BCBS Talking Out of Both Sides of Their Mouths

Not many days ago on May 11, executives from health insurance companies, hospitals, the AMA, and other players in the health industry met with President Obama to announce their initiative and cooperation in cutting the rising costs of health care in the U.S. They said they would voluntarily work to reduce the rate of growth of health care costs in coming years. Everyone knew that it was not an extensive promise, but it was something. If nothing else, it was their effort to "get on the team" so that they could have some influence in the decisions about health reform.

By May 15, they were already trying to take it back. They said that President Obama had overstated their pledges. Although the letter they wrote and signed says they will act in support of the goal to reduce the rate of growth of health care costs by 1.5% per year, the New York Times reports they say they did not mean they would support this as a yearly reduction. I read the letter. Any reader would agree that they did say what they now claim they did not say.

Today, the Washington Post reported that the high-profit non-profit, BlueCross BlueShield of North Carolina, is putting together a slick media campaign to oppose one of the key elements of the health reform proposal: a public insurance option, especially for those whose employers do not provide quality health insurance as a benefit, but for anyone who chooses to enroll in it.

That got my goat. My health insurance premiums keep going up. My wife's premiums are skyrocketing, and BCBS has a contract to manage her State Employees' Plan. BCBS of NC has been in hot water for the huge amounts of profit and bonuses to executives they achieve as a non-profit with protected tax status. And now they want to spend the money they are squeezing out of us to make sure that the health care industry can continue to operate without serious competition.

The only competition in the industry is between giant corporations who "wink-wink" compete for big contracts that leave average people like me with no choices about health care. In addition, when our kids get out on their own and take entry-level jobs, they get offered insurance packages that have coverage caps of only $10k to $15k.

So this is the state of health care in our society. Waiting in the emergency room takes longer than watching a feature film at the cinema. More people die of medical mistakes than in auto accidents each year. More people died from lack of health insurance than from homicide last year.

I went to the BCBS of NC website to figure out how to offer a complaint about this ad campaign. I finally settled on the web form to report possible fraud and abuse. I listed BlueCross BlueShield of NC as the one committing the potential abuse. Then I wrote the following.

The Washington Post reported today that BCBS is planning to spend my premiums to run a media campaign opposing real options in health insurance. If the insurance industry is serious about reducing costs, then the best way to do that is to make sure that people whose companies cannot or do not offer quality insurance plans have access to a public insurance plan. Otherwise, the quasimonopoly will continue and many who can't afford health care will pay with their livelihood and health while the rest of us will pay higher premiums.

Give people choices.

DO NOT SPEND OUR HEALTH CARE PREMIUMS ON A SMEAR CAMPAIGN. This is not what I am paying you for. Save that money and reduce our premiums.

Spin and the Economy

One reason I am glad not to have cable TV (there are plenty of reasons I would like to have it, too, but that's another story) is the popular approach to "news" and "finance" that the all day gabfest channels put out. People who prove that they are good at talking and will say something catchy, provocative, or seductive, get to comment on whatever is happening. Why do they say what they say?

In economic comments, a good place to start in your analysis is to look for wishful thinking. The finance news channels have found that people want to be told that something good is about to happen. If a commentator can tie that pipe dream to her or his own interest, then the words spin at double speed. It can be so disgusting to listen to the popping off on those shows. Too much information, most of it empty-headed, is worse than not enough information.

I guess I prefer economists that try to unmask the interests and myths of economic reporting. I realize that these points of view are also subject to spin. Oh, well. Here is one I thought was pretty good. I found it at the Motley Fool.

Everybody's Lying to You
By Andy Louis-Charles
May 18, 2009

Maybe not everyone's lying to you, but it sure does seem that way.

You don't have to go far to catch an earful of big fish stories and half-baked forecasts coming out of Wall Street, Washington, and the boob tube. Can you really believe it when Citigroup (NYSE: C) claims to be " ... one of the better capitalized banks in the world?" Or should you listen when someone like Steve Forbes blames the entire economic crisis on mark-to-market accounting?

Everyone has some vested interest coloring his or her version of the truth. Whether it's padding their pockets, protecting their reputations, or making headlines, everyone has a motive. The trick is to separate motives from facts. While aligning your interests with the truth doesn't guarantee success, it surely beats chasing down a pack of lies.

Here are three economic fibs that you should disregard.

Lie No. 1 -- Consumer spending will solve our problems.
While the National Retail Federation may love articles like Newsweek's, "Stop Saving Now," such commentaries are reckless attempts to reflate the consumer credit bubble and inflate readership. In this particular essay, the author goes as far as to label savers as "hoarders" and encourage businesses "to roll the dice."

