A Few Comments on Health Care Reform

Guess who said this.

And again I will say we must do this together. I pledge to you that I will do my best to see that business and labor and Government work together for a change.

But all of our efforts to strengthen the economy will fail—let me say this again; I feel so strongly about this—all of our efforts to strengthen the economy will fail unless we also take this year, not next year, not 5 years from now but this year, bold steps to reform our health care system.

No, it wasn't President Obama telling the AMA how he was going to reform the USA's health care delivery and financing system within 90 days. This is a quote from former President Bill Clinton's 1993 state of the union address. Due to the secrecy used to cover byzantine health care rationing, "Hillary Care" never came to be. If it had we would have deficit spending every year of the Clinton Administration and a health care system much worse than we have today. Maybe that's why Obama appointed HRC Secretary of State, to keep her out of his attempts to reform our health care system into what he thinks it should be.

Another question. Who was the first president(or presidential candidate) to advocate health care reform. Not Bill Clinton, but Theodore Roosevelt back at the beginning o of the 20th century, not the end of it.

The only change brought on by congress in our health care system was medicare back in 1966. It was part of LBJ's Great Society platform. It was the first government sponsored enterprise (GSE) to deal with our nation's health care financing. Now Obama and Kennedy want another GSE to help reform some of the shortcomings of our current system. Yes folks, you read me correctly. They want a public health insurance plan to compete with private health insurance. They believe this competition will keep private health insurance on its toes and hold down increases in health insurance premiums. Yeah, Right!! When Medicare was introduced most private insurers decided to not offer primary coverage to medicare beneficiaries. They only offered medicare supplement plans to cover deductibles and coinsurance. I doubt this public option, if it is ever enacted, would do what President Obama and his fellow reformers expect it to do.

And one more comment. This public insurance plan sure sounds like it will become for health insurance what Fannie Mae and Freddie Mac are for housing. This makes me hope congress does not enact this plan. If the 70-80% of Americans are happy with their current coverage why are our leaders doing this public plan???
Also, in Kennedy's plan are 2 interesting provisions. One, all employers will be required to cover their employees or pay into a public insurance pool for people who cannot get or afford existing insurance. Second, Medicaid Coverage (basically health insurance for children,the disabled and seniors (age 65+)with limited income and resources) will be provided to all families whose income is less than 500% of the federal poverty level. For a family of four, this is $110,000 yearly !!!

The first question that comes to my mind is this. IF, employers are required to "play or pay" (give their employees health insurance or fund an insurance pool with their hard earned revenues) won't they be more reluctant to pay more cash compensation to their employees? IF so, won't fewer and fewer employees get raises and bonuses? Won't this mean more and more families will make less than 500% of poverty level income? If so, they will also be eligible for Medicaid. Who will be the primary insurer, medicaid or the employer's insurance? If I were an employer, forced to cover my employees with health insurance and found out several of my employees were receiving medicaid coverage as well, I would want to drop all insurance coverage like a very hot potato.

Second question, how will all these draconian and duplicitous measures make our health care system any better? Or, even better how will it make our economy any stronger or better? Every regulatory process (i.e. burden) the government imposes on employers is actually a really great boon to industry...if you are in the offshore outsourcing industry. Otherwise, it is a boon to the unemployment services industry, the welfare industry etc. When and if the congress and the US government finally figure out that many of their rules and regulations discourage business from hiring US workers, then we will get a better economy and with it, an even better health care system.

P. S. President Obama, Rome was not built in one day nor was it toppled in one day. What's your hurry and urgency on health care? You've got 3+ years to accomplish something. 70-80% of Americans like their current health care arrangements and are alarmed and disturbed by the prospects of changes you propose. Every President before had a full plate of issues just as you do. Why not focus on more demanding issues like Afghanistan, Iraq, the Middle East first and then slowly increase your focus on health care. Look at the Bill Clinton quote above. IF the USA managed to get by for 16 years without his calls for health care reform, maybe we can limp through another 16 months for better results. (no changes can be a very good result)

GM's one very small & very expensive step toward economic recovery

June 1, 2009 GM filed for chapter 11 bankruptcy. 6 months ago, GM's former CEO Rick Wagoner said bankruptcy was unthinkable. He said American car buyers would not purchase cars from a carmaker in bankruptcy for fear of loss of warranty support. For the latest on this and other interesting tidbits of info on this monumental bankruptcy, go to GM's official bankruptcy website, www.gmreinvention.com. There you will find reassurances that current GM customers have nothing to worry about, GM asked the bankruptcy court to require continued honoring of all warranties, parts needs and promotions. Even customers of dealers that will not have their contracts renewed have nothing to worry about. Other GM dealers will gladly step up to the plate and fulfill any customer needs. I hope none of the unrenewed dealers were the only GM dealer within a 25-50 mile radius of their city/town. That would create a major inconvenience for existing customers and a discouragement for future prospective customers.

