Does My Health Care Cover Being Eaten by Piranhas?

The health care debate is as curious an American phenomenon as there ever was. And the most curious thing of all is that with all the heated rhetoric flying around today, the debate was over before it even began. The Health Insurers Have Already Won. That was the cover story of Business Week last week, hardly a left-leaning socialist rag. “The carriers have succeeded in redefining the terms of the reform debate to such a degree that no matter what specifics emerge in the voluminous bill Congress may send to President Obama this fall, the insurance industry will emerge more profitable.”

I have always said that Obama is, before he is anything else, a buttoned-down corporate guy, and will end up alienating more on the left than the right. It’s hard to imagine what the “town hall protest faction” think they want or don’t want from him. The anger rises to such a fever pitch I wonder if this even really about health care. Or, is the quality of discourse summed up by this sign seen at a rally last week: “KEEP YOUR GOVERNMENT HANDS OFF MY MEDICARE!” Never mind the so-called “death panels,” a notion so idiotic one is rendered speechless thinking of a response.

The funny thing is that the Town Hall crazies are turning blue trying to protect “the best health care system in the world,” when, by all the numbers and facts, dollar for dollar, in terms of actual outcomes, it’s actually just about the worst. Score 10 for the spin-meisters. But that’s the game: appeal to poorly-defined fears that will always linger among the “sound bite” news culture.

What we will get is a cobbled-together patchwork engineered by the insurance industry. It’s difficult right now to say whether it will be better or worse, but it will not be a whole lot different. The hundreds of millions in campaign donations and lobbying efforts directed toward all the key players in Congress have sealed the deal. All that’s left is arguing over semantics.

Having grown up in a country with a single payer system, Canada, but having spent the last 25 years here as a naturalized US citizen, I feel like I might have some worthwhile perspective to thrown into the mix, although I must admit it feels like dipping my toe into a river filled with piranhas.

When thinking about complicated things I usually try to pull back to the broadest possible perspective before narrowing the focus and arguing minutia. If there is one word that defines the fear that Americans have over government controlled medical care it is this: Rationing. To that I say this: All health care systems are rationed. No country on earth can provide ALL that medical science has to offer to EVERY individual. In many single-payer systems, care is rationed by waiting times. As it turns out, many times, if people must wait for a procedure, lo and behold, it turns out they didn’t really need it! Of course, yes, single-payer systems can and do apportion acute care in a timely manner. Most single-payer systems have higher life expectancies, lower infant mortality, etc. than the US private system, at half the cost. We are 37thin outcomes. Is this the best we can do?

Still, some Canadians feel they can’t get the level of care that US private insurers provide for their best customers. That’s true, they can’t. So they head south if they have to and can afford to. For sure, that truism forms the crux of what is the health care debate in Canada. It’s called a “two-tier system,” and the debate is: should we provide a moderate level of care as a baseline and then offer more expensive care to those who can afford it? That was the debate way back when I still lived there, and still rages today. Some provinces have edged toward providing that second tier while others fear it will wreck the system. In this way, that part of the debate is very similar to the “public school/ private school” debate.

But here’s the thing: When they do look for care outside of the system, Canadians typically head for the Mayo Clinic, a medical establishment so well-orchestrated they provide an astounding level of care for far less than what health care costs average in the US private system. Apparently they do it by managing the system coherently. No superfluous tests performed just to protect doctors against lawsuits, because doctors are paid by and protected by Mayo. They get to focus on just medicine and the patient.

Of course there are stories of Canadians heading south for care because waiting times were unacceptably long. These stories are exploited to maximum benefit by those arguing to stay with a private system. But what about the stories of the 14,000 people per day US health care companies drop because of pre-existing conditions or other technical violations, most of them in the midst of a health crisis. They would love to be on someone’s waiting list. Some of them are among the thousands who declare medical bankruptcy. (50% of all bankruptcies) Some just go without care. Others end up getting expensive procedures in more affordable places like Thailand or India.

