Editor's Note:
This is a quite long essay by Bill Moyers, but one well worth the time as we go about our advocacy and other political work. Food for thought!
- SPC
We, the Plutocrats vs. We, the People
Saving the Soul of Democracy
by Bill Moyers
Sixty-six years ago this summer, on my 16th birthday, I went to work for the daily newspaper in the small East Texas town of Marshall where I grew up. It was a good place to be a cub reporter -- small enough to navigate but big enough to keep me busy and learning something every day. I soon had a stroke of luck. Some of the paper’s old hands were on vacation or out sick and I was assigned to help cover what came to be known across the country as “the housewives' rebellion.”
Fifteen women in my hometown decided not to pay the social security withholding tax for their domestic workers. Those housewives were white, their housekeepers black. Almost half of all employed black women in the country then were in domestic service. Because they tended to earn lower wages, accumulate less savings, and be stuck in those jobs all their lives, social security was their only insurance against poverty in old age. Yet their plight did not move their employers.
The housewives argued that social security was unconstitutional and imposing it was taxation without representation. They even equated it with slavery. They also claimed that “requiring us to collect [the tax] is no different from requiring us to collect the garbage.” So they hired a high-powered lawyer -- a notorious former congressman from Texas who had once chaired the House Un-American Activities Committee -- and took their case to court. They lost, and eventually wound up holding their noses and paying the tax, but not before their rebellion had become national news.
The stories I helped report for the local paper were picked up and carried across the country by the Associated Press. One day, the managing editor called me over and pointed to the AP Teletype machine beside his desk. Moving across the wire was a notice citing our paper and its reporters for our coverage of the housewives' rebellion.
I was hooked, and in one way or another I’ve continued to engage the issues of money and power, equality and democracy over a lifetime spent at the intersection between politics and journalism. It took me awhile to put the housewives' rebellion into perspective. Race played a role, of course. Marshall was a segregated, antebellum town of 20,000, half of whom were white, the other half black. White ruled, but more than race was at work. Those 15 housewives were respectable townsfolk, good neighbors, regulars at church (some of them at my church). Their children were my friends; many of them were active in community affairs; and their husbands were pillars of the town’s business and professional class.
So what brought on that spasm of rebellion? They simply couldn’t see beyond their own prerogatives. Fiercely loyal to their families, their clubs, their charities, and their congregations -- fiercely loyal, that is, to their own kind -- they narrowly defined membership in democracy to include only people like themselves. They expected to be comfortable and secure in their old age, but the women who washed and ironed their laundry, wiped their children’s bottoms, made their husbands’ beds, and cooked their family’s meals would also grow old and frail, sick and decrepit, lose their husbands and face the ravages of time alone, with nothing to show from their years of labor but the crease in their brow and the knots on their knuckles.
In one way or another, this is the oldest story in our country’s history: the struggle to determine whether “we, the people” is a metaphysical reality -- one nation, indivisible -- or merely a charade masquerading as piety and manipulated by the powerful and privileged to sustain their own way of life at the expense of others.
“I Contain Multitudes”
There is a vast difference between a society whose arrangements roughly serve all its citizens and one whose institutions have been converted into a stupendous fraud, a democracy in name only. I have no doubt about what the United States of America was meant to be. It’s spelled out right there in the 52 most revolutionary words in our founding documents, the preamble to our Constitution, proclaiming the sovereignty of the people as the moral base of government:
“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.”
What do those words mean, if not that we are all in the business of nation-building together?
Now, I recognize that we’ve never been a country of angels guided by a presidium of saints. Early America was a moral morass. One in five people in the new nation was enslaved. Justice for the poor meant stocks and stockades. Women suffered virtual peonage. Heretics were driven into exile, or worse. Native people -- the Indians -- would be forcibly removed from their land, their fate a “trail of tears” and broken treaties.
No, I’m not a romantic about our history and I harbor no idealized notions of politics and democracy. Remember, I worked for President Lyndon Johnson. I heard him often repeat the story of the Texas poker shark who leaned across the table and said to his mark: “Play the cards fair, Reuben. I know what I dealt you.” LBJ knew politics.
Nor do I romanticize “the people.” When I began reporting on the state legislature while a student at the University of Texas, a wily old state senator offered to acquaint me with how the place worked. We stood at the back of the Senate floor as he pointed to his colleagues spread out around the chamber -- playing cards, napping, nipping, winking at pretty young visitors in the gallery -- and he said to me, “If you think these guys are bad, you should see the people who sent them there.”
And yet, despite the flaws and contradictions of human nature -- or perhaps because of them -- something took hold here. The American people forged a civilization: that thin veneer of civility stretched across the passions of the human heart. Because it can snap at any moment, or slowly weaken from abuse and neglect until it fades away, civilization requires a commitment to the notion (contrary to what those Marshall housewives believed) that we are all in this together.
American democracy grew a soul, as it were -- given voice by one of our greatest poets, Walt Whitman, with his all-inclusive embrace in Song of Myself:
“Whoever degrades another degrades me,
and whatever is done or said returns at last to me...
I speak the pass-word primeval -- I give the sign of democracy;
By God! I will accept nothing which all cannot have their counterpart of on the same terms...
(I am large -- I contain multitudes.)”
Author Kathleen Kennedy Townsend has vividly described Whitman seeing himself in whomever he met in America. As he wrote in I Sing the Body Electric:
“-- the horseman in his saddle,
Girls, mothers, house-keepers, in all their performances,
The group of laborers seated at noon-time with their open dinner-kettles and their wives waiting,
The female soothing a child -- the farmer’s daughter in the garden or cow-yard,
The young fellow hoeing corn --”
Whitman’s words celebrate what Americans shared at a time when they were less dependent on each other than we are today. As Townsend put it, “Many more people lived on farms in the nineteenth century, and so they could be a lot more self-reliant; growing their own food, sewing their clothes, building their homes. But rather than applauding what each American could do in isolation, Whitman celebrated the vast chorus: ‘I hear America singing.’” The chorus he heard was of multitudinous voices, a mighty choir of humanity.
Whitman saw something else in the soul of the country: Americans at work, the laboring people whose toil and sweat built this nation. Townsend contrasts his attitude with the way politicians and the media today -- in their endless debates about wealth creation, capital gains reduction, and high corporate taxes -- seem to have forgotten working people. “But Whitman wouldn’t have forgotten them.” She writes, “He celebrates a nation where everyone is worthy, not where a few do well.”
President Franklin Delano Roosevelt understood the soul of democracy, too. He expressed it politically, although his words often ring like poetry. Paradoxically, to this scion of the American aristocracy, the soul of democracy meant political equality. “Inside the polling booth,” he said, “every American man and woman stands as the equal of every other American man and woman. There they have no superiors. There they have no masters save their own minds and consciences.”
God knows it took us a long time to get there. Every claim of political equality in our history has been met by fierce resistance from those who relished for themselves what they would deny others. After President Abraham Lincoln signed the Emancipation Proclamation it took a century before Lyndon Johnson signed the Voting Rights Act of 1965 -- a hundred years of Jim Crow law and Jim Crow lynchings, of forced labor and coerced segregation, of beatings and bombings, of public humiliation and degradation, of courageous but costly protests and demonstrations. Think of it: another hundred years before the freedom won on the bloody battlefields of the Civil War was finally secured in the law of the land.
And here’s something else to think about: Only one of the women present at the first women’s rights convention in Seneca Falls in 1848 -- only one, Charlotte Woodward -- lived long enough to see women actually get to vote.
“We Pick That Rabbit Out of the Hat”
So it was, in the face of constant resistance, that many heroes -- sung and unsung -- sacrificed, suffered, and died so that all Americans could gain an equal footing inside that voting booth on a level playing field on the ground floor of democracy. And yet today money has become the great unequalizer, the usurper of our democratic soul.
No one saw this more clearly than that conservative icon Barry Goldwater, longtime Republican senator from Arizona and one-time Republican nominee for the presidency. Here are his words from almost 30 years ago:
“The fact that liberty depended on honest elections was of the utmost importance to the patriots who founded our nation and wrote the Constitution. They knew that corruption destroyed the prime requisite of constitutional liberty: an independent legislature free from any influence other than that of the people. Applying these principles to modern times, we can make the following conclusions: To be successful, representative government assumes that elections will be controlled by the citizenry at large, not by those who give the most money. Electors must believe that their vote counts. Elected officials must owe their allegiance to the people, not to their own wealth or to the wealth of interest groups that speak only for the selfish fringes of the whole community.”
About the time Senator Goldwater was writing those words, Oliver Stone released his movie Wall Street. Remember it? Michael Douglas played the high roller Gordon Gekko, who used inside information obtained by his ambitious young protégé, Bud Fox, to manipulate the stock of a company that he intended to sell off for a huge personal windfall, while throwing its workers, including Bud’s own blue-collar father, overboard. The younger man is aghast and repentant at having participated in such duplicity and chicanery, and he storms into Gekko’s office to protest, asking, “How much is enough, Gordon?”
Gekko answers:
“The richest one percent of this country owns half our country’s wealth, five trillion dollars… You got ninety percent of the American public out there with little or no net worth. I create nothing. I own. We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip. We pick that rabbit out of the hat while everybody sits out there wondering how the hell we did it. Now, you’re not naïve enough to think we’re living in a democracy, are you, Buddy? It’s the free market. And you’re part of it.”
That was in the high-flying 1980s, the dawn of today’s new gilded age. The Greek historian Plutarch is said to have warned that “an imbalance between rich and poor is the oldest and most fatal ailment of a Republic.” Yet as the Washington Post pointedout recently, income inequality may be higher at this moment than at any time in the American past.
When I was a young man in Washington in the 1960s, most of the country’s growth accrued to the bottom 90% of households. From the end of World War II until the early 1970s, in fact, income grew at a slightly faster rate at the bottom and middle of American society than at the top. In 2009, economists Thomas Piketty and Emmanuel Saez explored decades of tax data and found that from 1950 through 1980 the average income of the bottom 90% of Americans had grown, from $ 17,719 to $ 30,941. That represented a 75% increase in 2008 dollars.
Since 1980, the economy has continued to grow impressively, but most of the benefits have migrated to the top. In these years, workers were more productive but received less of the wealth they were helping to create. In the late 1970s, the richest 1% received 9% of total income and held 19% of the nation’s wealth. The share of total income going to that 1% would then rise to more than 23% by 2007, while their share of total wealth would grow to 35%. And that was all before the economic meltdown of 2007-2008.
Even though everyone took a hit during the recession that followed, the top 10% now hold more than three-quarters of the country’s total family wealth.
I know, I know: statistics have a way of causing eyes to glaze over, but these statistics highlight an ugly truth about America: inequality matters. It slows economic growth, undermines health, erodes social cohesion and solidarity, and starves education. In their study The Spirit Level: Why Greater Equality Makes Societies Stronger, epidemiologists Richard Wilkinson and Kate Pickett found that the most consistent predictor of mental illness, infant mortality, low educational achievement, teenage births, homicides, and incarceration was economic inequality.
So bear with me as I keep the statistics flowing. The Pew Research Center recently releaseda new study indicating that, between 2000 and 2014, the middle class shrank in virtually all parts of the country. Nine out of ten metropolitan areas showed a decline in middle-class neighborhoods. And remember, we aren’t even talking about over 45 million people who are living in poverty. Meanwhile, between 2009 and 2013, that top 1% captured 85% percent of all income growth. Even after the economy improved in 2015, they still took in more than half of the income growth and by 2013 held nearly half of all the stock and mutual fund assets Americans owned.
Now, concentrations of wealth would be far less of an issue if the rest of society were benefitting proportionally. But that isn’t the case.
Once upon a time, according to Isabel Sawhill and Sara McClanahan in their 2006 report Opportunity in America, the American ideal was one in which all children had “a roughly equal chance of success regardless of the economic status of the family into which they were born.”
Almost 10 years ago, economist Jeffrey Madrick wrote that, as recently as the 1980s, economists thought that “in the land of Horatio Alger only 20 percent of one’s future income was determined by one’s father's income.” He then cited research showing that, by 2007, “60 percent of a son’s income [was] determined by the level of income of the father. For women, it [was] roughly the same.” It may be even higher today, but clearly a child's chance of success in life is greatly improved if he’s born on third base and his father has been tipping the umpire.
This raises an old question, one highlighted by the British critic and public intellectual Terry Eagleton in an article in the Chronicle of Higher Education:
”Why is it that the capitalist West has accumulated more resources than human history has ever witnessed, yet appears powerless to overcome poverty, starvation, exploitation, and inequality?... Why does private wealth seem to go hand in hand with public squalor? Is it... plausible to maintain that there is something in the nature of capitalism itself which generates deprivation and inequality?”
The answer, to me, is self-evident. Capitalism produces winners and losers big time. The winners use their wealth to gain political power, often through campaign contributions and lobbying. In this way, they only increase their influence over the choices made by the politicians indebted to them. While there are certainly differences between Democrats and Republicans on economic and social issues, both parties cater to wealthy individuals and interests seeking to enrich their bottom lines with the help of the policies of the state (loopholes, subsidies, tax breaks, deregulation). No matter which party is in power, the interests of big business are largely heeded.
More on that later, but first, a confession. The legendary broadcast journalist Edward R. Murrow told his generation of journalists that bias is okay as long as you don’t try to hide it. Here’s mine: plutocracy and democracy don’t mix. As the late (and great) Supreme Court Justice Louis Brandeis said, “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.” Of course the rich can buy more homes, cars, vacations, gadgets, and gizmos than anyone else, but they should not be able to buy more democracy. That they can and do is a despicable blot on American politics that is now spreading like a giant oil spill.
In May, President Obama and I both spoke at the Rutgers University commencement ceremony. He was at his inspirational best as 50,000 people leaned into every word. He lifted the hearts of those young men and women heading out into our troubled world, but I cringed when he said, “Contrary to what we hear sometimes from both the left as well as the right, the system isn’t as rigged as you think...”
Wrong, Mr. President, just plain wrong. The people are way ahead of you on this. In a recent poll, 71% of Americans across lines of ethnicity, class, age, and gender said they believe the U.S. economy is rigged. People reported that they are working harder for financial security. One quarter of the respondents had not taken a vacation in more than five years. Seventy-one percent said that they are afraid of unexpected medical bills; 53% feared not being able to make a mortgage payment; and, among renters, 60% worried that they might not make the monthly rent.
Millions of Americans, in other words, are living on the edge. Yet the country has not confronted the question of how we will continue to prosper without a workforce that can pay for its goods and services.
Who Dunnit?
