We Can’t Wait Until We Can Afford It

It looks as if health care reform is going to cost $1.6 trillion over the next ten years. If that is not enough to scare the pants off you, think about all of the government programs that run hugely over budget. However, this cost does not mean we should not implement a public health care plan that ensures that everyone–that is, everyone, EVERYONE, not just most people–has an adequate health care plan. This is something we need to do, as much as we needed to invade Afghanistan and Iraq. When something must be done, you start doing it.

How many families would get started if women waited until they could afford to raise children to get pregnant? Nobody, except the very rich, can afford to have children. Parents do not wait until they can afford children; they have children and stretch their means to raise them.

This is what the United States must do, now. We must implement a universal health care system and then go about finding the means to support it.

World’s Best Health Care System

It is really aggravating when people claim, without stating their basis, that the United States has the World’s Best Health Care System. In the first place, this is just cheerleading. No matter what school it is, the coach and the student council president will proclaim “We’re number one” at the Friday night pep rally. It doesn’t make any difference if the school is U.S.C. or Eastern West Virginia Polytechnical Institute, which hasn’t won a game in any sport since an opponent was disqualified during the Carter Administration. Depending on how the different countries’ health care is measured, the United States’ is undoubtedly better that Zimbabwe’s, but whether it is better than Sweden’s or Canada’s or France’s is less sure. Furthermore, the quality of the care is beside the point for 100 million uninsured and underinsured U.S. residents. They don’t get it.

Secondly, the United States does not have a “health care system.” We have a medical service industry. Then we have a health insurance industry that rations medical services based on insured status and rakes off 15 or 20 per cent. If we really had a system, one third of the nation would not lack adequate health care.

We need a public health care system like Medicare that everyone can buy into at a reasonable price. Medicare has been a wonderful success, despite all the criticism from the political right, the American Medical Association, and the health insurance industry. There are problems, but they are manageable and susceptible to reform.

Health insurance executives are whining that they cannot compete with a public health care system. What better argument could you find in favor of establishing it? They cannot compete because a public system would be fairer, more efficient, and less expensive than the private insurance industry. These executives are like muleskinners a century ago whining that the internal combustion engine will put them out of business. True, but is that a reason to outlaw gasoline?

We need an inexpensive public alternative to private health insurance. That it will hurt the insurance industry is no excuse for leaving 100 million Americans without adequate health insurance. A fair health care system is a fundamental part of the social infrastructure. It is time to fill that void in the United States.

Let Some People Go!

There was discussion on the radio today about reducing Michigan’s prisoner population—and no, it wasn’t Neo-Cons pushing wholesale capital punishment. It was the director of the Department of Corrections talking about early release for low-risk prisoners. I hope this idea gets some legs; reducing our prison population is way overdue.

We could save $150,000,000 per year by reducing the prison population by 20%, without compromising public safety. The parole board automatically denies consideration for parole for many classes of prisoner. Our incarceration rate is too high and climbing. The parole board routinely denies parole despite solid evidence that most first-offenders who are convicted of CSC, Murder 2, VCSA, and many other crimes have very low recidivism rates. A conscientious parole board would sort out the good risks from the bad ones, not refuse to consider anyone who was convicted of certain crimes. “Life means life” is not sound public policy it’s a political mantra. For more information visit sites such as:
http://www.justicepolicy.org/
http://www.capps-mi.org/
https://www.mackinac.org/article.aspx?ID=35

If we cut our prison population from 50,000 to 40,000, the savings would be $300,000,000 at $30,000 per prisoner. Pour half of that savings into prisoner re-entry programs and we would still save $150,000,000–and greatly improve the social fabric in our state.

Think about it: In 1984 Michigan had 15,000 prisoners and the population was 9.2 million. Today we have 50,000 Michigan prisoners and the population is 10.2 million. Do you feel three times as safe as you did in 1984? I think we could reduce the prison population by two thirds without compromising public safety, but let’s start with a modest 20%.

Unfortunately, our parole board members are gutless bureaucrats who refuse to do the job they were hired for and our legislators are knee-jerk jerks who can’t see beyond the next election. They are afraid to tell the public anything it does not want to hear.

I don’t have much hope that Michigan will adopt any sane corrections policies in my lifetime; but if you are educated far above average, and are capable of understanding what our government cannot, you might want to give this some thought.

