The Impact of Federalism on Corporate Power in American Legislatures: The Case of Health-Insurance Reform

Florida, like about a dozen other states, debated in 2009 a proposed amendment to its state constitution that would have blocked, at least symbolically, much of the federal health-care insurance overhaul on the grounds that it tramples individual liberty. Behind the amendments was an industry with a vested interest—an industry that made substantial campaign contributions to the supporters of the amendment. I contend that there is an ethical conflict of interest lurking here, even if it is constitutional (assuming that wealth constitutes free speech, which itself is a problematic assumption), but the main issue here is how the blockage of federal law applying in Florida (and other states) would have affected federalism. What would have been better for the American federal system: federal or state legislation, or perhaps a combination? 

It was not just ideology that united the proposal’s legislative backers in Florida. The amendment's 42 co-sponsors, all Republicans, were almost all recipients of out-sized campaign contributions from major health care interests, a total of about $765,000 in 2008 alone. Around the 2008 election, moreover, the groups that provided health care contributed about $102 million to state political campaigns across the U.S., surpassing the $89 million the same donors spent at the federal level. 

The conflict of interest for the 42 co-sponsors in the Florida legislature opened them and their health-insurance backers to attack by those who wanted the federal government to be involved in health-insurance. Indeed, those federalists argued that the magnitude of the health-care industry’s contributions demonstrated the dangers of leaving such a question up to individual states, where campaign finance and ethics rules varied at the time from strict to negligible. The industry had enormous power at the state level, those federalists contended, and very few states had state-level consumer groups that were able to lobby effectively against the industry-legislator nexus. 

On the other hand, federalizing health-insurance law contributed to the consolidation-tendency of the "extended republic" at the expense of its member republics, or states. Indeed, the matter of the U.S. Government’s enumerated (i.e. limited) powers was not lost on the state legislators of several states who  were opposed to a federal health-care law. “We are trying to prepare, and trying to send a message that there is no reason for those decisions to get made at the federal level,” said Representative Linda L. Upmeyer, a Republican who was leading efforts in Iowa's legislature to prevent the anticipated federalization by the federal president, Barak Obama.[1] Upmeyer and anti-federalists knew that without “opt-in” or “opt-out” provisions in the federal legislation, state constitutional amendments would be preempted even should Congress refuse to reform health insurance. 

To be sure, states opting out of the eventual Affordable Care Act could have compromised the economies of scale assumed by the federal cost-saving measures. However, not even the cost-efficiency of proposed federal legislation should always overrule the contribution of the bill on the system of federalism. This focus had been a factor in the trend since the 1860's toward the consolidation of power at the federal level at the expense of the diversity-expressive power of the states. Too much "one size fits all" with not enough taking into account the differences between the member-states in an empire-level political union leads to an unbalanced system of federalism and thus eventual demise of the union itself. This point is lost when the focus is on particular pieces of legislation, and more specifically on their respective redeeming cost-efficiencies. 

What if industry power over legislation is strongest at the state level? Would not another incremental movement towards political consolidation at the expense of federalism have the virtue of protecting democracy from the encroachment of plutocracy, the rule by wealth? Yet leading up to Obama's Affordable Care Act of 2010, the president dropped his public-option for health insurance when the lobbyist for the private health-insurance industry threatened to withdraw its support. Obama's political calculus was doubtless that the vote would be so close that he would need the industry's support--hence, as often is the case in American legislation--incrementalism is the rule and large packages like FDR's New Deal are the exception. 

Therefore, even though the member-state legislatures are perhaps more easily dominated by big business, the federal head is also capable of being controlled or steered. Perhaps part of the solution to the problem of industry dominance over government lies in enabling the state governments to be able to check the federal government, and vice versa. In other words, the worst enemy of corporate corruption of public officials at either government may be balanced federalism.

1.  David D. Kirkpatrick, “Health Lobby Takes Fight to the States,” The New York Times, December 28, 2009. 

Should Health Care Be a Right?