You didn’t have to read Das Kapital to see this coming or to realize that the United States was being transformed into one of the harshest, most unforgiving societies among the industrial democracies. You could instead have read the Economist,arguably the most influential business-friendly magazine in the English-speaking world. I keep in my files a warning published in that magazine a dozen years ago, on the eve of George W. Bush’s second term. The editors concluded back then that, with income inequality in the U.S. reaching levels not seen since the first Gilded Age and social mobility diminishing, “the United States risks calcifying into a European-style class-based society.”
And mind you, that was before the financial meltdown of 2007-2008, before the bailout of Wall Street, before the recession that only widened the gap between the super-rich and everyone else. Ever since then, the great sucking sound we’ve been hearing is wealth heading upwards. The United States now has a level of income inequality unprecedented in our history and so dramatic it’s almost impossible to wrap one’s mind around.
Contrary to what the president said at Rutgers, this is not the way the world works; it’s the way the world is made to work by those with the money and power. The movers and shakers -- the big winners -- keep repeating the mantra that this inequality was inevitable, the result of the globalization of finance and advances in technology in an increasingly complex world. Those are part of the story, but only part. As G.K. Chesterton wrote a century ago, “In every serious doctrine of the destiny of men, there is some trace of the doctrine of the equality of men. But the capitalist really depends on some religion of inequality.”
Exactly. In our case, a religion of invention, not revelation, politically engineered over the last 40 years. Yes, politically engineered. On this development, you can’t do better than read Winner Take All Politics: How Washington Made the Rich Richer and Turned Its Back on the Middle Class by Jacob Hacker and Paul Pierson, the Sherlock Holmes and Dr. Watson of political science.
They were mystified by what had happened to the post-World War II notion of “shared prosperity”; puzzled by the ways in which ever more wealth has gone to the rich and super rich; vexed that hedge-fund managers pull in billions of dollars, yet pay taxes at lower rates than their secretaries; curious about why politicians kept slashing taxes on the very rich and handing huge tax breaks and subsidies to corporations that are downsizing their work forces; troubled that the heart of the American Dream -- upward mobility -- seemed to have stopped beating; and dumbfounded that all of this could happen in a democracy whose politicians were supposed to serve the greatest good for the greatest number. So Hacker and Pierson set out to find out “how our economy stopped working to provide prosperity and security for the broad middle class.”
In other words, they wanted to know: “Who dunnit?” They found the culprit. With convincing documentation they concluded, “Step by step and debate by debate, America’s public officials have rewritten the rules of American politics and the American economy in ways that have benefitted the few at the expense of the many.”
There you have it: the winners bought off the gatekeepers, then gamed the system. And when the fix was in they turned our economy into a feast for the predators, “saddling Americans with greater debt, tearing new holes in the safety net, and imposing broad financial risks on Americans as workers, investors, and taxpayers.” The end result, Hacker and Pierson conclude, is that the United States is looking more and more like the capitalist oligarchies of Brazil, Mexico, and Russia, where most of the wealth is concentrated at the top while the bottom grows larger and larger with everyone in between just barely getting by.
Bruce Springsteen sings of “the country we carry in our hearts.” This isn’t it.
“God’s Work”
Looking back, you have to wonder how we could have ignored the warning signs. In the 1970s, Big Business began to refine its ability to act as a class and gang up on Congress. Even before the Supreme Court’s Citizens United decision, political action committees deluged politics with dollars. Foundations, corporations, and rich individuals funded think tanks that churned out study after study with results skewed to their ideology and interests. Political strategists made alliances with the religious right, with Jerry Falwell’s Moral Majority and Pat Robertson’s Christian Coalition, to zealously wage a cultural holy war that would camouflage the economic assault on working people and the middle class.
To help cover-up this heist of the economy, an appealing intellectual gloss was needed. So public intellectuals were recruited and subsidized to turn “globalization,” “neo-liberalism,” and “the Washington Consensus” into a theological belief system. The “dismal science of economics” became a miracle of faith. Wall Street glistened as the new Promised Land, while few noticed that those angels dancing on the head of a pin were really witchdoctors with MBAs brewing voodoo magic. The greed of the Gordon Gekkos -- once considered a vice -- was transformed into a virtue. One of the high priests of this faith, Lloyd Blankfein, CEO of Goldman Sachs, looking in wonder on all that his company had wrought, pronounced it “God’s work.”
A prominent neoconservative religious philosopher even articulated a “theology of the corporation.” I kid you not. And its devotees lifted their voices in hymns of praise to wealth creation as participation in the Kingdom of Heaven here on Earth. Self-interest became the Gospel of the Gilded Age.
No one today articulates this winner-take-all philosophy more candidly than Ray Dalio. Think of him as the King Midas of hedge funds, with a personal worth estimated at almost $16 billion and a company, Bridgewater Associates, reportedly worth as much as $154 billion.
Dalio fancies himself a philosopher and has written a book of maximsexplaining his philosophy. It boils down to: “Be a hyena. Attack the Wildebeest.” (Wildebeests, antelopes native to southern Africa -- as I learned when we once filmed a documentary there -- are no match for the flesh-eating dog-like spotted hyenas that gorge on them.) Here’s what Dalio wroteabout being a Wall Street hyena:
“…when a pack of hyenas takes down a young wildebeest, is this good or bad? At face value, this seems terrible; the poor wildebeest suffers and dies. Some people might even say that the hyenas are evil. Yet this type of apparently evil behavior exists throughout nature through all species... like death itself, this behavior is integral to the enormously complex and efficient system that has worked for as long as there has been life... [It] is good for both the hyenas, who are operating in their self-interest, and the interests of the greater system, which includes the wildebeest, because killing and eating the wildebeest fosters evolution, i.e., the natural process of improvement... Like the hyenas attacking the wildebeest, successful people might not even know if or how their pursuit of self-interest helps evolution, but it typically does.”
He concludes: “How much money people have earned is a rough measure of how much they gave society what it wanted...”
Not this time, Ray. This time, the free market for hyenas became a slaughterhouse for the wildebeest. Collapsing shares and house prices destroyed more than a quarter of the wealth of the average household. Many people have yet to recover from the crash and recession that followed. They are still saddled with burdensome debt; their retirement accounts are still anemic. All of this was, by the hyena’s accounting, a social good, “an improvement in the natural process,” as Dalio puts it. Nonsense. Bull. Human beings have struggled long and hard to build civilization; his doctrine of “progress” is taking us back to the jungle.
And by the way, there’s a footnote to the Dalio story. Early this year, the founder of the world’s largest hedge fund, and by many accounts the richest man in Connecticut where it is headquartered, threatened to take his firm elsewhere if he didn’t get concessions from the state. You might have thought that the governor, a Democrat, would have thrown him out of his office for the implicit threat involved. But no, he buckled and Dalio got the $22 million in aid -- a $5 million grant and a $17 million loan -- that he was demanding to expand his operations. It’s a loan that may be forgiven if he keeps jobs in Connecticut and creates new ones. No doubt he left the governor’s office grinning like a hyena, his shoes tracking wildebeest blood across the carpet.
Our founders warned against the power of privileged factions to capture the machinery of democracies. James Madison, who studied history through a tragic lens, saw that the life cycle of previous republics had degenerated into anarchy, monarchy, or oligarchy. Like many of his colleagues, he was well aware that the republic they were creating could go the same way. Distrusting, even detesting concentrated private power, the founders attempted to erect safeguards to prevent private interests from subverting the moral and political compact that begins, “We, the people.” For a while, they succeeded.
When the brilliant young French aristocrat Alexis de Tocqueville toured America in the 1830s, he was excited by the democratic fervor he witnessed. Perhaps that excitement caused him to exaggerate the equality he celebrated. Close readers of de Tocqueville will notice, however, that he did warn of the staying power of the aristocracy, even in this new country. He feared what he called, in the second volume of his masterwork, Democracy in America, an “aristocracy created by business.” He described it as already among “the harshest that ever existed in the world” and suggested that, “if ever a permanent inequality of conditions and aristocracy again penetrate the world, it may be predicted that this is the gate by which they will enter.”
And so it did. Half a century later, the Gilded Age arrived with a new aristocratic hierarchy of industrialists, robber barons, and Wall Street tycoons in the vanguard. They had their own apologist in the person of William Graham Sumner, an Episcopal minister turned professor of political economy at Yale University. He famously explained that “competition... is a law of nature” and that nature “grants her rewards to the fittest, therefore, without regard to other considerations of any kind.”
From Sumner’s essays to the ravenous excesses of Wall Street in the 1920s to the ravings of Rush Limbaugh, Glenn Beck, and Fox News, to the business press’s wide-eyed awe of hyena-like CEOs; from the Republican war on government to the Democratic Party’s shameless obeisance to big corporations and contributors, this “law of nature” has served to legitimate the yawning inequality of income and wealth, even as it has protected networks of privilege and monopolies in major industries like the media, the tech sector, and the airlines.
A plethora of studies conclude that America’s political system has already been transformed from a democracy into an oligarchy (the rule of a wealthy elite). Martin Gilens and Benjamin Page, for instance, studied data from 1,800 different policy initiatives launched between 1981 and 2002. They found that “economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy while mass-based interest groups and average citizens have little or no independent influence.” Whether Republican or Democratic, they concluded, the government more often follows the preferences of major lobbying or business groups than it does those of ordinary citizens.
We can only be amazed that a privileged faction in a fervent culture of politically protected greed brought us to the brink of a second Great Depression, then blamed government and a “dependent” 47% of the population for our problems, and ended up richer and more powerful than ever.
The Truth of Your Life
Which brings us back to those Marshall housewives -- to all those who simply can’t see beyond their own prerogatives and so narrowly define membership in democracy to include only people like themselves.
How would I help them recoup their sanity, come home to democracy, and help build the sort of moral compact embodied in the preamble to the Constitution, that declaration of America’s intent and identity?
First, I’d do my best to remind them that societies can die of too much inequality.
Second, I’d give them copies of anthropologist Jared Diamond’s book Collapse: How Societies Choose to Fail or Succeedto remind them that we are not immune. Diamond won the Pulitzer Prize for describing how the damage humans have inflicted on their environment has historically led to the decline of civilizations. In the process, he vividly depicts how elites repeatedly isolate and delude themselves until it’s too late. How, extracting wealth from commoners, they remain well fed while everyone else is slowly starving until, in the end, even they (or their offspring) become casualties of their own privilege. Any society, it turns out, contains a built-in blueprint for failure if elites insulate themselves endlessly from the consequences of their decisions.
Third, I’d discuss the real meaning of “sacrifice and bliss” with them. That was the title of the fourth episode of my PBS series Joseph Campbell and the Power of Myth. In that episode, Campbell and I discussed the influence on him of the German philosopher Arthur Schopenhauer, who believed that the will to live is the fundamental reality of human nature. So he puzzled about why some people override it and give up their lives for others.
“Can this happen?” Campbell asked. “That what we normally think of as the first law of nature, namely self-preservation, is suddenly dissolved. What creates that breakthrough when we put another’s well-being ahead of our own?” He then told me of an incident that took place near his home in Hawaii, up in the heights where the trade winds from the north come rushing through a great ridge of mountains. People go there to experience the force of nature, to let their hair be blown in the winds -- and sometimes to commit suicide.
One day, two policemen were driving up that road when, just beyond the railing, they saw a young man about to jump. One of the policemen bolted from the car and grabbed the fellow just as he was stepping off the ledge. His momentum threatened to carry both of them over the cliff, but the policeman refused to let go. Somehow he held on long enough for his partner to arrive and pull the two of them to safety. When a newspaper reporter asked, “Why didn’t you let go? You would have been killed,” he answered: “I couldn’t... I couldn’t let go. If I had, I couldn’t have lived another day of my life.”
Campbell then added: “Do you realize what had suddenly happened to that policeman? He had given himself over to death to save a stranger. Everything else in his life dropped off. His duty to his family, his duty to his job, his duty to his own career, all of his wishes and hopes for life, just disappeared.” What mattered was saving that young man, even at the cost of his own life.
How can this be, Campbell asked? Schopenhauer’s answer, he said, was that a psychological crisis represents the breakthrough of a metaphysical reality, which is that you and the other are two aspects of one life, and your apparent separateness is but an effect of the way we experience forms under the conditions of space and time. Our true reality is our identity and unity with all life.
Sometimes, however instinctively or consciously, our actions affirm that reality through some unselfish gesture or personal sacrifice. It happens in marriage, in parenting, in our relations with the people immediately around us, and in our participation in building a society based on reciprocity.
The truth of our country isn’t actually so complicated. It’s in the moral compact implicit in the preamble to our Constitution: we’re all in this together. We are all one another’s first responders. As the writer Alberto Rios once put it, “I am in your family tree and you are in mine.”
I realize that the command to love our neighbor is one of the hardest of all religious concepts, but I also recognize that our connection to others goes to the core of life’s mystery and to the survival of democracy. When we claim this as the truth of our lives -- when we live as if it’s so -- we are threading ourselves into the long train of history and the fabric of civilization; we are becoming “we, the people.”
The religion of inequality -- of money and power -- has failed us; its gods are false gods. There is something more essential -- more profound -- in the American experience than the hyena’s appetite. Once we recognize and nurture this, once we honor it, we can reboot democracy and get on with the work of liberating the country we carry in our hearts
Saving the Soul of Democracy
by Bill Moyers
Sixty-six years ago this summer, on my 16th birthday, I went to work for the daily newspaper in the small East Texas town of Marshall where I grew up. It was a good place to be a cub reporter -- small enough to navigate but big enough to keep me busy and learning something every day. I soon had a stroke of luck. Some of the paper’s old hands were on vacation or out sick and I was assigned to help cover what came to be known across the country as “the housewives' rebellion.”
Fifteen women in my hometown decided not to pay the social security withholding tax for their domestic workers. Those housewives were white, their housekeepers black. Almost half of all employed black women in the country then were in domestic service. Because they tended to earn lower wages, accumulate less savings, and be stuck in those jobs all their lives, social security was their only insurance against poverty in old age. Yet their plight did not move their employers.
The housewives argued that social security was unconstitutional and imposing it was taxation without representation. They even equated it with slavery. They also claimed that “requiring us to collect [the tax] is no different from requiring us to collect the garbage.” So they hired a high-powered lawyer -- a notorious former congressman from Texas who had once chaired the House Un-American Activities Committee -- and took their case to court. They lost, and eventually wound up holding their noses and paying the tax, but not before their rebellion had become national news.
The stories I helped report for the local paper were picked up and carried across the country by the Associated Press. One day, the managing editor called me over and pointed to the AP Teletype machine beside his desk. Moving across the wire was a notice citing our paper and its reporters for our coverage of the housewives' rebellion.
