He's Mitch Danials, governor of Indiana and an ideological absolutist on the virtues of privatizing government, and he was announcing his hallmark plan to outsource that state's administration of food stamps, Medicaid, and other welfare benefits for poor folks. No need for all those government case workers, Daniels declared, because the needs of welfare recipients can be better met the corporate way – with efficient computers and call centers.
IBM was given a $1.1-billion contract from the state to take charge. Taxpayers, boasted the governor, will reap "a billion dollars in savings," while low-income families will enjoy the stellar service of the private sector.
Serving a public need, however, is not as easy as designing computer software. More than two years into the task, IBM's stumbles and fumbles include lost paperwork, frustrating runarounds, poorly-trained staff, inadequate equipment, and rejection of qualified applicants. The rate of mishandled food-stamp cases, for example, has more than tripled since IBM took over.
To try to fix this mess, the state has now issued a list of 200 reforms that IBM must achieve, giving it until September to shape up. The changes include hiring additional staff and managers, which will eliminate much of the highly-touted "savings" that privatization was to bring. A state official says bluntly: "It's possible we'd have to cancel the contract."
The so-called "efficiencies" of privatization are actually only achieved by shortchanging service and eliminating the personal touch – and that's no way to run a public program.
If the economy moves from a recession to a full-blown depression, presumably IBM's profits, thanks to its oft-professed "business model", would shoot right through the roof.
Anyway, whatever IBM is doing to cut costs and boost margins - and chief financial officer Mark Loughridge has been understandably vague over the past several quarters about "workload rebalancing" and other initiatives that are driving margins - it is working out better than expected, because IBM is now saying that it can hit $9.70 per share earnings in 2009, up from its previous guidance of at least $9.20 from earlier this year, and putting it well on track to its goal of delivering $10 to $11 EPS in 2010. (As if anyone except Wall Street cared about EPS, which IBM largely makes happen through the billions and billions of dollars it expends buying up mountains of its own shares.) ...
The margin expansion story - and the reason why IBM is throwing off cash and is able to buy back so much of its shares - is happening in its two services groups. Global Technology Services, the part of IBM that does outsourcing and technical support, reported sales of $9.1bn, down 9.8 per cent, but gross margins were 34.8 per cent (up 3.2 points), getting close to the margins that IBM has on hardware. Global Business Services, which does business process engineering, application outsourcing, and systems integration, reported sales were off an eye-opening 15 per cent, but gross margins here were also up, to 27.2 per cent (an increase of 1.4 points). Loughridge said that while outsourcing revenues were down in the quarter because existing customers were tightening their belts, other customers were looking for ways to cut costs and IBM's signings for new strategic outsourcing and business transformation and optimization contracts rose by 13 per cent to $6.7bn. IBM's total signings across the two services groups came to $14bn in the quarter, and the company had a $132bn service backlog as it exited the quarter, about the same as it had last year.
And the cuts were massive. Gross margin improved better than two percentage points, thanks to IBM's "strategic transformation" -- headcount reductions, plus some added efficiencies -- while other income and expenses fell 18.8% during the quarter. In short, IBM cut costs and realized efficiencies far faster than its revenue fell.
Some employers are taking steps to make themselves more attractive to younger workers, who may fear a shortage of promotion opportunities. International Business Machines Corp. in December created an online tool to boost its internal mentorship program, in which older, more experienced employees share knowledge with younger workers, says Mary Ann Bopp, manager of IBM's mentoring programs. In turn, senior employees are seeking "reverse mentors" to learn about, for example, online social networking. Since December, more than 3,500 employees have signed up to be mentors and more than 2,600 co-workers have sought them out. "There was huge demand," Ms. Bopp says.
A survey by the Conference Board, a nonprofit research group, shows that Americans over 55 have had their confidence in the economy shaken. In January 2008, its index measuring how confident Americans over the age of 55 felt about the future stood at 84.6. By last February, that figure had plummeted to 22.1, although it has since recovered some ground. This sense of insecurity is making older Americans willing to work longer. In March 2001, before the first signs of the collapse of the Internet stock bubble, 32.8 percent of Americans above the age of 55 considered themselves part of the labor force—either working or seeking work. Today the comparable rate is 40.2 percent.
I have to tell you about my experience with the most basic of claims, submitted to UHC. For over 10 years, my wife and I have gone to Costco in the fall and gotten our flu shots. They give us a piece of paper to document the procedure and our payment, and I submit two claims forms, one for me and one for her. The shots are $20 each.
I do not recall of a single instance in which UHC did *not* deny the claims. Every year I go around and around with them over two $14 checks that they owe us. It is always a different excuse. My fight with UHC over flu shot claims has become a tradition and standing joke at our house. In the last few years, I almost always win.
