The Progressive Ensign

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Hospitals Cut Non-Compete Deals With Insurers

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: wbur.org

Hospitals are the number one cost in health care nationwide at $1 trillion per year.  Healthcare is close to 20 % of the U.S. annual GDP.  Physician and clinical services are second followed by prescription drugs.

Sources: Centers for Medicare and Medicaid Services, The Wall Street Journal – 9/19/18

Hospitals are at the center of the most intense and high care treatments for surgeries, interventions, procedures and emergency care.  Most must take Medicare payments if they are to have a wide enough patient population to support their business. Yet, Medicare reimbursements often don’t cover the actual costs of treatment.  Hospitals look to employer – insurer plans and cash customers to make up the difference.

The Wall Street Journal investigated a number of hospital – insurer contracts and found in some cases the hospitals and insurers were cutting contracts which included non-compete clauses.  Thus, if a hospital had a dominant position in a patient market, it would require that the insurer not insure patients of their competitor.  Clearly, a restraint of trade, causing employer plans to pick up the balance, and in some cases where doctors were affiliated with hospitals employees were having to pick up the extra cost. Employers have seen premiums from insurers going up to handle the extra cost of these sweetheart deals.

These close partnership deals between hospitals and insurers create higher costs where services are much cheaper outside of the hospital in a doctor’s office.

Sources: Health Care Cost Institute, The Wall Street Journal – 9/19/18

Instead of hospitals steering patients to their doctors for many services, they provide the services on an outpatient basis at a much more expensive price. Insurers pick up the outpatient cost and then charge employers and patients higher premiums than necessary.

Next Steps:

 We have supported the Affordable Health Care Act provisions requiring insurers to insure all patients with existing conditions, and other patient oriented options.  However, this law is only the first step in reforming the healthcare industry, rigorous enforcement of anti-trust laws needs to take place to eliminate practices like these non-compete agreements.  We call for transparency in pricing of all drugs, and the relationship between drug manufacturers and pharmacies. We recommended in earlier posts that all Americans should have access to good quality health care, beginning with a healthcare account at birth. Then, as the patient takes a job, employer plans can be used, but always between jobs or disability the patient is covered.  Medicare should be the first line of insurance for all from birth with employer plans supplementing the main plan.  Medicare should have complete negotiating rights with drug manufacturers to get the best price for all patients.  All health care for profit companies should be barred from buying back stock and wasting money on executives which is better spent reducing prices and increasing the quality of care.

Tariff Price Increases Hit Consumers

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: powertime.co.za

The tariffs applied last year sheltered the U.S. appliance industry for washers and dryers. What happened is a case study for what is likely to happen in other sheltered industries.  Retailers rushed shipments of appliances prior to the tariffs going into effect. Prices were slashed sales went up, bringing demand forward in April. By July of this year sales are down almost 3%. While appliance sales falling can be partly explained by the slowdown in housing sales, this trend does not explain the price increases buyers in the market did experience.  Samsung and LG competing with U.S. manufacturers, GE and Whirlpool, increased prices from 4 – 8 % on their models due to the tariffs. U.S. manufacturers raised their prices as well, so consumers ended up paying more anyway. If anything, prices should have been going down with fewer buyers in the market, instead there was a distorted market.

Sources: Department of Commerce, The Wall Street Journal – 9/18/19

The South Korean manufacturers have already made permanent moves to end the price challenge with Samsung producing appliances in a plant near Newbury County, South Carolina beginning this past January.  LG is following suit, by opening a plant near Clarksville, Tennessee this fall.

So, what has happened is consumers will pay more for appliances, and jobs will come to the U.S. which the tariffs may have intended.  Consumers are paying the price of the switch and it is not clear if the consumer will be better off.

Next Steps:

With the U.S. manufacturers depending on tariff shelter protection, they may not be as competitive as they could be with their competition coming on shore to take them on from a U.S. staging point.  Certainly, with plants in the U.S. there is a level playing field for all the appliance companies.  Consumers are likely to pay to find out which manufacturer is best and will be around 5 years from now.

We don’t like to see the federal government picking winners and losers in the marketplace. Capitalism, entrepreneurship and innovation should take over providing the best products at the lowest price for consumers.  We prefer to see the government ensuring there is a level playing field and true competition.  Time will tell us if the tariff move was an good one for consumers and the economy.