I was hooked, and in one way or another I’ve continued to engage the issues of money and power, equality and democracy over a lifetime spent at the intersection between politics and journalism. It took me awhile to put the housewives' rebellion into perspective. Race played a role, of course. Marshall was a segregated, antebellum town of 20,000, half of whom were white, the other half black. White ruled, but more than race was at work. Those 15 housewives were respectable townsfolk, good neighbors, regulars at church (some of them at my church). Their children were my friends; many of them were active in community affairs; and their husbands were pillars of the town’s business and professional class.
So what brought on that spasm of rebellion? They simply couldn’t see beyond their own prerogatives. Fiercely loyal to their families, their clubs, their charities, and their congregations -- fiercely loyal, that is, to their own kind -- they narrowly defined membership in democracy to include only people like themselves. They expected to be comfortable and secure in their old age, but the women who washed and ironed their laundry, wiped their children’s bottoms, made their husbands’ beds, and cooked their family’s meals would also grow old and frail, sick and decrepit, lose their husbands and face the ravages of time alone, with nothing to show from their years of labor but the crease in their brow and the knots on their knuckles.
In one way or another, this is the oldest story in our country’s history: the struggle to determine whether “we, the people” is a metaphysical reality -- one nation, indivisible -- or merely a charade masquerading as piety and manipulated by the powerful and privileged to sustain their own way of life at the expense of others.
“I Contain Multitudes”
There is a vast difference between a society whose arrangements roughly serve all its citizens and one whose institutions have been converted into a stupendous fraud, a democracy in name only. I have no doubt about what the United States of America was meant to be. It’s spelled out right there in the 52 most revolutionary words in our founding documents, the preamble to our Constitution, proclaiming the sovereignty of the people as the moral base of government:
“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.”
What do those words mean, if not that we are all in the business of nation-building together?
Now, I recognize that we’ve never been a country of angels guided by a presidium of saints. Early America was a moral morass. One in five people in the new nation was enslaved. Justice for the poor meant stocks and stockades. Women suffered virtual peonage. Heretics were driven into exile, or worse. Native people -- the Indians -- would be forcibly removed from their land, their fate a “trail of tears” and broken treaties.
No, I’m not a romantic about our history and I harbor no idealized notions of politics and democracy. Remember, I worked for President Lyndon Johnson. I heard him often repeat the story of the Texas poker shark who leaned across the table and said to his mark: “Play the cards fair, Reuben. I know what I dealt you.” LBJ knew politics.
Nor do I romanticize “the people.” When I began reporting on the state legislature while a student at the University of Texas, a wily old state senator offered to acquaint me with how the place worked. We stood at the back of the Senate floor as he pointed to his colleagues spread out around the chamber -- playing cards, napping, nipping, winking at pretty young visitors in the gallery -- and he said to me, “If you think these guys are bad, you should see the people who sent them there.”
And yet, despite the flaws and contradictions of human nature -- or perhaps because of them -- something took hold here. The American people forged a civilization: that thin veneer of civility stretched across the passions of the human heart. Because it can snap at any moment, or slowly weaken from abuse and neglect until it fades away, civilization requires a commitment to the notion (contrary to what those Marshall housewives believed) that we are all in this together.
American democracy grew a soul, as it were -- given voice by one of our greatest poets, Walt Whitman, with his all-inclusive embrace in Song of Myself:
“Whoever degrades another degrades me,
and whatever is done or said returns at last to me...
I speak the pass-word primeval -- I give the sign of democracy;
By God! I will accept nothing which all cannot have their counterpart of on the same terms...
(I am large -- I contain multitudes.)”
and whatever is done or said returns at last to me...
I speak the pass-word primeval -- I give the sign of democracy;
By God! I will accept nothing which all cannot have their counterpart of on the same terms...
(I am large -- I contain multitudes.)”
Author Kathleen Kennedy Townsend has vividly described Whitman seeing himself in whomever he met in America. As he wrote in I Sing the Body Electric:
“-- the horseman in his saddle,
Girls, mothers, house-keepers, in all their performances,
The group of laborers seated at noon-time with their open dinner-kettles and their wives waiting,
The female soothing a child -- the farmer’s daughter in the garden or cow-yard,
The young fellow hoeing corn --”
Girls, mothers, house-keepers, in all their performances,
The group of laborers seated at noon-time with their open dinner-kettles and their wives waiting,
The female soothing a child -- the farmer’s daughter in the garden or cow-yard,
The young fellow hoeing corn --”
Whitman’s words celebrate what Americans shared at a time when they were less dependent on each other than we are today. As Townsend put it, “Many more people lived on farms in the nineteenth century, and so they could be a lot more self-reliant; growing their own food, sewing their clothes, building their homes. But rather than applauding what each American could do in isolation, Whitman celebrated the vast chorus: ‘I hear America singing.’” The chorus he heard was of multitudinous voices, a mighty choir of humanity.
Whitman saw something else in the soul of the country: Americans at work, the laboring people whose toil and sweat built this nation. Townsend contrasts his attitude with the way politicians and the media today -- in their endless debates about wealth creation, capital gains reduction, and high corporate taxes -- seem to have forgotten working people. “But Whitman wouldn’t have forgotten them.” She writes, “He celebrates a nation where everyone is worthy, not where a few do well.”
President Franklin Delano Roosevelt understood the soul of democracy, too. He expressed it politically, although his words often ring like poetry. Paradoxically, to this scion of the American aristocracy, the soul of democracy meant political equality. “Inside the polling booth,” he said, “every American man and woman stands as the equal of every other American man and woman. There they have no superiors. There they have no masters save their own minds and consciences.”
God knows it took us a long time to get there. Every claim of political equality in our history has been met by fierce resistance from those who relished for themselves what they would deny others. After President Abraham Lincoln signed the Emancipation Proclamation it took a century before Lyndon Johnson signed the Voting Rights Act of 1965 -- a hundred years of Jim Crow law and Jim Crow lynchings, of forced labor and coerced segregation, of beatings and bombings, of public humiliation and degradation, of courageous but costly protests and demonstrations. Think of it: another hundred years before the freedom won on the bloody battlefields of the Civil War was finally secured in the law of the land.
And here’s something else to think about: Only one of the women present at the first women’s rights convention in Seneca Falls in 1848 -- only one, Charlotte Woodward -- lived long enough to see women actually get to vote.
“We Pick That Rabbit Out of the Hat”
So it was, in the face of constant resistance, that many heroes -- sung and unsung -- sacrificed, suffered, and died so that all Americans could gain an equal footing inside that voting booth on a level playing field on the ground floor of democracy. And yet today money has become the great unequalizer, the usurper of our democratic soul.
No one saw this more clearly than that conservative icon Barry Goldwater, longtime Republican senator from Arizona and one-time Republican nominee for the presidency. Here are his words from almost 30 years ago:
“The fact that liberty depended on honest elections was of the utmost importance to the patriots who founded our nation and wrote the Constitution. They knew that corruption destroyed the prime requisite of constitutional liberty: an independent legislature free from any influence other than that of the people. Applying these principles to modern times, we can make the following conclusions: To be successful, representative government assumes that elections will be controlled by the citizenry at large, not by those who give the most money. Electors must believe that their vote counts. Elected officials must owe their allegiance to the people, not to their own wealth or to the wealth of interest groups that speak only for the selfish fringes of the whole community.”
About the time Senator Goldwater was writing those words, Oliver Stone released his movie Wall Street. Remember it? Michael Douglas played the high roller Gordon Gekko, who used inside information obtained by his ambitious young protégé, Bud Fox, to manipulate the stock of a company that he intended to sell off for a huge personal windfall, while throwing its workers, including Bud’s own blue-collar father, overboard. The younger man is aghast and repentant at having participated in such duplicity and chicanery, and he storms into Gekko’s office to protest, asking, “How much is enough, Gordon?”
Gekko answers:
“The richest one percent of this country owns half our country’s wealth, five trillion dollars… You got ninety percent of the American public out there with little or no net worth. I create nothing. I own. We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip. We pick that rabbit out of the hat while everybody sits out there wondering how the hell we did it. Now, you’re not naïve enough to think we’re living in a democracy, are you, Buddy? It’s the free market. And you’re part of it.”
That was in the high-flying 1980s, the dawn of today’s new gilded age. The Greek historian Plutarch is said to have warned that “an imbalance between rich and poor is the oldest and most fatal ailment of a Republic.” Yet as the Washington Post pointedout recently, income inequality may be higher at this moment than at any time in the American past.
When I was a young man in Washington in the 1960s, most of the country’s growth accrued to the bottom 90% of households. From the end of World War II until the early 1970s, in fact, income grew at a slightly faster rate at the bottom and middle of American society than at the top. In 2009, economists Thomas Piketty and Emmanuel Saez explored decades of tax data and found that from 1950 through 1980 the average income of the bottom 90% of Americans had grown, from $ 17,719 to $ 30,941. That represented a 75% increase in 2008 dollars.
Since 1980, the economy has continued to grow impressively, but most of the benefits have migrated to the top. In these years, workers were more productive but received less of the wealth they were helping to create. In the late 1970s, the richest 1% received 9% of total income and held 19% of the nation’s wealth. The share of total income going to that 1% would then rise to more than 23% by 2007, while their share of total wealth would grow to 35%. And that was all before the economic meltdown of 2007-2008.
Even though everyone took a hit during the recession that followed, the top 10% now hold more than three-quarters of the country’s total family wealth.
I know, I know: statistics have a way of causing eyes to glaze over, but these statistics highlight an ugly truth about America: inequality matters. It slows economic growth, undermines health, erodes social cohesion and solidarity, and starves education. In their study The Spirit Level: Why Greater Equality Makes Societies Stronger, epidemiologists Richard Wilkinson and Kate Pickett found that the most consistent predictor of mental illness, infant mortality, low educational achievement, teenage births, homicides, and incarceration was economic inequality.
So bear with me as I keep the statistics flowing. The Pew Research Center recently releaseda new study indicating that, between 2000 and 2014, the middle class shrank in virtually all parts of the country. Nine out of ten metropolitan areas showed a decline in middle-class neighborhoods. And remember, we aren’t even talking about over 45 million people who are living in poverty. Meanwhile, between 2009 and 2013, that top 1% captured 85% percent of all income growth. Even after the economy improved in 2015, they still took in more than half of the income growth and by 2013 held nearly half of all the stock and mutual fund assets Americans owned.
Now, concentrations of wealth would be far less of an issue if the rest of society were benefitting proportionally. But that isn’t the case.
Once upon a time, according to Isabel Sawhill and Sara McClanahan in their 2006 report Opportunity in America, the American ideal was one in which all children had “a roughly equal chance of success regardless of the economic status of the family into which they were born.”
Almost 10 years ago, economist Jeffrey Madrick wrote that, as recently as the 1980s, economists thought that “in the land of Horatio Alger only 20 percent of one’s future income was determined by one’s father's income.” He then cited research showing that, by 2007, “60 percent of a son’s income [was] determined by the level of income of the father. For women, it [was] roughly the same.” It may be even higher today, but clearly a child's chance of success in life is greatly improved if he’s born on third base and his father has been tipping the umpire.
This raises an old question, one highlighted by the British critic and public intellectual Terry Eagleton in an article in the Chronicle of Higher Education:
”Why is it that the capitalist West has accumulated more resources than human history has ever witnessed, yet appears powerless to overcome poverty, starvation, exploitation, and inequality?... Why does private wealth seem to go hand in hand with public squalor? Is it... plausible to maintain that there is something in the nature of capitalism itself which generates deprivation and inequality?”
The answer, to me, is self-evident. Capitalism produces winners and losers big time. The winners use their wealth to gain political power, often through campaign contributions and lobbying. In this way, they only increase their influence over the choices made by the politicians indebted to them. While there are certainly differences between Democrats and Republicans on economic and social issues, both parties cater to wealthy individuals and interests seeking to enrich their bottom lines with the help of the policies of the state (loopholes, subsidies, tax breaks, deregulation). No matter which party is in power, the interests of big business are largely heeded.
More on that later, but first, a confession. The legendary broadcast journalist Edward R. Murrow told his generation of journalists that bias is okay as long as you don’t try to hide it. Here’s mine: plutocracy and democracy don’t mix. As the late (and great) Supreme Court Justice Louis Brandeis said, “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.” Of course the rich can buy more homes, cars, vacations, gadgets, and gizmos than anyone else, but they should not be able to buy more democracy. That they can and do is a despicable blot on American politics that is now spreading like a giant oil spill.
In May, President Obama and I both spoke at the Rutgers University commencement ceremony. He was at his inspirational best as 50,000 people leaned into every word. He lifted the hearts of those young men and women heading out into our troubled world, but I cringed when he said, “Contrary to what we hear sometimes from both the left as well as the right, the system isn’t as rigged as you think...”
Wrong, Mr. President, just plain wrong. The people are way ahead of you on this. In a recent poll, 71% of Americans across lines of ethnicity, class, age, and gender said they believe the U.S. economy is rigged. People reported that they are working harder for financial security. One quarter of the respondents had not taken a vacation in more than five years. Seventy-one percent said that they are afraid of unexpected medical bills; 53% feared not being able to make a mortgage payment; and, among renters, 60% worried that they might not make the monthly rent.
Millions of Americans, in other words, are living on the edge. Yet the country has not confronted the question of how we will continue to prosper without a workforce that can pay for its goods and services.
Who Dunnit?
You didn’t have to read Das Kapital to see this coming or to realize that the United States was being transformed into one of the harshest, most unforgiving societies among the industrial democracies. You could instead have read the Economist,arguably the most influential business-friendly magazine in the English-speaking world. I keep in my files a warning published in that magazine a dozen years ago, on the eve of George W. Bush’s second term. The editors concluded back then that, with income inequality in the U.S. reaching levels not seen since the first Gilded Age and social mobility diminishing, “the United States risks calcifying into a European-style class-based society.”
And mind you, that was before the financial meltdown of 2007-2008, before the bailout of Wall Street, before the recession that only widened the gap between the super-rich and everyone else. Ever since then, the great sucking sound we’ve been hearing is wealth heading upwards. The United States now has a level of income inequality unprecedented in our history and so dramatic it’s almost impossible to wrap one’s mind around.
Contrary to what the president said at Rutgers, this is not the way the world works; it’s the way the world is made to work by those with the money and power. The movers and shakers -- the big winners -- keep repeating the mantra that this inequality was inevitable, the result of the globalization of finance and advances in technology in an increasingly complex world. Those are part of the story, but only part. As G.K. Chesterton wrote a century ago, “In every serious doctrine of the destiny of men, there is some trace of the doctrine of the equality of men. But the capitalist really depends on some religion of inequality.”
Exactly. In our case, a religion of invention, not revelation, politically engineered over the last 40 years. Yes, politically engineered. On this development, you can’t do better than read Winner Take All Politics: How Washington Made the Rich Richer and Turned Its Back on the Middle Class by Jacob Hacker and Paul Pierson, the Sherlock Holmes and Dr. Watson of political science.