John B. Payne, Attorney
Dearborn, Michigan; Pittsburgh, Pennsylvania
(800) 220 7200
FAX (313) 562 3340
©2008 John B. Payne, Attorney
www.law-business.com

Federal Dollars Should Benefit Citizens, Not Shareholders

According to January 18, 2009 New York Times, bankers see the federal TARP bailout money as a handout for the banks’ benefit. Just listen to John C. Hope III, the chairman of Whitney National Bank in New Orleans at the following URL:

http://tinyurl.com/8zvcfk

He sees the $300 million in government money his bank received as an insurance policy for the bank, not as an incentive to help citizens in trouble. “Make more loans?” Mr. Hope said. “We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans.”

For Mr. Hope, the Whitney National Bank chairman, “the main motivation for TARP” was to safeguard his bank against the “possibility things couldget a lot worse,” not for any public purpose. The Whitney, he says, would continue making loans “that we would have made with or without TARP.”

“We see TARP as an insurance policy,” he said. “That when all this stuff is finally over, no matter how bad it gets, we’re going to be one of the remaining banks.”

Feathering the nests of wealthy bankers was not Congress’s goal in shelling out the first $350 billion of our tax dollars. It was to encourage the banks to help citizens stay in their homes and keep their jobs.

It is easy to understand why Mr. Hope lacks empathy for ordinary citizens. His annual compensation is over $2.3 million. As CEO of a large financial institution, his first obligation is to ensure its health. However, he takes on civic responsibilities when his bank accepts a huge grant of federal funds. He is obligated to use those funds for the public good. Drop Mr. Hope a line and tell him you hope he sees the light. His office address is:

Whitney National Bank
228 St. Charles Avenue
New Orleans, Louisiana 70130
(504) 586-7272

He is also listed at:

1832 Palmer Ave
New Orleans, Louisiana 70118
(504) 862-5772

After you drop the misnamed Mr. Hope a line, contact your Congressional delegation and the President. Let them know that you want federal funds to be used to help people in trouble, not to insure institutions that are doing well already.

MLK’s Dream

The 2008 general election forged new ground in U.S. politics.  However, it did not fulfill Rev. Martin Luther King’s dream that his children would “one day live in a nation where they will not be judged by the color of their skin but by the content of their character.”  Although the election of Barack Obama showed that at least in come cases we have moved beyond judging a person by his or her skin color, we have not arrived at the point at which we judge political candidates by the content of their character.

The scurrilous hatchet job based on religion Libby Dole, the incumbent U.S. Senator from North Carolina, attempted on Kay Hagan, her challenger, and the rumor-mongering about Obama’s connection to Islam are evidence of a concerted effort by the Christian Right and Center to impose a religious barrier against non-Christians being elected to public office.

Dole attacked Hagan as an atheist because she attended a fund-raiser sponsored by well-known liberals at the home of activists who advocate the separation of church and state.  Dole’s televison ad featured the image of Hagan and the voice of a woman — not her — saying “there is no God.”

“Elizabeth Dole is attacking my strong Christian faith,” Hagan said in a conference call with reporters.  She responded with her own ad portraying herself as a strong Christian who teaches Sunday School.

As appalling as Dole’s attack was, it is equally appalling that Hagan defended herself by clinging to the Cross, not by asserting that the qualifications for public office do not include belonging to the right religion, or any religion.  Hagan’s defense is as threatening to the separation of church and state as Dole’s original attack.  However necessary Hagan’s response may have been, based on the Bible-Belt mentality of her constituency, it is disappointing that she made no attempt to inform them that establishing a Christian theocracy is no more healthy or desirable than establishing an Islamic or Hindu theocracy, or adopting a governmental hostility to religion.

The Dole-Hagan affair was not the only disturbing development in the 2008 election cycle.  The so-called Saddleback Forum, really a religious vetting session inserted into the presidential campaign, made it apparent that both McCain and Obama were laying their religious convictions out for the electorate.  In this, they continued a trend set by the current President.
President Kennedy promised that his official actions would be based on his secular convictions, not his religious beliefs.  George W. Bush, however, solicited votes from the Christian right based on his claim to be Born-Again.  He made an implied commitment to run the country according to his interpretation of the Bible, rather than the U.S. Constitution.  That he was hugely successful in pulling votes by virtue of his “values,” despite the anti-family and belligerent biases of his policies, raises the question of whether government in the United States may one day be dominated by clerics, as in Iran.
The Saddleback Forum, in which the “presumptive candidates” for the two major parties presented themselves for examination by an Evangelist, is a terrifying turn away from secular government.  It is an acknowledgment by the candidates that the country is not merely Christian, but Evangelical.
Religious diversity has been one of this country’s strengths.  What happens to diversity when only Evangelicals can run for office with any likelihood of success?  It is not beyond the realm of possibility that qualification for public office may depend on approval by a Council of Clerics, as in Iran.  Approval by the religious establishment will never be an official qualification to run for office, but there may come a time when no candidate can mount a viable campaign without demonstrating his religious bona fides and the only way to do that is examination by religious authorities.
Thus, we have moved away from judging candidates by the color of their skin, but we have started judging them by the flavor and the fervor of their faith.  That falls far short of judging them by the content of their character.

