Week In Review
A Weekly Column by Bill Onasch
October 27, 2008
Not all corporations are suffering in this time of crisis. The health insurance robber barons seem to be doing okay, thank you. WellPoint, the largest component of the Blue Cross Blue Shield Association, is now the biggest, with nearly 35 million customers. Last year their premium revenue was about 56 billion. Second place United Healthcare, the corporate sponsor of the AARP, had nearly ten million fewer members but racked up even more premiums–nearly 69 billion.
United was not only able to get more money up front–they kept more of it. The industry has a revealing term for what actually gets spent on real healthcare–medical loss ratio. United paid out 80.6 percent of their revenues in such “losses” compared to WellPoint’s 82.4. Number three Aetna held down such spending to 79.5 while number four Cigna did better yet, allowing only 78.5 percent to be pried from their fist.
Awash in cash, the healthcare barons decided that the banker barons shouldn’t get all the gravy from the Health Savings Account (HSA) scam that congress made much more attractive in 2003 and is widely promoted by politicians of both boss parties. They are a centerpiece of McCain’s health plan. Obama said in an interview with the American Academy of Family Physicians, “Health Savings Accounts may be a helpful way of saving taxpayers money in the current health care environment.”
John Casillas, director of the Medical Banking Project, explained HSA magic to the Los Angeles Times,
“There's fees for managing the account, transaction fees, fees for investing the funds. You're going to see many billions of dollars moving from premium payments to professionally managed investment funds under HSA rules. Some people think that banks are going to threaten health plans by replacing them in the marketplace.”
WellPoint decided to reinvent itself as a financial services company, targeting this rich vein of HSA accounts.
At first the Federal Reserve folks gave them a hard time. Slow to get with the program they thought this company with its own medical facilities, and mail order pharmacy, as well as administering Blue Cross plans, was part of the healthcare industry, not a bank. But it took only a few winks and nudges to convince the Fed that those activities were merely “complementary” to its main business -- financial services. It pledged to limit them to less than 5 percent of total revenue.
The Times commented,
“That a medical insurer would agree to keep a lid on healthcare expenditures so it could get approval to open a bank illustrates a fundamental change in the industry: Insurers are moving away from their traditional role of pooling health risks and are reinventing themselves as money managers -- providers of financial vehicles through which consumers pay for their own healthcare.”
So what happens when your doctor tells you that you need major surgery and come to find out your HSA went down the tube in a failed loft project in SoHo? We may not be far away from hearing such horror stories.
We need a different “fundamental change.” Instead of being a commodity, or a financial service, healthcare should be a publically financed human service provided to all–as it is in most countries. Unfortunately, no matter who wins the election a week from Tuesday we will be no closer to that just and realizable goal.
With new hires coming in at 14-dollars an hour, and billions of tax-payer dollars available for retooling, you might think the Big Three would have a bright future. But they claim they are in imminent danger of collapse.
While some of this is hype, needed to justify even more help from the government and union, there is no question that the industry as a whole faces serious trouble, the Big Three more than the transplants, and Chrysler most of all. There’s no light at the end of the tunnel.
Chrysler’s current step-parent, owning 80 percent, is strip-and-flip Cerberus. This unsavory outfit–whose board includes former Treasury Secretary John Snow, and former Vice-President Dan Quayle--desperately wants to move the smallest of the Three. The deadbeat dad who sold out to Cerberus, Daimler, recently listed the value of their remaining Chrysler stake as “zero.”
Cerberus’s first choice would be to swap Chrysler to General Motors in exchange for total ownership of GMAC credit. Both sides are agreeable–but lack the cash needed to complete the deal. Chrysler has also been in talks with Renault-Nissan but that appears to be going nowhere. Yet another option would be for both Chrysler and GM to file for bankruptcy.
All of these options are bad news for Chrysler and GM workers. If GM gets Chrysler it will be as the final flip-and-stripper with tens of thousands of jobs lost. Chrysler workers wouldn’t fare much better with Renault-Nissan. And bankruptcy could lead to the abrogation of even the existing surrender UAW contracts. Even the VEBA, established to secure retiree healthcare, could be vulnerable.
Of course, there’s yet another option the bosses may offer–an additional big government bailout coupled with even more draconian concessions by the UAW. (The last IUE-organized GM plant has now been closed.)
UAW president Ron Gettlefinger has made his displeasure clear but said little else. When a reporter asked him about the possibility of reopening contract negotiations with the Big Three he snapped, “next question.”
Like most of the economy, auto is facing a crisis of overproduction. There is simply more production capacity than will likely ever again be utilized. This is just beginning to be “corrected” through plant closings and mass layoffs.
Traditional calls for reducing hours of work with no cut in pay to share the work are still valid. When the auto industry was organized wall-to-wall by the UAW this would have been a realistic demand for collective bargaining. But today the majority of the industry is unorganized and the UAW segment is the weakest in the market. We can only expect to win such measures now by taking political power and implementing them by law.
And when the Big Three now, and the transplants later, abandon plants--such as those in Janesville, Wisconsin and Moraine, Ohio just this past week--we should demand that the government take them over. Using the same skilled workforce, with union contracts intact, we could put them to work as part of a new public sector, making things we need–transit vehicles, wind turbines, PV and CSP solar power, materials for green building construction and renovation.
That’s sort of a segue to the next item.
Save the Dates–April 3-4
Over the years, the kclabor.org website has initiated conferences on working class issues. For example, in 2004, we brought in guest speakers such as Amjad Al-Jawhary, representing the Federation of Worker Councils and Trade Unions of Iraq, and Ed Bruno, former Director of Organizing for the UE, and more recently coordinating organizing for the National Nurse Organizing Committee, for a Worker Rights At Home and Abroad conference. In 2005 we featured Labor Party national organizer Mark Dudzic, veteran workplace and union democracy advocate Jerry Tucker, and labor environmentalist Christine Frank, at a gathering entitled The Future of American Labor.
For some time, people have been pestering us about when kclabor.org is going to have another conference. We've decided we can wait no more. We think the inter-related economic and climate crises demand urgent attention and bold proposals to deal with them. We want to make a contribution to that effort.
The gathering will take place in Kansas City April 3-4, with a Friday evening solidarity panel and plenary and workshop sessions roughly 9-5 on Saturday. Most likely there will be some social event Saturday night.
The working title is: New Crises, New Agendas. One component will be “educational,” analyzing and explaining the basics of the two crises. Because we not only want to understand but change our reality we also hope to help focus a discussion of program, strategy and tactics needed for revival of a class struggle wing of the labor and social movements.
We’re still in the planning stage. We have some good speakers lined up and others invited but we continue to consult with others as we fine tune the schedule. We also have yet to deal with such basic questions as site and cost. We hope to be able to issue a call and schedule within a few weeks. In the meantime I wanted to give readers a heads up and urge you to consider joining us in Kansas City April 3-4.
Still Trying For Unity
Last week I reported on a unilateral call by UFPJ for a hazily defined “national mobilization” against the war in Washington next March 19. Within a few hours, the other major national coalition, ANSWER issued their own call for a mass demonstration in Washington, and several regional centers, on March 21. The National Assembly to End the Iraq and Afghanistan Wars and Occupations has issued a sensible statement, Urging Unity of the Antiwar Movement for the March Actions.
That’s all for this week.
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