They were mystified by what had happened to the post-World War II notion of “shared prosperity”; puzzled by the ways in which ever more wealth has gone to the rich and super rich; vexed that hedge-fund managers pull in billions of dollars, yet pay taxes at lower rates than their secretaries; curious about why politicians kept slashing taxes on the very rich and handing huge tax breaks and subsidies to corporations that are downsizing their work forces; troubled that the heart of the American Dream -- upward mobility -- seemed to have stopped beating; and dumbfounded that all of this could happen in a democracy whose politicians were supposed to serve the greatest good for the greatest number. So Hacker and Pierson set out to find out “how our economy stopped working to provide prosperity and security for the broad middle class.”
In other words, they wanted to know: “Who dunnit?” They found the culprit. With convincing documentation they concluded, “Step by step and debate by debate, America’s public officials have rewritten the rules of American politics and the American economy in ways that have benefitted the few at the expense of the many.”
There you have it: the winners bought off the gatekeepers, then gamed the system. And when the fix was in they turned our economy into a feast for the predators, “saddling Americans with greater debt, tearing new holes in the safety net, and imposing broad financial risks on Americans as workers, investors, and taxpayers.” The end result, Hacker and Pierson conclude, is that the United States is looking more and more like the capitalist oligarchies of Brazil, Mexico, and Russia, where most of the wealth is concentrated at the top while the bottom grows larger and larger with everyone in between just barely getting by.
Bruce Springsteen sings of “the country we carry in our hearts.” This isn’t it.
“God’s Work”
Looking back, you have to wonder how we could have ignored the warning signs. In the 1970s, Big Business began to refine its ability to act as a class and gang up on Congress. Even before the Supreme Court’s Citizens United decision, political action committees deluged politics with dollars. Foundations, corporations, and rich individuals funded think tanks that churned out study after study with results skewed to their ideology and interests. Political strategists made alliances with the religious right, with Jerry Falwell’s Moral Majority and Pat Robertson’s Christian Coalition, to zealously wage a cultural holy war that would camouflage the economic assault on working people and the middle class.
To help cover-up this heist of the economy, an appealing intellectual gloss was needed. So public intellectuals were recruited and subsidized to turn “globalization,” “neo-liberalism,” and “the Washington Consensus” into a theological belief system. The “dismal science of economics” became a miracle of faith. Wall Street glistened as the new Promised Land, while few noticed that those angels dancing on the head of a pin were really witchdoctors with MBAs brewing voodoo magic. The greed of the Gordon Gekkos -- once considered a vice -- was transformed into a virtue. One of the high priests of this faith, Lloyd Blankfein, CEO of Goldman Sachs, looking in wonder on all that his company had wrought, pronounced it “God’s work.”
A prominent neoconservative religious philosopher even articulated a “theology of the corporation.” I kid you not. And its devotees lifted their voices in hymns of praise to wealth creation as participation in the Kingdom of Heaven here on Earth. Self-interest became the Gospel of the Gilded Age.
No one today articulates this winner-take-all philosophy more candidly than Ray Dalio. Think of him as the King Midas of hedge funds, with a personal worth estimated at almost $16 billion and a company, Bridgewater Associates, reportedly worth as much as $154 billion.
Dalio fancies himself a philosopher and has written a book of maximsexplaining his philosophy. It boils down to: “Be a hyena. Attack the Wildebeest.” (Wildebeests, antelopes native to southern Africa -- as I learned when we once filmed a documentary there -- are no match for the flesh-eating dog-like spotted hyenas that gorge on them.) Here’s what Dalio wroteabout being a Wall Street hyena:
“…when a pack of hyenas takes down a young wildebeest, is this good or bad? At face value, this seems terrible; the poor wildebeest suffers and dies. Some people might even say that the hyenas are evil. Yet this type of apparently evil behavior exists throughout nature through all species... like death itself, this behavior is integral to the enormously complex and efficient system that has worked for as long as there has been life... [It] is good for both the hyenas, who are operating in their self-interest, and the interests of the greater system, which includes the wildebeest, because killing and eating the wildebeest fosters evolution, i.e., the natural process of improvement... Like the hyenas attacking the wildebeest, successful people might not even know if or how their pursuit of self-interest helps evolution, but it typically does.”
He concludes: “How much money people have earned is a rough measure of how much they gave society what it wanted...”
Not this time, Ray. This time, the free market for hyenas became a slaughterhouse for the wildebeest. Collapsing shares and house prices destroyed more than a quarter of the wealth of the average household. Many people have yet to recover from the crash and recession that followed. They are still saddled with burdensome debt; their retirement accounts are still anemic. All of this was, by the hyena’s accounting, a social good, “an improvement in the natural process,” as Dalio puts it. Nonsense. Bull. Human beings have struggled long and hard to build civilization; his doctrine of “progress” is taking us back to the jungle.
And by the way, there’s a footnote to the Dalio story. Early this year, the founder of the world’s largest hedge fund, and by many accounts the richest man in Connecticut where it is headquartered, threatened to take his firm elsewhere if he didn’t get concessions from the state. You might have thought that the governor, a Democrat, would have thrown him out of his office for the implicit threat involved. But no, he buckled and Dalio got the $22 million in aid -- a $5 million grant and a $17 million loan -- that he was demanding to expand his operations. It’s a loan that may be forgiven if he keeps jobs in Connecticut and creates new ones. No doubt he left the governor’s office grinning like a hyena, his shoes tracking wildebeest blood across the carpet.
Our founders warned against the power of privileged factions to capture the machinery of democracies. James Madison, who studied history through a tragic lens, saw that the life cycle of previous republics had degenerated into anarchy, monarchy, or oligarchy. Like many of his colleagues, he was well aware that the republic they were creating could go the same way. Distrusting, even detesting concentrated private power, the founders attempted to erect safeguards to prevent private interests from subverting the moral and political compact that begins, “We, the people.” For a while, they succeeded.
When the brilliant young French aristocrat Alexis de Tocqueville toured America in the 1830s, he was excited by the democratic fervor he witnessed. Perhaps that excitement caused him to exaggerate the equality he celebrated. Close readers of de Tocqueville will notice, however, that he did warn of the staying power of the aristocracy, even in this new country. He feared what he called, in the second volume of his masterwork, Democracy in America, an “aristocracy created by business.” He described it as already among “the harshest that ever existed in the world” and suggested that, “if ever a permanent inequality of conditions and aristocracy again penetrate the world, it may be predicted that this is the gate by which they will enter.”
And so it did. Half a century later, the Gilded Age arrived with a new aristocratic hierarchy of industrialists, robber barons, and Wall Street tycoons in the vanguard. They had their own apologist in the person of William Graham Sumner, an Episcopal minister turned professor of political economy at Yale University. He famously explained that “competition... is a law of nature” and that nature “grants her rewards to the fittest, therefore, without regard to other considerations of any kind.”
From Sumner’s essays to the ravenous excesses of Wall Street in the 1920s to the ravings of Rush Limbaugh, Glenn Beck, and Fox News, to the business press’s wide-eyed awe of hyena-like CEOs; from the Republican war on government to the Democratic Party’s shameless obeisance to big corporations and contributors, this “law of nature” has served to legitimate the yawning inequality of income and wealth, even as it has protected networks of privilege and monopolies in major industries like the media, the tech sector, and the airlines.
A plethora of studies conclude that America’s political system has already been transformed from a democracy into an oligarchy (the rule of a wealthy elite). Martin Gilens and Benjamin Page, for instance, studied data from 1,800 different policy initiatives launched between 1981 and 2002. They found that “economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy while mass-based interest groups and average citizens have little or no independent influence.” Whether Republican or Democratic, they concluded, the government more often follows the preferences of major lobbying or business groups than it does those of ordinary citizens.
We can only be amazed that a privileged faction in a fervent culture of politically protected greed brought us to the brink of a second Great Depression, then blamed government and a “dependent” 47% of the population for our problems, and ended up richer and more powerful than ever.
The Truth of Your Life
Which brings us back to those Marshall housewives -- to all those who simply can’t see beyond their own prerogatives and so narrowly define membership in democracy to include only people like themselves.
How would I help them recoup their sanity, come home to democracy, and help build the sort of moral compact embodied in the preamble to the Constitution, that declaration of America’s intent and identity?
First, I’d do my best to remind them that societies can die of too much inequality.
Second, I’d give them copies of anthropologist Jared Diamond’s book Collapse: How Societies Choose to Fail or Succeedto remind them that we are not immune. Diamond won the Pulitzer Prize for describing how the damage humans have inflicted on their environment has historically led to the decline of civilizations. In the process, he vividly depicts how elites repeatedly isolate and delude themselves until it’s too late. How, extracting wealth from commoners, they remain well fed while everyone else is slowly starving until, in the end, even they (or their offspring) become casualties of their own privilege. Any society, it turns out, contains a built-in blueprint for failure if elites insulate themselves endlessly from the consequences of their decisions.
Third, I’d discuss the real meaning of “sacrifice and bliss” with them. That was the title of the fourth episode of my PBS series Joseph Campbell and the Power of Myth. In that episode, Campbell and I discussed the influence on him of the German philosopher Arthur Schopenhauer, who believed that the will to live is the fundamental reality of human nature. So he puzzled about why some people override it and give up their lives for others.
“Can this happen?” Campbell asked. “That what we normally think of as the first law of nature, namely self-preservation, is suddenly dissolved. What creates that breakthrough when we put another’s well-being ahead of our own?” He then told me of an incident that took place near his home in Hawaii, up in the heights where the trade winds from the north come rushing through a great ridge of mountains. People go there to experience the force of nature, to let their hair be blown in the winds -- and sometimes to commit suicide.
One day, two policemen were driving up that road when, just beyond the railing, they saw a young man about to jump. One of the policemen bolted from the car and grabbed the fellow just as he was stepping off the ledge. His momentum threatened to carry both of them over the cliff, but the policeman refused to let go. Somehow he held on long enough for his partner to arrive and pull the two of them to safety. When a newspaper reporter asked, “Why didn’t you let go? You would have been killed,” he answered: “I couldn’t... I couldn’t let go. If I had, I couldn’t have lived another day of my life.”
Campbell then added: “Do you realize what had suddenly happened to that policeman? He had given himself over to death to save a stranger. Everything else in his life dropped off. His duty to his family, his duty to his job, his duty to his own career, all of his wishes and hopes for life, just disappeared.” What mattered was saving that young man, even at the cost of his own life.
How can this be, Campbell asked? Schopenhauer’s answer, he said, was that a psychological crisis represents the breakthrough of a metaphysical reality, which is that you and the other are two aspects of one life, and your apparent separateness is but an effect of the way we experience forms under the conditions of space and time. Our true reality is our identity and unity with all life.
Sometimes, however instinctively or consciously, our actions affirm that reality through some unselfish gesture or personal sacrifice. It happens in marriage, in parenting, in our relations with the people immediately around us, and in our participation in building a society based on reciprocity.
The truth of our country isn’t actually so complicated. It’s in the moral compact implicit in the preamble to our Constitution: we’re all in this together. We are all one another’s first responders. As the writer Alberto Rios once put it, “I am in your family tree and you are in mine.”
I realize that the command to love our neighbor is one of the hardest of all religious concepts, but I also recognize that our connection to others goes to the core of life’s mystery and to the survival of democracy. When we claim this as the truth of our lives -- when we live as if it’s so -- we are threading ourselves into the long train of history and the fabric of civilization; we are becoming “we, the people.”
The religion of inequality -- of money and power -- has failed us; its gods are false gods. There is something more essential -- more profound -- in the American experience than the hyena’s appetite. Once we recognize and nurture this, once we honor it, we can reboot democracy and get on with the work of liberating the country we carry in our hearts
Warren and Sanders Lead Probe Into 'Dangerous, Irresponsible' Aetna Ploy
by Dierdre Fulton - Common Dreams
Leading progressive U.S. senators are demanding Aetna come clean about its "questionable" decision to withdraw from the federal Affordable Care Act (ACA) health care exchanges after the Department of Justice (DOJ) challenged the company's proposed merger with Humana.
In a letter (pdf) sent Thursday to Aetna CEO Mark Bertolini, Sens. Bernie Sanders (I-Vt.), Elizabeth Warren (D-Mass.), Edward J. Markey (D-Mass.), Sherrod Brown (D-Ohio), and Bill Nelson (D-Fla.), probe the events that led up to last month's announcement that the insurance behemoth would pull out of 11 of the 15 states where it sells Obamacare plans.
One day after that announcement, it was revealed that Aetna had in fact directly threatened the federal government by vowing to pull out of the ACA if its proposed merger to Humana was not approved.
"Aetna's decision regarding its participation in the ACA exchanges appears to be an effort to pressure the Justice Department into approving a merger that the department has alleged violates antitrust law and has the potential to significantly harm consumers all across the country," the senators write in their letter.
They denounce such a ploy as "dangerous," "irresponsible," and "inexplicable."
"You must now answer to both your shareholders and to the thousands of Americans who trusted Aetna with their health coverage," the letter reads, before concluding with a list of questions that the senators demand Bertolini answer by next Thursday:
What exact costs will Aetna incur now that the Justice Department has challenged the merger? What costs will Aetna incur if the merger is ultimately blocked?
Why did Aetna agree to a deal that included a $1 billion break-up fee? When the company agreed to this condition, did Aetna conduct an internal assessment of the risk of a DOJ challenge? When Aetna agreed to pay this fee, was Aetna aware that it would endanger participation in the ACA exchanges?
What steps did Aetna take, prior to July 2016, to mitigate the risk that the Justice Department would challenge or successfully block its proposed acquisition of Humana?
When did Aetna first determine that its participation in the public exchanges would be contingent upon federal government approval of its proposed acquisition of Humana?
When did Aetna first inform investors that its participation in the public exchanges would be contingent upon federal government approval of its proposed acquisition of Humana? What other risks did the company disclose to investors?
What criteria did Aetna use in determining the states from which to withdraw in 2016?
During Aetna's April 29, 2016, Q1 2016 earnings call, Aetna said that it had a "very good cost structure" in states in which it had experienced growth in its ACA exchange population, including Florida, Georgia, and North Carolina. Why is Aetna withdrawing from states in which it had a "very good cost structure" or where Aetna has performed well in the past?
How many enrollees have contacted Aetna over its decision to withdraw from the ACA exchanges? What materials and resources is Aetna making available to assist consumers in selecting new health insurance coverage?
But however the insurance company decides to respond to the senators' letter, the episode remains "the best argument for a single-payer health plan," as Robert Reich put it in August.