The UHC all-time best excuse for denial came three years ago. They told me that the claims were denied because the paperwork was unreadable. I told them that I had copies, and that the paperwork was readable on my copies, and they had the originals, so their denial was inappropriate. They told me that they scan the originals, and that their scanned images were unreadable. I told them to pull the originals. They refused, and denied my verbal appeal. Can you believe this bizarre situation? They deny my claim on the basis of a problem that they caused in their process.
I called IBM HR. HR helped me out, and got things fixed with UHC in a few minutes, and I got my $28.
In the 10 years that I have been fighting with UHC over these piddly-ass claims, their former CEO walked away with about a billion dollars in compensation. Think about that for a minute.
People think that Obama is nutty to want to tamper with the free market by insisting on a public plan option. I am a very strong believer in the free market, but this market is not free. It is rigged, and we are captives, and no matter what laws Congress passes, the United Healthcare's of the world will find ways to screw ordinary people who lack relentless persistence. If Congress passed a law tomorrow stating that companies had to work with original paperwork, not scanned images, UHC would hire a blind reviewer who would claim that my claim was not readable - the UHC's of the world will always be one step ahead of legislation. The real reason we need a public plan is so that ordinary people can just walk away rather than be subjected to this kind of nonsense, year in and year out, from companies like United Healthcare.
I started on Medicare in May. I have been to the doctor several times with problems. In each case, Medicare just paid. No fighting, no denials, they just paid what their agreement with me says they should pay. I feel like I have died and gone to heaven. Torbilll
Every year I have to appeal, and appeal. On the second appeal, they pay me. For a while, they kept telling me that my doctor put the wrong code on the form. Of course, when I asked, or she asked, what code she was supposed to put, they wouldn't tell her or me.
Last year, I pasted the part of the policy lingo that says they pay for mammograms, on the form (I don't use staples anymore; they denied a claim one year because of staples). That worked on the first try. But there is no predicting what will happen this year. And they know they have me. They are sole supplier. What they don't know is how stubborn IBM taught me to be.
I feel bad for people who don't have the energy or knowledge to fight the giant insurance companies. Thank goodness my Mom has Medicare. If I had to do her fighting and mine, I wouldn't have time to work the job I took after IBM retirement.
President Obama, who co-sponsored say-on-pay legislation while in the Senate, remains in support, as is the Democrat-controlled Congress. Likewise the public at large. Focus groups have been describing CEO pay with words such as "obscene" and "immoral" rather than words like "excessive" or "overly generous" as in the past, says Leslie Gaines-Ross, chief reputation strategist at Weber Shandwick. ...
CEOs have opinions like everyone else, but the public rarely sees that side because positions on anything controversial risk upsetting customers. When they feel compelled to take a stand at odds with the public, it is usually articulated by trade associations and lobbyists, so as to put CEOs and the companies they run at arm's length from controversy. Not this time. Even though say-on-pay legislation is almost a sure thing, CEOs and former CEOs contacted by USA TODAY spoke out against it, both forcefully and individually. "Say-on-pay is just another government regulation and intrusion into free enterprise," says Howard Putnam, former CEO of Southwest and Braniff airlines. ...
CEO median compensation at S&P 500 companies rose 23% from 2003-2008 despite going down 7.5% to $8 million from 2007 to 2008, according to Equilar, which tracks executive compensation. John Castellani, president of the Business Roundtable, an association representing CEOs of companies with more than $5 trillion in annual revenue, says shareholders have always had the ability to enforce say-on-pay by using the shareholder resolution process. That makes legislation unnecessary, he says. ...
CEOs are not unanimous in their opinions, even where it comes to pay. Patrick Byrne, CEO of Internet retailer Overstock, says he is more concerned about CEOs influencing boards than shareholders influencing CEOs. "The CEO is hired by shareholders. He works for them, just like a farmhand works for the folks who own the ranch," says Byrne, among the CEOs who support say-on-pay legislation. He says CEOs "capture" their boards, leaving shareholders unrepresented. Real estate developer Don Peebles, recently named by Forbes as one of the 20 wealthiest African-Americans, also supports say-on-pay. He says CEOs who have no significant ownership often have compensation packages designed to reward them on the upside, but they suffer few consequences on the downside. "There is no real alignment of interests," Peebles says.
To address these problems, the Durbin-Grassley bill would, among other things:
The L-1 visa program allows companies to transfer certain employees from their foreign facilities to their U.S. offices for up to seven years. Experts have concluded that some employers use the L-1 program to evade restrictions on the H-1B program because the L-1 program does not have an annual cap and does not include even the minimal labor protections of the H-1B program. As a result, efforts to reform the H-1B program are unlikely to be successful if the L-1 program is not overhauled at the same time. The Durbin-Grassley bill would institute a number of reforms to the L-1 visa program, including establishing for the first time a process to investigate, audit and penalize L-1 visa abuses.