Ask that same Canadian if they would like to sign up for a top-notch US plan. It will cost more than your mortgage, no pre-existing conditions please, and you can and will be dropped at any time if we feel there is a violation of our complex rules. If you didn’t read the fine print, you will either be denied certain procedures, or have to pony up a huge co-pay, especially if you didn’t “pre-authorize” the procedure correctly. You will probably have a large yearly deductible and by the way, they will kill you with red tape and don’t even think you can win. Oh, and did I forget to say that your premiums will double every 10 years? (Mine have.) I dare say most Canadians would take their chances with plain vanilla single payer, come what may.

Health care is rationed in the US, too: 47 million of us just don’t have it. Plus, all that aforementioned pre-authorizing and co-pay and denying coverage stuff is rationing too. If you’re really into tough love you can pretend that most of the uninsured and underinsured are too lazy to work hard enough to pay for a good plan. But, in a mostly Christian nation, does that seem like a charitable way to think? I cannot think that way. Go ahead and call me a bleeding-heart liberal. My heart does bleed. It bleeds for all the pain and suffering in the world, whether or not the sufferers deserve it. Health Care is a basic human right. If we can’t afford it then cut something else. If government can only accomplish two things, let it be health care and roads. Everything else is gravy.

Don’t get all bent out of shape when some socialized benefits go to “the least of you” (Jesus’ words), unless you also rally against all the socialized benefits that regularly go to agri-business, oil and gas industries, defense contractors, media conglomerates, corrupt foreign dictators and militaristic regimes. It’s not suddenly a Marxist plot when the little guy gets a break!

Speaking of gravy, the actuarial unit of United Health Care, one of the largest health care companies in America, is busy as a bee hive crunching numbers. Although they are trying to down play the results, most of them point to the incredible windfall the company will enjoy under almost any plan now being considered in the debate. Still, they are trying to squeeze the numbers further, having spent $3.4 million lobbying congress. Most scenarios would have the public still owing 25% of the cost of their care, even after the huge premiums. United Health Care would prefer something more like a 65-35 split. So, they’ll do more lobbying.

United, like all the other companies shaping this reform, will do fine. After hitting up mostly smaller employers with double-digit increases, their profits, especially in the units providing Medicare to the poorest of the poor, were up 34% last year. Single-payer is the worst thing that could possibly happen to these companies. Even a government-sponsored insurer operating as a competitor is unacceptable. That might be a “Trojan horse” to a single-payer system. Private plans have spent in excess of $19 million lobbying mostly Democratic members of congress to defeat a government-sponsored competitor.

Single-payer is not even on the table, and can’t even be discussed in polite company. By some estimates, a single-payer system might save Americans about 1 trillion dollars a year. Admittedly all estimates in something this volatile are suspect, and this one doesn’t explain what would happen to taxes. But this one comes from Business Week. Why would such a conservative publication propagate such a socialist notion? Because businesses small and large are getting killed by health care costs, especially when they compete with countries with single-payer systems. When “business” doesn’t trust the business of providing health care, why would you? Would it be impossible to run a nation-wide, non-profit health care corporation along the lines of the Mayo Clinic?

Medicare and Medicaid are held up as abysmal failures, yet what other plan of any kind in any country insures only the elderly, the infirm and the destitute? Of course it’s expensive! Private insurers want a chance to pick up that business? They do it only under contract with a guaranteed margin. Ask your grandparents if they’d like to take their chances with a private plan.

Let the debate continue, but extreme partisanship will not get us there. The current system cripples families, crushes small businesses, and drags the economy down. Let’s remove the rhetoric and have a serious debate. Single-payer already works worldwide, and yes it has its problems, some of them big. But there is no private model to go by. After big banking sent the economy on a suicide mission, how can we believe that big Pharma and big Health Care have anything in mind but this quarter’s balance sheet at your health’s expense?

So, my friends, it comes down to this: Who do you want to manipulate your health care? The government, who seemingly can’t do anything right, or the corporations whose bottom lines don’t care a pig in a poke for what happens to your particular health? Worse than that – their bottom lines are completely dependent on how many claims they don’t pay. I don’t normally advocate bigger government anything. And it ticks me off that there’s nothing between cut-throat capitalism and government incompetence. This time though, I would prefer to take my chances with a government bureaucracy, it’s a lot less like getting eaten by piranhas.

