I can’t think of a state less equipped to deal with major health insurance rate hikes than Michigan, currently mired with – this will not be a typo – 15.6% unemployment. But that’s exactly what they’re getting.
In the past few days, 114,000 Michigan households have received bad-news letters from Blue Cross Blue Shield of Michigan, socking individual health insurance subscribers with premium increases averaging 22%, effective Oct. 1.
Blue Cross could have said, “Hey, things could have been worse. We asked for a 56% rate hike first and dialed it back to 22%” — but that probably would have just made folks angrier.
Instead, the Blue Cross letters simply stated, “We know every Michigan resident faces financial challenges, and we thank you for your business and loyalty to the Blues.”
The two numbers, unemployment and rate hikes, have a correlation. Individual insurance has expanded by 96% at Blue Cross of Michigan in the past two years. That’s because they act like a non-profit state “co-op” would in a private sector allowed to discriminate against their customers:
In just the past two years, the number of under-65 individual subscribers has grown by 59,000, or 96%, at Blue Cross, the nonprofit “insurer of last resort” in Michigan. Private for-profit insurers tend to cherry-pick younger, healthier consumers, driving older and less-healthy people to Blue Cross if they have no employer-provided group coverage.
State law requires Blue Cross to offer insurance to anyone, but it also demands that the company not lose money on its insurance products. Therein lies the rub: Blue Cross lost $133 million last year on individual subscribers.
This is that “perfect market” that conservatives like to talk about. Given the ability to discriminate over its customers, private insurers dump the sick on to Blue Cross. And because the state requires Blue Cross to break even, they must raise their premiums basically at the rate of the cost of health inflation year-over-year, often on the poorest and most vulnerable members of society.
We hear from conservatives that businesses may drop their plans under health insurance reform. Actually, that’s virtually assured if nothing is done. Companies, especially small businesses, will have no chance keeping up with these ever-increasing rates and hope to compete in the global marketplace. And ultimately, those businesses who do pay for these rate hikes do so out of potential wage increases for their employees. Wage growth stagnates and people wind up with less disposable income. The money funneled to health insurance companies could be used to reverse the recession and pull us into economic recovery. In this sense, insurance companies are acting like a siphon, reducing the fuel that can be used to drive the engine of growth.
And that siphon will take more and more money out of your pocket, unless we do something now.
Connect the dots: Goldman Sachs made $3.44 billion in profit this past quarter, while the U.S deficit topped $1 trillion for the first time in the nation’s history and appeared to be headed toward doubling that figure before the budget year is out. Since most of the increase in the federal deficit is due to bailing out the banks and salvaging the greater economy they helped destroy, why is the top investment bank doing so well?
Well, because that was the plan, as devised by Bush Treasury Secretary Henry Paulson, a former CEO of Goldman Sachs. Remember that Lehman Brothers, Goldman’s competitor, was allowed to go bankrupt. The Paulson crowd wouldn’t let Lehman change its status to that of a bank holding company and thus qualify for federal funds; soon afterward, Goldman was granted just such a deal, worth a quick $10 billion. Much is now made of Goldman paying back part of its bailout money, but forgotten is the $12.9 billion that Goldman got as its cut of the $180 billion AIG payoff. That is money that will not be paid back.
Wells Fargo is a roadblock to economic recovery. That’s what members of the United Electrical, Radio, and Machine Workers (UE) are claiming, as they literally blocked a busy Rock Island, Illinois intersection late last week to protest Wells Fargo’s decision to cut off credit to the Quad City Die Casting factory.
100 Quad City factory employees risk losing their jobs if Wells Fargo doesn’t extend tens of thousands of dollars in credit to continue day-to-day operating costs. So why won’t Wells Fargo use some of its $25 billion in bailout funds to keep this factory afloat, particularly when the Illinois-Iowa Quad Cities region is losing $6.1 million in wages and tax revenue annually? According to UE organizer Leah Fried, “[Wells Fargo] want[s] to get out from under the TARP money because they want to get out from the scrutiny. They’re hoarding.” Wells Fargo has even gone so far as to prevent the company from paying the wages and benefits owed to its employees, which prompted UE to file charges with the National Labor Relations Board last week.
