be either unwound or allowed to lapse, while new contracts must be traded on a central clearinghouse where regulators can decide whether sellers are adequately capitalized or not. The Fed's solution -- underwriting the entire financial system to prevent another Lehman Bros. Fiasco -- doesn't address the fundamental problem; it just puts more pressure on the dollar which is already beginning to buckle. The question now is whether Congress will pull its head out of the sand long enough to do the people's work and pass the laws that will re-regulate the system. There is a remedy, but it requires action, and fast. Without course-correction, the prospect of a derivatives meltdown gets bigger by the day.

Mike Whitney lives in Washington state. He can be reached at fergiewhitney@msn.comhttp://www.counterpunch.org/whitney05222009.html

Monday, June 1, 2009

THE TALIBAN IN PAKISTAN, KRUGMAN ON REAGAN, WALL STREET AND A CONTRARIAN VIEW

Our news tracker usually focuses on domestic policy, but the word is intruding, alas.

Taliban take 400 hundred students hostage

http://news.yahoo.com/s/ap/20090601/ap_on_re_as/as_pakistan

Krugman on the long-term causes of the economic crisis: Reagan did it

http://www.nytimes.com/2009/06/01/opinion/01krugman.html

I like Krugman and I am no economist and he is a Nobel Prize winner in economics. So who am I to argue? However, I think that from a political economy/political sociology point of view one piece is missing from his analysis, which I will put as questions, because I think it would be worth doing research on. (If any of you knows an economist/sociologists who has written extensively on this (I am sure there are some out there), please let me know. I'd like to read them.)

When did American firms begin to export jobs to other countries? After the first oil shock? Why did they do it? Because salaries indexed to the rate of inflation in unionized companies made labor "too expensive"? Because Wall Street desiderata about "acceptable" rates of return on investments soared to the point that every and any cost had to be slashed? Because modern communications made shifting production to far-away countries? All of the above? Plus other things I am not thinking about?

And why did Americans get heavily indebted? Because they are irresponsible? Or because they were trying to maintain the same life-style they had had until that point, and they were pushed into borrowing because of the loss of purchasing power accompanying the loss of manufacturing jobs? (Our wonderful service economy pays nothing, except for the very few at the top.)

Journalists, pundits and even economists love to talk about our loss of moderation and our binging on easy debt. Perhaps they are right. But I can tell you, being a political philosopher, that it was typical of pre-modern writers to bemoan the loss of "frugality" as the main cause of the decline of republics (the ancient Roman republic being the archetypal case). Modern political philosophy and sociology taught us to look at impersonal, structural forces as crucial drivers of behavior. You can resist those forces, but up to a point. Wouldn't it be more useful to try to understand what is limiting (not completely thwarting, but limiting) our ability to choose freely how spend our money (and save it)? This said by a person who can't stant McMansions and SUV's, would love to have a ZIP car ten minutes away from her house so she could get rid of one car, keeps her house very cool in winter, mends her own socks (literally), etc. etc. (But I am not giving up sprinkling parmesan on my spaghetti, not yet, at least.)

Today is the day's of GM going into bankruptcy


http://www.nytimes.com/2009/06/02/business/02auto.html?_r=1&hp

But Wall Street is rising...

http://www.ft.com/cms/s/0/9078b782-4eac-11de-8c10-00144feabdc0.html

... even though the online news from Money & Markets is very pessimistic. I am not saying we have to accept all they say (after all they try to sell contrarian investments, that bet on the market going down not up), but the numbers they quote are impressive,

General Motors used to be among the giant companies widely considered "too big to fail."
Almost all of Wall Street said a GM bankruptcy was "unthinkable." Most Americans didn't even consider it as a real possibility. And as recently as February, outgoing and incoming administration officials were still insisting they would never let it happen.
But three and a half years ago, in our October 11, 2005 edition, "
GM Headed for Bankruptcy," I warned you that "too big to fail" was a myth ... that the myth would be shattered ... and that the final day of reckoning for General Motors would be in federal bankruptcy court.
Now, that day is here.
General Motors, once the world's largest company, will be in a New York bankruptcy court, filing for Chapter 11 later today, and it's high time to declare that ...

"Too Big to Fail" Has Failed

Plus, it's high time for all Americans to confront a new, more sober reality: The government is not nearly as powerful as advertised.
Case in point: If you're among those who thought Fed Chairman Ben Bernanke had the power to end this debt crisis, think again.
Despite the most massive bond buying spree in the Fed's 95-year history, Bernanke has failed to stem an avalanche of selling by bond investors ... failed to stop bond prices from plunging ... and failed to roll back a rising tide of long-term interest rates.
How is this possible?
For a quick review of the events, just rewind the clock to the Fed's
March 18 press release, when Bernanke launched his newest, high wire act with great fanfare and bravado.
At that time, despite $700 billion on TARP funds authorized by Congress, the U.S. Treasury Department was making virtually no headway in unfreezing credit markets. The world's largest lenders were still in gridlock. Most forms of credit were still unavailable to even the most worthy borrowers. The credit-addicted global economy, suddenly deprived of its regular debt fix, was in convulsions, collapsing uncontrollably.
So, in a desperate attempt to jump-start the credit markets, Bernanke dared go where no other Fed Chairman had gone before.