Doug Friesen
8/13/09

“Bubblenomics” and The American Dream

The business of news-mongering just ain’t what it used to be. Walter Cronkite is dead and there‘s no one else believable. Two weeks ago, a Time Magazine poll revealed that Jon Stewart, with 44% of the vote, is the nation’s most trusted news personality. Brian Williams was a distant second with 29%, Charles Gibson was in there somewhere, and Katie Couric was an “also ran”, with a scant 7%.

The message is clear: the network anchors are reporting glossed-over and sanitized news, but few of us are buying it. In a world where someone like Sarah Palin can become famous uttering nothing but well-rehearsed sound bite platitudes, no two sentences having any direct correlation, one pauses to wonder, “where does America get its news?”

Into this vacuum of truth, morals and intellect walks Matt Taibi. Matt is a senior political correspondent for Rolling Stone who just wrote a very controversial article entitled “The Great American Bubble Machine – How Goldman Sachs Blew Up the Economy.” The subhead is: “From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression - and they're about to do it again”

Matt is a very earnest fellow. In interviews and talk shows he comes off as very knowledgeable and literate in the ways of Wall Street. He is smart, glib, and believable. I heard him on NPR take apart veteran Wall Street icon Charlie Ellis like slicing chicken. I have no reason not to believe him, because everything he says rings true compared with everything else we already know, and all the so-called experts lack any credibility whatsoever.

So this is the gist of it: Goldman Sachs has so many alums in positions to control the levers of power, they can and do manipulate world markets at their will. Matt calls it “pump and dump.” I call it “bubblenomics.” The scheme is the same. Run up the market by encouraging investors to jump in on the hot new thing. Get out ahead of time if you can, and even if you don’t, you’ve already made a killing. It worked on internet companies that had no earnings or even a saleable product or service. It worked on selling unsuspecting investors like pension funds, mortgage securities based on thin air. Matt even has credible evidence that Goldman Sachs had a lot to do with driving up the price of gas last year.

This is the new Wall Street. It’s not about building long-term wealth that creates jobs and commerce. It’s gimmick-driven wealth that does nothing for the overall economy. It’s not even capitalism. Capitalism is when people create value that someone else buys, and the ancillary benefits spin off through the system. I have no problem with people getting rich off that system; that’s the stuff of the American dream. These guys are hollowing out the economy by sucking the money straight out of the system. That some of their fabulous wealth eventually trickles down does not make for a robust recovery. It’s robbery! Some guys in three-piece suits cleaned out my 401K (twice in 10 years!), now those same guys are paying themselves billions in bonuses from bailout money that comes from MY taxes. Every time a bubble is inflated and busts, more wealth is stripped out of the working class and goes straight to the top. My friend, that’s no longer the American dream, that’s the stuff of Third World nightmares.

It all started when the giant investment banks went public. Before that there was a sense of guardianship among traders. Now it’s a “bonus culture” feeding frenzy, and the only sense is to jerk whatever chain you can to spill the money pot. With no one in control and no standards, greed has worked its magic throughout the system.

The list of Goldman Sachs alums is impressive: Robert Rubin (former GS CEO), Clinton’s treasury secretary, was the Godfather of deregulation. That sleight-of-hand was carried on by Rubin protégé Larry Summers, Clinton’s next Treasury Secretary and now Obama’s Chief Economic Advisor. Then there was Henry Paulson, Bush’s Treasury Secretary (former GS CEO). Hank strong-armed weak regulators (like SEC Head William Donaldson, former GS Head), and was instrumental in the gutting of rules governing leverage and the limits of risk. Together, they created an economy that was on a suicide mission.

The ultimate power-play was when Paulson allowed Lehman Brothers, Goldman Sachs’ chief competitor in many areas, to die, while they threw liferings to all the other drowning Wall Street souls.