John Payne, Attorney
Garrison LawHouse, PC
1800 Grindley Park Street, Suite 6
Dearborn, Michigan 48124
Come visit me at: http://www.law-business.com
313.563.4900/fax 313.562.3340

Pennsylvania Office:
9853 Old Perry Highway.
Wexford, PA 15090-9312
800.220.7200/fax 412.548.0022

© John B. Payne, 2008

Chainsaw Management

Too many employees in too many companies are quivering in their cubicles or at their workstations, waiting to face the HR hangman.  This is partly the result of slumping auto and home sales, but it is more the result of poor management.  Large corporations are no longer run by entrepreneurs.  They are run by bean-counting nebbishes who only have one answer to a reduction in business–layoffs.  The results of this human-resource belt-tightening are A) the employees who remain are stressed and overworked to the breaking point and B) the company’s skilled workforce is no longer available when business picks up again.  An entrepreneur should exploit the opportunity presented by excess employees, not shed them like dead batteries from an over-indulged child’s electronic toys.
Albert “Chainsaw Al” Dunlap is the mismanagement poster boy of Downsizers Syndrome.  He killed Sunbeam in 1996 by cutting payroll by 50%, closing 18 of 26 factories and simulating profits by “channel stuffing.”  Channel stuffing is over-producing merchandise and jamming the distribution network with the excess, then reporting the merchandise as sold.  Like a Ponzi scheme, this only works in the short term and it soon became apparent that Sunbeam was headed for the graveyard of failed companies.
Chainsaw Al is only an extreme example of the Little Johnny One Notes of corporate governance.  The current crop of CEOs seem hardwired to respond to any problem with pink slips.  The bigger the problem, the more pink slips get handed out.
Publicizing layoffs often results in an escalation of the stock price.  However, that is only a speedbump in the stock’s slide and seldom has a lasting effect.
In 1996, Robert Reich, then Secretary of Labor, said “I do think it’s unfortunate to view a company’s employees as costs of production rather than assets.”  A skilled workforce is the engine that powers the organization.  Chopping away parts of the engine in response to reduced demand for products or services is foolish.  A creative, entrepreneurial management team sees excess workers as an opportunity, not a problem.
I was the chair of the board of directors of a community mental health provider when its budget was cut by 25%.  This was a situation where layoffs would impair the organization’s ability to provide services, resulting in a vicious cycle of reduced budgets causing reduced delivery of services and reduced delivery of services causing further budget cuts.  Calling the employees together, I pledged that there would be no layoffs.  As it turned out, there were some unpaid leaves taken by managers and employees and there were a couple of “pay holidays,” but no one was laid off and we survived the cut-backs until our budget was restored.  What was crucial was that the organization made it clear, as soon as the budget restrictions became known, that it would stand by its employees.  This improved morale and gave the staff the determination to weather the crisis.
The budget dilemma faced by our non-profit was the opposite of that faced by home builders and car makers.  We were expected to maintain production despite budget cutbacks.  In the for-profit world, companies may find that they have too many workers for the production demand.
There are also those managers who want to lay off employees to show how tough and frugal they are; so they cut the number of staff without regard to productivity or merit.  These are managers who think that if 100 employees can get the job done, 90 should be able to handle it.  Then they decide that if 90 can do the work, 80 employees are enough.  They are like tax-cut maniacs for whom no tax cut is ever deep enough.
What would a canny manager do instead of cutbacks?  Put supernumerary employees to work in new areas and on new products.  A car company CEO should consider moving employees into green initiatives–working on hyper-efficient vehicles.  The latest gas crisis will not be the last and sooner or later, the U.S. public will decide that they don’t need 5,000-pound SUVs to commute to work or to drive to the bodega.  If the U.S. Big Three want to stay in the game, they should stop designing the cars that they think are the most profitable and start developing the cars that are adapted to the uses people put them to.
A company that produces products for the home-construction industry does not have to cut back, just because there is a slump in new housing starts.  The CEO should think outside the big box and use the excess production capacity to start new ventures.
Many of the laid-off employees walk off with a severance package equal to several months of salary and benefits.  Figuring that cost, added to the company’s investment in those workers, it becomes apparent that a huge amount of the company’s assets are walking out the door.  These employees could work on new products or services for up to a year, at no cost to the organization!
The stock market has lost half of its value in the past year.  So what?  The money is not gone, as I recently pointed out.  Depressed stock prices and tight credit make it difficult for corporations to raise capital.  This will lead 99 out of 100 CEOs to cut back operations and lay off employees.  However, one in 100, or maybe even one in 1,000, will see the opportunities in the current market.  Instead of cutting off the hands that produce the wealth of the nation, they will find ways to keep those hands busy.  Instead of bemoaning the trouble U.S. businesses are in, they will take over troubled businesses and turn them around.  This is still the Land of Opportunity and CEOs who see that will lead their companies to unguessable prosperity.

