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Asking the Wrong Questions: Reflections on Amazon, the Post Office, and the Greater Good

The author of this post which was published in April 2018 on Save The Post Office is Mark Jamison, a retired North Carolina Post Master. From time to time, I have featured both Marks and Steve’s post office advocacy on Angry Bear. Steve is a literature professor who teaches “place studies” at the Gallatin School of New York University. One of these days I will visit Mark in the mountains of North Carolina.

“If they can get you asking the wrong questions, they don’t have to worry about answers.” — Thomas Pynchon, Gravity’s Rainbow

I have not written or said much about postal issues for the last couple of years. After seven years of writing articles for Save the Post Office and other websites, as well as contributing numerous comments to the Postal Regulatory Commission, what more was there to say?

I spent thirty years of my working life at the Postal Service. I’ve put in countless hours reading USPS reports, OIG reports, GAO reports, and who knows how many pleadings before the PRC. I have written numerous articles about the general idea of the postal network as an essential public infrastructure, the arcane minutiae of postal costing and the actions of the PRC, and the machinations of a Congress that seemed more inclined to bloviate and posture than attempt to solve a serious problem affecting millions of Americans and thousands of communities, large and small, rural and urban.

I never stopped thinking about these issues, but what more was there to say? And why bother, really, when the politicians and managers that could actually make changes seemed inclined to let inertia and the status quo slowly erode the capabilities of the postal network while degrading hundreds of thousands of good middle-class jobs?

And then President Trump had one of those brain farts he periodically shovels out over Twitter.

Motivated by his dislike for Jeff Bezos — who has far more money than Mr. Trump will ever have or imagine having and who also owns the Washington Post, which tends to say things that are not particularly complimentary of Mr. Trump and his Alphonse-and-Gaston act as president — the president let forth a blast about how Amazon was ripping off the Postal Service.

It was obvious from his Tweets and subsequent comments Mr. Trump did not have a clue about postal policy, let alone any sort of command of the details. Then again, when the president speaks, people tend to listen. And, as the English poet William Cowper once observed, “A fool must now and then be right, by chance.” (Here in the mountains of North Carolina we might say that even a blind hog finds an acorn once in a while).

But was Mr. Trump right about Amazon? A good many folks in the media wanted to know, since if the president says it, it may not be true but it is certainly news.

As it happens, I had written a number of pieces here on STPO specifically about Amazon’s Negotiated Service Agreement with the Postal Service and about package costing and pricing methods in general. In 2013, I also filed a motion with the Postal Regulatory Commission seeking access to the non-public materials in the PRC docket approving Amazon’s NSA. Both the Postal Service and Amazon immediately filed comments opposing my request.

Not content with making an argument for why the NSA should remain secret, Amazon went on to disparage me personally by quoting my articles on Save the Post Office. Amazon observed that I had written that the “postal rate system has become a morass of embedded privilege,” business mailers “are doing fine,” and the Postal Service is a “wholly owned subsidiary of Mailers Inc.” I had also opined, noted Amazon, that PMG Donahoe lied in recent testimony to the Senate, and “Donahoe and the [Board of Governors] have demonstrated an unrestrained contempt for Congress, the rule of law, and most importantly, the American people.”

For what it’s worth, the PMG did give “misleading testimony, and later said he “misspoke.” Everything else I wrote about the rate system, the mailers, and the BOG was true, too. Not that this should have had anything to do with the PRC’s decision not to allow me to see the Amazon NSA it had approved

Anyway, Google being what it is, my pieces about Amazon and the post office showed up in searches, and a few intrepid or at least curious reporters contacted me with questions.

I should give those reporters credit for caring enough about their work to attempt a thorough job. While some of them just wanted a simple answer to, “Is Trump right or wrong?” a couple of these reporters really did want to understand the issues that were involved. Rather than go with a Citibank report that was seriously flawed both methodologically and factually (which just goes to show that highly paid financial analysts writing for elite firms are just as prone to self-delusion and tipping the scales towards their preferred narrative as the rest of us), there were at least a couple of outlets that made the effort to dig beyond the headlines.

The problem is that even the more thorough journalists were asking the wrong questions. Their questions were based on an ingrained narrative about the post office. And, as has become the case in much of our political dialogue, the narratives that prevail and the agendas that drive them originate not from a broad civic space balancing the interests of the American people but from relatively narrow interests. As discussed in a recent post here on STPO about postal retirement and benefit liabilities, it is these agendas that tend to drive the policy prescriptions.

In 2015 I wrote a piece titled “When Titans Collide: UPS petitions the PRC to change USPS costing methodologies.” The piece examined a year long attempt to gerrymander postal costing and pricing systems in ways that best served those in the mailing and package delivery industries. Some of the players have changed over the years as the mail mix has changed, but the goal remains the same – find a way to defenestrate the Postal Service.

