April 1 Week In Review

Week In Review

April 1 2013

by Bill Onasch

Outdated and Confusing

That’s what Representative Kevin Brady, Republican of Texas and chairman of a health subcommittee, recently said about Medicare. Perhaps unwittingly, he makes some good points as quoted in a recent New York Times article by Jackie Calmes and Robert Pear,

“Can you imagine a world in which someone has to buy hospital and nursing home coverage from one insurance company, physician office coverage from another insurance company, prescription drug coverage from yet another company, and likely supplemental coverage from a fourth insurance company? This is exactly how the current Medicare benefit is designed.”

These true life examples are one reason I have never been comfortable with the slogan Medicare For All. Call me an ingrate, but I’m here to tell you that present Medicare is not what it’s cracked up to be. That’s why ninety percent of us old folks are also are signed up with Medigap, employer retiree, or Medicaid plans to supplement what Medicare doesn’t pay.

Traditionally, Republicans such as Brady and former VP candidate Paul Ryan, have called for completing the present partial privatization of Medicare, perhaps giving the elderly coupons for discounted private insurance. But now, as the same Times article examines in some detail, players in the GOP appear ready to talk turkey with labor’s White House friend about transferring much more of the cost of health care to those mainly too old or sick to work. A couple of months ago Eric Cantor, the number two Republican majority leader in the House, called for combining Parts A and B of Medicare. Out of pocket expenses for most Medicare recipients would be substantially increased.

President Obama is ready to do that, and a whole lot more, if the Republicans will supply a little Vaseline in the form of modest tax increases on the wealthiest. He has guaranteed the GOP he can deliver his party’s votes in Congress to get the job done.

The White House also seeks a fifteen percent surcharge on those supplemental plans ninety percent of us now pay for. As the Times duly notes, economists say that such coverage leaves beneficiaries insensitive to costs, increasing Medicare’s spending.

I must plead guilty to being less sensitive to costs than these unnamed economists. Last year, as I found myself unable to read street and exit signs even during daytime driving, I had cataract removal surgery on both eyes. Medically it was a great success. It may extend my ability to safely drive years longer.

But my selfishness ran up bills for eighteen thousand dollars for the two operations. Though there was considerable haggling among them, the lion’s share of these charges are being picked up by Medicare and most of the rest by a bitter Blue Cross administrator of my employer retiree insurance–for which I pay the full premium. I wound up paying 300 dollars out of pocket.

If deductibles and copays had been higher, and if I had to finally drop the already very expensive Blue Cross supplement, I would have done my part to reduce spending. I guess giving up driving and watching the world slowly grow dimmer is considered by those dedicated to affordable care to be a reasonable sacrifice in this time of fiscal crisis.

My wife Mary, who by no means agrees with all of my radical outlook, has a knack for clearing away the smoke to see the gun. She asked, “why don’t they talk about those sending out the bills being insensitive to the costs?”

Good question. Certainly health care costs are outrageous. While much attention is focused on keeping every other industry competitive in the world economy no other country comes close to spending what America pays for health care–more than two-and-a-half times more than most developed nations. It can’t be explained by old people running to the doctor for every ache and pain–as I recently reported we’re way behind other countries–in fortieth place– in average life span. No, we have to look elsewhere.

I’m agreeable to physicians being among the highest paid in society. Their work is vital and it takes a lot of time and money to put an MD or DO behind your name. Nearly all are competent, many are genuinely dedicated to helping people. But, as an article in Forbes reported, in this country their rate of compensation far exceeds the value of the mediocre level of health care their profession delivers,

“A recent McKinsey study states that in other developed countries, generalists earn double the income of the average worker, while specialists earn 2.7 times the average worker. In the U.S., primary care physicians earn five times more than the average worker and specialists earn ten times more than the average worker.”

There are few individual practices today. Nearly all physicians are employed by clinics or institutions that expect to make a healthy profit above and beyond the generous compensation to doctors. Nurses and technicians earnings on the other hand are much closer to the average worker than to the doctors they work with. The blue collar and clerical workers supporting the health Establishment are frequently among the lowest paid in their fields.