Working Class Left Out of Economic Recovery

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Photo: thedailybeast.com

As the stock market continues to defy gravity and news stories herald the second longest economic recovery since WWII, yet many working class people are left out of the recovery.  A recent report by the St. Louis Federal Reserve shows that non college graduates have lost ground or are just maintaining their economic status since 1998.

Sources: The New York Times, Federal Reserve Bank of St. Louis – 9/14/18

College graduates continue to make strides in income and dramatically increased wealth versus the median since 1989.  Though college graduates who were Black or Hispanic actually saw a decline in their wealth levels versus the median.  However, non-graduate whites while gaining some income versus the median saw their income largely stagnant and wealth accumulation flat.  Non graduate Hispanics and Blacks fared even worse than whites in the case of blacks making zero progress over the median in wealth and half the progress of whites in income over the last 30 years.

William R. Emmons, an economist at the St. Louis Fed and a co-author of its report, noted in a New York Times story, ‘the most striking result was the steep declines among white families headed by someone without a college degree. Members of this group — labeled the white working class — not only were left behind financially, but also lagged in other measures of well-being, like self-reported health, homeownership, and marriage or cohabitation rates.’

Next steps: 

We have noted in posts the urgent need for a comprehensive ‘Marshall Plan’ like imitative in our nation’s Heartland.  Unemployment is two to three times higher there, high quality education is not as accessible, the opioid epidemic is gripping major sections of the Midwest and rural South while there is a failing infrastructure with slow Internet speeds.  All this lack of investment leaves our Heartland citizens out of the economic and career opportunities that other regions have enjoyed since the Great Recession.   We recommend that the federal government provide seed funding, borrowing from the successful Silicon Valley mode of venture investment, for partnerships between universities and colleges to develop innovation centers for job training, health services, enhanced apprenticeship programs, startup incubators and installation of high speed internet fiber optic systems.  There is no time to waste, this initiative needs to be implemented immediately to prevent even further widening of the economic gap between coastal regions and our Heartland.

What are our goals as Americans?

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: bu.edu

We need to come together on what we all want if we are to have a government that works for all not just the rich. What are our goals?  What is our mission as a country?  What binds us together in seeking the common good?

The Preamble to the Constitution provides insights and guidance:

We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.”

Let’s look at the first phrase ‘ to form a more perfect union’ – this phrase implies that things are not perfect that the country is a work in progress.  To ‘establish justice’ for all means not a system of justice just for the top 1 % or the privileged.  Justice means that the law is blind to outward power or religion, race, color or other personal factors.  Justice says that equality of justice for all under the law needs to happen in applying the law to all, so the poor, black or others don’t feel the weight of justice on them greater than other people. To ‘ensure domestic tranquility’ we won’t enjoy life, raise families, perform in our jobs, or provide service if our country is in constant uproar or unsafe.  Peace needs to be protected and available to every citizen, including those living in ‘unsafe areas’, they have a right to live in a safe neighborhood too.  Tranquility means the political dialogue between difference points of view is conducted in civility and respect.

To ‘provide for the common defense’ means that we expect our government to keep us safe from foreign aggression and the government – not vigilantes are to keep the peace under the Constitution. To ‘promote the general welfare’.  Key environmental elements of our existence we all share; air, water, land  means we will be strident in protecting our natural resources. We need to support institutions that sustain the general welfare like federal, state and local agencies that ensure we have access to all these environment elements but also, education, health and freedom to travel.

Finally, to ‘secure the blessings of liberty to ourselves and posterity’ implies that there is equality of opportunity for all.  We all have differences, we have the liberty to pursue whatever goals we have for our lives, our families and our friends.  We need to ensure that equal opportunities are safeguarded and provided for all regardless of wealth, race, color, religion or orientation. Education is a keystone to our providing a path for those at the lower end of the income scale to apply themselves, get a good education and contribute to our country to the highest level of their ability possible.

Our country thrives as the most prosperous country in the world because we let people be free to follow their dreams and help those who come to our shores to pursue their dreams here.  We need to remember the goals the Preamble to the Constitution sets out to establish through a government by the people. We must become united in these shared goals to make real progress in solving the national problems we face.

California Urges World Leaders to Move Fast On Climate Solutions

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: globalclimateactionsummit.org

Yesterday, California Gov. Jerry Brown, convened the  Global Climate Action Summit in San Francisco.  The Summit brought together climate change leaders from around the world in private, government and non – government sectors to focus on action-oriented programs to mitigate the effects of global warming. Just before the meeting started Governor Brown signed into law a goal for the state to be using 100 % electric and renewable energy by 2045.