The piece looked at the issues that were at the crux of Mr. Trump’s complaint – the Postal Service wasn’t charging enough and it was making “bad deals.” I looked in detail at some of the costing and pricing methods and tried to engage those specific arguments. But the heart of the matter was that the Postal Accountability and Enhancement Act, the 2006 law that in many ways governs the operation of the Postal Service, had set up an impossible and counterproductive environment that failed to recognize the value of the postal network as an essential national infrastructure.

PAEA had many aims but good policy wasn’t really the focus. After decades of trying to fit the Postal Service into a box it was ill-suited to occupy — that of simply another mailing business rather than an infrastructure — PAEA took a big step in the direction of privatization. By separating postal products into market-dominant and competitive categories and by creating a rate mechanism designed more to satisfy mailing interests than create and sustain a reliable and ongoing postal network, PAEA set up a system that would engage a lobbyist’s feeding frenzy. Other provisions of PAEA were designed to lead to the elimination of postal jobs by saddling the Postal Service with unwarranted and punitive liabilities for its retirees. Though the legislation was filled with all manner of technical provisions, it was largely ideological.

After examining all the arguments in the PRC docket on costs and prices, all the briefs and studies presented by the Postal Service, UPS, the PRC’s Public Representative, and various stakeholders, I came to the conclusion that we had lost the forest for the trees. We had lost sight of the big picture in the sense that the ideas of universal service and access became wholly secondary considerations. We were no longer discussing the broadly-based concerns of national infrastructure. Instead, we had waded into a swamp of special interests where every group of mailers sought the best and highest advantage.

I sent a link of the Titans piece to the journalists who called wanting to understand the current kerfuffle created by Mr. Trump’s comments. I suppose it’s immodest of me to include the response I got from one of the journalists, but I will because it makes a greater point. After reading the piece he e-mailed: “I think this is probably the most insightful and brilliant blog post that synthesizes a generation of (misguided) political thinking and explains how that altered the trajectory of the USPS.”

He said some other nice things, went on to thank me for spending an hour and a half on the phone with him, and then continued to call and email with more questions. But despite my efforts to get him to look at the big picture, he kept coming back to the issue of whether or not the Postal Service could and should be charging more for Amazon packages and if other mailers were also getting sweetheart deals.

So there we were, back to talking about the wrong questions.

What we should have been talking about is how to preserve an essential national infrastructure that connects every American while providing good solid middle-class jobs with salaries and benefits that sustain families and get spent in local communities, an infrastructure that provides affordable rates that benefit American consumers and businesses.

Instead we were arguing about whether charging more for packages would make the Postal Service more profitable and whether big companies like Amazon ought to be paying more, while neglecting to factor in that most increases in package prices would simply be passed on to consumers while allowing UPS and FedEx more freedom to raise prices.

At this point I thought that maybe I was missing something, so I went back and looked at a couple of PRC dockets and recent Annual Compliance Determinations, which review how well the Postal Service is fulfilling its general legal obligations. I also looked at a recent docket on costing methodologies, a subject UPS has repeatedly sought to litigate even though they have never made a credible case the methodologies currently in use aren’t reasonable. Most particularly I looked at RM2017-1, the PRC docket that reviewed the level of institutional contribution that competitive products had to make. This was the one area where I thought UPS had at least a reasonable point in its 2015 filings.

After reading a few hundred pages of legalese and lobbyist pleadings and maneuverings, I came to the conclusion maybe Macbeth had a point, this was all sound and fury signifying nothing. (Macbeth’s greater point is that it still ends in death.)

But Mr. Trump Tweeted.

Recalling Mr. Cowper’s admonishment that a fool could be right and still be a fool, I thought maybe we should look for some validity in his Tweet. Mr. Trump seemed to be making two points. First, the Postal Service was making bad deals, and second that Amazon was destroying retail across America. Let’s take the second one first: Is Amazon destroying local retail?

Maybe, perhaps probably, but that’s not a new phenomenon. Before there was Amazon there was Wal-Mart. In 2006 Tom Slee wrote a wonderful little book titled “No One Makes You Shop at Wal-Mart: The Surprising Deception of Individual Choice.” Slee uses game theory to demonstrate that the cumulative total of what appears to be a series of rational choices by individuals turns out to have a vastly negative aspect for local communities.

Actually, it’s not a new idea. Back in the 1930’s, Keynes made the same observation in describing what he called “The Paradox of Thrift.” Keynes noticed that in an economic downturn, individuals make the rational choice of spending less and saving more. If the economy is sour, it’s better to be conservative than a spendthrift. That makes a lot of sense for the individual, but when lots of individuals make that same perfectly rational decision, the end result is that consumer spending dries up, which makes the downturn even worse.

Slee’s updated version of Keynes’s insight is that people rationally value low prices. They also have preferences for nice communities, for vibrant downtowns, and a healthy local business sector. But in most cases those other preferences are somewhat indistinct or at least not entirely obvious.

What is obvious is that saving a few cents on a loaf of bread is a good thing. And while many of us valued wandering around the local grocery market and hardware store, talking to the local owner who probably knew a little bit about a lot of things, we also value the convenience of one-stop shopping. It’s just convenient to be able to look at that new drill in the same store where I’m doing my grocery shopping, and the fact the new drill costs a few dollars less doesn’t hurt.