Next Paulson bailed out AIG, (the day after he allowed Lehman to go down). That was because AIG was Goldman Sachs’ number one creditor. Of the original $80 billion AIG bailout, $13 billion went straight to Goldman Sachs, a bankruptcy payment of 100 cents on the dollar. (Unheard of in any insolvency situation, just ask General Motors creditors, who got pennies on the dollar, if anything at all; or GM stockholders, whose stock is worthless in the new re-organized GM.) Without this payout, Goldman Sachs would arguably not have survived.

Matt’s article was made all the more timely when Goldman Sachs, shortly after paying back bailout funds, went on to post the largest quarterly profit in its 180-year history. Of course the bailout money, which GS made a big deal about not needing, is just the tip of the iceberg. More important is the money coming out of the back door of the Fed, an amount that can never be known because of the shroud of secrecy under which the Fed operates. This cheap money means that GS and the other of the Government’s “chosen” banks have access to guaranteed profits, courtesy of the taxpayer. They used the bailout to fill their coffers and pay themselves record bonuses, an average of $700,000 for each employee.

The Goldman Sachs list goes on: Recently-departed New York Fed Chairman (Former GS CEO) Steven Friedman steered bailout dollars to GS while letting other banks twist in the wind. Present New York Fed Chairman is William Dudley (Former GS Chief Economist). Keep in mind that the NY Fed is the most powerful branch of the Fed and directly responsible for policing Wall St. Conveniently, when Goldman Sachs switched from an investment bank to a bank holding company in order to receive the cheap Government money, they would now be regulated by all their old buddies who now ran the Fed!

Garry Gensler, Rubin’s top aide in the deregulation years, is now the head of the Commodity Futures Trading Commission, the outfit that would be in charge of regulating derivatives — that is if there was any regulation, which there isn’t. The NY Insurance Department, which would regulate Credit Default Swaps (if there was any regulation), headed by, you guessed it, former GS Vice Pres.

That list only scratches the surface. Turn over any rock in any Government body that controls the economy; there you will find Goldman Sachs. President Obama vowed on the campaign trail that his White House would never employ a registered lobbyist. Regrettably, he has GS loyalists throughout the power structures.

After almost a year, nothing has changed. Instead of using that massive public subsidy to kick-start the economy, they are keeping the money and turning it into bonuses and yachts. Instead of adopting prudent business models, they are still engaging in extraordinarily risky behavior because they have a guaranteed stream of cheap money from the Government.

So, what’s the next bubble? Don’t be surprised; it’s already started: The cap and trade program in carbon emissions! This is a highly complex commodities market that, under the recently passed Energy Bill, is mandated by government but administered and controlled by Wall Street. Even Al Gore is in on the fun, having formed a cap and trade company with some former Goldman Sachs big wigs.

Goldman Sachs spent 3.5 million lobbying for the bill’s passage and they got exactly what they paid for, a new bubble to inflate. After all, Goldman Sachs was Obama’s second largest campaign contributor. Thought that Wall Street was a Republican sport? The street has, for the last several years, contributed to the Dems 3:1. As Nobel economist Paul Krugman says of Goldman Sachs “They are very good at what they do. It’s just that what they do isn’t very good for America.”

In response to Matt’s article, Goldman Sachs sent one of their “flacks” to respond. The rebuttal is laughable in its sanctimony. “We reject the assertion that we are inflators of bubbles and profiteers in busts, and we are painfully conscious of the importance of being a force for good.” “We could hardly be described as having been a major player in the mortgage market, unlike so many of our current and former competitors.”

Ahem: In 2006 alone, Goldman Sachs sold $77 billion in mortgage securities, a third of which went bad. Sure, some sold more, but where I come from, $77B is real money.

In light of all the GS henchmen who marched the economy over a cliff and are now picking the pockets of the fallen, here’s the best one: “…in the wake of the events of the past year or two, Goldman’s partners have pretty much lost their appetite for going into public service.” Thank God. I doubt the public would survive any more of Goldman Sachs’ “largesse.”

Doug Friesen
Aug 10, 2009