John B. Payne, Attorney

Dearborn, Michigan & Pittsburgh, Pennsylvania

(800) 220 7200

FAX (313) 562 3340

©2008 John B. Payne, Attorney

www.law-business.com

Money (That’s What I Want)

As the stock market gyrates wildly, the question of where the money goes when the market drops begs for an answer like a poorly disciplined puppy when dinner is served.  The figure that was mentioned in news broadcasts when the market dropped 777 points in a day was a trillion dollars.  If a trillion dollars went out of the market, where did it go?  The immediate assumption is that the country became a trillion dollars poorer when the market fell by that much.  But is that really what happened?

For an investor who buys and holds stock for a period of time, it seems that appreciation and depreciation come out of nowhere.  Let’s say that Rosco buys a share of Youngstown Universal Cotter Keys, Inc. for one dollar.  He holds the share of YUCK for a year and he gets $10 when he sells it.  As far as Rosco is concerned, he just received nine dollars for nothing.  Conversely, if Rudy bought that share from Rosco for $10 and it dropped to one, Rudy’s nine dollars just vanished like civil servants at quitting time.  What if Rosco had not sold his share of YUCK and it went from one to ten and back down again?  Were these virtual dollars with no more substance than idle musings?

The money is real and even if Rosco bought and sold his share of stock for the same price, the fact that it rose and then fell nine dollars means that there were real money flows that enriched some investors and impoverished others.  The money that the rise and fall of Rosco’s share of YUCK represents was real money that flowed into and out of the market, but was not gained or lost in the broader economy.

The first step to understanding how the money comes into and goes out of the stock market, is to consider that the rise and fall of the value of Rosco’s single share of stock is not an isolated event.  If shares of YUCK go $1.00 to $2.00, it is because tens or hundreds of  thousands of shares were traded and the final sales were for $2.00 at the end of the trading period.  However, for the sake of simplicity, consider the situation where YUCK is being sold one share at a time.

Everyone who bought for a dollar and sold for two took a dollar in profit out of the market.  If Rosco receives $2.00 from Rosie for a share of YUCK that he purchased for $1.00, Rosie puts two dollars into the market and Rosco takes two dollars out–his initial investment and a dollar of profit.  If Rosie then sells to Reginald for $3.00, he puts that much in and Rosie gets back her investment plus a dollar in profit.  Tracing a series of transactions up to the $10.00 price, then back to $1.00, it becomes obvious that the rise and fall of YUCK reflects the change in what investors are willing to pay for YUCK shares, but no money disappeared.  In this hyper -simplified economic picture, every dollar that went into the market came from an investor’s cash account and every dollar that came out went back into a cash account.  Therefore, all of the money that pours out of the stock market stays in the economy!

Expansion and contraction of the stock markets makes some poor investors rich and some rich investors poor, but the wealth of the country does not rise and fall with the stock markets.  It just gets relocated within the economy.

A portion of the change in share prices reflects real growth or lack of profitability of individual companies.  Investors have been scurrying away from U.S. auto manufacturers like dexedrine-dosed lemmings this year because they did not foresee rising gas prices–like, Who would have thought that the price of a limited resource would go up as supplies diminish?–and produce fuel-efficient vehicles.  However, the shares were high a few years ago because Ford, GM and Chrysler had a big line-up of popular gas-guzzlers that yielded high profits.  Some of the drop in U.S. auto stocks is therefore related to the companies’ market strength, but not all of it.