So lots of folks make the perfectly rational decision to shop at the big box everything store because it’s convenient and cheaper. Oh maybe a few diehards make a conscious effort to give at least some business to local retailers, but margins are slim for local businesses, so the loss of a few customers makes a big difference. So one day we wake up and that vibrant local downtown suddenly has several vacant stores. And because Wal-Mart is big, it can exercise economies of scale like squeezing suppliers for lower prices. And as local retail businesses die so do jobs, which gives Wal-Mart more power in dictating wages.

One day we wake up and those cheap prices we rationally valued have cost us a lot of elements that we valued in our community. Things seem to tilt towards the lowest common denominator. The end result filters through all parts of the community. There’s been no end of reporting on how Wal-Mart instructed employees how to apply for food stamps or Medicaid or other benefits since they didn’t make enough to afford the basics. On balance local tax revenues may suffer. Perhaps the hardest things to measure are the damages to the quality of life and community cohesion.

Amazon is Wal-Mart writ large for the internet age. Amazon started out selling books, but now it calls itself “The Everything Store.” More importantly Amazon is much more than a retailer. It’s a logistics company. Jeff Bezos has simply used retail to generate the revenues to build a vast network of warehouses and backroom data support services. Amazon has a presence in nearly every sector of the economy.

It appears that we love it too, or at least the stock market which, unfortunately, seems to be the gauge by which we measure the success not only of the economy but of our communities and lives. The last I looked Amazon’s P/E ratio was nearly ten times higher than that of the average of the market generally. That means that investors value the company so much that the price of its stock is at historically high multiples of earnings.

Is Amazon killing American retail? Probably, but as Tom Slee might point out, no one makes you shop there.

That brings us to Mr. Trump’s other complaint, that the Postal Service is making terrible deals. Maybe but maybe not. If he’s basing that argument on the fact that the Postal Service is losing money, it’s important to remember that the Postal Service was designed to lose money. It is intentionally built to shovel funds back into the Federal budget, not through profits but from accounting trickery that saddles it with excess liabilities.

By all measures the package business that Mr. Trump focused on is adding to the bottom line with regularity. It’s also important to remember that the Postal Service has only about a 16% share of the package delivery market. It really isn’t in a position to dictate prices.

Much of the noise that followed Mr. Trump’s Tweets seemed to ignore the fact that forcing the Postal Service to charge more for packages would give its competitors, UPS and FedEx, an excuse to raise their prices. In the end, consumers would end up paying higher prices. Plus, forcing the Postal Service to charge more for packages would not only violate the basic market principles it has supposedly been designed to serve but also the structure of the free market itself.

We’re asking the wrong questions and it’s not because we’re stupid. We’re asking the wrong questions because those are the questions a large part of corporate America and the financial elites want us to ask. Mr. Trump got elected by sleight of hand – promising this and doing that – and that’s exactly what is happening with respect to the Postal Service.

So what are the right questions?

First of all, if competition is so important, why is 85% of the package delivery market controlled by two companies? Why aren’t the FTC and the Anti-Trust division of the Justice Department paying attention to this?

Do we value good jobs, local communities, and quality of life? Or do we value low prices more than anything else? If Amazon is too big and powerful, if it’s doing the same thing to local retail that Wal-Mart did a generation ago, then perhaps we should be asking ourselves what it is we really value.

Are we being given an honest accounting of the consequences of government policies? Why, given that 94% of the American public favored some form of protections for Net neutrality, did the FCC ruled in favor of monopoly providers? After a tax cut that was supposed to encourage more investment in the economy and higher wages for workers, why are we just seeing more stock buybacks? And are we going to have to pay for those tax cuts and avoid crippling deficits by cutting the wages and benefits of workers and further eviscerating the safety net?

Do we value the institutions that leveled the playing field and brought to millions of people the benefits of an economy that worked for the many and not merely the few? Do we value essential infrastructures like the postal network?

And finally, this. Are we content to play the duped mark in an oligarch’s confidence game? Are we going to watch valuable public assets and healthy public spaces and public participation in the economy get shuffled around in a game of three-card monte when the winner can only be the entitled elite?

(Mark Jamison is a retired postmaster. His articles on Save the Post Office can be found here, and the comments he’s filed with the Postal Regulatory Commission are listed here.)

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Merry Christmas

Back down from the mountains where it was snowing yesterday, a silent beauty. Sitting in my daughter’s kitchen drinking a cup of Keurig manufactured coffee. The household is quiet as I think about the events of the last months and attempt to pen a few words.

Washington is still shut down and one man pouts. Thousands of people suffer the impact of a hurricane in Puerto Rico, floods in the South, and wild fires in California due to our impact upon the environment. Legislatures in Wisconsin, North Carolina, and Michigan are still trying to steal an election from the voters. There is no peace amongst the peoples of this world and many live in poverty.