I mentioned the reduction on the PM's before it happened, as well as other actions. The writing is on the wall. Sam made commitments to the street on eps for stock. They will reach it..by slashing jobs and back filling with cheap staff in GDF's. The rumor mill about band 5 being the highest is correct..FACT There will be a few exceptions, but not many at all.
Customer sat is irrelevant now days. Cost is the primary factor for outsourcing. Many top level clients are figuring out IBM is cutting North American Staffing and there fore cost:They now want their contract costs reduced.
Its a race to the bottom for IT folks. It's over within IBM. The street is not much better. There is jobs and some companies do pay a decent wage, but when IBM gets this going, you can be assured others will follow. TCS (Tata) is already more cost competitive and ibm has to compete with their low overhead... these moves are to align with those costs. I always felt that customer facing roles would be safe.. I did to my peril. Keep your resume up to date and take as much educational opportunities that you can. DONT count on a long term job. Look out for you and not ibm... its not the same ibm it was 10 years ago...those days are gone. Good luck to all... -sore sphincter
Alliance reply: I am sorry for your job loss and the effect it has on you. I understand your feelings of betrayal. Yes, you may file a lawsuit; however, you need a good amount of evidence that you were discriminated against. It is a very hard row to hoe. Find an attorney, and present her/him with your reason for litigation. Listen to her/him carefully, when they elaborate on what I've just said. Many, many people have gone before you. This will not be the first time IBM has been sued; nor the last. IBM continues to fire people at will, because they are AT WILL Employees. Regardless if you are a working mother, working father, single, married, divorced, white, black, asian, brown, christian, jewish, muslim, hindu, atheist or whatever, IBM doesn't care about you; and has plenty of legal funds to fight you in court. This is why we continue to remind everyone that visits this web site: You are an AT WILL EMPLOYEE. You have no employment contract and you have no bargaining power while you are an IBM employee. You all need to organize, NOW. It is truly the only way to move forward, toward any kind of job security, benefits, and fair treatment on the job.
Last week, Bill Moyers brought to our attention two important stories. (See above for the first one) On "Bill Moyers Journal" on PBS Friday night, Bill talked with Wendell Potter, a former Cigna exec turned whistleblower. In Potter's own startling words (startling not because we didn't know, but because a former insider, someone who, less than two years before, was a practicing purveyor of these professed sleazy tactics, said them):
"The industry has always tried to make Americans think that government-run systems are the worst thing that could possibly happen to them, that if you even consider that you're heading down the slippery slope towards socialism... I think that people who are strong advocates of our health care system remaining as it is, very much a free market health care system, fail to realize that we're really talking about human beings here, and it doesn't work as well as they would like it to... They are trying to make you worry and fear a government bureaucrat being between you and your doctor. What you have now is a corporate bureaucrat between you and your doctor... The public plan would do a lot to keep [health insurance companies] honest, because it would have to offer a standard benefit plan. It would have to operate more efficiently, as does the Medicare program. It would be structured, I'm certain, on a level playing field so that it wouldn't [have an] unfair advantage [over] the private insurance companies. Because it could be administered more efficiently, the private insurers would have to operate more efficiently."
The interview is a half-hour long. Later into it he outlines the insurance industry's efforts to discredit Michael Moore's documentary, "Sicko", when they saw the truth in it and were afraid the American people might believe it, too. This to me was a stunning admission, the entire interview an astonishing piece of journalism--again, not entirely surprising, but I saw a door opening, enough for us to wedge our foot in. Wan rays of sunshine about to turn dazzling, if only we can keep the momentum going.
The bill would require virtually all Americans to carry health insurance or pay a penalty. And it would require all but the smallest businesses to provide health insurance for their workers or pay a substantial fee. It would also expand Medicaid to cover many more poor people, and it would create new exchanges through which millions of middle-class Americans could buy health insurance with the help of government subsidies. The result would be near-universal coverage at a surprisingly manageable cost to the federal government. ...
Predictably, the idea of raising taxes this way has critics outraged, with some charging that it is unfair to require a small sliver of the population to bear the brunt of the cost. The wealthy have benefited greatly from Bush-era tax cuts, and their incomes have risen disproportionately in recent years. It seems proper that they should contribute heavily to an effort that is vital to hard-pressed Americans and to the long-term health of the economy.