He dropped short-term rates to zero.
He committed to buying $300 billion in long term Treasury securities plus another $100 billion in government agency securities.
He even promised to buy up to another $750 billion of mortgage-backed securities.
Total new commitments in that one announcement alone: $1.15 trillion.
But by going so far out on a limb so fast, it was impossible for the Fed Chairman to estimate what the impact might be. There was no historical precedent. No way of knowing.
He didn't know how worldwide bond investors might respond.
He couldn't begin to guess to what degree his actions might rekindle their inflation fears or damage their trust in the credit of the U.S. government.
He had no basis for estimating how many investors would shun or dump U.S. bonds ... how far they could drive down bond prices ... or how far they might push up long-term interest rates.
Worst of all, if, for whatever reason, his new venture truly upset the equilibrium between the supply and demand for bonds, he had no Plan B.
In a nutshell, on March 18, Ben Bernanke jettisoned his balancing poles, abandoned any policy safety net and launched a stunt that would make the most daring tightrope walker tremble with fear.
And unfortunately, right now, even before all the moneys have been spent, the enterprise is already beginning to fail.

The critical events ...

Event #1Huge Fed Purchases of Treasuries
Since March 25, the Fed has been buying Treasury notes and bonds like they were going out of style.
The Fed kicked off the program with a purchase of $8 billion and followed up with another $7.5 billion two days later. Since then, the Fed has jumped into the Treasury-bond market with average purchases exceeding $5 billion at least 10 times per month.
Total bought so far: $130.5 billion.

Event #2Despite the Fed's Giant Purchases, Treasury Bond Prices Have Continued to Plunge
Instead of rising or stabilizing as Bernanke had hoped, Treasury bond prices have fallen sharply.
Sure, bond prices momentarily jumped higher in the wake of the Fed's landmark March 18 announcement. And yes, they have typically enjoyed mini rallies whenever the Fed bid up the market with some more big bucks. But in the final analysis, bond prices have wound up sharply lower and long-term rates sharply higher.

Event #3Mammoth Fed Purchases of Mortgage Bonds
The amounts the Fed has poured into the market for mortgage-backed securities (MBSs) make its Treasury purchases look small by comparison: The Fed launched the program with a $10 billion purchase on January 7, ramping it up quickly from there, and buying up to $33 billion a pop by late March.
Total bought so far: A whopping $507 billion!

Event #4Despite the Fed's Mammoth Mortgage Bond Purchases, We've Just Seen a Sudden Collapse in Mortgage Bond Prices
For a while, it seemed the Fed was able to hold the line, keeping the price on a benchmark long-term mortgage bond near the 100 level.
But last week, the market collapsed. And even with a modest recovery on Friday, there is no mistaking the abject failure of the Fed to keep mortgage prices up and mortgage rates down.
This all raises the simple but unanswerable question:
Now what?
Since the Fed has no Plan B, what does it do next?
Does it print more money, buy more bonds and pray that despite no change in policy, it will magically see a change in results?
Does it try to repeal the law of gravity — to somehow prevent sellers from selling and falling prices from falling?
Does it seek to travel back in time — to somehow reverse the blunders of past Fed Chairmen who helped create today's debt monster in the first place?
Sorry, but those "solutions" are both insane and impossible.
Why? Why are they insane and why is Bernanke's policy a failure?
Because his tight wire is flanked by two, conflicting — and destabilizing — forces, only one of which can possibly be countered at any one time.

Destabilizing Force #1 Too Much NEW Debt
The Treasury alone will need to issue a whopping $1.84 trillion in net new Treasury securities this year — just to finance the deficit expected by the Obama Administration.
That excludes any larger deficit due to a worse-than-expected decline in the economy.
It excludes any costs for credit that goes bad (among the trillions that the government now guarantees).
It even excludes the $50 billion additional funding now being contemplated for General Motors ... or the hundreds of billions now being demanded by cities and states ... or the uncountable billions from any future shoe to fall.
Yes, a lot of people seem to think the Fed can just print all the money it needs and inflate away the problem. But these people have conveniently ignored ...

Destabilizing Force #2Too Much OLD Debt
According to the Fed's
Flow of Funds Report (pdf page 67, Table L.4), at the end of last year, there were $14.5 trillion in Treasury securities, agency securities and mortgage-backed securities outstanding in the world — precisely the ones the Fed has been trying to buy up this year.
The big dilemma: If just 10 percent of those are dumped on the market, it would trigger the sale of $1.45 trillion worth, easily overwhelming the Fed's purchases.
The bigger dilemma: The main reasons investors sell — fear of inflation and damage to the U.S. government's credit — are, themselves caused by the Fed's own buying. In other words, the more the Fed buys, the more our bond investors are motivated to sell.
Bottom line:
To the degree the Fed rushes into the market to deal with destabilizing force #1 — too much new debt — it merely aggravates destabilizing force #2 — too much old debt. And ...
Ultimately, there's only one way the Fed can resolve force #2 and convince investors to hold on. It must abandon its efforts to counter force #1. It cuts back or stops its money printing to buy up bonds.
Just a future scenario? Not quite.
My charts above demonstrate that this is already beginning to happen right now: Mr. Bernanke's daredevil tight wire act is already a failure.
The great day of reckoning of this massive government rescue enterprise is already approaching.

My Recommendations
Do not be deceived by the Fed's supposedly almighty powers.
Do not get lured in by Wall Street's hype.
And whenever anyone tells you that a company is "too big to fail," just remember General Motors

Senators Levin and Stabenow sign letter supporting the public health insurance option.

It's addressed to Senators Kennedy and Baucus.

http://brown.senate.gov/imo/media/doc/Letter.pdf