If this message finds you more fortunate than those around you or others in the world today, it is Christmas today and a time to give of yourselves in celebration of this day. Peace to you and family and I hope this note finds you good in health and prosperous.

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Man of The Year

“WASHINGTON (The Borowitz Report)—Capping an extraordinary 2018, Donald J. Trump announced on Thursday that he had been named Man of the Year by the terrorist organization known as ISIS.

Trump made the announcement after receiving the news from the leader of ISIS, Abu Bakr al-Baghdadi, whom Trump called ‘a terrific, fabulous guy.’

‘I got along great with him, and he said a lot of nice things about me,” Trump said. “He said ISIS didn’t even consider anyone else.’

Trump, who is expecting to receive an official Man of the Year plaque from ISIS in the next few weeks, said that the award ‘came as a total surprise to me.’

‘It’s a particularly impressive honor when you consider ISIS was co-founded by Hillary and Obama,’ he said.”

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Neoliberalism as Structure and Ideology

Neoliberalism as Structure and Ideology

As someone who has looked at the world through a political economic lense for decades, I am restless with the “cultural turn”.  Once upon a time, it is said, the bad old vulgarians of the left believed that economic structure—the ownership of capital, the rules under which economies operate and the incentives these things generate—were everything and agency, meaning culture and consciousness, were nothing.  The latter was sometimes claimed to be derivative of the form.

Then we had a cultural turn.  Now it seems it’s all about consciousness and ideology, of which economic structures are a pale reflection.  Neoliberal ideology is said to have seeped its way into the heads of intellectuals, journalists and politicians—perhaps even the public at large—and this explains things like deregulation, privatization and the ubiquity of outsourcing and global value chains.  It’s even possible to have 500-page treatises about the failures of capitalism that make no reference at all to the empirical structure of the economy, only modes of thought, as I point out here.

According to this view, the various failings of our society, from the inability to act on climate change to mass incarceration to the imposition of market logic on higher education, all converge as consequences of neoliberal hegemony.  But what is neoliberalism?  It is usually described as a philosophy, born sometime between the fall of the Hapsburgs (Slobodian) and the postwar convening of the Mont Pèlerin Society (Mirowski et al.), and surely there is truth to these well-documented accounts.  But should we understand the past four decades or so as primarily the product of a sea-change in thought, the end result of these precursor currents?

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The Gender Pay Gap

The most recent year for reported year-round earnings data available for full-time workers revealed the gender earnings gap to be 20 percent between men and women or said a different way women earned 20 percent less than men (Hegewisch 2018).

The earnings gap between women and men has been measured (in the past) by taking a snapshot of both genders who have worked fulltime year-round and in a given year. Reviewing a 15-year period from 2001 through 2015, The Institute for Women’s Policy Research examined the different labor force experiences of women and men. The report “The Slowly Narrowing Gender Wage Gap” showed 28 percent of women and 59 percent of men worked consistently full-time, year-round between 2001 and 2015.

In previous reports, it has been stated women earn 80 cents to every dollar a man would make which understates the pay inequality issue for women. Looking only to full time women labor leaves many of them out of the picture when compared to men. Some of the highlights coming out of this study:

“Women today earn just 49 cents to the typical men’s dollar, much less than the 80 cents usually reported.” Total earnings are measured across a 15-year period for all workers, not just full time workers, and who have worked at least one year. Earnings for women were 49% of the earnings for men in 2015. Over the 15-year period, progress or gains in salary for women versus men has slowed when compared to the previous 30 years.

“The cost of taking time off from the labor force is high.” Women taking one year off from work resulted in annual earnings 39% less than women who worked the 15-year period. When compared to a 15-year period starting in 1968 the 2001 through 2015 period saw a 12% decrease in pay. Men were also penalized; but, it was not to the same degree as women much of the time.

“Strengthening women’s labor force attachment is critical to narrowing the gender wage gap.” At nearly twice the rate of men, 43% of women had at least one year off with no earnings over the last 50 years. Polices such as paid family and medical leave and affordable child care can help woman participation rate improve and men to share unpaid time off.

“Enforcement of equal employment opportunities and Title IX in education is critical to narrowing the wage gap.” Enforcement would assist women in gaining access to those higher paying fields which are now off-limits and has been for decades.

Expanding policies and programs to other parts of the country beyond what a few states have done or adopting national policies could help close the comprehensive, long-term earnings gap in the United States and equalize women’s pay with men’s across the lifetime.

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100 Percent Of US Senate Against MBS

100 Percent Of US Senate Against MBS

Wow. Sometime ago here, I called for Crown Prince of the Kingdom of Saudi Arabia, Mohammed bin Salman bin Abdulaziz al Sa’ud, (MbS) to be rmoved from his position. How he is punished beyond that for his crimes, I do not care, especially as I think being prevented from becoming the King of Saudi Arabia will be for him the worst punishment.

So for once the US Senate agrrees with me, 100%, really. Hey, I have to cheer such an event that has never happened brfore and probably will not again. Yay! The US Senate has voted 100% to declare that MbS is guilty for ordering the murder of Kamal Khashoggi. They are right. He is guilty guilty guilty.