The conference sponsors focused on urgency in their introduction to the conference:

The Global Climate Action Summit, happening midway between Paris 2015 and 2020, is timed to provide the confidence to governments to ‘step up’ and trigger this next level of ambition sooner rather than later. 

The momentum we generate this year must lead to bending the curve of emissions down by 2020—science advises us that this gives the world the best opportunity to prevent the worst effects of climate change. 2018 therefore must be the beginning of a new phase of action and ambition on climate change.

The Summit will underscore the urgency of the threat of climate change by mobilizing the voices and experience of real people, in real communities already facing real and stark threats. It will challenge and channel the energy and idealism of people everywhere to step up and overcome it.”

The carbonization of our planet is the preeminent challenge of our times, possibly threatening our very existence long term.  World-wide temperature records are being set from Tokyo to Washington as the following heat map for 2018 indicates:

Source: The Washington Post – 7/5/18

About 25 % of the heat is being soaked up by the ocean causing algae blooms which can contaminate water and cause wildlife to die. Scientists in the Pacific Northwest have discovered how certain ocean plants can dilute and mitigate water acidity. There are a variety of solutions being developed by governments and private businesses, yet what we need is a coordinated effort focused on those solutions that are most effective, affordable and can be quickly implemented.

We applaud California leaders for taking the initiative on this critical issue of our times to urge world governments to implement solutions to climate change before the problem goes beyond our ability to cope with the effects.

End Offshore Corporate Tax Havens

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: marylandpirg.org

In 2016, multinational U.S. corporations booked over 50 % of their foreign profits in overseas tax havens.  Whether the profits are made in Casablanca or Singapore corporations are using lax US tax laws and accommodative offshore tax haven laws to book profits where they can’t be taxed at fair share rates.  Note that pre-tax profits viewed as a percentage of wages paid ranged from 200 % in Singapore to 800 % in Ireland!

Sources: The Wall Street Journal, The Daily Shot – 9/12/18

Combine this tax information with the soaring use of stock buybacks by moving dollars from these offshore accounts to juice the price of their stock and we see corporate executives doing a great job of increasing their stock based compensation.

Sources: Compustat, Bloomberg Finance LP, Deutsche Bank, The Wall Street Journal, The Daily Shot – 9/12/18

The US stock market has dramatically diverged from overseas markets where China markets are down in bearish territory at 20 % for the year and emerging markets down close to 18 %. Yet, the  S & P 500 Index of U.S. stocks is up 7.4 % for the year.  With all the uncertainty in emerging country currencies, trade wars, lack of wages, falling home and care sales, the U.S. stock markets keep rising being propped up by stock buybacks. Nearly $1 trillion of buy backs have been announced for the year. Buy back dollars are not going toward raising employee wages which are 312 times lower than CEO wages.

Sources: The Wall Street Journal, The Daily Shot – 9/12/18

Little wonder workers are not getting a fair wage in many industries with corporate executives stashing money overseas where it is out of reach of U.S. tax laws.  Plus, executives are compensated for increasing profits, not increasing wages that would cut into profits.

Next Steps:

Corporations received a windfall from the Tax Bill last year which did not change taxation of U.S. corporate profits overseas, but instead gave corporations a huge one-time tax break on repatriated funds from the listed rate of 35 % to 15.5 % for cash related assets and 8% for illiquid assets.  Many corporations did bring funds back to U.S. this year, yet 70 % of the funds were used for dividends and stock buybacks. Only a small percentage of repatriated funds went to raising worker’s wages which is what CEOs promised they would do when lobbying for the Tax Bill.

It is time for corporate leaders to understand they need to start paying their fair share of U.S. taxes for entities overseas, and they need to pay a share of the cost of our armed forces overseas.  They benefit directly from having safe countries, government protection through embassies and staff and safe passage of cargo worldwide.  Plus, the U.S. government working in partnership with corporations provides businesses opportunities that firms from other countries with less presence don’t enjoy.  U.S. corporations need to pay up, and recognize profits in their respective countries where they do business with a share going to the U.S. government for the offshore benefits they receive.

Declining Mobility Limits Millennials Careers, Economy

 

Image: dailymail.co.uk

More millennials are living with their parents than ever before due to lack of income, availability of housing and marriage later in life.  Moves by people under age 35 are continuing to decline.  Seniors are moving a bit more but overall they are staying put in their homes for retirement, as the cost to move to a new home is soaring.  Home prices have increased on average by 6.7 % per year over the past five years, skewed toward large square foot homes for upper income buyers.