GM also plans to trim its dealerships down to 3600 by the end of 2010. From its 5969 dealers in 2008, this is a 40% reduction. At the end of 2008 GM had 20% share of the USA auto sales. Toyota had 19% share with 1500 dealers in the USA. Either GM is going to increase their market share or further reduce the number of dealers. Only time (36 to 60 months) will tell.

Now, for the really bad news. What can the owners of GM stock expect now. Go to gmreinvention.com and click on investors. This is how GM will respond to investors that try to file a claim with the bankruptcy court:

Why can't stockholders file claims with the court?
The Bankruptcy Code is clear that stock is an "interest" and not a "claim." Stockholders will be
instructed as to how they can establish their proof of interest. If a stockholder does file a "proof
of claim," the company will object to that claim on the basis that the stockholder does not have a
valid claim according to the rules of the Bankruptcy Code.

In 25 words or less, current GM shareholders are toasted road kill. Now we know why diversification of your investments is so important. If any of the GM shareholders are highly dependent on their GM share dividends in their retirement, they are in a world of pain. I hope most shareholders saw the writing on the wall before the US government did and bailed out. Ultimately, the bankruptcy court will decide if the shareholders will get any compensation. Let's face facts, folks. If the GM shares were worth anything, GM would not be in chapter 11. The share price reflects the market's and investors' valuation of the company as a profitable ongoing concern. The only good news for shareholders is if they also have a GM credit card, they will keep the bonus points and use them to purchase their next GM vehicle, if they feel so inclined and can still afford one. The stock of one of the (formerly) largest corporations in the world gets trashed but credit card points remain intact??!! With priorities like these, I no longer wonder how we got into this recession.

A question for Sonia Sotomayor

President Obama's announcement of Sonia Sotomayor as his Supreme Court Justice Nominee unleashed a flood of favorable and unfavorable comments about her competency as a Supreme. Then came these 32 words from a 2001 lecture at UC Berkeley:

I would hope that a wise Latina woman with the richness of her experiences would more often than not reach a better conclusion than a white male who hasn't lived that life."

I am in the midst of a long overdue spring cleaning so I know how much glass is in my home. Therefore, I will not cast stones at Judge Sotomayor. I will ask a very rhetorical question.

Do you know about the Supreme Court ruling "Brown vs. Board of Education?" The long version is "Oliver Brown et al vs. the Topeka Board of Education." In 25 words or less, this decision declared the separate but equal doctrine for racial segregation in public schools unconstitutional. This decision kick started the civil rights movement and made this nation a much better place for everyone. This decision was also reached by white males. The arguments were made by Thurgood Marshall, a black man, but nonetheless the decision was made by white males. (Thurgood Marshall became the first Black Man to be appointed a Justice of the United States Supreme Court)

My question to Judge Sotomayor. How would your wise Latina wisdom and richness of experiences have improved this decision? Maybe, just maybe us white males have richness of experience as well. Remember, you put a lot of emphasis on your experiences, but you seem to have overlooked the wisdom and richness of experience of us white males. Besides, what difference does richness of experience make? This is a country that respects rule of law. Everything I read about you prior to your gaffe makes me think you respect and will defend this concept.

Oh well, that's off my my chest. I wish you the best even if you do not get the appointment. (I think you should get it. Nobody's perfect!)

News from the wonderful world of USA finance

First, Edward Liddy announced that he would be resigning from his $1.00 CEO position at AIG when a replacement was found. He felt that AIG has reached the point where a long term CEO was needed. ( See my 3/19/09 posting "congressional follies about AIG") AIG's Trustees are also requesting 6 new independent board members at the June 30, 2009 annual shareholders meeting. Earlier, Mr. Liddy had said AIG was on track to pay back the bailout money within the next 5 years. Mr. Liddy and the trustees are on the path to recovery for AIG. The USA owes them a well deserved Thank You Very Much for all your effort and endeavor to help get our economy strong again. Our fearless leaders in congress will probably berate them every chance they get. My advice to Mr. Liddy and the trustees, don't let the turkeys get you down!!