The price of YUCK shares may go up or down, based on YUCK’s profitability and financial health, but it may also go up or down based on investors’ perceptions of the cotter key industry specifically or the U.S. economy in general.  Although some change in the market indices will be reflective of the health of the corporate sector, wild swings, such as in the last few weeks, are not due to rapid variations in corporate financial viability.  If the Dow drops 6% today, is the U.S. business climate 5% colder today than it was yesterday?  As the Dow declined from 14,000 to 8,000, the country did not lose 42% of its value, or even 42% of the value of its businesses.  The Dow fell due to a dramatic mood swing in the investing public away from stocks.  That deflated stock values, but all that money is still out there in the U.S. economy.

Don’t panic!  Although there will be cutbacks and business failures, the money that left the stock market is still out there.  Sooner or later, investors will realize that they cannot make money on their money unless they put it where profits are being generated.  That’s the stock market; and when money starts flowing back into stock, the markets shall rise again.

John B. Payne, Attorney

Dearborn, Michigan & Pittsburgh, Pennsylvania

(800) 220 7200

FAX (313) 562 3340

©2008 John B. Payne, Attorney

www.law-business.com

Only 900-Day Wait for Social Security

In May 2007, Social Security Commissioner Michael J. Astrue announced plans to reduce the backlog of hearing requests. When he made that announcement there were 63,000 disabled individuals who had been waiting for over 1,000 days to get benefits. A further 138,000 had been waiting for over 900 days. That is over 200,000 individuals who had been living on air, like saprophytic plants, for more than two and a half years!

Since then, Social Security has made “significant progress” with a number of initiatives outlined in the Commissioner’s plan. He claims that aggressive new approaches include increasing efficiency, improving business practices and expanding use of automation. This progress included hiring 133 Administrative Law Judges for 64 locations, opening the National Hearing Center and reducing the number of aged cases.

“Opening the National Hearing Center” means that great numbers of applicants will no longer get to see an administrative law judge. They just get a video conference with a judge in Falls Church, Virginia.

Care to see the progress for yourself? The numbers speak for themselves. Read the semiannual report at:

http://www.ssa.gov/appeals/Backlog_Reports/Semiannual_Report%20FY%2008b.pdf

Everyone should take a look at this and write his, her, or its congressman, congresswoman, or congressother, and senator. This is pitiful. After crowing triumphantly about eliminating the 1,000-day cases last FY and reducing the 900-day cases from 135K to 50K by March, Mr. Astrue, throws in some meaningless graphs and bureaucratic nonsense to give the impression that he is bringing the situation under control. It is pure, unadulterated mendacity by misdirection.

SSA does not say anything about the mean or the median wait times, nor does it say whether those are declining. He does say that applications are up, so myopic concentration on only the oldest of the old cases will provide no improvement with new cases on the increase. Furthermore, it will be at least two more years before SSA cracks the two-year barrier. Is this acceptable? There is no mention of how all these old cases were finalized. There was a June political cartoon that showed a fat Burmese general allowing a civilian to die of starvation, then stating that the problem was solved because the civilian was no longer hungry. Is this the same thing? How many of these 900-day cases were “resolved” by the death of the applicant?

Finally, it will be observed that they claim to have eliminated 63,000 1,000-day cases last year and 80,000 of 138,000 900-day cases this year. If there were 63,000 1,000-day cases and 138,000 900-day cases, and this is a geometric progression, there may be as many as 500,000 800-day cases and Lord knows how many 700-day cases. So far they have been picking low-hanging fruit. It’s going to get a lot tougher to bring the numbers down as they go along.

This does not represent any real progress. Once again, more pressure needs to be brought to bear on this surly, bloated bureaucracy to determine eligibility for badly-needed benefits in a reasonable length of time. Would a one-year time limit be unreasonable? Ask a person who is unable to work due to a serious disability whether a year without income is a problem. If eligibility cannot be determined within a year, benefits should be granted on a temporary basis. Paying benefits to presumably eligible applicants is a lot lighter burden on the government than trying to live like an orchid on a piece of wood is for applicants.

