Tag Archives: Imported

The epitome of an Econ-Atrocity: health insurance sicko as can be

It’s hard to think of something that counts as an “econ-atrocity” more than the health insurance industry’s practice of paying bonuses to employees who meet targets for cancelling policies of sick customers or refusing to cover the care that the customers need. My uncle sent me this link to the latest revelation published in the LA Times:

Health insurer tied bonuses to dropping sick policyholders

By Lisa Girion, Los Angeles Times Staff Writer
November 9, 2007
One of the state’s largest health insurers set goals and paid bonuses based in part on how many individual policyholders were dropped and how much money was saved.

Woodland Hills-based Health Net Inc. avoided paying $35.5 million in medical expenses by rescinding about 1,600 policies between 2000 and 2006. During that period, it paid its senior analyst in charge of cancellations more than $20,000 in bonuses based in part on her meeting or exceeding annual targets for revoking policies, documents disclosed Thursday showed.

As my uncle put in his email’s subject line, “did somebody say, ‘single-payer health plan?'”

MoveOn moves on climate bills

See the blog post I wrote for my employer’s website.

A friend of mine, who knows from my own previous email missives that there are important things afoot in Congress regarding pending legislation on global warming, forwarded me this message from MoveOn.org.

From: Ilyse Hogue, MoveOn.org Political Action
Sent: Tue, 30 Oct 2007 12:23 pm
Subject: Corporate windfall or clean energy economy

Click here to add your name: “Any climate legislation that gives “˜pollution credits’ away for free means windfall profits for big polluters. Congress should ensure that corporations pay taxpayers for these credits. The money raised should help develop clean energy sources and support the workers and consumers affected by the shift to clean energy.”

[cont’d]

A back-of-the-envelope sense of the socio-economic impact of reducing fossil fuel usage to fight global warming

I’ve been writing posts recently advocating for a Sky Trust style program to
1) cap carbon emissions from the burning of fossil fuels
2) auction the permits within that cap
3) pay out revenue from the auction to each American on a per-person basis.

One thing I’ve wondered about is, “what will the impact be on people for reducing the availability of fossil fuels by the amount necessary to aggressively fight global warming?”

The first part of the answer is to see how much reduction of fossil fuels will be necessary. The standard goal being targeted in currently proposed legislation is to cut carbon emissions by 80% by the year 2050. That gives us roughly 40 years (since any program will only begin in a couple years at best), and, depending on the precise details of the program will require annual reductions–for the first bunch of years, at least–of between 2% and 4%. Read more

“Little Green Lies”

From BusinessWeek:

Little Green Lies
The sweet notion that making a company environmentally friendly can be not just cost-effective but profitable is going up in smoke. Meet the man wielding the torch

Sobering thoughts from a dedicated environmentalist business-reformer. Among other things, what this shows is that real change in business behavior won’t come until the economics changes. The price of creating pollution must go up–when (if) it does, the return-on-investment equation will change, and that’s the best hope for changing business behavior and achieving real reductions in pollution. Ideally, this will take the form of a cap-and-trade program where all emission permits are auctioned and revenue recycled as per-capita payments to all Americans, as championed by Peter Barnes.

Telephone justice

Kudos to the folks at the Center for Constitutional Rights and their allies in the struggle to end exploitative telephone contracts in New York state prisons. The problem is not restricted to New York, but that’s where the Telephone Justice coalition has been focusing its efforts.

Typically, states receive kickback commissions from the phone companies who receive the contract, creating a situation in which there is no incentive to seek competitive bids. Unsurprisingly rates for such calls are well above market rates, as much as $6 per minute. The phone companies and prison officials justify the high prices by saying there is a need for added security measures. There is little evidence to justify this claim, especially since calls from all Federal prisons cost just 7¢ a minute.

In any case, the records show that companies and states often make millions of dollars in profits from surcharges and inflated per-minute rates. In New York State, 57.5 percent of the profits – over $200 million since 1996 – were kicked back to the state in the form of commissions.

So it turns out that crime does pay, only it’s the state and telephone companies that are getting paid, not the perpetrator or victim of the crime. The joys of being the middleman. Is it possible that schemes like this contribute to state legislatures’ ongoing practice of finding new ways to put and keep people in jail, from “three strikes” laws to mandatory minimums for victimless crimes? State governments like to find ways to generate revenue without imposing general taxes, and ripping money off from the families of inmates is probably a good way to do so without incurring the wrath of most voters. That’s just one of the arguments made by lawyers at the CCR who helped to end this practice.

The contracts are also unjustifiable as a matter of public policy. The profits returned to the states are treated as income – in New York, they are said to pay for basic prisoner services such as health care and release clothes – and this system is analogous to an unlegislated, regressive, and highly selective tax, under which specific individuals are asked to bear the financial burdens that are the proper responsibility of the state. By imposing such burdens on families of prisoners, the practice resembles a form of collective punishment.