Second, Treasury Secretary Timothy Geithner will be announcing rules for executive compensation for the banks receiving bailout funds. Nothing concrete has been announced yet but there are some interesting ideas on the subject already. In a May 24, 2009 Rueters article by Dena Aubin and Corbett Daly, they quoted 2 Harvard Law professors, Lucian Bebchuk and Holger Spamann On the subject. The professors believe executive compensation should be based on more criteria than stock price. Since equity (the bank's stock) is only 5% of a bank's assets, other items such as deposits, loan portfolios & credit ratings should also be used to set performance rewards. The professors argue that if stock price is the only criteria for rewards, the stock price can be artificially boosted at the expense of the rest of the banks assets. I agree with this idea. The purpose of incentives is to reward work that makes the company more profitable, not just the stock. If the company's overall profitability improves, the stock will improve as well.

RIP David Kellermann, CFO Freddie Mac

A rather sad post today. David Kellermann, age 41, CFO for Freddie Mac was found dead today at his home in Fairfax, Va. (a suburb of Washington DC). The police are reporting it as an apparent suicide without any explanation why. The police are still conducting a homicide investigation at his home. Mr Kellermann worked at Freddie Mac for 16 years. He became CFO when Freddie Mac was placed in conservatorship in September 2008.

This is the second loss of a senior executive for Freddie Mac in as many months. On March 1, 2009, David Moffett, CEO of Freddie Mac since it was put in conversatorship, announced his intention to resign as CEO and Board member by March 13 at the latest.

My condolences to the Kellermann family and everyone at Freddie Mac. You lost a good man way too soon.

How to kill 2 birds with no stones

During the recent Maersk Alabama piracy incident, I had a real brain storm. Since the US Government (AKA American taxpayers) is a major funder of the various and sundry plans to bail out/stimulate the economy, let's save them some money. Rather than set up this elaborate public private investment plan, let's cut out a few of the middle men/women and a few layers of regulatory bureaucracy all at once. Just take the absolute worst of the Legacy loans & securities (FKA toxic assets) & sell them off to the pirates (or their ransom victims) for ransom. The Somali pirates consider themselves voluntary coast guard to protect Somali waters from foreign fishing trawlers and toxic waste dumpers. Selling them legacy assets is not much of a reach beyond volunteer coast guardsmen. Remember, the pirates seized the Maersk Alabama, a loaded container ship which is not easily mistaken for a fishing trawler. The fact that the Maersk Alabama was carrying tons of food aid for Kenya, Mozambique and Somalia really makes the volunteer coast guard defense really indefensible. The millions of dollars received as ransom for seized ships speaks for itself.

President Obama should consider putting Bernie Madoff on a work release program to promote the idea to the Somalis. The possibilities are endless. Since the worst of these legacy assets are only suitable for extreme speculative investing or wrapping fish, the Somalis should get better use out of the assets than most nations or investors.

Big Brother or Waxman the wimp??

On Thursday, April 2, 2009 the US House of Representatives passed H. R. 1256, the Waxman Family Smoking Prevention and Tobacco Control Act by a vote of 298-112. (Italics mine) This act gives the FDA authority to regulate tobacco products by such means as larger warning statements, disclosure of ingredients, limits on flavoring additives and control of marketing efforts, especially when children are targeted. (italics mine again) If you are interested in the details and want a better return on your tax dollars, visit this site http://thomas.loc.gov/ . Do not read this in front of your computer workstation. It is such a great antidote for insomnia you will end up with your head on your keyboard which could initiate a large bill for membership to very obscure websites you didn't know existed.

Rep. Waxman proclaimed his so-called triumph over the evil tobacco industry with this press announcement:

"This is truly a historic day in the fight against tobacco, and I am proud that we have taken such decisive action," said Energy and Commerce Committee Chairman Henry Waxman, D-Calif., the bill's sponsor. "Today we have moved to place the regulation of tobacco under FDA in order to protect the public health, and now we all can breathe a little easier."

If this proclamation does not win the lamest, worst excuse of a pun award, there shouldn't be one!!

Also, please note that there are more regulations and restrictions in this bill than the earlier tobacco settlement. (AKA government sponsored extortion) Our fearless leaders in Congress justify this in the name of dramatic improvements in public health. It seems they have discovered what the American public has known for decades. Tobacco use can be bad for your health. Another noteworthy item, all of these draconian "Big Brother" regulations are the result of Congress' supposed altruistic concern for public health. If they are so concerned about their beloved taxpayers, why doesn't this proposed law ban the sale of tobacco products, rather than create more laws and bureaucracy?? The answer is banned products cannot be taxed. In other words, Mr. Waxman and conspirators do not wish to kill the cash cow, just cut back on how much pasture they can access. More on this to come.

And one more thing. Isn't the FDA the same government agency whose diligent efforts maintain our food safety and security from such diseases as Escherichia coli (E. coli), salmonella and Bovine Spongiform Encephalopathy(aka Mad Cow Disease)??? More on this to come as well.