Socialized Medicine–Gotta Have It

Not a Constitutional Right

On the topic of universal health coverage, or, as we diehard liberals like to call it, Socialized Medicine, the Federalist Society crowd and other Neo-Cons make a big production out of trying and failing to find justification for it in the Constitution.  To the extent that we buy into that issue, we are being led astray.  The question is not whether there is a Constitutional right to health care, for there assuredly is not.  The question is whether it is good social policy to establish a program that will ensure a minimum level of access, regardless of means.
Our Conservative comrades compare food, shelter, and education to health care and ask whether those who propose universal health care also propose to provide all of the other necessities of life.  This is intended as ridicule, but the answer is yes; under certain circumstances.

On Food, Shelter & Public Services

Food is certainly a necessity of life, as is shelter.  However, few who say we need universal health care also advocate for free food for all or public housing without regard to need.  What is the difference?  Why aren’t we opening barracks for yuppies and mess halls for the middle class?  Food and shelter, for the most part, are within the financial capacity of most people; even the minimum-wage working class.
It makes sense to establish a government-run program to provide an essential service that is prohibitively expensive for individuals.  This is particularly true when it is relatively inexpensive if provided to the population at large.  It is furthermore sound public policy for the government to provide a service to individuals to protect the public health or welfare.
Almost no one questions the propriety of government programs to provide water and sewerage services to the general population.  A well and a septic system are relatively inexpensive and in most of rural America are quite satisfactory solutions to the problems of acquiring potable water and disposing of waste.  This does not work so well in more built-up areas.  When the population density reaches six or eight households per acre, it becomes both expensive and hazardous from a public health standpoint to allow individual households to remain “off the grid” as to water and sewerage.  In an environment like Manhattan, it would be preposterous.  Even the most conservative ideologues concede the necessity of public service projects to provide water and sewerage.
In a similar fashion, police and fire services are generally accepted as necessarily a governmental responsibility, although at one time property owners had to buy badges for the fronts of their houses to show that they had purchased fire services from for-profit fire brigades.  Why have nearly all communities of more than a few families formed fire departments at community expense?  Infernos like the Chicago Fire.  Your purchase of fire services is of little value if the houses around yours are unprotected.  The point is that a community must establish a fire department for all property in the community to protect itself effectively against fire.
What about the police?  I haven’t heard Limbaugh or O’Reilly calling for abolition of police departments or the FBI.  Although big companies may establish their own security force, communities must have a police department to protect people and property and enforce the law without regard to whether a given individual purchased police services or paid taxes.
Why does it make sense to establish universal health care, but not free food and shelter?  We do provide some subsidies for food and shelter, but there is no widespread lack of ability to purchase those things.  We don’t have a third of the population starving to death the way we have a third of the country starving for health care.  That does not mean it doesn’t happen, though.
The government tried to provide food and shelter in the wake of Katrina.  If there were a nationwide catastrophic failure of the food supply–say along the lines of the Irish Potato Famine–the government would be flying C-130s to other continents to buy food for public distribution.  This, of course, assumes that there is no catastrophic failure of national leadership–say along the lines of the Katrina Aftermath.

Availability, Cost & Fairness

The health care crisis in this country is not an availability, nor a cost, crisis. It is a failure to devise an effective system of pricing and distribution.  If we stopped treating the poor and uninsured in emergency rooms at the expense of those who pay for care either through insurance or out-of-pocket, the rapid escalation of insurance premiums would taper off and we would start paying the true cost of the services we are consuming.  If we require the healthy uninsured to buy into the system, the overall cost to everyone would be further reduced.  Just as we require car insurance, we should require a health care buy-in so that a healthy uninsured person who becomes catastrophically ill or injured does not become a charity case to everyone’s detriment.
Those who have health insurance cringe at the thought of “socialized medicine,” but a third of our population lack health insurance at least episodically.  I am sure they would welcome socialized medicine, as compared with what they have now. If a basic catalog of health benefits is insufficient for others, they could purchase supplemental insurance the way Medicare members purchase medigap insurance today.  It could be the best of all possible worlds for everyone. At least it would be better than what we have now.