Given the class divide in who goes to jail, and the divide in who tends to vote, relatively few voters are from families with someone in jail. So the people who are being squeezed have no clout with the lawmakers. Well, in New York they’ve managed to earn some clout through the efforts of the Telephone Justice coalition, which was launched by the CCR.

Since 1999, the Center for Constitutional Rights (CCR) has been fighting on the ground and in the courts to end the exploitative telephone contract between New York State and MCI/Verizon which charged family members 630% more for collect phone calls from their loved ones in prison than the average consumer. Single-carrier collect call systems are the norm for telephone service in prisons across the United States. Prisoners may only call collect, and loved ones who accept the calls must accept the terms dictated by the chosen phone company. At a time when prisoners are increasingly housed in facilities hundreds of miles away from their home communities, telephones become for many the only way to stay in touch.

This year, after three years of tireless work, we won. [cont’d]

Next step: take the campaign to all the other states. (See the campaign’s endorsers page for links to some other telephone justice efforts around the country.

Class and the Law: A Study in Contrasts

I’ll be writing more later, but for now, just a couple of things I thought make up a good contrast. Not many people would be surprised by the assertion that economic classes receive different treatment before the law in the U.S., but the following two items are certainly remarkable. First, take a look at this story, about a group arrested for feeding the homeless in Orlando. Yes, apparently charity begins and ends at home: “mass feeding in one area” is banned by a city ordinance. Don’t worry though, not everybody suffers from such casual and needless oppression. Gazillionaire hedge fund managers will get to keep their huge tax break: their income is considered capital gains and so is subject to the 15% capital gains tax, not to the regular income tax or to the payroll tax that funds social security benefits. Mark Shields explains why. Thanks to MoJoBlog for the tip on the lack of legislation.

Oh and by the way, Keith Knight tells it like it is.

Reaganomics reconsidered

I’m always open to listen to arguments from the honorable opposition. You learn more from your critics than your allies, after all. And so, in the spirit of open mindedness, a reconsideration of Reaganomics via The Onion:

Reaganomics Finally Trickles Down To Area Man
October 13, 2007 | Issue 43 #41

HAZELWOOD, MO Twenty-six years after Ronald Reagan first set his controversial fiscal policies into motion, the deceased president’s massive tax cuts for the ultrarich at last trickled all the way down to deliver their bounty, in the form of a $10 bonus, to Hazelwood, MO car-wash attendant Frank Kellener.

[cont’d]

Reminder: read “Beat the Press”

Dean Baker’s “Beat the Press” has so many good posts lately I’m not going to link to them individually, just encourage you to go browse. Required reading. Topics: Tom Friedman and USA Today continue to cry, “Social Security sky is falling”; Wall Street Journal gives free pass to Fred Thompson’s malicious ignorance; NPR gets “free trade” wrong; healthcare crises real and imagined; and so on.

Climate policy cont’d: Obama talking the talk

Barack Obama must have read the Jonathan Alter article in Newsweek, or maybe he shared the back of a taxi with Peter Barnes. Whatever the cause for his conversion, he’s now speaking a bit of the gospel.

Presidential hopeful Barack Obama on Monday called for reducing U.S. greenhouse gas emissions by 80 percent of the 1990 level by 2050. His proposal would force power companies and other businesses to pay for all their pollution.

He proposed a modified “cap and trade” approach to reducing emissions that would require businesses to buy allowances to pollute, creating an incentive to reduce energy usage.

Under a traditional cap and trade system, power plants or businesses that exceed pollution caps must buy or trade for additional capacity, generally from plants that have taken steps to reduce their emissions. Unlike some of his rivals, Obama said he would auction all allowances rather than grandfathering some to big emitters such as oil and coal companies.

“No business will be allowed to emit any greenhouse gases for free,” he said. “Businesses don’t own the sky, the public does, and if we want them to stop polluting it, we have to put a price on all pollution.”

Sweetness. Of course, Obama is still listed as a co-sponsor of Lieberman’s “big business owns the sky, so give allowances for free to the big emitters” bill, so we’ll have to see what he does in terms of walking the walk. But for all my cynicism, hearing the right talk is an unexpected pleasure.

Meanwhile, I’m surprised to see this statement in the Washington Post “campaign 2008” blog:

Most legislation offered to reduce carbon emissions takes this form [cap total emissions and allow trading of allowances within that limit], even though many economists believe a carbon tax would be simpler, if more difficult to sell politically.

Which “most” economists are they talking about? When you have a specific target you are trying to reach, taxes are a blunt and inaccurate instrument. Plenty of the nerdiest economists can whip up a quick model to show how a cap-and-trade system is more economically efficient (using the terms of market economics) than a tax system in this kind of scenario. Maybe someone needs to do a survey of economists or something. Anyhow, I badmouthed Congress the other day for being (or acting willfully) ignorant of simple economic principles.* But now, if the Washington Post is right, I’ve got to badmouth “most economists” and give credit to the politicians for getting this one right.

*”which is so Econ 101 it’s plain pathetic that most of Congress seems to be dismissing it out of hand

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