The pharmaceutical companies amply reward a layer of talented doctors and scientists for research and development while holding the line on labor costs of those producing their wares–leading to truly astronomical profits. Thanks to the AARP and the late Ted Kennedy, Medicare is forbidden by law from negotiating more reasonable drug prices.

And then there are the insurance company gatekeepers who add substantial cost to health care while not actually providing any.

I can think of adjectives more appropriate than insensitive to describe the commodity health care complex but I try to keep this column suitable for family reading. We should, of course, fight against any cuts in existing Medicare benefits–as well as other plans being shafted by the Affordable Care Act.

Health care is an example of American Free Enterprise at its worst. What’s really required to bring the health of Americans up to developed country standards, while also cutting in half the outrageous bills we pay, is to do as the British workers used their Labor Party to do more than six decades ago when they socialized medicine through the National Health Service.

Back On Track

I want to thank my friend Andy in Brooklyn for forwarding an excellent Wall Street Journal article entitled Boom Times on the Tracks: Rail Capacity, Spending Soar. He also posed a rhetorical question,

“To those from other theoretical heritages who believe finance capital floats in the air without roots in production, or that debt rules all, what do you think these trains are shipping -- bond certificates? insurance policies?”

The article says,

“Welcome to the revival of the Railroad Age. North America's major freight railroads are in the midst of a building boom unlike anything since the industry's Gilded Age heyday in the 19th century-this year pouring $14 billion into rail yards, refueling stations, additional track. With enhanced speed and efficiency, rail is fast becoming a dominant player in the nation's commercial transport system and a vital cog in its economic recovery.”

Revenues are up well over pre-recession levels at the five major U.S. rail carriers–Union Pacific, Burlington Norther Santa Fe, CSX, Norfolk Southern, and Kansas City Southern.

A chart showing the goods being hauled does not include bond certificates or insurance policies. It instead lists a mix of fuels, chemicals, building materials, grains, and containerized cargo needed to support a giant economy ultimately based on manufacturing, agribusiness, and commerce.

Because of technology and deteriorating working conditions on the job, the blue collar working class has declined in size. But their enormous productivity gives them more economic and social weight than ever. We haven’t been de-industrialized but we have largely been de-unionized–and our surviving unions, unlike the rail carriers, have been shunted on to the wrong track.

Faster Track To Debt

One big proponent of the myth that America has shifted to a finance-based economy is the education industry. They have done an effective job in convincing working class kids they may as well throw themselves under the bus if they fail to get a college degree. MBA programs are particularly popular but television advertising displays a wide range of academic opportunities.

The price of this education has increased even more rapidly than its perceived need. The majority of new students can only make it because of veteran’s benefits and/or student loans. Outstanding student loan debt now exceeds a trillion dollars–more than credit car debt, more than car loan debt. About 85 billion are in Past Due status. Forty-two percent of those still paying their student debt are in the 30-50 age range; seventeen percent are over 50.

But this situation will likely soon change. AP reports, “Incoming college freshmen could end up paying $5,000 more for the same student loans their older siblings have if Congress doesn't stop interest rates from doubling.”

The total increase in debt as interest rates on subsidized student loans go from 3.4 to 6.8 percent is about six billion dollars annually at the present rate of applications. This comes at a time when the Fed continues its zero interest “stimulus” policy.

The costs and financing of American education are just as outrageous as those in health care. They are even less “competitive” with other major industrialized countries. Public universities are tuition-free in France, Germany, and Sweden. So are trade school apprenticeships. In Italy university students grumble about paying an average tuition of about a thousand Euros–1,280 U.S. Dollars. Hardly diploma mills, these are among the most respected centers of learning in the world.

Also like the health care comparison, the differences between America and what a former Secretary of Defense dismissed as Old Europe, is class politics. Each of the countries cited have at least one mass working class party that secured these basic rights for all. Until American workers do the same we must dance to the tunes on the playlist of the bosses and bankers.

That’s all for this week.