"[T]he real choice in the future is becoming clear," he wrote at the time. "Obamacare is only smoking it out. One alternative is a public single-payer system. The other is a hugely-expensive for-profit oligopoly with the market power to charge high prices even to healthy people—and to charge sick people (or those likely to be sick) an arm and a leg."
Indeed, as Sanders declared last month: "The provision of health care cannot continue to be dependent upon the whims and market projections of large private insurance companies whose only goal is to make as much profit as possible."
Leading progressive U.S. senators are demanding Aetna come clean about its "questionable" decision to withdraw from the federal Affordable Care Act (ACA) health care exchanges after the Department of Justice (DOJ) challenged the company's proposed merger with Humana.
In a letter (pdf) sent Thursday to Aetna CEO Mark Bertolini, Sens. Bernie Sanders (I-Vt.), Elizabeth Warren (D-Mass.), Edward J. Markey (D-Mass.), Sherrod Brown (D-Ohio), and Bill Nelson (D-Fla.), probe the events that led up to last month's announcement that the insurance behemoth would pull out of 11 of the 15 states where it sells Obamacare plans.
One day after that announcement, it was revealed that Aetna had in fact directly threatened the federal government by vowing to pull out of the ACA if its proposed merger to Humana was not approved.
"Aetna's decision regarding its participation in the ACA exchanges appears to be an effort to pressure the Justice Department into approving a merger that the department has alleged violates antitrust law and has the potential to significantly harm consumers all across the country," the senators write in their letter.
They denounce such a ploy as "dangerous," "irresponsible," and "inexplicable."
"You must now answer to both your shareholders and to the thousands of Americans who trusted Aetna with their health coverage," the letter reads, before concluding with a list of questions that the senators demand Bertolini answer by next Thursday:
What exact costs will Aetna incur now that the Justice Department has challenged the merger? What costs will Aetna incur if the merger is ultimately blocked?Why did Aetna agree to a deal that included a $1 billion break-up fee? When the company agreed to this condition, did Aetna conduct an internal assessment of the risk of a DOJ challenge? When Aetna agreed to pay this fee, was Aetna aware that it would endanger participation in the ACA exchanges?What steps did Aetna take, prior to July 2016, to mitigate the risk that the Justice Department would challenge or successfully block its proposed acquisition of Humana?When did Aetna first determine that its participation in the public exchanges would be contingent upon federal government approval of its proposed acquisition of Humana?When did Aetna first inform investors that its participation in the public exchanges would be contingent upon federal government approval of its proposed acquisition of Humana? What other risks did the company disclose to investors?What criteria did Aetna use in determining the states from which to withdraw in 2016?During Aetna's April 29, 2016, Q1 2016 earnings call, Aetna said that it had a "very good cost structure" in states in which it had experienced growth in its ACA exchange population, including Florida, Georgia, and North Carolina. Why is Aetna withdrawing from states in which it had a "very good cost structure" or where Aetna has performed well in the past?How many enrollees have contacted Aetna over its decision to withdraw from the ACA exchanges? What materials and resources is Aetna making available to assist consumers in selecting new health insurance coverage?
But however the insurance company decides to respond to the senators' letter, the episode remains "the best argument for a single-payer health plan," as Robert Reich put it in August.
"[T]he real choice in the future is becoming clear," he wrote at the time. "Obamacare is only smoking it out. One alternative is a public single-payer system. The other is a hugely-expensive for-profit oligopoly with the market power to charge high prices even to healthy people—and to charge sick people (or those likely to be sick) an arm and a leg."
Indeed, as Sanders declared last month: "The provision of health care cannot continue to be dependent upon the whims and market projections of large private insurance companies whose only goal is to make as much profit as possible."
Insurers May Be Down on the ACA's Exchanges ...
... but they should be careful what they wish for
By Caroline Poplin, M.D., J.D.
MedPage Today, Sept. 6, 2016
Last month, Aetna announced that it would drastically reduce its participation on the Affordable Care Act (ACA) exchanges in 2017 because of larger-than-expected losses: it will go from 15 states to four. This follows similar decisions by UnitedHealth Group and Humana. As a result, more than one third of the exchanges next year will have only one participating insurer, so no competition at all. As early as May, even before the insurers' announcements, analysts were predicting double-digit premium increases in 2017.
Why is this happening?
The Obama administration, as well as stalwart supporters in the policy community, have rushed to assure us that nothing much is happening: some bumps along the way were to be expected in such a grand experiment, and the Department of Health and Human Services (HHS), working with other stakeholders, will make it right.
Maybe.
Keep in mind that the whole point of the ACA was to placate private, for-profit health insurers, the group that destroyed Hillary-care in the 1990's. (Remember Harry and Louise?) The companies did not want to lose their customers in the individual market -- the healthy and the wealthy -- and those customers, who had qualified for insurance, wanted to keep it.
But before the ACA, something like 40 million Americans had no access to health insurance, let alone healthcare; many more were underinsured. People demanded better. Centrist Democratic leaders -- today we would call them the political elite -- were determined to show that everyone could be adequately covered by commercial health insurers competing in a private market. So they filled the ACA with features designed specifically to make the new system attractive to commercial insurers.
First and most important, the federal government subsidized premiums for those with incomes under 400% of the federal poverty level ($97,000 for a family of four in 2016) -- taxpayer funds that went directly to insurers. In addition, the ACA included three different programs to protect insurers from unusually costly patients (and simultaneously to prevent companies from cherry-picking healthy customers). These were known as the three 'R's: reinsurance, risk corridors, and risk adjustment. Only risk adjustment, under which insurers with a higher proportion of healthy customers compensate those with a sicker cohort, is permanent; the other two programs expire at the end of the year.
In exchange for these protections, insurers were required to offer every plan at the same price to all customers -- that is, all plans were community-rated, with limited adjustments only for age and smoking status. No more pre-existing condition exclusions -- patients with chronic illnesses could be charged no more than healthy customers. This is far and away the most popular feature of the ACA.
Nevertheless, 3 years in, insurers are complaining of losses, and voting with their feet. To reverse the downward momentum, HHS is tweaking risk adjustment, and adding a program to reimburse costs over $2 million for a single individual (to be shared among insurers).
ACA supporters have more ideas: greater outreach to eligible young, healthy people; higher penalties for failure to enroll; fewer required benefits; narrower networks. Insurers would like to adjust ratings upwards by, for example, charging the oldest customers five times more than younger ones, instead of three times more; or obtaining government reinsurance for especially costly patients; Hillary has suggested higher taxpayer-funded subsidies, and perhaps a "public option".
Many of these measures would increase the cost of exchange policies and/or reduce their value. But the current policies are not great insurance: premiums are high. In 2015, 86% of enrollees received subsidies. Only 2% of eligible families who did not qualify for subsidies enrolled. Moreover, many families cannot access the benefits they have paid for because of high out-of-pocket expenses, especially deductibles.
The average deductible for a silver plan in 2015 was $2,994 -- this in a country where 46% of families could not manage $400 for an emergency without borrowing the money or selling something. The federal limit next year for out-of-pocket expenses (including deductibles and co-pays, but not premiums) for a family is $14,300.
Under the ACA, the goal for insurers is to price their policies low enough to attract the healthy, but high enough to cover the costs of the sick. But even with giant computers, Big Data, and armies of actuaries, that may not be possible. It is certainly not the standard insurance business plan.
Commercial insurance works by charging individuals enough to cover their risk (with something left over for profit). High-risk people often cannot buy insurance at all. No one sells ordinary flood insurance to homeowners in a flood plain. We have Medicare for elderly and disabled people because they couldn't get private health insurance. Insurers want to keep their healthy customers, and let someone else -- high-risk pools, charity, the government -- take care of anyone who gets sick.
But remember this: health insurance is not healthcare. Insurers are simply middlemen: if they disappeared -- or were paid simply to track claims -- and replaced by a Medicare-for-all system, everyone could still access healthcare. It is not clear that the value added by the industry is worth the cost, estimated at $350 billion. Spending that money directly on healthcare could improve our health, and eliminating public subsides to private insurers would reduce the deficit.
Insurers who are dissatisfied with the ACA: Be careful what you wish for.
http://www.medpagetoday.com/washington-watch/reform/60047
Would You Like Some Insurance With Your Insurance?
By Caroline Poplin, M.D., J.D.
MedPage Today, Sept. 6, 2016
Last month, Aetna announced that it would drastically reduce its participation on the Affordable Care Act (ACA) exchanges in 2017 because of larger-than-expected losses: it will go from 15 states to four. This follows similar decisions by UnitedHealth Group and Humana. As a result, more than one third of the exchanges next year will have only one participating insurer, so no competition at all. As early as May, even before the insurers' announcements, analysts were predicting double-digit premium increases in 2017.
Why is this happening?
The Obama administration, as well as stalwart supporters in the policy community, have rushed to assure us that nothing much is happening: some bumps along the way were to be expected in such a grand experiment, and the Department of Health and Human Services (HHS), working with other stakeholders, will make it right.
Maybe.
Keep in mind that the whole point of the ACA was to placate private, for-profit health insurers, the group that destroyed Hillary-care in the 1990's. (Remember Harry and Louise?) The companies did not want to lose their customers in the individual market -- the healthy and the wealthy -- and those customers, who had qualified for insurance, wanted to keep it.
But before the ACA, something like 40 million Americans had no access to health insurance, let alone healthcare; many more were underinsured. People demanded better. Centrist Democratic leaders -- today we would call them the political elite -- were determined to show that everyone could be adequately covered by commercial health insurers competing in a private market. So they filled the ACA with features designed specifically to make the new system attractive to commercial insurers.
First and most important, the federal government subsidized premiums for those with incomes under 400% of the federal poverty level ($97,000 for a family of four in 2016) -- taxpayer funds that went directly to insurers. In addition, the ACA included three different programs to protect insurers from unusually costly patients (and simultaneously to prevent companies from cherry-picking healthy customers). These were known as the three 'R's: reinsurance, risk corridors, and risk adjustment. Only risk adjustment, under which insurers with a higher proportion of healthy customers compensate those with a sicker cohort, is permanent; the other two programs expire at the end of the year.
In exchange for these protections, insurers were required to offer every plan at the same price to all customers -- that is, all plans were community-rated, with limited adjustments only for age and smoking status. No more pre-existing condition exclusions -- patients with chronic illnesses could be charged no more than healthy customers. This is far and away the most popular feature of the ACA.
Nevertheless, 3 years in, insurers are complaining of losses, and voting with their feet. To reverse the downward momentum, HHS is tweaking risk adjustment, and adding a program to reimburse costs over $2 million for a single individual (to be shared among insurers).
ACA supporters have more ideas: greater outreach to eligible young, healthy people; higher penalties for failure to enroll; fewer required benefits; narrower networks. Insurers would like to adjust ratings upwards by, for example, charging the oldest customers five times more than younger ones, instead of three times more; or obtaining government reinsurance for especially costly patients; Hillary has suggested higher taxpayer-funded subsidies, and perhaps a "public option".
Many of these measures would increase the cost of exchange policies and/or reduce their value. But the current policies are not great insurance: premiums are high. In 2015, 86% of enrollees received subsidies. Only 2% of eligible families who did not qualify for subsidies enrolled. Moreover, many families cannot access the benefits they have paid for because of high out-of-pocket expenses, especially deductibles.
The average deductible for a silver plan in 2015 was $2,994 -- this in a country where 46% of families could not manage $400 for an emergency without borrowing the money or selling something. The federal limit next year for out-of-pocket expenses (including deductibles and co-pays, but not premiums) for a family is $14,300.
Under the ACA, the goal for insurers is to price their policies low enough to attract the healthy, but high enough to cover the costs of the sick. But even with giant computers, Big Data, and armies of actuaries, that may not be possible. It is certainly not the standard insurance business plan.
Commercial insurance works by charging individuals enough to cover their risk (with something left over for profit). High-risk people often cannot buy insurance at all. No one sells ordinary flood insurance to homeowners in a flood plain. We have Medicare for elderly and disabled people because they couldn't get private health insurance. Insurers want to keep their healthy customers, and let someone else -- high-risk pools, charity, the government -- take care of anyone who gets sick.
But remember this: health insurance is not healthcare. Insurers are simply middlemen: if they disappeared -- or were paid simply to track claims -- and replaced by a Medicare-for-all system, everyone could still access healthcare. It is not clear that the value added by the industry is worth the cost, estimated at $350 billion. Spending that money directly on healthcare could improve our health, and eliminating public subsides to private insurers would reduce the deficit.
Insurers who are dissatisfied with the ACA: Be careful what you wish for.
http://www.medpagetoday.com/washington-watch/reform/60047
MedPage Today, Sept. 6, 2016
Last month, Aetna announced that it would drastically reduce its participation on the Affordable Care Act (ACA) exchanges in 2017 because of larger-than-expected losses: it will go from 15 states to four. This follows similar decisions by UnitedHealth Group and Humana. As a result, more than one third of the exchanges next year will have only one participating insurer, so no competition at all. As early as May, even before the insurers' announcements, analysts were predicting double-digit premium increases in 2017.
Why is this happening?
The Obama administration, as well as stalwart supporters in the policy community, have rushed to assure us that nothing much is happening: some bumps along the way were to be expected in such a grand experiment, and the Department of Health and Human Services (HHS), working with other stakeholders, will make it right.
Maybe.
Keep in mind that the whole point of the ACA was to placate private, for-profit health insurers, the group that destroyed Hillary-care in the 1990's. (Remember Harry and Louise?) The companies did not want to lose their customers in the individual market -- the healthy and the wealthy -- and those customers, who had qualified for insurance, wanted to keep it.
But before the ACA, something like 40 million Americans had no access to health insurance, let alone healthcare; many more were underinsured. People demanded better. Centrist Democratic leaders -- today we would call them the political elite -- were determined to show that everyone could be adequately covered by commercial health insurers competing in a private market. So they filled the ACA with features designed specifically to make the new system attractive to commercial insurers.
First and most important, the federal government subsidized premiums for those with incomes under 400% of the federal poverty level ($97,000 for a family of four in 2016) -- taxpayer funds that went directly to insurers. In addition, the ACA included three different programs to protect insurers from unusually costly patients (and simultaneously to prevent companies from cherry-picking healthy customers). These were known as the three 'R's: reinsurance, risk corridors, and risk adjustment. Only risk adjustment, under which insurers with a higher proportion of healthy customers compensate those with a sicker cohort, is permanent; the other two programs expire at the end of the year.
In exchange for these protections, insurers were required to offer every plan at the same price to all customers -- that is, all plans were community-rated, with limited adjustments only for age and smoking status. No more pre-existing condition exclusions -- patients with chronic illnesses could be charged no more than healthy customers. This is far and away the most popular feature of the ACA.