In the Spring of 2019, President Trump promised that a Republican alternative to "Obamacare" would soon be unveiled; the majority leader of the U.S. Senate, Mitch McConnell, quickly informed the president that the prospects of such legislation passing the Democratic-controlled U.S. House were zilch. This virtually guaranteed that health care would be play a salient role in the upcoming 2020 presidential race. The underlying question, I submit, has been whether health care ought to be a right, which the government would be obligated to ensure. Such a right would obviously not be one of those that hold government back (e.g., the right to liberty). Whether a right ensured by government or holding government back, the nature of a right is such that it is to be respected by others, whether individuals, organizations, or the state. Such respect, being an obligation, constrains those others. Hence, health care as a right has been controversial in the U.S. 
The Senior US Senator from Illinois, Dick Durbin, said the following just before one of the votes in December, 2009 on the Affordable Care Act, the health-care insurance reform legislation initiated by President Obama: “Thirty million Americans who currently don’t have health insurance  have the peace of mind of knowing that they have health insurance,” Mr. Durbin said. He added, “This is a real debate over whether or not health care is going to be a right or a privilege in America.”[1] By using the word, privilege, Sen. Durbin was implying that having access to health care on the sole basis of whether a person has money is unfair. 
If being wealthy is a good indication of being worthy of survival, then it may be assumed that health care for all, whether through private, non-profit, or government insurance, would undermine survival of the fittest. This in turn takes fit to mean strong or good. Were the humans in the financial sector before the financial crisis of 2008 strong or good? Does not fraud point to an underlying weakness? When Dick Fuld was CEO of Lehman Brothers before it collapsed, was he a strong leader or a pitiful man whose ambition got the best of him? 
In "survival of the fittest," fit has to do with fitting in with a changed environment. Such fitness, or fit, is on nature's terms rather than necessarily according to our notions of strong and good. For instance, a young drug dealer in a large city may have twelve "baby mamas." This means that the man had impregnated twelve women, who had been attracted to him on some basis that they valued. The sheer number of offspring suggests that the man was successful in reproducing himself; he thus fit well in his environment on this nauralistic basis. If survival of the fittest lies the availability of health care, should that man be covered while a poor religious man who has contributed to society without earning much money or having children should not? 

See also "Congressional Cuts to Foodstamps: Violating a Human Right?"

1. David Herszenhorn and Robert Pear, "Parties Stay United as Health Bill Clears Steps in Senate," The New York Times, December 22, 2009.

The Tail Wagging the Dog: Congress under the Influence

Congress may be like a drunk, unaware that it is being handed one drink after another by vested interests oriented to legislation with specific financial objectives. On February 28, 2010 on CNN’s State of the Union, Nancy Pelosi, Speaker at the time of the U.S. House of Representatives, said that the health insurance companies didn’t want a government-financed and operated "public option" for American citizens, so it was off the table. Her statement resonates with the earlier one by U.S. Senator Richard Durbin just after his forclosure-assistance amendment failed: "The banking lobby owns Congress." That the health insurance companies and Wall Street banks were generally viewed as at least partially culpable even as they still had Congress in their pockets points to a serious corruption in American government.

Even when companies (or an industry) are at fault, they can still call the shots in Congress when their interests are at stake. At the very least, they can encourage diversions that enable them to safeguard planks in legislation that protect their interests. Consider, for example, Representative Dennis Cardoza, a Democrat of California in the U.S. House. The husband of a family practice physician, he is intimately familiar with the failings of the American health care system. His wife “comes home every night,” he said, “angry and frustrated at insurance companies denying people coverage they have paid for.” Even so, he is on the fence on the Democratic health-care reform proposal because he wants stronger anti-abortion language and more cost control. Were he really angry like his wife, he would be pushing for the public option and for real restrictions on the insurance companies, rather than allowing secondary issues to get in the way.