Source: Trulia – 1/31/2018

Overall Americans are not moving like they used to in the 1990s, and before the Great Recession. In 2017, 34.9 million Americans moved to new residences, translating to a household mobility rate of 10.9%, which is the lowest rate in the last 50 years since the Census Bureau has been tracking this statistic. Lack of mobility is showing up in total household formations including rental units, new and existing home figures.  For all of 2017 there were only 400,000 household units formed, notice this is a similar pace to the aftermath of the Great Recession.

Source: Federal Reserve of St. Louis, 1/2018

The mobility that is taking place is from major cities to major cities or coast to coast.  We noted in our post on Heartland Economics that one of the issues that faces many rural regions in the South and Midwest is lack of new jobs, digital infrastructure, health and education services.  When young people in these regions cannot receive the education they need to build a career where there are jobs in the cities they stay where they are in low wage jobs with few prospects of advancement. The opioid epidemic is worst in rural regions in the country where a sense of hopelessness has set in for many people.  While in the last quarter some of these regions have seen an increase in jobs, this increase in economic activity is likely to be a passing surge from a very low economic base to begin with that will not last without long term investment.

Next Steps:

Why should we be concerned with lack of workforce mobility?  Because, when people do not move to take on new jobs, or start families or get away from home, home purchases decline, furniture sales drop, appliance sales fall and the overall economic life blood of our economy stagnates. What do we need to do?  Raise wages for workers to a decent level in each metro and rural region of the country, so people can build a nest egg and make a down payment on a home.  Rental unit pricing needs to be addressed in a way that is fair to the multiunit owner while holding down rental costs. The most recent Tax Bill passed in December of 2017 eliminated the provision for tax deductions by employers or workers for unreimbursed moving expenses.  This provision needs to be reinstated to drive the costs of moving down.  Interest on first mortgages should be made tax deductible for all regions of the country with a special emphasis on low income first time buyers. In rural regions we recommend special tax zones be established to offer incentives for investors to setup businesses there, with partnerships with local universities to build incubators for startups much along the model pioneered in Silicon Valley yet tuned to the needs of the region.  The size of our workforce is declining, we have young people staying at home so we need to address the issue of lack of mobility head on to provide the  life opportunities to our young people that earlier generations enjoyed.

Civic Service Sustains the Common Good

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: wikipedia.org

Benjamin Franklin was asked by a woman as he walked out from a hundred days writing the Constitution, “Doctor, do we have a Monarchy, or a Republic?”  He warned, “A Republic, if you can keep it.”  Franklin’s point was to ensure the new American government would endure, citizens had to get involved, participate in civic pursuits and be concerned about their government.

From Aristotle’s time when civic virtue was proclaimed as an attribute of the good citizen to today’s activists all civic participation is rooted in service.   How do we foster ‘otherness’ in our citizenry?  Starting from birth, a child receives support and love from its mother and father.  Closer to the mother at first, experiencing the nurturing and selflessness of the mother in the home.  Families provide a way for children to learn to support their siblings, parents, aunts, uncles and grandparents.  They learn to do chores that support the family, certainly this was a requirement in farm based families.

Today, most families are in urban centers with the mother and father likely to be both working, and chores are less clear with household machines and the Internet.  Kids spend more time on electronic devices than talking with family members. So, how do children learn to be selfless?  Volunteering at school, participating in local charities, with their mother and father taking the lead in initiating family service are all good ways to learn service.

Yet, what about our urban core areas or poor areas where families are just trying to survive day to day, do they have time for service?  Or where there is only one head of house to provide or raise the children? They need support, plus as a society we are so segregated by income and residence there is rarely a mixing of classes, ethnicities or cultures.

Domestic service, sponsored by the federal government for all young people 18 – 24 years of age for two years in programs patterned after Americorp is a good start.  Americans from all walks of life have an opportunity to serve their communities, states or travel to other areas of the country to provide necessary support services in areas they would otherwise never live.

We have fewer life experiences where we work with mixed classes working toward a share goal, resulting in a highly divisive and abusive civil discourse.  If we start working together to support our communities, our states, and our country maybe we can discover that we have more in common and build on those common interests in our civic affairs.

 

Driver Connects Patients with Cancer Treatments

Image: wahospitality.org

Cancer treatment in the U.S. cost $87.8 billion in 2014, with 1.7 million new cases being diagnosed each year.  In a analysis by the American Cancer Society, patients paid $3.8 billion in out of pocket expenses for their care in 2014.