Nevertheless, 3 years in, insurers are complaining of losses, and voting with their feet. To reverse the downward momentum, HHS is tweaking risk adjustment, and adding a program to reimburse costs over $2 million for a single individual (to be shared among insurers).
ACA supporters have more ideas: greater outreach to eligible young, healthy people; higher penalties for failure to enroll; fewer required benefits; narrower networks. Insurers would like to adjust ratings upwards by, for example, charging the oldest customers five times more than younger ones, instead of three times more; or obtaining government reinsurance for especially costly patients; Hillary has suggested higher taxpayer-funded subsidies, and perhaps a "public option".
Many of these measures would increase the cost of exchange policies and/or reduce their value. But the current policies are not great insurance: premiums are high. In 2015, 86% of enrollees received subsidies. Only 2% of eligible families who did not qualify for subsidies enrolled. Moreover, many families cannot access the benefits they have paid for because of high out-of-pocket expenses, especially deductibles.
The average deductible for a silver plan in 2015 was $2,994 -- this in a country where 46% of families could not manage $400 for an emergency without borrowing the money or selling something. The federal limit next year for out-of-pocket expenses (including deductibles and co-pays, but not premiums) for a family is $14,300.
Under the ACA, the goal for insurers is to price their policies low enough to attract the healthy, but high enough to cover the costs of the sick. But even with giant computers, Big Data, and armies of actuaries, that may not be possible. It is certainly not the standard insurance business plan.
Commercial insurance works by charging individuals enough to cover their risk (with something left over for profit). High-risk people often cannot buy insurance at all. No one sells ordinary flood insurance to homeowners in a flood plain. We have Medicare for elderly and disabled people because they couldn't get private health insurance. Insurers want to keep their healthy customers, and let someone else -- high-risk pools, charity, the government -- take care of anyone who gets sick.
But remember this: health insurance is not healthcare. Insurers are simply middlemen: if they disappeared -- or were paid simply to track claims -- and replaced by a Medicare-for-all system, everyone could still access healthcare. It is not clear that the value added by the industry is worth the cost, estimated at $350 billion. Spending that money directly on healthcare could improve our health, and eliminating public subsides to private insurers would reduce the deficit.
Insurers who are dissatisfied with the ACA: Be careful what you wish for.
http://www.medpagetoday.com/washington-watch/reform/60047
by Bram Sable-Smith - NPR
For the first time in her life, 26-year-old freelance designer Susannah Lohr had to shop for health insurance this year.
She called up a major insurer in the St. Louis area where she lives, and it offered her a plan with a hefty $6,000 deductible — that's the amount she would have to cover herself before the insurance kicks in.
When she balked, the salesman on the phone suggested that she could buy a "gap plan," a separate policy for $50 a month to cover her deductible.
"After I got off the phone with him, I realized: That's actually just insurance for my insurance," she said, laughing.
Gap plans, used to cover out-of-pocket expenses like high deductibles, are becoming increasingly popular among consumers and businesses.
The rising price of insurance is driving the trend, explains insurance broker Ryan Hillenbrand, president of the Missouri Association of Health Underwriters.
"People see the prices of individual insurance and they say, 'Boy, a $6,000 deductible seems really high. I don't want something that gives me that much risk,' " Hillenbrand says. "That's why [the gap insurance] market is heating up a little bit more."
Gap insurance is in a category of insurance known as "limited benefit." No matter how bad a person's situation, the plan will pay out only a certain amount of money. "Mini-med" policies, now illegal under the Affordable Care Act, are another example of a limited benefit plan
Now, there's renewed interest in gap plans. With monthly premiums on health insurance going up, more people are choosing cheaper, high-deductible options. In 2016, more than 90 percent of people buying insurance under the ACA chose plans with an average deductible of $3,000 or higher.
Next year, the cost of one of the most popular plans available under the Affordable Care Act could increase by 10 percent on average across the country. That comes on top of a 5 percent jump the year before.
When consumers see those prices, Hillenbrand says, "they get sticker shock."
"If you don't qualify for a subsidy, you're bearing the brunt of all that cost," Hillenbrand says. "And here come the gap plans."
About 8 in 10 people qualify for some form of subsidy on the Obamacare exchanges, helping to make insurance more affordable for consumers.
Businesses, on the other hand, are facing those costs on their own. And for some businesses, especially smaller firms, gap plans can make a lot of sense, says Alex Forrest, an insurance broker in South Carolina.
"The cost of health insurance is going up and businesses have been forced to deal with that by raising their deductibles or increasing out-of-pocket costs for their employees," he says. "That stinks."
With a gap plan, he says, companies can offer a package of health benefits that keeps out-of-pocket-expenses for employees down. And they still spend less than they would with higher-priced plans with lower deductibles.
Forrest says he has seen more gap insurance products for businesses come to market in the past few years. They're being marketed as a way to keep out-of-pocket expenses low for employees. This video explaining a plan called the "Premium Saver" boasts: "The only thing that's really different for you is, now, you have two [insurance] cards instead of one."
St. Louis footwear company Diba Imports, for example, purchases both a high-deductible health plan and a type of gap plan called "hospital indemnity insurance" for its roughly 30 employees.
"It basically reimburses most of your deductible if you have an illness or injury that puts you in the hospital," says Diane Butrus, the company's COO.
Butrus says that Diba used to pay the deductibles directly for its employees, but as those deductibles started rising, eventually up to $3,000, "we couldn't afford to do that anymore."
The unpredictability was especially hard for a small company like Diba. The cost of covering employee deductibles swung widely year to year, hitting $25,000 one year when several employees needed serious care.
The hospital indemnity plan only costs the company just under $50 a month per employee — not exactly cheap at about $18,000 per year — but at least Diba knows exactly how much it will spend on insurance every year.
"It's been very good," says Butrus.
Not everyone is bullish about gap plans, however, especially for individual buyers.
Health economist Deborah Chollet of Mathematica Policy Research, an independent research firm, says the insurance reforms in the ACA were designed "basically to drive these kinds of creative insurance arrangements out of the market."
Because gap plans aren't major medical insurance, Chollet explains, they're not regulated by the health care law and can avoid complying with consumer protections built into the law. So the companies providing gap insurance, she says, "can ask you about your health status, they can deny you coverage, they can do all of the kinds of things that the Affordable Care Act prohibits."
Chollet says individuals might be better off getting an Obamacare plan through their state exchange, or at least checking to see if they qualify for subsidies, as 80 percent of consumers on the exchanges do.
That's what Lohr ended up doing. It took her three full days on HealthCare.gov to find the best plan, but after her tax credit, her monthly premium is about $200 and her deductible is just $600.
It's "a much better plan," she says.
For people who are intimidated, overwhelmed or find the whole process of choosing a plan unmanageable, there are dozens of free health insurance navigators in each state — people you can talk to who will help you choose your coverage. It's something Lohr wishes she had known about when she started searching for a plan.
How the Sugar Industry Shifted Blame to Fat
by Anahad O'Connor - NYT
The sugar industry paid scientists in the 1960s to play down the link between sugar and heart disease and promote saturated fat as the culprit instead, newly released historical documents show.
The internal sugar industry documents, recently discovered by a researcher at the University of California, San Francisco, and published Monday in JAMA Internal Medicine, suggest that five decades of research into the role of nutrition and heart disease, including many of today’s dietary recommendations, may have been largely shaped by the sugar industry.
“They were able to derail the discussion about sugar for decades,” said Stanton Glantz, a professor of medicine at U.C.S.F. and an author of the JAMA paper.
The documents show that a trade group called the Sugar Research Foundation, known today as the Sugar Association, paid three Harvard scientists the equivalent of about $50,000 in today’s dollars to publish a 1967 review of research on sugar, fat and heart disease. The studies used in the review were handpicked by the sugar group, and the article, which was published in the prestigious New England Journal of Medicine, minimized the link between sugar and heart health and cast aspersions on the role of saturated fat.
Even though the influence-peddling revealed in the documents dates back nearly 50 years, more recent reports show that the food industry has continued to influence nutrition science.
Last year, an article in The New York Times revealed that Coca-Cola, the world’s largest producer of sugary beverages, had provided millions of dollars in funding to researchers who sought to play down the link between sugary drinks and obesity. In June, The Associated Press reported that candy makers were funding studies that claimed that children who eat candy tend to weigh less than those who do not.
The Harvard scientists and the sugar executives with whom they collaborated are no longer alive. One of the scientists who was paid by the sugar industry was D. Mark Hegsted, who went on to become the head of nutrition at the United States Department of Agriculture, where in 1977 he helped draft the forerunner to the federal government’s dietary guidelines. Another was Dr. Fredrick J. Stare, the chairman of Harvard’s nutrition department.
The industry “should have exercised greater transparency in all of its research activities,” the Sugar Association statement said. Even so, it defended industry-funded research as playing an important and informative role in scientific debate. It said that several decades of research had concluded that sugar “does not have a unique role in heart disease.”
The revelations are important because the debate about the relative harms of sugar and saturated fat continues today, Dr. Glantz said. For many decades, health officials encouraged Americans to reduce their fat intake, which led many people to consume low-fat, high-sugar foods that some experts now blame for fueling the obesity crisis.
“It was a very smart thing the sugar industry did, because review papers, especially if you get them published in a very prominent journal, tend to shape the overall scientific discussion,” he said.
Dr. Hegsted used his research to influence the government’s dietary recommendations, which emphasized saturated fat as a driver of heart disease while largely characterizing sugar as empty calories linked to tooth decay. Today, the saturated fat warnings remain a cornerstone of the government’s dietary guidelines, though in recent years the American Heart Association, the World Health Organization and other health authorities have also begun to warn that too much added sugar may increase cardiovascular disease risk.
Marion Nestle, a professor of nutrition, food studies and public health at New York University, wrote an editorial accompanying the new paper in which she said the documents provided “compelling evidence” that the sugar industry had initiated research “expressly to exonerate sugar as a major risk factor for coronary heart disease.”
“I think it’s appalling,” she said. “You just never see examples that are this blatant.”
Dr. Walter Willett, chairman of the nutrition department at the Harvard T. H. Chan School of Public Health, said that academic conflict-of-interest rules had changed significantly since the 1960s, but that the industry papers were a reminder of “why research should be supported by public funding rather than depending on industry funding.”
Dr. Willett said the researchers had limited data to assess the relative risks of sugar and fat. “Given the data that we have today, we have shown the refined carbohydrates and especially sugar-sweetened beverages are risk factors for cardiovascular disease, but that the type of dietary fat is also very important,” he said.
The JAMA paper relied on thousands of pages of correspondence and other documents that Cristin E. Kearns, a postdoctoral fellow at U.C.S.F., discovered in archives at Harvard, the University of Illinois and other libraries.
The documents show that in 1964, John Hickson, a top sugar industry executive, discussed a plan with others in the industry to shift public opinion “through our research and information and legislative programs.”
At the time, studies had begun pointing to a relationship between high-sugar diets and the country’s high rates of heart disease. At the same time, other scientists, including the prominent Minnesota physiologist Ancel Keys, were investigating a competing theory that it was saturated fat and dietary cholesterol that posed the biggest risk for heart disease.
Mr. Hickson proposed countering the alarming findings on sugar with industry-funded research. “Then we can publish the data and refute our detractors,” he wrote.
In 1965, Mr. Hickson enlisted the Harvard researchers to write a review that would debunk the anti-sugar studies. He paid them a total of $6,500, the equivalent of $49,000 today. Mr. Hickson selected the papers for them to review and made it clear he wanted the result to favor sugar.
Harvard’s Dr. Hegsted reassured the sugar executives. “We are well aware of your particular interest,” he wrote, “and will cover this as well as we can.”
As they worked on their review, the Harvard researchers shared and discussed early drafts with Mr. Hickson, who responded that he was pleased with what they were writing. The Harvard scientists had dismissed the data on sugar as weak and given far more credence to the data implicating saturated fat.
“Let me assure you this is quite what we had in mind, and we look forward to its appearance in print,” Mr. Hickson wrote.After the review was published, the debate about sugar and heart disease died down, while low-fat diets gained the endorsement of many health authorities, Dr. Glantz said.
“By today’s standards, they behaved very badly,” he said.
Drug companies spend millions to keep charging high prices
by David Lazarus - LA Times
Pharmaceutical heavyweight Mylan, the latest poster child for drug-industry greed, finally stuck up for itself Thursday. It argued that “the system,” not avarice, was to blame for the company jacking up the price of EpiPens, a common (and life-saving) allergy remedy, by over 400%.
“Look, no one’s more frustrated than me,” Mylan Chief Executive Heather Bresch declared on CNBC.
Actually, millions of people — those with chronic medical conditions or other illnesses — are more frustrated than her.
Despite Mylan’s offer Thursday of discount coupons for some EpiPen users, the only system at work here is a cash-fat industry routinely preying on sick people. It’s a system that the drug industry will do whatever’s necessary to protect.
Of roughly $250 million raised for and against 17 ballot measures coming before California voters in November, more than a quarter of that amount — about $70 million — has been contributed by deep-pocketed drug companies to defeat the state’s Drug Price Relief Act.
Contributions aimed at killing the initiative are on track to be the most raised involving a single ballot measure since 2001, the earliest year for which online data are available, according to MapLight, a nonpartisan organization that tracks money in politics.
The Drug Price Relief Act would make prescription drugs more affordable for people in Medi-Cal and other state programs by requiring that California pay no more than what’s paid for the same drugs by the U.S. Department of Veterans Affairs. It would, in other words, protect state taxpayers from being ripped off.
Industry donations to crush the Drug Price Relief Act “will top $100 million by the election, I’m quite certain of it,” said Michael Weinstein, president of the AIDS Healthcare Foundation and a leading backer of the state measure, also known as Proposition 61. “They see this as the apocalypse for their business model.”
The drug industry already has succeeded in eviscerating Senate Bill 1010, legislation in Sacramento that would have required pharmaceutical companies to detail the costs of producing medicine and explain any price increases. The bill’s author, state Sen. Ed Hernandez (D-West Covina), pulled it from consideration last week after industry lobbyists succeeded in watering it down with business-friendly provisions.
Mylan’s money-grubbing approach to EpiPens is only the latest example of a drug company mercilessly putting the squeeze on patients.
EpiPens are a decades-old way of delivering epinephrine, a hormone that counters the potentially fatal effects of severe allergic reactions to things such as bee stings and peanuts. There’s about a dollar’s worth of epinephrine in each EpiPen, to which Mylan acquired the rights in 2007 and proceeded to steadily impose double-digit price hikes.
But don’t forget Gilead Sciences charging $1,000 a pill for its hepatitis C drug Sovaldi. Or Turing Pharmaceuticals, which purchased rights to a well-established parasite drug used by AIDS and cancer patients and promptly raised the price by 5,000%.