Across the country, we’re seeing more and more protests this one. As journalist/labor activist Mike Elk recently noted, these public demonstrations are highly effective ways of bringing national attention to the bailed out banks that are cutting off credit and have done pathetically little to jump-start our ailing economy. We saw this last December, when laid-off UE workers held sit-ins at Republic Windows and Doors in Chicago because Bank of America and JPMorgan Chase wouldn’t fork over credit for the company to pay severance.
It’s not working. The Bush-Obama strategy of throwing trillions at the banks to solve the mortgage crisis is a huge bust. The financial moguls, while tickled pink to have $1.25 trillion in toxic assets covered by the feds, along with hundreds of billions in direct handouts, are not using that money to turn around the free fall in housing foreclosures.
As The Wall Street Journal reported Tuesday, “The Mortgage Bankers Association cut its forecast of home-mortgage lending this year by 27% amid deflating hopes for a boom in refinancing.” The same association said that the total refinancing under the administration’s much ballyhooed Home Affordable Refinance Program is “very low.”
Aside from a tight mortgage market, the problem in preventing foreclosures has to do with homeowners losing their jobs. Here again the administration, continuing the Bush strategy, is working the wrong end of the problem. Although President Obama was wise enough to at least launch a job stimulus program, a far greater amount of federal funding benefits Wall Street as opposed to Main Street. Continue reading →
Anyone else out there find himself doubled over laughing after reading Goldman, Sachs chief Lloyd Blankfein’s “apology” for his bank’s behavior leading up to the financial crisis? Has an act of contrition ever in history been more worthless and insincere? Even Gary Ridgway did a better job of sounding genuinely sorry at his sentencing hearing — and he was a guy who had sex with dead prostitutes because it was cheaper than paying live ones.
Looking at Blankfein’s one-sentence apology, I’m struck in particular by a couple of phrases:
While we regret that we participated in the market euphoria…
Really, Lloyd? You “participated” in the market euphoria? You didn’t, I don’t know, cause the market euphoria? By almost any measurement, Goldman was a central, leading player in the subprime housing bubble story. Just yesterday I was talking to Guy Cecala at Inside Mortgage Finance, the trade publication that tracks statistics in the mortgage lending industry. He said that at the height of the boom, in 2006, Goldman Sachs underwrote $76.5 billion in mortgage-backed securities, or 7% of the entire market. Of that $76.5 billion, $29.3 billion was subprime, which is bad enough — but another $29.8 billion was what’s called “Alt-A” paper. Alt-A mortgages are characterized, mainly, by crappy documentation and lack of equity: no income verification, no asset verification, little-to-no cash down. So while “only” 38% of the mortgage-backed securities Goldman underwrote were subprime, more than three-fourths of their securities were what is called “non-prime,” ie either subprime or Alt-A. “There’s a lot of crap in there too,” says Cecala.
Ohio’s tenacious Congressman grills CEO of Bank of America Ken Lewis as he came to testify before the House Committee on Oversight and Government Reform. It’s good to know we still have some representatives we can count on.
Check out the surprise teaser for Moore’s newest documentary about the economic meltdown. I always love his ability to bring much-needed attention to serious issues using humor. If you think the bailout for AIG, Goldman Sachs, CitiBank and Bank of America simply wasn’t enough, it’s time we dig deeper and help out those poor, struggling CEOs! Apparently, when this teaser aired in select theaters in LA, New York, Washington, D.C, and Chicago, ushers walked down the aisles with collection jars and some audience members actually contributed.
Everyone wants the economy to bounce back, and the President’s not wrong to believe that the way to revive things is to boost confidence.
But if mass confidence is what it’s gong to take, the people at the bottom of our economic pyramid need hope — not only that they’ll have jobs again and homes to keep – but protection against mortgage crooks – and restitution if they’ve been scammed.
The city of Baltimore is currently pursuing a suit against Wells Fargo.
Wells Fargo stands accused of disproportionately denying minority consumers favorable loans while targeting them for subprime ones with high interest rates, mandatory arbitration clauses and punitive prepayment penalties.
On yesterday’s (6/4/09) Your World, Fox News contributor Tucker Carlson joined host Neil Cavuto to discuss the good news that Wal-Mart is hiring 22,000 workers “without any government stimulus at all.” Rather than analyze or investigate the circumstances of the hires, Fox used the news to take a swipe at the Obama administration – and America’s workers – by suggesting that this had proved the government stimulus package was unnecessary. The “fair and balanced” segment featured a host and guest with, essentially, the same opinion.