Employer Problems

Multinational corporations will ultimately lead the charge to universal state-run health insurance.  U.S. industry is suffering a huge competitive disadvantage because of health care costs “built in” to every product.
Spiraling health costs are crippling those employers who continue to insure their employees and giving a competitive advantage to the skinflint employers who refuse to do so.  In the ‘60s and ‘70s, even low-level employees of small companies generally had health care coverage with only a small amount of employee contribution.  That is no longer true.  There are approximately 47 million  who are recognized as “uninsured” by the government.  This is nearly twice the number of those considered unemployed, so a large part of this group are the working poor.
Uninsured means that they had no insurance during the previous year.  However, other studies show that if you include persons who had no insurance for part of the previous year, the number is at least twice that, or 94 million who are uninsured or under-insured.
There are approximately 301 million people in the United States, of whom 38 million are 65 or older.  Since almost all of the 65-and-up cohort are covered by Medicare, 38% of those who would be in the market for health insurance are under-insured.  If you factor in all of those  already covered by Medicaid, the under-insured population under 65 is probably close to 50%.
Besides the un- and underinsured, those who have coverage are seeing a serious erosion in their benefits.  I could not be in business were my wife not employed by a major corporation.  However, the employer-paid portion of her health coverage has shrunk while the deductibles and co-pays have increased tremendously in the last ten years.  A simple trip to the emergency room for a laceration or other injury requiring radiology now costs us $2,000 or more.  A hospital admission would cost more than $5,000.  How can a family of four trying to get by on $50,000 a year afford that kind of expense, let alone the “working poor?”
One would think that the majority of us would demand universal health care, but the insurance and health care provider lobbies are very powerful and the uninsured are not.  Furthermore, “socialized medicine” has been stigmatized by its opponents.  The “liberal” press has not been much help, either.
A client became very irate when I made a remark about how this country needs universal health care.  He said, “You are talking about socialized medicine; that would be very bad; no, no, no!”
“Gary,” I replied, “you are in your forties and living with your father; you have no health insurance, at all.  How could socialized medicine be worse that what you have now?”  I explained how much it would cost him if he injured himself or became seriously ill.  He became very thoughtful after our discussion.

We Pay Too Much for Bad Coverage for the Uninsured

Another argument against universal health care is made by libertarians and Neo-Cons who say they do not want to pay for other people’s medical care.  This is ridiculous.  People who are uninsured–and that is mostly people who cannot afford health insurance, not those who decide to forgo health insurance because otherwise they would have to settle for a 525i when they want a 760Li–get medical coverage at public expense now.  However, instead of seeing a physician from time to time to catch developing problems, they go to the emergency room with a crisis.
Unless the plan is to allow hospitals to turn away critically injured or ill people if they cannot prove that they have cash for treatment or that they are insured, the uninsured will continue to be treated at the expense of those of us who have insurance or can afford to pay for care.  If the plan is, in fact, to deny the ill and injured if they cannot pay, this would mean that everyone would have to ensure that they can prove their coverage even in an emergency.
Let’s assume that your daughter is stabbed during a robbery and her purse is stolen.  She is lying on the sidewalk, bleeding to death.  The EMS are called.  Before they will try to stop the bleeding or take her to a hospital, they will demand to see proof of health insurance.
What if you have a heart attack?  If you do not have your health insurance card on you, too bad.  You don’t get helped.
Unless you are an Ayn Rand disciple and are willing to ration health care to only those with high income or assets, universal health care is the only reasonable answer.
In the first place, providing universal health care, so that everyone has a reasonable level of health maintenance, as well as hospitalization coverage, probably would not cost much more than the current hodgepodge of Medicare, Medicaid, health insurance, and indigent care–with millions simply falling through the cracks.  It would cost less in the long run because there would be more healthy, productive citizens.
Furthermore, the per capita cost can be kept low.  One of the problems with health insurance is that too many healthy people under insure or go without insurance.  This means that the insureds with the highest health care costs tend to be concentrated in certain plans that then have very high premiums due to insurer screening or by reason of better coverage.
A universal plan like Medicare that provides basic coverage at a nominal cost would be cheaper and more fair in the long run.  It would cost less than the current expenditures in taxes, health insurance premiums, lost wages, poor performance in school and on the job, and so forth.
The argument I hear all the time, which I find deeply troubling, is that with universal coverage, we will have rationing of health care.  We have rationing now.  The only difference between the way health care is rationed now and how it would be with universal coverage is who has to wait for care.
Under the current system, the poor and working poor get the short end of rationing.  With universal coverage, upper middle class Americans will have to share some of the burden of waiting or limiting care.  This is about the political power of the middle class, not the numbers of people affected, or the cost, or the efficiency or efficacy of the system; it is about an ultimately democratic system for delivering care.  It is apparently deeply un-American to suggest that the health or life of a lawyer or accountant is not more important than the health or life of a cashier or mother on welfare.