A recent Reuters investigation found that prices for four of the nation's top 10 drugs have more than doubled since 2011, with the remaining six jumping in price by at least 50%.
“It’s like being held hostage,” Weinstein told me. “The public’s hatred of this industry is an incredible thing. They create life-saving drugs, but, because of their greed, people can’t afford them. What good is a life-saving drug if you can’t get it?”
The Drug Price Relief Act aims to protect California taxpayers by using purchases by the VA as a yardstick by which state agencies can measure if they’re getting a reasonable deal.
It probably would make more sense if Medicare, with more than 55 million beneficiaries, served in that federal capacity rather than the VA. But Big Pharma, abetted by the industry’s Republican cronies, has consistently blocked efforts to allow Medicare to negotiate drug prices. The VA has no such constraint.
The drug industry, ambitiously, is positioning itself as a defender of California consumers. For example, industry representatives have warned that if the prices charged to state agencies were as low as what the VA pays, some drug companies might stop doing business with the likes of Medi-Cal, the prison system and the California Public Employees’ Retirement System, making certain meds unavailable.
The industry “has serious concerns about this poorly written measure because of the negative impact it will have on Californians,” said Pricilla VanderVeer, a spokeswoman for Pharmaceutical Research and Manufacturers of America, a trade group.
I asked Kathy Fairbanks, a spokeswoman for the No on 61 Campaign, if she’d characterize sky-high drug prices as a problem for patients. No, she said, that’s not how she’d put it.
“It’s an issue, how about that?” Fairbanks allowed.
“Healthcare and healthcare costs are top of mind for a lot of people,” she said. “However, Proposition 61 isn’t the answer.”
I asked Fairbanks if she was taking any prescription meds.
“No,” Fairbanks answered. “Are you?”
I told her that, as a person with Type 1 diabetes, I’ve watched helplessly as the price of insulin has tripled since 2002.
“Oh,” Fairbanks replied.
Oh indeed.
No one’s saying drug companies shouldn’t recover the costs of developing and marketing drugs, or that the industry shouldn’t enjoy reasonable profit for its efforts.
But what Mylan and other maestros of greed show us is that this is an industry that fleeces the most vulnerable members of society, and rewards itself handsomely for its morally dubious behavior. From 2007 to 2015, Mylan’s CEO — daughter of Democratic Sen. Joe Manchin of West Virginia — saw her total compensation soar from $2.5 million to $19 million, according to regulatory filings.
The Drug Price Relief Act wouldn’t force pharmaceutical companies out of business. It simply would provide a mechanism for state programs to pay something closer to fair prices for medication.
The fact that the drug industry is willing to spend as much as $100 million to keep that from happening tells you all you need to know.
How a bite from a stray dog shows the sick state of U.S. healthcare
by David Lazarus - LA Times
Jan Kern was bitten by a stray dog while traveling abroad and ended up with a jaw-dropping illustration of why the U.S. healthcare industry is completely sick.
That’s because she underwent a series of rabies shots in three countries at four medical facilities. What that revealed, and which will surprise no one, is that Americans pay way more for the exact same treatment than people in other nations.
Video: U.S. Airstrike Hits Afghan Hospital
Moreover, her experience highlights the lack of uniformity for drug prices, including commonly used medications. One facility might charge a few bucks for the same drug that costs thousands of dollars at a U.S. hospital.
“There’s no rhyme or reason to our medical system,” said Rick Kern, 61, who contacted me about his 62-year-old wife’s global healthcare adventure after reading my recent column on drug prices.
What’s great about his story as well is that, after I shared it with about a dozen healthcare experts, the consistent reaction was one of utter disbelief. We’re accustomed to shaking our heads at U.S. healthcare costs. Things become significantly more absurd when a couple of overseas medical facilities are stirred into the mix.
“It’s obvious that our system is unlike any other health system,” said Uwe Reinhardt, a healthcare economist at Princeton University. “Other systems were set up to care for patients. Ours was set up by the providers — the hospitals and drug companies — for their own benefit.”
The Kerns are former Palos Verdes residents who now reside on Lake Tahoe. While traveling in Southeast Asia a couple of years ago, Jan was bitten by a stray pooch near Cambodia’s Angkor Wat temple. The couple went to a nearby hospital, where a doctor recommended vaccination for rabies, necessitating a series of four shots.
The first shot at Royal Angkor International Hospital cost $125. That included $66.75 for the dose of Verorab, a $25 hospital charge and a $25 doctor fee.
Jan received her second Verorab shot at a clinic in northern Thailand. The bill this time: A mere $18.50, which provides the best evidence of the drug’s actual cost. Even with the clinic’s overhead factored in, a shot of Verorab, which is manufactured by French pharmaceutical firm Sanofi Pasteur, was priced well below $20.
Things changed dramatically once the Kerns returned to this country. For her third shot, Jan visited Torrance Memorial Medical Center. It was a Sunday, and she had to go to the emergency room, so that added considerably to her cost. The tab for a single injection: $5,254.85.
Shot No. 4 was administered at the Redondo Beach branch of HealthCare Partners medical group. This time the bill was $427.
It’s important to note that the Kerns weren’t on the hook for any of these charges. They’d shrewdly purchased travel insurance before their trip, which covered all related medical costs, even once back in the United States.
Also, that crazy bill from Torrance Memorial was the hospital’s opening salvo in haggling with insurers. Such astronomic charges typically are paid only by those lacking coverage. The actual insured price invariably will be much lower.
And Verorab, which is commonly prescribed for rabies in Europe and Asia because it’s relatively cheap to produce, isn’t available in the United States. Costlier vaccines must be used.
Even so, the Kerns’ experience demonstrates the financial pitfalls that await anyone with a high-deductible health plan and thus responsibility for a greater share of medical costs. It also underlines the lunacy of U.S. healthcare pricing.
Clearly a big hospital like Torrance Memorial has more overhead expenses than a little clinic in rural Thailand — it’s not an apples-to-apples comparison. But that doesn’t mitigate how a bill for less than $20 in another country can turn into a bill for over $5,000 in this one.
“Even if the Torrance bill was $1,200, that’s still a stark difference in prices,” said Nadereh Pourat, a professor of health policy and management at UCLA. “It shows that the free market doesn’t work for healthcare. It works for buying televisions, but with healthcare, there’s no price transparency.”
She and other experts I spoke with said this lack of transparency, plus a lack of competition, suggest a need for pharmaceutical price controls — which are a common feature of the healthcare systems of other developed countries.
Otherwise, they said, drug companies and hospitals are free to charge as much as they can get away with.
“People have no ability to price shop,” said Dana Goldman, director of the USC Schaeffer Center for Health Policy and Economics. “And that certainly works to the benefit of suppliers.”
Larry Van Horn, director of the Center for Health Care Market Innovation Research at Vanderbilt University, said he sees hope for change in the growing use of high-deductible insurance plans.
“Neither providers nor medical technology companies will be able to charge the prices they have historically if they expect an average American to foot the bill,” he said. “That is the future, and it will be bright. Providers will have to supply services that people can afford out of pocket, and this will force them to innovate and take down their costs to survive.”
I asked Rick Kern what he learned from his wife’s trip down the healthcare rabbit hole.
He said the main thing was how easy it was to understand what was happening with overseas medical systems. Treatment was straightforward, and costs were clearly spelled out and affordable.
“Here in the U.S.,” Kern said, “we received a bill from Torrance Memorial and nothing was itemized; nothing was clear. Most of all, how do you justify such a huge markup?”
He laughed. “I have an MBA and am a former chief financial officer, and I can’t understand this stuff.”
That should have us all foaming at the mouth.
http://www.latimes.com/business/lazarus/la-fi-lazarus-rabies-vaccine-prices-20160906-snap-story.html
Dropout by Dartmouth Raises Questions on Health Law Cost-Savings Effort
by Robert Pear - NYT
WASHINGTON — In its quest to remake the nation’s health care system, the Obama administration has urged doctors and hospitals to band together to improve care and cut costs, using a model devised by researchers at Dartmouth College.
But Dartmouth itself, facing mounting financial losses in the federal program, has dropped out, raising questions about the future of the new entities known as accountable care organizations, created under the Affordable Care Act.
The entities are in the vanguard of efforts under the health law to move Medicareaway from a disjointed fee-for-service system to a new model that rewards doctors who collaborate and coordinate care.
Medicare now has more than 400 accountable care organizations, serving eight million of the 57 million Medicare beneficiaries. Obama administration officials say the new entities are saving money while improving care, but some independent experts have questioned those claims.
“There’s little in the way of analysis or data about how A.C.O.s did in 2015,” said Dr. Ashish K. Jha, a professor at the Harvard School of Public Health. “The results have not been a home run.”
Continue reading the main story
In addition, he said, “there is little reason to think that A.C.O.s will bend the cost curve in a meaningful way” unless they bear more financial risk, sharing losses as well as savings with the government.
An evaluation for the federal government found that Dartmouth’s accountable care organization had reduced Medicare spending on hospital stays, medical procedures, imaging and tests. And it achieved goals for the quality of care. But it was still subject to financial penalties because it did not meet money-saving benchmarks set by federal officials.
“We were cutting costs and saving money and then paying a penalty on top of that,” said Dr. Robert A. Greene, an executive vice president of the Dartmouth-Hitchcock health system. “We would have loved to stay in the federal program, but it was just not sustainable.”
Dr. Elliott S. Fisher, the director of the Dartmouth Institute for Health Policy and Clinical Practice, said: “It’s hard to achieve savings if, like Dartmouth, you are a low-cost provider to begin with. I helped design the model of accountable care organizations. So it’s sad that we could not make it work here.”
Dr. Greene offered this analogy: It is easier for a person who runs a mile in 12 minutes to reduce the time to 10 minutes than for a five-minute miler to break the four-minute barrier.
Dartmouth-Hitchcock is the main teaching hospital for Dartmouth’s medical school, of which the Dartmouth Institute is part.
Since accountable care organizations began operation in 2012, a number like Dartmouth have dropped out of the program, citing financial uncertainties and unrealistic benchmarks for spending. Organizations with higher levels of prior spending had a greater ability to achieve cost savings in the first years of the program, by reducing unnecessary services, so they were more likely to qualify for financial rewards, according to the Government Accountability Office, an investigative arm of Congress.
The idea of accountable care organizations and the name are generally traced back to a paper in 2006 by Dr. Fisher and colleagues at Dartmouth and its medical school. Writing in the journal Health Affairs, they reported that Medicare beneficiaries received most of their care from doctors who were directly or indirectly affiliated with a local hospital.
Continue reading the main story
Rather than trying to measure the performance of individual doctors, they said, Medicare should assess the hospital and the doctors together and hold them jointly accountable for the cost and quality of care provided to a defined group of Medicare patients.
In effect, this was an effort to overcome the fragmented nature of most American health care and to replicate some of the benefits of managed care while still allowing Medicare patients to visit any doctors they wanted.
The new entities, unlike health maintenance organizations, “can’t tell you which health care providers to see” and “can’t limit your Medicare benefits,” the Obama administration tells beneficiaries. But, it says, doctors and hospitals working together in an accountable care organization can share information, including test results and prescription drug data, so it is easier for them to coordinate care for patients.
Under the law, doctors and hospitals can share in savings if they meet certain goals established by Medicare officials, who set separate benchmarks for each group of health care providers.
Andrew M. Slavitt, the acting administrator of the federal Centers for Medicare and Medicaid Services, said that accountable care organizations were beginning to deliver tangible benefits. The current version is an early iteration “like the iPhone 2,” he said on Twitter.
Dr. Fisher said he was cautiously optimistic about the future of accountable care organizations. “Evidence on spending suggests modest savings over all,” he said, though he acknowledged that in Medicare “the model has yet to achieve the benefits many advocates hoped for.”
Accountable care organizations are one of many demonstration projects being conducted by the Center for Medicare and Medicaid Innovation, an office created by the Affordable Care Act to test new ways of financing and delivering care. Under the law, the secretary of health and human services has sweeping power to expand such projects nationwide if she finds that they would reduce Medicare spending without harming the quality of care.
The center is testing new ways to pay for prescription drugs, medical devices, cancercare, hip replacement surgery and many other services.
Continue reading the main story
The Congressional Budget Office predicts that the center’s activities will save $34 billion over the next 10 years, although it does not know which projects will save money.
Republicans in Congress are taking aim at the center, saying its experiments jeopardize patients’ access to care and usurp the authority of Congress. In some cases, doctors and patients are required to participate.
“The agency has, in effect, enacted changes to the Medicare and Medicaid programs while circumventing Congress,” said Representative Tom Price, Republican of Georgia and chairman of the House Budget Committee.
The House Appropriations Committee has approved legislation that would eliminate $7 billion that remains available to the center.
Democrats defend the innovation center, saying the nation desperately needs to find ways of delivering better care at lower cost. To shut down the center or block its work would amount to “killing the baby in the nursery before it ever grows up,” said Representative Jim McDermott, Democrat of Washington.
WASHINGTON — In its quest to remake the nation’s health care system, the Obama administration has urged doctors and hospitals to band together to improve care and cut costs, using a model devised by researchers at Dartmouth College.
But Dartmouth itself, facing mounting financial losses in the federal program, has dropped out, raising questions about the future of the new entities known as accountable care organizations, created under the Affordable Care Act.
The entities are in the vanguard of efforts under the health law to move Medicareaway from a disjointed fee-for-service system to a new model that rewards doctors who collaborate and coordinate care.
Medicare now has more than 400 accountable care organizations, serving eight million of the 57 million Medicare beneficiaries. Obama administration officials say the new entities are saving money while improving care, but some independent experts have questioned those claims.
“There’s little in the way of analysis or data about how A.C.O.s did in 2015,” said Dr. Ashish K. Jha, a professor at the Harvard School of Public Health. “The results have not been a home run.”
Continue reading the main story
In addition, he said, “there is little reason to think that A.C.O.s will bend the cost curve in a meaningful way” unless they bear more financial risk, sharing losses as well as savings with the government.
An evaluation for the federal government found that Dartmouth’s accountable care organization had reduced Medicare spending on hospital stays, medical procedures, imaging and tests. And it achieved goals for the quality of care. But it was still subject to financial penalties because it did not meet money-saving benchmarks set by federal officials.
“We were cutting costs and saving money and then paying a penalty on top of that,” said Dr. Robert A. Greene, an executive vice president of the Dartmouth-Hitchcock health system. “We would have loved to stay in the federal program, but it was just not sustainable.”
Dr. Elliott S. Fisher, the director of the Dartmouth Institute for Health Policy and Clinical Practice, said: “It’s hard to achieve savings if, like Dartmouth, you are a low-cost provider to begin with. I helped design the model of accountable care organizations. So it’s sad that we could not make it work here.”