He needs to be removed, and the sooner the broader Saudi royal family figures this out and moves to replace him, the better, really, for the world as a whole, given the ongoing important role that nation plays in the world economy worldwide. It is clear thart he came to power thanks to Jared Kushner and the Trump admin, who supported his coup removal of his predecessor, Mohammed bin Nayef bin Abdulaziz al Sa’ud, who was deeply respected by US mil-intel apparati. MbS had become Defense Sec and was able to send his guys to MbN’s palace and imprison him until he gave up and let MbS replace him as Crown Prince. None of this would have happened without Trump and Jared Kushner approving of it, which they did.

 

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Department of Education to Cancel $150 million in Student Loans

CNN, Thursday: The Department of Education will implement a rule known as the Borrower Defense to Repayment created during President Obama’s Administration and blocked by Secretary of Education Betsy DeVos in 2016. The rule or regulation grants federal loan forgiveness automatically for students who could not complete their education due to the schools shutting down before their education was completed while they were enrolled. Unfortunately students are not eligible if they moved to another school to complete their education. The later part sounds ridiculous to me as a fraud is a fraud regardless of where you end up. Anyway, it is a partial victory for a minority of students caught up in the bad student loan environment. Given the magnitude of the issue, more than 1,400 schools closed between 2013 and 2015 stranding many students with excessive loans and an incomplete education by for-profit schools. 15,000 former students are impacted by the court’s ruling and mandate to complete the forgiveness process.

The Michigan Queen of For-Profit Charter Schools who also draws on the local taxes to pay for the unaudited costs of the schools blocked this rule when she took office giving For-Profit so called colleges and mostly bankrupt a chance to challenge (why?) the ruling. 18 states and the District of Columbia took exception to Betsy and the Department of Education blocking the relief to students defrauded by colleges. The Judge ruled in October against the Department of Education, Betsy, and the For-Profit College industry. In December, The Department of Education decided to begin the debt cancellation process and not appeal. The cancellation will take 30 to 90 days to complete or 3 -6 months over all from October 2018? How quick they move.

Meanwhile Ms. DeVos through a spokesperson says: “she ‘respects the role of the court’ but still believes that many provisions in the Obama rule are ‘bad policy.’ The department will continue the work of finalizing a new rule that protects both borrowers and taxpayers.”

Ms. DeVos is promoting a new rule which would proportion the amount of education received from the school against the cost of a completed education and also compare it to earnings of those who completed their education. She conveniently forgets, no completion, no earnings at that level acquired from a complete education. Her comment justifying such actions moves from talking of “saving taxpayers money” to talking of “saving the government money.” Anything to pay down the deficit created by this administration.

Another hypocrisy, bankruptcy protection for business, Trump, and individuals but little or no protection for students.

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Heads Up on Out of Network ER Doctors, etc. in 2019

Last December 2017, Envision Healthcare Corporation paid an approximate $30 million to settle allegations for subsidiary EmCare doctors getting bonus payments for admitting patients to hospitals when it was not necessary.

History:

A subsidiary of Envision, EmCare is a provider of physician services to emergency departments, inpatient services for hospitals, acute care surgery, trauma and general surgery, women’s and children’s services, radiology / teleradiology programs and anesthesiology services. If you have ever been hospitalized, Radiology is one service which always seems to have someone other than the hospital billing you. One study of billing practices of 194 hospitals in which EmCare handled billing and was out-of-network; the average out-of-network billing rate was 62% higher than the national average of 26%. When EmCare’s billing was compared to that of a competitor TeamHealth, the latter’s billing in other hospitals was less and there was a smaller increase in out-of-network service billing.

If you remember a while back, Rusty and I would discuss the ongoing consolidation of hospitals, clinics, and pharmacies. The reasoning behind the consolidation was to have enough market clout when negotiating with insurance and Medicare. Having a larger presence and being able to set pricing nationally and regionally is a big factor in the rising cost of healthcare.

Envision is the biggest player in staffing ERs and Anesthesiology departments with 6% of the $41 billion emergency department and hospital-based physician staffing and 7% of the $20 billion anesthesiologist staffing. Two-thirds of all Emergency Departments (ED) do some type of outsourcing even if it is short term.

Present:

United Healthcare insurance is pitted against Envision’s practice of over pricing for it’s 25,000 emergency doctors, anesthesiologists and other hospital-based clinicians charge to patients and pass through. The disagreement over pricing and how it is paid for by insurance as billed by 3rd party providers will spill over into patients being billed more frequently for higher prices not accepted by insurance.

UnitedHealthcare’s 27 million privately insured patients could face expensive and unexpected doctor bills as of 2019 if Envision doctors become out-of-network for United Healthcare. According to the research group NORC at the University of Chicago more than half of Americans have received an unexpected medical bill. In another study by economists from the Federal Trade Commission in 2017, 1 in 5 emergency-room admissions resulted in a surprise out-of-network bill.