I don’t believe Dennis Cardoza was all that angry at the companies that have been refusing to fuffill their responsibilities to their customers who have paid premiums. Moreover, he was allowing himself to succumb to the self-interested manipulation of the insurance companies that had purported sparked his anger. It is in the health insurance companies' interest that costs are reduced because then their expenses are reduced. If he were really angry like his wife, he would not be so willing to do something that would benefit them so much; rather, he would be working to take power and money away from them by insisting on a public option.

America’s Health Insurance Plans, a lobbyist for the insurers, announced in March 2010 as Congress was considering health-insurance reform that the organization was buying more than a million dollars’ worth of television advertising time in order to "explain" why insurance premiums had been rising. Such a claim of educating the public is a subterfuge behind a financially-induced intention to manipulate public opinion to shape the health insurance law in the interest of the insurers (even as their practices of exclusion had been part of the problem). The week before, the White House had indicated that the industry’s rationale for the raised premiums was unconvincing, but how many people got this information through the din of the lobbyist's commercials?

All too often without realizing it, citizens allow industries to get away with their misrepresentations that are geared to thwart reform. The health insurance industry’s ads convince us that the companies really aren’t sharks; we ignore Sen. Rockefeller’s likening of the companies to sharks—you don’t know there is a shark until you see its fin and feel its sharp teeth. In other words, our anger is too easily (and conveniently…for the sharks) dissipated. In other words, we let the bad kids off the hook and go on as if the problem were somehow no longer out there. This puts the misbehaving kids in a position to thwart any parenting. We ignore the inherent conflict of interest in this scenerio as the kids steer public policy to our detriment.

I suppose it is only natural that sick kids would not feel culpable for their illnesses. Even so, the sick kid sitting on the table in a physician's office does not get to decide on his own treatment even if he or she is from a rich family. If there is an adult in the room, the kid is overruled in his own case and the shot is given over the kid’s objection. In the case of health reform, one might reasonably ask: where are the adults, or are the sick insurers in the driver's seat even as they are on the table?

 Source:

 David M. Herszenhorn and Robert Pear, “Parliamentary Hurdle Could Thwart Latest Health Care Overhaul Strategy,” The New York Times, March 9, 2010.

De-Funding Obamacare

It is odd that even after a bill becomes a law, it can be defunded, thereby effectively killing it even though it has not been voted down.  One would think that it would be required to pass the funding that is required by the law. The Republican Party has strategized on how to deconstruct Obama’s health-insurance law through various means.

Republicans could turn to the annual appropriations and budget process or push stand-alone bills to delay or stop funding for provisions of the law they dislike, including the individual mandate, the health insurance exchanges and the Medicaid expansion. They might also work to weaken provisions in the bill that deal with Medicare physician reporting requirements that some physicians find onerous and block the creation of a nonprofit research institute to examine the effectiveness of various medical treatments. Mandatory funding, which comprises much of the health measure that began in 2014, will continue unless Republicans can change current law. Discretionary funding must be approved each year but differences between House and Senate versions of appropriations measures must be ironed out and that generally produces a compromise package. Why all of the law’s funding would not be mandatory as part of the law defies logic and government functioning. Also, how the mandatory funding could comprise much of the law when the individual mandate, the exchanges, and the medicaid expansion can be defunded, is also beyond me.

A major problem with the defunding strategy is that since so much of the bill is inter-related, trying to dismantle it piecemeal could lead to unintended consequences. While the individual mandate is unpopular, “you can’t pull it out of the law without all sorts of other elements falling apart,” Reischauer says. And scrapping the mandate, which requires most people to have coverage or pay a penalty, would anger health insurers — a core GOP constituency. Insurers have agreed to abide by new consumer protections, such as not denying coverage based on a pre-existing medical condition, in exchange for 32 million new customers. Hospitals agreed to payment cuts on the premise that more people would have health care and hospitals would have less uncompensated care. In other words, because the health insurance industry got basically what it wanted—the mandate without a public option—it would be highly unlikely that certain parts of the law would be defunded unless it were in the interest of the health insurance companies.  Therefore, the mandate is not apt to be defunded unless the rest of the law is to go down too.