On the contrary, consumers and businesses need to spend prudently, save frequently, and invest intelligently. Luckily, consumers have started to show restraint and begun to embrace the low-price mantra of retailers like Wal-Mart (NYSE: WMT). In contrast, "aspiration brands" such as Nordstrom (NYSE: JWN) are taking it on the chin. If anything, consumers have put down credit cards and taken up new ways to make money.

The consumer-tracking firm Trendwatching.com has even identified the "recession-induced need for cash" as the "Sellsumer" trend. Expect consumers to spend more time spring-cleaning and selling their excess stuff on eBay (Nasdaq: EBAY) and Amazon.com (Nasdaq: AMZN). Consumption is out and production is in.

Lie No. 2 -- Housing will bounce back.
Real estate doesn't bounce. Not only is appreciation dead for now, it may never have existed. Dennis Cauchon makes that point in the USA Today report "Why home values may take decades to recover." His data show that "the average annual investment return from 1950-2000 was less than one-half of 1% per year, after adjusting for inflation."

Housing has two major purposes, for income and for living. When you buy a home to live in, your goal is to acquire a dwelling that brings you pleasure and carries a cost of ownership that is competitive with what you would otherwise pay in rent.

If you buy for investment purposes, you need to perform a discounted cash flow analysis based on the estimated rental cash flows. Either way, appreciation should not be part of the equation.

So, with unemployment on the rise, and housing inventories still sky high, you need to think twice before jumping into any homebuilding stock. (Ironically, with rock-bottom interest rates, one-time tax credits, and falling prices, there's never been a better time to buy your first home.)

Lie No. 3 -- (Insert name here) is too big to fail.
Don't believe the hype; there are no companies too big to fail. Even nations are not too big to fail, as demonstrated by the fall of Rome and the decline of the British Empire. What do exist are institutions so globally intertwined that their failures would cause side effects that would be simply unpalatable to business leaders and elected officials alike. Thus, there's a difference between being too big to fail, and being too important.

Would Americans accept losing their life savings above the FDIC threshold? Could the country stomach endless lines of irate customers demanding their deposits from national banks like Bank of America (NYSE: BAC)?

There is no doubt we could have survived it, but politicians tend to dislike civil unrest and business owners aren't fond of riots. The "too big to fail" travesty seems like an avoidable consequence of bank centralization. Keep in mind that between 1984 and 2003, the size of our banking system declined by almost 48% as 15,084 entities consolidated into 7,842.

That's why superstar analyst Meredith Whitney's idea to supercharge regional banks, instead of feeding the national lenders, appears to be an intelligent first step. Innovative banks like Umpqua (Nasdaq: UMPQ) could use the capital to pick up the slack of megabank zombies.

Believe your lying eyes
Tall tales are common when it comes to matters of money, but don't let the hot air take you off course. The key is to not debate opinions, but to explore facts. No one can predict the economy, so focus on great businesses that execute and management teams that don't lie to you.

Trade and Health Care Costs

I am not what you might call a "free trader," because what usually goes under the name of free trade is really a way of giving advantages to the parties (whether corporations, oligarchies, nations, or private businesses) who already have the greatest financial power. Breaking down "all" trade barriers gives the wealthy an open door to expand their economic power. Theoretically, it opens doors to small businesses, weaker economies, and entrepreneurs to gain access to larger markets, too, but that remains mostly in the realm of possibility when the big players are capable of exploiting the opportunities with greater speed and organizational prowess.

I put "all" in scare quotes above because so-called free trade and so-called free markets are never really free. Deregulation opens up paths of freedom for capital, that is for the financially powerful, but it often keeps up the barriers that would benefit common people. The unseen hand of Adam Smith's market is not strictly pursuing the common good. It is often the unseen hand that writes the fine print in legal documents, adds unrelated earmarks to legislation which benefit a few, holds the cigar and cocktail in the backroom where portentious decisions get made without considering the good of the average person.

Dean Baker calls the bluff of the "free traders" by bringing up health care. He proposes,

Suppose that people in the United States paid twice as much for our cars as people in Canada, Germany, and every other wealthy country. Economists would no doubt be pointing out the enormous amount of waste in the US auto industry. They would insist that we both take advantage of the lower cost cars available elsewhere and take steps to make our own industry more efficient.

For some reason, economists do not have the same attitude towards health care.

He goes on to discuss how the economics of health care is working against the U.S. Too many people in the U.S. operate under the misconception that "America has the best health care system in the world." Obviously the residents of the US have better health care than many places in the world, but the World Health Organization's most recent rankings of the health care systems of the nations of the world places the US at 37th out of 190, barely in the top 20 %. The right-wing free market advocates will pick at the WHO ranking system, pointing out potential problems with the statistics they consider, but taking pot shots does not make the glaring problems go away, especially the growing problems of lack of access.

So paying twice as much for less is not a good deal. If you want to read the rest of Baker's article, you can find it here.