While the ACA increased the numbers of people insured, approximately 20% of people have problems paying medical bills largely because healthcare is still rising faster than most other costs and income. One source of increased costs has been the billing from out-of-network doctors billing patients utilizing in-network facilities such as hospital Emergency Departments. NEJM recently published a Yale Study by Zack Cooper, Ph.D., and Fiona Scott Morton, Ph.D. (Out-of-Network Emergency-Physician Bills — An Unwelcome Surprise) reported on the increased occurrence of surprise-billing for out-of-network services.

Patients typically do not choose to use out-of-networks doctors or facilities. They will choose an in-network facility and expect an in-network doctor(s) to care for them. Healthcare insurance expects its buyers to use in-network services or pay a penalty for not doing so. When one arrives at an in-network Emergency Department, they expect to be cared for by an in-network doctor. I have yet to hear a doctor on duty offering up he or she is not employed by the hospital but instead by a third party. The patient is not aware of in-network or out-of-network issues until they get the bill. The market place is not working for the customer and the doctor still gets the business regardless of the price and there is no competition from other facilities or in negotiated pricing due to having insurance. The third party employer knows this issue as well as the hospital. The only fool in the room is the patient waiting to be cared for and be used. Insurance will pay a portion of the cost or negotiate with the hospital for a price. The third party company employing the doctor may yet charge the patient for the balance of the costs associated with the doctor and at a higher percentage than normal. The uncovered and unexpected higher cost is the rub.

The authors of the Yale study analyzed the claim’s data of a large commercial insurance company insuring tens of millions of people, focusing on ED visits for people under 65 years of age, occurring between January 2014 and September 2015, and at hospitals registered with the American Hospital Association. They chose hospitals with over 500 ED visits and identified the Hospital Referral Region (HRR). Utilizing the breakdown criteria yielded “more than 2.2 million ED visits Broken in 294 of the 306 HRRs, covering all 50 states, and capturing more than $7 billion in spending.” The map of the United States (above) is a pictorial representation of the data.

Summarizing their finding and estimating cost impact, Yale: “of the 99.35% of ED visits occurring at in-network facilities, 22% involved out-of-network physicians. The greater than 1 in five ratio (22%) masks a significant geographic variation in surprise-billing occurrence to patients among HRRs. 89% and 62% of surprise-billing rates occur in McAllen, Texas and St. Petersburg, Florida as compared to Boulder, Colorado and South Bend, Indiana with the surprise-billing rate there near zero.”

Envision questions the validity of the study and blames United Healthcare for not paying the billing and claiming insurance is the problem. Insurance coverage is a problem; but, it is not of the same magnitude when one starts to look at the increase in costs of $1 trillion from 1996 to 2013 of which 50% was due solely to price increases.

Additional Costs?:

And yes there are “potential” extra costs for patients who are treated by an out-of-network ER physician or any out-of-network service. In one hospital I was in, Radiology was out of network as well as one surgeon. Both negotiated a rate with United Healthcare. Then too, this was written into the ESI policy. I had no choice in doing in-network as I came through the ER each time and was too ill to decide and/or go to another hospital.

In a Kaiser/New York Times Survey: Among the insured with problem medical bills, a quarter (26%) said they received unexpected claim denials and about a third (32%) say they received care from an out-of-network provider that their insurance wouldn’t cover. The out-of-network charges were a surprise for a large majority: 69 percent were unaware that the provider was not in their plan’s network when they received the care.

The same NEJM/Yale study which had looked ay frequency of surprise Out-of-Network Emergency-Physician Bills also looked at the costs of the bill and what was left over for patients to pay. On average, in-network emergency-physician claims were paid at 297% of Medicare rates. For reference in the Yale study, the authors used other medical disciplines as a benchmark. Orthopedists are paid at 178.6% of Medicare rates for knee replacements and internists are paid at 158.5% of Medicare rates for routine office visits. The Yale study showed out of-network emergency physicians charged an average of 798% of Medicare rates resulting in a calculated, potential, and additional cost for patients. The difference between the out-of-network emergency physician charge and 297% of the Medicare rate for the same services in the patient’s location could be billed for an average balance of $622.55 (unless their insurer paid the difference). It is also important to note that the potential balance bills can be extremely high; the maximum potential balance bill faced by a patient included in our data set was $19,603.

The suggested solution from the study was for states to require hospitals to sell a bundled ED care package that includes both facility and professional fees. In practice, that would mean that the hospital would negotiate prices for physician services with insurers and then apply these negotiated rates for certain designated specialties. The hospital would then be the buyer of physician services and the seller of combined physician and facility services. If physicians considered the hospital’s payment rates too low, they could choose to work at another hospital.

The hospital, doctors, and the insurance companies would compete for the best package to service the patients utilizing them. In the end, this is a stopgap measure until healthcare costs can be brought under control in a better manner.

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Michigan’s Lame Duck Republican Legislature

Michigan Electablog “Lame Duck Republican Majority at work in Michigan.”