Let’s Get Fair

Consider a recent public health study citizens of the U.K.  How often do we hear the British Health Service demonized as all that is wrong with “socialized medicine?”  And yet, by virtually every measure, the British are healthier than are Americans.  They spend half as much of GDP on health care and achieve far better outcomes.  The Germans spend a quarter of what we do and have an excellent system.  It is time for us to wake up and get civilized.

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John Payne, Attorney
Garrison LawHouse, PC
1800 Grindley Park Street, Suite 6
Dearborn, Michigan 48124
Come visit me at: http://www.law-business.com
313.563.4900/fax 313.562.3340

Pennsylvania Office:
9853 Old Perry Highway.
Wexford, PA 15090-9312
800.220.7200/fax 866.399.7695

© John B. Payne, 2008

Pennsylvania Supreme Court Smacks Down Medicaid Agency

Yours Truly scored a victory for community spouses of Pennsylvania nursing home patients on Tuesday, May 29, 2008. On that day the Pennsylvania Supreme Court sent the Department of Public Welfare packing. It denied DPW’s appeal from the decision of the Commonwealth Court that DPW could not refuse to grant Medicaid based on a proper, Medicaid-compliant, immediate annuity purchased by the community spouse.

To start at the beginning, on February 5, 2003, Pauline Ross entered a nursing home. On April 8,
2005, Pauline’s community spouse, Leonard Ross, transferred $418,026.66 in marital assets into a Fidelity & Guarantee “Medicaid Qualified, Single Premium,Immediate Annuity.” Under the annuity contract, F&G pays Leonard $10,211.83 per month from May 15, 2005, to September 15, 2008. Leonard established the F&G Annuity so that Pauline would be eligible for Medical Assistance-Nursing Home Care benefits and to pass the marital assets on to the next generation. Leonard is the owner and sole annuitant of the F&G Annuity, and Leonard’s three children are the beneficiaries if Leonard dies before September 15, 2008. Pauline had no monetary interest in the F&G Annuity, and, after Leonard transferred the marital assets into the F&G Annuity, Pauline had no assets with which to pay for her nursing home care.

Pennsylvania refused to approve Medicaid for Pauline, claiming that the annuity could be sold to J.G. Wentworth at a 40% discount, an immediate payment of $250,000. Pauline, according to the Commonwealth, had that much in available assets.

There were several problems with DPW’s case. First of all this would be a loan, not a sale, and loan proceeds are not considered an asset under Medicaid law. Secondly, there was solid testimony proving that F & G would not permit J.G. Wentworth to purchase the annuity. Finally, federal Medicaid law clearly permits exactly this sort of transaction. Pennsylvania and only four other states try to deny Medicaid in such cases.

An administrative law judge–a DPW employee, of course–ruled against Ms. Ross. She said Mr. Ross would have to dump the annuity on J.G. Wentworth and lost 40% of his investment. On appeal, the Pennsylvania Commonwealth Court pummeled the Department. It ruled that Mr. Ross was within his rights to invest in an annuity and his wife is entitled to Medicaid. Tuesday’s ruling by the supreme court was the final smackdown. Pennsylvania’s highest state court told DPW it could not deny Medicaid based on a properly amortized Medicaid-friendly annuity purchased by the community spouse.

Tuesday’s ruling also completed the tri-fecta. Two federal district courts had already told DPW it was acting illegally. Those cases were Mertz, ex rel. Mertz v. Houstoun, 155 F. Supp. 2d 415 (E.D. Pa., 2001), and James ex rel. James v. Richman, 465 F. Supp. 2d 395 (M.D. Pa., 2006). DPW appealed the James ruling to the federal court of appeals, but has little chance of winning.

This decision means that if your spouse is in a nursing home, you can preserve a substantial amount of money through an annuity, in addition to the 50% or $104,400 the DPW says you can keep. This annuity purchase is done after your spouse is in a nursing home. If an annuity sales person tells you to put your money into an annuity now, in case you or your spouse needs to go into a nursing home, run–do not walk–away. However, if your spouse is in a nursing home in Pennsylvania and your assets, apart from your house and one care, are higher than $25,000, we can help you save the excess. Call us for a consultation.

John B. Payne, Attorney

Dearborn, Michigan & Pittsburgh, Pennsylvania

(800) 220 7200

FAX (313) 562 3340

©2008 John B. Payne, Attorney

www.law-business.com