Source: American Cancer Society – 4/2017

One of the major problems in cancer care is the physician centric model the U.S. has today, which can create major delays in treatment and sometimes mismatches the patient with a specific type of cancer with the correct care program.

Driver, a startup with over $100 million in venture backing has developed an application on the Internet to help patients correctly identify the type of cancer they have and match them to clinical trials and treatment programs. The software allows the patient to be proactive about managing the course of treatment without being totally dependent the treatment processes of their healthcare provider. Driver has partnered with the National Cancer Institute (NCI) to provide access to the latest information on cancer treatment trials. NCI has also validated the matching process that Driver employs.

“There is an air gap between knowledge and patients that has existed in cancer care since the 1850s,” said Driver co-founder Will Polkinghorn. “We want to close that space, “ in a recent Bloomberg interview.

The Driver app puts the patient in the driver’s seat so they are empowered to take command of their care.  As time is of the essence in cancer care, educating patients and giving them access to the information to initiate their care is crucial.  While the target is to provide the application and cancer identification workup at low cost, the initial trial starting this month in the U.S. and China will cost patients $3,000.

We have been an advocate of innovative ways to provide health care to patients.  Empowering patients to take direct management of their care instead of being dependent on a bureaucracy in a health provider network is an interesting approach.  Providing updated information, access to clinical trials with direct identification of the specific cancer the patient has, will possibly ensure greater accuracy and speed in the treatment process, thus saving more lives and reducing costs. Innovative solutions that disrupt the present status quo of extremely expensive health insurance, provider, drug manufacturers and federal government complex need to shift if we are to see a lower cost, higher quality healthcare system.  In particular, our Heartland healthcare providers are falling behind in providing standard health care to our people.  We need to turn this spiraling down in care with soaring prices, now.

57M Gig Economy Workers Hit Benefit Limits

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: thcceomagazine.com

Gig workers create millions of dollars of goods and services for the U.S. economy yet remain frustrated at not picking off a benefits stream for themselves. While, gig economy workers enjoy ‘lifestyle benefits’ they are lacking in good health insurance, retirement plans, stock options and addons like commute cost compensation, discounts at restaurants, staff lunches, evening taxi service, onsite laundry and company cafeteria.  Income is irregular and unpredictable for contractors whether the gig is a project or a longer term assignment with an agency.

In Silicon Valley and many high growth regions jobs in security, food concession, facilities management, IT, accounting, travel, web design, and HR have been outsourced, contracted or shifted to independent contractor roles working in their home. While independent contractors have autonomy and work flexibility they are missing key benefits.  Contingent workers like Uber drivers using the Uber app to find riders and handle billing are essentially working for the company yet not enjoying full time worker benefits.

So, how widespread in our economy is the contractor workforce?  Gallup completed a recent survey and found about 36 % of the workforce is engaged in some type of gig work.

Sources: Gallup, The Wall Street Journal, The Daily Shot – 9/5/18

Seven percent of workers had one traditional job and a gig job while 3 % had two gig type jobs for a total of 10 % with two jobs.  Workers in the bottom 80 % in income have seen their wages actually decline over the past 10 years. So, it is no surprise they need to hold at least two jobs to maintain their standard of living.  The number of workers holding multiple jobs has skyrocketed in the past few years.

Sources: Deutsche Bank, The Wall Street Journal, The Daily Shot – 9/5/18

Note the high during the Great Recession of multiple job holders, and yet today in a strong economy we see a similar peak in workers with multiple jobs.  Is this economy really working for the majority of the labor force?

Next Steps:

The economy has not ‘lifted all boats’, we know that the top 10 % in income received 90 % of the income gains since 2008.  The most recent Tax Bill from Congress benefited the top 1 % and corporations to the tune of a $1 trillion deficit to be paid by all taxpayers who are seeing their incomes and benefits decline.  The gig economy has been a mechanism for corporate executives and their wealthy shareholders to cut costs, pass along retirement benefits responsibility to employees and shut many workers out of profit sharing programs.

We have proposed in previous posts that in addition to raising worker wages, gig economy works would be well served if they received health insurance from birth, a retirement program in tandem with Social Security at the time of a worker’s first job and other income protections.

It is time we recognize that the gig economy is here to stay, it is a key component of the dynamism and flexibility in the workforce to drive growth and innovation – we need to plan for the just needs of workers to make the economy work for all.

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