Accrued Sick Time: This was one of the proposals not allowed to go to the ballot. Why? Because if it passed and it would have, Repubs would have needed 2/3rds vote to overturn it. Instead they passed it before November 6th and now they are altering it by taking coverage responsibility from over 93% of Michigan’s firms. The threshold for exemption from the law was raised from 5 in the proposal to 50 in proposed legislation.

Out of 173,309 businesses in Michigan, 162,003 firms have fewer than 50 employees.

The amount of required leave will be cut in half from 72 to 36 hours. It will also take hundreds of hours of work to accrue a few days of leave as employees must work 40 hours to earn an hour of leave instead of the 30 established in the citizens-backed initiative.

One Fair Wage: Michigan Senate Republicans voted to gut the minimum wage increase.

An amendment to the minimum wage increase passed earlier this year to deny voters a chance to vote on the citizens-backed initiative as a Proposal. Instead Senate Bill 1171 will add eight years to the deadline for increasing the minimum wage to $12, from 2022 to 2030. Tipped workers will be hurt the most with their pay capped at $4 an hour.

Unions: In an effort to stop union leaders from being able to take paid leave to do their jobs as union stewards, etc. Republican Senator Marty Knollenberg introduced Senate Bill 796. Democratic Senator Vincent Gregory had this to say about the bill:

“Bills like this only serve one purpose, they are just another step in the systematic destruction of unions and workers’ rights. Union leave time arrangements are an efficient, cost-effective way to quickly resolve employee disputes, disciplinary issues and other matters, and they help not just workers but also management.”

Puppy Mills: State legislators are working to protect puppy mills by ensuring they can continue to sell puppies to Michigan pet stores. House Bills 5916 and 5917 narrowly passed the Michigan House of Representatives last Thursday. It now goes to the Senate.

Ohio based Petland is the backer of these bills. Over 280 localities across the country have passed laws to prohibit the sale of puppies in pet stores, in order to protect animals and consumers. Petland has gone state-to-state lobbying lawmakers to shield the corporation from local regulation. In the past two years, they have failed in Florida, Georgia, Tennessee, and Illinois.

Recycling aluminum and PET. District 17 House Representative Joseph Bellino:The bill removes aluminum and PET plastic away from community-based recycling systems. Rerouting these materials into local recycling programs would provide the boost recyclers need to sustain their programs and expand access to even more communities.”

What he fails to say is that ALL of the returned containers are now recycled. If the 1976 “Bottle Bill” is repealed, many of those returned containers would end up in landfills.

Wetlands: Michigan State Republican Senator – Escanaba Tom Casperson proposed Senate Bill 1211 redefining which wetlands require state Department of Environmental Quality permission to modify or fill and doubling the size threshold at which regulation is required, from 5 acres to 10 acres.

Senate Bill 1211 would remove 70,000 wetlands statewide from protection totaling about a half-million acres. In most Michigan counties, it would include about half of their remaining wetlands. These wetlands, lakes and streams can be filled, dredged, and constructed on without a permit according to Tom Zimnicki, agriculture policy director for the Michigan Environmental Council.

Mackinaw Tunnel: Lame Duck Republican Gov. Rick Snyder struck a tunnel agreement in October with the Canadian oil transport giant. The company would pay to build a $350-million tunnel beneath the straits that would encase a replacement pipeline to prevent a spill and allow the existing line to be decommissioned. The state is also expected to kick in $4.5 million in infrastructure costs for the tunnel.

To bypass environmental approvals and accelerate required land condemnation, Snyder wants the tunnel overseen and owned by the Mackinac Bridge Authority.

• Finally, Staff Allocations: Newly elected Democratic Senator Jeff Erwin revealed; Democratic members of the state Senate are given $129,700 plus two staff benefit packages (for two staff members.) Republican senators, in sharp contrast, are given $212,700 plus four staff benefit packages (for FOUR staff members). Democratic Senators get HALF of the staff and 61% of the financial resources of Republican Senators to run their offices.

These allocations are hold overs from the budgets created by outgoing Senate Majority Leader Arlan Meekhof. According to Irwin, legislative staff salaries range from $25,000-$75,000 with some exceptions. “As a minority member, I have learned, we can buy benefit packages from the Senate business office and squeeze a third staff member into that budget as long as the salaries are less than the total,” he told me.

I guess we will have to pound them into the ground again.

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Is the “Green New Deal” a Marxist Plot?

At the CEPR blog, Beat the Press, Dean Baker and Jason Hickel are debating degrowth. Dean makes the excellent point that “claims about growth” from oil companies and politicians who oppose policies to restrict greenhouse gas emissions, “are just window dressing.” I also agree, however, with the first comment in response to Dean’s post that his point about window dressing could be taken much further.

I would add that economic growth is window dressing for what used to be referred to much more aggressively as “man’s triumph over nature” or the “control of nature.” Climate change deniers are more forthright about this connection between aggression and so-called growth: “Is “Strive on — the control of nature is won, not given” a controversial statement? What does it mean for science if it is?” asks Linnea Lueken at the Heartland Institute website.