I contend that law should not be allowed to be defunded. That is, upon passage, the law should have its required funding established as a matter of law.  Secondly, I contend that private companies with a vested interest in a law should not be allowed to have such power that they can tailor the law to their liking. Extant industries have too much power in the US Government.  As a reflection of this condition, we over-rely on private companies and the market—ignoring their downsides. Where basic necessities such as access to basic health-care is concerned, our over-reliance can be fatal.

Source: http://www.msnbc.msn.com/id/39295110/ns/health-health_care/

Osama Killed by Obama: What Does American Patriotism Stand For?

On the day after Osama was killed by Obama, people in the American states were united in a feeling of pride for their union. Midway through a run at sunset, I paused beneath an American flag. I was caught not out of breath but by the distinct snapping sound of lazy flapping noises as the flag rolled in the light breeze. I looked up and stared at the red, white and blue performing its series of rolls. The fabric was much more alive than that stiff, wired flag still on the surface of the moon. A flag is meant to be alive—literally carried along as troops advance on a battlefield. Today’s flags hanging off still poles next to restaurants and car dealerships can hardly capture the dynamic energy of victory. To be sure, such victory was hinted at the night before as people ran hither and dither carrying flags in celebration outside the White House. It had struck me in watching the joyous scene how rare such clear-cut victories are.  It is a pity that some enemy must die for such clarity to be celebrated in a spirit of unity.

Looking up at sunset at the American flag—a symbol that has seemingly always been around—I wondered what it really stands for. What values cling most firmly to it?—nevermind the principles that are formally entailed in it. Turning to look at the auto business sponsoring the flag, I noticed a large sign displayed high up across one of the building’s walls above the repair garage: “Free Courtesy Cars for Customers with Select Insurance Companies.” My mind instantly leapt to “Free health-care for citizens with select health insurance only”—the others don’t get any. Is monetary-based exclusion the American way? What does that flag say about those who are not among the select? Is the red, white and blue referring to people living here who have money—the others just sort of existing here as though permanent aliens?

As my eyes were about to go back up the flag pole, I noticed that between tree trunks the naked sun was just about to touch the ground. Heaven would meet earth for a split-second before the ground ate into the perfect circle. I thought of Ben Franklin’s comment at the end of the U.S. constitutional convention in 1787 as he was wondering aloud whether the sun painted on the back of the presider’s chair was rising or setting. It would be ironic if on the day after a great military victory I associated the setting orange disc with the bright colors waving above me; something about the “select insurance companies” wording on the wall of the sponsoring company was giving me a proclivity to do just that, even as I felt a sense of pride in my eyes being drawn to the power in the movements of the giant fabric above me.

After my run, I briefly spoke with an auto-plant worker visiting from Michigan. He had been watching the Detroit Tigers play the Yankees.  He was disappointed in his team because even with a $200 million payroll, they had lost to Minnesota (I think). Of course, the Yankee organization knew how to put out the money to buy talent. The Tiger fan put it more bluntly. “The Yankees buy championships.” For a fan to reduce baseball teams to their payrolls seemed odd to me. Do fans in other regions of the world reduce sport to money, or is there something distinctly American about it? Whereas in Europe player captains receive championship trophies, team owners tend to get the honor in America. Clearly, a subtle difference in the value of wealth (and money as a motivator) distinguishes the United States from the European Union. Might wealth itself be what America is known for as a society?—a people obsessed with valuing money?

Can we go so far, moreover, as to conclude that the American flag stands for money? If so, did the patriotism evinced in the wake of Osama’s death reduce to dollars and cents? The political uncertainty that comes with terrorism is unquestionably bad for business. Even so, the sense of justice achieved through the execution—we could not even risk a trial—stood on the principle of an eye for an eye. Money, it could be said, was put in the service of a normative debt to be paid for the loss of innocent lives even though they could never be retrieved. However, it is difficult to see how the patriotism evinced reduces to greed.