Health Insurance Options

Last week it became clear that the discussion, soon to be a debate, on health care is beginning to hit its stride in Washington. The first big news was that people in the medical and insurance industry were making big promises about keeping down the rate of growth in health costs. Up to now we've been told by them that the expenses were unavoidable. Hmmm.

Then the analysts came into the discussion speculating on what it might mean that these people in the industry were willing to make such a public promise. Discussions of how many lobbyists have been hired were supplemented by figures on how much the insurance industry, pharmaceutical industry, and other medical interests are paying to lobbyists. People with deep pockets and big profits at stake will get the best representation that money can buy.

The rest of us suckers will have to take what they decide is best for us. Or maybe not. We may not have the money, but we have the people to stand up to these interests. If the Republicrats and Demicans in Congress are inclined to do what the medical interests say, we need to let them know that they are in for a few million wake-up calls from the people who are suffering under the current system which is force-fed to us as if the experts know what is best for all of us clueless people with and without paychecks they want us to sign over to them.

Here is a letter I wrote to the Durham Herald-Sun, and it showed up in this Sunday's edition.

Insurance Options

I know that the health insurance industry made a big public show of saying they will cut back the rise in health care costs. If they can, why haven't they done it already?

As it stands, people who still have health insurance have been losing real wages in a giant wealth transfer to the insurance companies and their allies. And so many more people have simply lost insurance coverage.

This is not a system of choices. It is a system of betting against the odds that one illness or injury won't make you go broke.

A real option would be to make these insurers compete with a public plan available to anyone who needs or wants it. A fair and competitive public insurance plan will force the insurance industry to cut profits and big bonuses so people can afford to go to the doctor.

We can't let Washington give in to the medical lobbies that want to maintain the costly, inequitable system we now have. They need to listen to the voters and make a quality public health plan available to all. That would be a real choice.

MIKE BROADWAY
Durham
May 17, 2009

Congratulations Dr. Willie Jennings

I wanted to note that my good friend and colleague, Dr. Willie Jennings, theologian at Duke Divinity School, received notice yesterday evening that the university has awarded him tenure. Willie stepped out of the tenure process for nine years to serve as Academic Dean of Duke Divinity School. Under his leadership, Duke Divinity made many important strides in building a strong faculty and instituting important programs. His invaluable assistance to Dean Greg Jones has helped to make Dr. Jones's years a period of growth and accomplishments in many ways.

Three years ago, Dr. Jennings stepped down from his appointment as Dean to return to the teaching faculty. Now three or four people divide up the work he was doing. The university started the tenure clock again, right where he had left off. With only half the time remaining, Willie had to restart the writing and research requirements. The Divinity School gave him long-awaited leave time to complete the task. Last June he turned in the materials for tenure review, including the manuscript of a book that had been accepted by Yale University Press for publication.

Ten months later, the tenure committee announced its decision. Dr. Jennings received his well-deserved reward for hard work, creative scholarship, and service to the university. We look forward to the forthcoming book.

Willie has been a good friend to me for many years. When my youngest daughter and his oldest daughter were very tiny, we enrolled them in the same Saturday morning dance class. Willie and I began to build up a deep friendship during that time, as both of us were new teachers. It was during this period that I faced one of the great crises of my life, dealing with the ugly racist side of the churches who had brought me to know Jesus. Willie talked and prayed me through this hard time. When we began the process of moving our family to a new church, Willie urged us to come to Mt. Level Missionary Baptist Church. The headwaters of much of our lives can be found in those months. By being available as a vessel for the Holy Spirit, Willie has been a gift from God to me and to my family.

NC Lacrosse Owes a Debt to Jim Kirkley

I have a fond friendship with Jim Kirkley. We were occasional conversants when he was finishing his dissertation at Duke and I was just taking courses in the late 1980s. Then when I was entering the job market, thanks to Jim a job at Shaw University found me. Going on sixteen years later, as they say, the rest is history. During the time that we both taught undergraduates, I spoke with him most every day. Over the past few years, as our teaching paths do not cross so often, we try to catch up every now and then. And through the years I have learned to admire him as a teacher, a leader, a scholar, a minister, a father, and a coach.

When Jim started coaching lacrosse in North Carolina, there was not much of an organization. A few private schools were playing, and a few public schools in the Research Triangle were getting things going. I don't know the history that well, but I do know that he became the driving force in making lacrosse become a team sport in many cities and schools across the state.

An article in the Durham Herald-Sun recognized his achievements this week (the photo here was published with the article--Jim is the tall one on the right). He is retiring from coaching after seventeen years at Riverside High School in Durham. He has won state championships, helped students get athletic scholarships, and mentored other coaches, along with serving as commissioner of the NC High School Lacrosse Association. People like Jim help you know what it means to live a good life. I wish him the best in the new pursuits he will undertake.