Scattered throughout his writings, Donald Winnicott made fleeting but intense criticisms of “sentimentality.” “Sentimentality is useless for parents,” he remarked in a 1949 article on the analysis of psychotic patients, “as it contains a denial of hate, and sentimentality in a mother is no good at all from the infant’s point of view.” The inference he drew from this observation was that “a psychotic patient in analysis cannot be expected to tolerate his hate of the analyst unless the analyst can hate him.”
In a 1946 article on the treatment of juvenile delinquents, he warned against “one of the biggest threats” to the use of psychological methods in the management of young offenders was “the adoption of a sentimental attitude towards crime:

If advances seem to come but are based on sentimentality, they are valueless; reaction must surely set in, and the advances had better never have been made. In sentimentality there is repressed or unconscious hate, and this repression is unhealthy. Sooner or later the hate turns up.

The most thorough discussion by Winnicott of his aversion to sentimentality is probably his 1939 article, “Aggression and its roots.” As it is only three paragraphs, I quote it in its entirety:

Finally, all aggression that is not denied, and for which personal responsibility can be accepted, is available to give strength to the work of reparation and restitution. At the back of all play, work, and art, is unconscious remorse about harm done in unconscious fantasy, and an unconscious desire to start putting things right.

Sentimentality contains an unconscious denial of the destructiveness underlying construction. It is withering to the developing child, and eventually it can make him need to show in direct form destructiveness which, in a less sentimental milieu, he could have conveyed indirectly by showing a desire to construct.

It is partly false to state that we ‘should provide opportunity for creative expression if we are to counter children’s destructive urges’. What is needed is an unsentimental attitude towards all productions, which means the appreciation not so much of talent as of the struggle behind all achievement, however small. For, apart from sensual love, no human manifestation of love is felt to be valuable that does not imply aggression acknowledged and harnessed.

He might well have added, “And I’m not so sure about sensual love.”
This all may sound somewhat arbitrary and speculative but actually it is a very compressed and jargon-free application of Melanie Klein’s developmental theory of the self. What Klein referred to as the depressive position involves an infant’s feeling of “guilt” — or in Winnicott’s less extravagant terminology, “concern” — about its aggressive fantasies toward its mother. In Klein’s rather lurid account of the infant’s aggressive fantasy:

The phantasied attacks on the mother follow two main lines: one is the predominantly oral impulse to suck dry, bite up, scoop out, and rob the mother’s body of its good contents.… The other line of attack derives from the anal and urethral impulses and implies expelling dangerous substances (excrements) out of the self and into the mother.… These excrements and bad parts of the self are meant not only to injure the object but also to control it and take possession of it.

Whether or not the infant has such unconscious aggressive fantasies about the mother’s body, Rex Tillerson, when he was CEO of Exxon, expressed similar, fully-conscious ones, “My philosophy is to make money. If I can drill and make money, then that’s what I want to do…” Robert White-Stevens, the corporate-designated nemesis of Rachel Carson following the publication of Silent Spring, exemplified the “control of nature” faction of science:

Miss Carson maintains that the balance of nature is a major force in the survival of man, whereas the modern chemist, the modern biologist and scientist, believes that man is steadily controlling nature.

White-Stevens’s vision of a “feeble creature” penetrating “every corner of the planet,”  and “contest[ing] the very laws and powers of Nature, herself,” could have been written as a Kleinian parody of the of the infantile arrogance of scientistic triumphalism:

Within the past 100 years, man has emerged from a feeble creature, virtually at the mercy of Nature and his environment, to become the only being which can penetrate every corner of the planet, communicate instantly to anywhere on earth, produce all the food, fiber, and shelter he needs, wherever he may need it, change the topography of his lands, the sea and the universe and prepare his voyage through the very arch of heaven into space itself.

This is the stuff that science is made of, and man has learned to use it. He cannot now go back; he has crossed his Rubicon and must advance into the future armed with the reason and the tools of his sciences, and in so doing will doubtless have to contest the very laws and powers of Nature herself. He has done this already by expanding his numbers far beyond her tolerance and by interrupting her laws of inheritance and survival. Now, he must go all the way, for he cannot but partially contest Nature. He has chosen to lead the way; he must take the responsibility upon himself.

But I digress. What does all this have to do with economic growth? Again, as Winnicott explained, “aggression that is not denied, and for which personal responsibility can be accepted, is available to give strength to the work of reparation and restitution.” However, “[i]n sentimentality there is repressed or unconscious hate, and this repression is unhealthy. Sooner or later the hate turns up.” Indeed, the hate does turn up at the Heartland Institute, where the “Green New Deal” is exposed as the “Old Socialist Despotism.”If it fails to acknowledge the primitive aggression of “man’s triumph over nature” that lies beneath the reparation of adopting environmentally-friendly policies, the debate between degrowth and green growth risks descending into sentimental bickering about the window dressing in the hotel on the edge of the abyss.

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