So what does the American flag really exude? Patriotic confidence? An in-crowd based on wealth? Perhaps some other set of values that can only be observed from a distance? What does the diverse empire of fifty republics united in an extended republic stand for? Is there a common denominator or is the patriotism of victory an artificial construction based on convenience?  I suspect that these questions will go unanswered until or unless Americans are called on to sacrifice, for it may be that the value of self-denial is too far removed from what the flag has come to represent.

See related essay involving the impact of killing Osama on Obama's ability to preside.

Employing Smokers: Economic, Political and Social Aspects

Hospitals in Florida, Georgia, Massachusetts, Missouri, Ohio, Pennsylvania, Tennessee and Texas (among others), stopped hiring smokers in 2010 and more countries were openly considering doing so. Paul Terpeluk, a director at the Cleveland Clinic in Ohio, said, “The trend line is getting pretty steep, and I’d guess that in the next few years you’d see a lot of major hospitals go this way.”[1] Indeed, this could come to be the case around the world. Various factors impact any comprehensive evaluation of a hospitals' policy against hiring smokers. The matter is therefore more complex than one might assume at first glance.
 

The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.

1. A. G. Sulzberger, “Hospitals Shift Smoking Bans to Smoker Ban,” The New York Times, February 10, 2011.

Obama Caving to Plutocracy

I contend that Obama caved on his campaign pledge (or promise) not to extend the bush tax cuts for the rich.  The added growth expected in 2011 from ALL of the cuts is just a half of a percent of GNP growth.  I have read that the rich save their tax cuts rather than use them in ways that stimuate the economy.  As for savings, banks have enough capital to lend (this isn't why they are still skittish in 2010).  That the vacuous argument that tax cuts for the rich will somehow create lots of jobs and save the economy from another recession has had any weight or credance really discourages me about American political discourse.  That Obama didn't "just say no" is also discouraging. 

On December 14, 2010, Pat O'Reilly said on his Foxs News show that the "far left" is in retreat because Ameriicans have rejected it.  He said even Obama has rejected the left. I think the left has vanquished itself.  Perhaps it could be said that the left is willingly impotent. Where is Al Gore?  Ralph Nadar?  Micheal Moore?  silence.  Only the sound of Obama caving. He should have refused to sign a tax cut continuation for the rich and said the Repubs could refuse to extend the cut for lower and middle income people--it would be the Repubs provoking the resumption of higher taxes for everyone rather than just on those who can afford them.  We need a Teddy Roosevelt or an Andrew Jackson. Teddy stood up to Standard Oil, and Jackson stood up to the Second Bank of the United States.

By contrast, Obama has operated largely in line with Wall Street (e.g., the bailout for the banks rather than foreclosed homeowners) and the health insurance industry (e.g. not even a public option, which was odious to the industry).  Barak Obama does not want to displease the powers that be; I suspect reelection has a lot to do with this state of affairs.  This raises the question: is there a counter in American politics to plutocracy?

The Conflict of Interest in a Silent Oligarchy Being Engaged in Its Public Policy

Goldman Sachs, which had played a role in enabling Greece to hide its public debt, urged investors in March of 2010 to buy shares in two big health insurance companies, UnitedHealth Group and Cigna. The reason: their rates were sharply up and competition was down. According to The New York Times, the White House claimed, “ the Goldman Sachs analysis shows that while insurers can be aggressive in raising prices, they also walk away from clients because competition in the industry is so weak.”[1] Rate increases ran as high as 50 percent, with most in “the low- to mid-teens” — far higher than overall inflation. 

The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.

1. David Herszenhorn, “Obama Wields Analysis of Insurers in Health Battle,” The New York Times, March 6, 2010.