Dr. Greene offered this analogy: It is easier for a person who runs a mile in 12 minutes to reduce the time to 10 minutes than for a five-minute miler to break the four-minute barrier.
Dartmouth-Hitchcock is the main teaching hospital for Dartmouth’s medical school, of which the Dartmouth Institute is part.
Since accountable care organizations began operation in 2012, a number like Dartmouth have dropped out of the program, citing financial uncertainties and unrealistic benchmarks for spending. Organizations with higher levels of prior spending had a greater ability to achieve cost savings in the first years of the program, by reducing unnecessary services, so they were more likely to qualify for financial rewards, according to the Government Accountability Office, an investigative arm of Congress.
The idea of accountable care organizations and the name are generally traced back to a paper in 2006 by Dr. Fisher and colleagues at Dartmouth and its medical school. Writing in the journal Health Affairs, they reported that Medicare beneficiaries received most of their care from doctors who were directly or indirectly affiliated with a local hospital.
Continue reading the main story
Rather than trying to measure the performance of individual doctors, they said, Medicare should assess the hospital and the doctors together and hold them jointly accountable for the cost and quality of care provided to a defined group of Medicare patients.
In effect, this was an effort to overcome the fragmented nature of most American health care and to replicate some of the benefits of managed care while still allowing Medicare patients to visit any doctors they wanted.
The new entities, unlike health maintenance organizations, “can’t tell you which health care providers to see” and “can’t limit your Medicare benefits,” the Obama administration tells beneficiaries. But, it says, doctors and hospitals working together in an accountable care organization can share information, including test results and prescription drug data, so it is easier for them to coordinate care for patients.
Under the law, doctors and hospitals can share in savings if they meet certain goals established by Medicare officials, who set separate benchmarks for each group of health care providers.
Andrew M. Slavitt, the acting administrator of the federal Centers for Medicare and Medicaid Services, said that accountable care organizations were beginning to deliver tangible benefits. The current version is an early iteration “like the iPhone 2,” he said on Twitter.
Dr. Fisher said he was cautiously optimistic about the future of accountable care organizations. “Evidence on spending suggests modest savings over all,” he said, though he acknowledged that in Medicare “the model has yet to achieve the benefits many advocates hoped for.”
Accountable care organizations are one of many demonstration projects being conducted by the Center for Medicare and Medicaid Innovation, an office created by the Affordable Care Act to test new ways of financing and delivering care. Under the law, the secretary of health and human services has sweeping power to expand such projects nationwide if she finds that they would reduce Medicare spending without harming the quality of care.
The center is testing new ways to pay for prescription drugs, medical devices, cancercare, hip replacement surgery and many other services.
Continue reading the main story
The Congressional Budget Office predicts that the center’s activities will save $34 billion over the next 10 years, although it does not know which projects will save money.
Republicans in Congress are taking aim at the center, saying its experiments jeopardize patients’ access to care and usurp the authority of Congress. In some cases, doctors and patients are required to participate.
“The agency has, in effect, enacted changes to the Medicare and Medicaid programs while circumventing Congress,” said Representative Tom Price, Republican of Georgia and chairman of the House Budget Committee.
The House Appropriations Committee has approved legislation that would eliminate $7 billion that remains available to the center.
Democrats defend the innovation center, saying the nation desperately needs to find ways of delivering better care at lower cost. To shut down the center or block its work would amount to “killing the baby in the nursery before it ever grows up,” said Representative Jim McDermott, Democrat of Washington.
How Yelp Reviews Can Help Improve Patient Care
Aaron E. Carroll - NYT
Hospitals and many insurance carriers care about patient satisfaction. It especially matters to hospitals because insurance payments can be influenced by how patients rate the care they receive, as well as by the health of the patient, which hospitals usually report.
Many people in the health care profession are put off by this. They argue that patient satisfaction scores aren’t necessarily aligned with outcomes. Moreover, they say that trying to improve satisfaction is a waste of time.
It’s possible, however, that patient satisfaction is being rewarded already, and that the efforts we are making to highlight it aren’t helping as much as we think.
Almost every study on patient satisfaction uses the Hospital Consumer Assessment of Healthcare Providers and Systems (H.C.A.H.P.S.) survey. Studies show it is correlated with clinical measures of quality, although some other studies dispute this.
Collecting such information is costly, but there may be other sources for quality assessments that don’t require investment from the health care system. In 2012, researchers in the Journal of General Internal Medicine examined online reviewsfrom RateMDs.com and Yelp. They found that a majority of reviews were positive. They noted, however, that patients reported on aspects of care that extended beyond the patient-physician encounter. They were concerned about staff, access to the hospital and convenience. They also cared greatly about the bedside manner of the doctors they encountered.
Continue reading the main story
Dr. Naomi Bardach, associate professor of pediatrics and health policy at U.C.S.F. Benioff Children’s Hospital San Francisco, and her colleagues looked at Yelp to determine how consumer ratings compared with those of the hospital consumer assessment survey. Of the almost 3,800 hospitals with survey and other data, about 25 percent also had ratings on Yelp. The correlation between Yelp and the survey was quite strong. Moreover, high ratings at Yelp were correlated with lower mortality for myocardial infarctions and pneumonia — and fewer readmissions for those problems as well as heart failure.
A recent study in Health Affairs expanded on this work. Researchers compared the content of Yelp narrative reviews with the factors considered important in the hospital consumer assessment survey. They found that Yelp reviews did cover most things the survey tallied. But they also covered an additional 12 criteria not in the survey.
These included the cost of a visit; insurance and billing; scheduling; compassion of staff; family member care; and the quality of many staff members. All of these things were important to patients, and all might be correlated with outcomes. More important, nine of the 15 most prevalent criteria in reviews were not included in the survey.
The use of metrics like the hospital consumer assessment survey assumes that those in the health care system have figured out how best to measure patient satisfaction. They also assume that all the information we need should come from patients or from the medical record.
That’s not how the real world works. In a more recent study, Dr. Bardach found that the perceptions of other family members matter and can also be powerful because they focus on safety in a way that patients may not be able to do. The same is true of those who help care for patients at home and help make medical decisions for them. Their opinions are ignored by the survey.
Those publicly available data may even be more comprehensive than that gathered at the behest of payers. The next question is whether the health care system needs to measure satisfaction — maybe the publicly available data, like at Yelp, is sufficient. Could those data be used alone to incentivize providers?
A couple of weeks ago, my colleague Austin Frakt wrote a column on hospital quality and market share. He argued that people could improve their health by choosing a hospital that has a higher quality rating. He also nodded to the fact that patient satisfaction scores are often aligned with quality and with better outcomes.
He highlighted a paper published in The American Economic Review that looked at how performance of hospitals was related to market share. Conventional wisdom holds that patients lack information on quality and that they cannot tell, or favor, providers who seem better. But researchers found that hospitals that performed better, on both outcomes and process-based measures, tended to have greater market share, and experienced greater market growth.
Further, they found that as patients shifted to hospitals with higher performance, that change alone drove a significant amount in the improvements seen in overall survival rates for a number of conditions. Overall survival improved, in part, just because patients shifted from hospitals with lower quality to higher quality. If patients had the ability to choose between hospitals, they tended to gravitate to those with higher performance.
In other words, this may be an area of health care where the free market is working. When allowed to choose, patients seem able to discern quality — as they define it — and gravitate toward it. It’s not clear that we need to be forcing the issue with measurement and reimbursement.
It’s important to recognize, though, that this was a study of Medicare patients, all of whom arguably have more flexibility in terms of hospitals and doctors than those with private insurance. Those with private insurance often are restricted by “narrow networks” and directed to a few facilities and offices.
Americans cry out for more choice in their health care. This sometimes gets translated to mean a choice of insurance companies. But Americans with government-provided Medicare, who have the least choice of insurers, have the most choices when it comes to providers. And they seem to use that freedom to choose providers who perform better.
I asked Dr. Bardach about this. “It’s still unclear how people are getting the information to choose the hospitals, but the power of stories is likely an important part of why Yelp and other online reviews are compelling,” she said. “Stories add nuance and context to the otherwise somewhat sterile numbers that the H.C.A.H.P.S. produces.”
Research shows that patients reward quality on their own — when they can. We might just need to make it easier for more of them to do so.
Health care pricing panel starts work with split views
Hospitals and many insurance carriers care about patient satisfaction. It especially matters to hospitals because insurance payments can be influenced by how patients rate the care they receive, as well as by the health of the patient, which hospitals usually report.
Many people in the health care profession are put off by this. They argue that patient satisfaction scores aren’t necessarily aligned with outcomes. Moreover, they say that trying to improve satisfaction is a waste of time.
It’s possible, however, that patient satisfaction is being rewarded already, and that the efforts we are making to highlight it aren’t helping as much as we think.
Almost every study on patient satisfaction uses the Hospital Consumer Assessment of Healthcare Providers and Systems (H.C.A.H.P.S.) survey. Studies show it is correlated with clinical measures of quality, although some other studies dispute this.
Collecting such information is costly, but there may be other sources for quality assessments that don’t require investment from the health care system. In 2012, researchers in the Journal of General Internal Medicine examined online reviewsfrom RateMDs.com and Yelp. They found that a majority of reviews were positive. They noted, however, that patients reported on aspects of care that extended beyond the patient-physician encounter. They were concerned about staff, access to the hospital and convenience. They also cared greatly about the bedside manner of the doctors they encountered.
Continue reading the main story
Dr. Naomi Bardach, associate professor of pediatrics and health policy at U.C.S.F. Benioff Children’s Hospital San Francisco, and her colleagues looked at Yelp to determine how consumer ratings compared with those of the hospital consumer assessment survey. Of the almost 3,800 hospitals with survey and other data, about 25 percent also had ratings on Yelp. The correlation between Yelp and the survey was quite strong. Moreover, high ratings at Yelp were correlated with lower mortality for myocardial infarctions and pneumonia — and fewer readmissions for those problems as well as heart failure.
A recent study in Health Affairs expanded on this work. Researchers compared the content of Yelp narrative reviews with the factors considered important in the hospital consumer assessment survey. They found that Yelp reviews did cover most things the survey tallied. But they also covered an additional 12 criteria not in the survey.
These included the cost of a visit; insurance and billing; scheduling; compassion of staff; family member care; and the quality of many staff members. All of these things were important to patients, and all might be correlated with outcomes. More important, nine of the 15 most prevalent criteria in reviews were not included in the survey.
The use of metrics like the hospital consumer assessment survey assumes that those in the health care system have figured out how best to measure patient satisfaction. They also assume that all the information we need should come from patients or from the medical record.
That’s not how the real world works. In a more recent study, Dr. Bardach found that the perceptions of other family members matter and can also be powerful because they focus on safety in a way that patients may not be able to do. The same is true of those who help care for patients at home and help make medical decisions for them. Their opinions are ignored by the survey.
Those publicly available data may even be more comprehensive than that gathered at the behest of payers. The next question is whether the health care system needs to measure satisfaction — maybe the publicly available data, like at Yelp, is sufficient. Could those data be used alone to incentivize providers?
A couple of weeks ago, my colleague Austin Frakt wrote a column on hospital quality and market share. He argued that people could improve their health by choosing a hospital that has a higher quality rating. He also nodded to the fact that patient satisfaction scores are often aligned with quality and with better outcomes.
He highlighted a paper published in The American Economic Review that looked at how performance of hospitals was related to market share. Conventional wisdom holds that patients lack information on quality and that they cannot tell, or favor, providers who seem better. But researchers found that hospitals that performed better, on both outcomes and process-based measures, tended to have greater market share, and experienced greater market growth.
Further, they found that as patients shifted to hospitals with higher performance, that change alone drove a significant amount in the improvements seen in overall survival rates for a number of conditions. Overall survival improved, in part, just because patients shifted from hospitals with lower quality to higher quality. If patients had the ability to choose between hospitals, they tended to gravitate to those with higher performance.
In other words, this may be an area of health care where the free market is working. When allowed to choose, patients seem able to discern quality — as they define it — and gravitate toward it. It’s not clear that we need to be forcing the issue with measurement and reimbursement.
It’s important to recognize, though, that this was a study of Medicare patients, all of whom arguably have more flexibility in terms of hospitals and doctors than those with private insurance. Those with private insurance often are restricted by “narrow networks” and directed to a few facilities and offices.
Americans cry out for more choice in their health care. This sometimes gets translated to mean a choice of insurance companies. But Americans with government-provided Medicare, who have the least choice of insurers, have the most choices when it comes to providers. And they seem to use that freedom to choose providers who perform better.
I asked Dr. Bardach about this. “It’s still unclear how people are getting the information to choose the hospitals, but the power of stories is likely an important part of why Yelp and other online reviews are compelling,” she said. “Stories add nuance and context to the otherwise somewhat sterile numbers that the H.C.A.H.P.S. produces.”
Research shows that patients reward quality on their own — when they can. We might just need to make it easier for more of them to do so.
Health care pricing panel starts work with split views
by Priyanka Dayal McCluskey - Boston Globe
The variation in prices paid to hospitals for providing similar care is either one of the biggest problems plaguing the Massachusetts health care industry or is no problem at all. It depends on whom you ask.
That was clear Tuesday at the first meeting of a special commission assembled to study price variation over six months and make recommendations for addressing it. The panel was created through legislation passed earlier this year to avoid a controversial ballot question that would have attacked price variation by redistributing money from higher-paid hospitals to their lower-paid competitors.
Several reports from the Globe’s Spotlight team, the attorney general’s office, and the state Health Policy Commission have shown that large teaching hospitals get paid more than smaller community hospitals for providing the same services and procedures. Many experts consider this a problem because the most expensive hospitals also tend to see the most patients, driving up medical costs. Community hospital leaders also argue that price disparities put them at a competitive disadvantage.
One recent study said that spending on low-risk pregnancy care, for example, ranged from less than $10,000 at some Massachusetts hospitals to more than $18,000 at others.
“Unless we specifically address unwarranted price variation on this commission, I’m concerned that the amount of the care delivered in higher cost settings is going to continue to escalate,” said Dr. Howard Grant, chief executive of Lahey Health in Burlington. “The consequence of that is that more community-based health care providers will continue to close.”
Karen Tseng, head of Attorney General Maura Healey’s health care division, said she hopes the commission issues concrete recommendations to resolve price variation, which she described as an urgent issue contributing to rising health care costs for consumers and employers.
“I think we all know what the problem is,” added Tyrek Lee, executive vice president of the Service Employees International Union, Local 1199. Lee’s union proposed the ballot question earlier this year that would have taken $440 million a year away from Partners HealthCare, the state’s highest-priced hospital system, and increased payments to other health care providers.
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