If you can afford it, you probably would pay that much, or more, to live longer, even if your quality of life wasn’t going to be good. But suppose it’s not you with the cancer but a stranger covered by your health-insurance fund. If the insurer provides this man — and everyone else like him — with Sutent, your premiums will increase. Do you still think the drug is a good value? Suppose the treatment cost a million dollars. Would it be worth it then? Ten million? Is there any limit to how much you would want your insurer to pay for a drug that adds six months to someone’s life? If there is any point at which you say, “No, an extra six months isn’t worth that much,” then you think that health care should be rationed. ...
Health care is a scarce resource, and all scarce resources are rationed in one way or another. In the United States, most health care is privately financed, and so most rationing is by price: you get what you, or your employer, can afford to insure you for. But our current system of employer-financed health insurance exists only because the federal government encouraged it by making the premiums tax deductible. That is, in effect, a more than $200 billion government subsidy for health care. In the public sector, primarily Medicare, Medicaid and hospital emergency rooms, health care is rationed by long waits, high patient copayment requirements, low payments to doctors that discourage some from serving public patients and limits on payments to hospitals. ...
Rationing health care means getting value for the billions we are spending by setting limits on which treatments should be paid for from the public purse. If we ration we won’t be writing blank checks to pharmaceutical companies for their patented drugs, nor paying for whatever procedures doctors choose to recommend. When public funds subsidize health care or provide it directly, it is crazy not to try to get value for money. The debate over health care reform in the United States should start from the premise that some form of health care rationing is both inescapable and desirable. Then we can ask, What is the best way to do it? ...
In Britain, everyone has health insurance. In the U.S., some 45 million do not, and nor are they entitled to any health care at all, unless they can get themselves to an emergency room. Hospitals are prohibited from turning away anyone who will be endangered by being refused treatment. But even in emergency rooms, people without health insurance may receive less health care than those with insurance. Joseph Doyle, a professor of economics at the Sloan School of Management at M.I.T., studied the records of people in Wisconsin who were injured in severe automobile accidents and had no choice but to go to the hospital. He estimated that those who had no health insurance received 20 percent less care and had a death rate 37 percent higher than those with health insurance. This difference held up even when those without health insurance were compared with those without automobile insurance, and with those on Medicaid — groups with whom they share some characteristics that might affect treatment. The lack of insurance seems to be what caused the greater number of deaths.
When the media feature someone like Bruce Hardy or Jack Rosser, we readily relate to individuals who are harmed by a government agency’s decision to limit the cost of health care. But we tend not to hear about — and thus don’t identify with — the particular individuals who die in emergency rooms because they have no health insurance. This “identifiable victim” effect, well documented by psychologists, creates a dangerous bias in our thinking. Doyle’s figures suggest that if those Wisconsin accident victims without health insurance had received equivalent care to those with it, the additional health care would have cost about $220,000 for each life saved. Those who died were on average around 30 years old and could have been expected to live for at least another 40 years; this means that had they survived their accidents, the cost per extra year of life would have been no more than $5,500 — a small fraction of the $49,000 that NICE recommends the British National Health Service should be ready to pay to give a patient an extra year of life. If the U.S. system spent less on expensive treatments for those who, with or without the drugs, have at most a few months to live, it would be better able to save the lives of more people who, if they get the treatment they need, might live for several decades. ...
One final comment. It is common for opponents of health care rationing to point to Canada and Britain as examples of where we might end up if we get “socialized medicine.” On a blog on Fox News earlier this year, the conservative writer John Lott wrote, “Americans should ask Canadians and Brits — people who have long suffered from rationing — how happy they are with central government decisions on eliminating ‘unnecessary’ health care.” There is no particular reason that the United States should copy the British or Canadian forms of universal coverage, rather than one of the different arrangements that have developed in other industrialized nations, some of which may be better. But as it happens, last year the Gallup organization did ask Canadians and Brits, and people in many different countries, if they have confidence in “health care or medical systems” in their country. In Canada, 73 percent answered this question affirmatively. Coincidentally, an identical percentage of Britons gave the same answer. In the United States, despite spending much more, per person, on health care, the figure was only 56 percent.
Likewise, the Republicans try to scare us that single payer health insurance will be horrible, but the truth is that we already have single payer health insurance in this country — it is called Medicare. And any politician who tried to get rid of Medicare would also find themselves quickly out of a job. In fact, even Dubya added a prescription benefit to Medicare.
So when Republicans try to scare you by throwing around terms like single payer or socialized medicine, it isn’t because they won’t work or won’t be popular, they are scared that they will work and they will be popular. Of course, that’s if the Republicans don’t manage to purposely make health care reform horrible (like they did with the prescription drug benefit they added to Medicare).
The Anonymous Liberal makes the point that in order “to adopt the Republican position on health care requires believing that every other country in the world is wrong, that their policy experts are misguided and their citizens confused. Indeed it requires believing that the American people themselves are wrong, that despite endless opinion polls to the contrary, people in this country really love the system we have.
The recommendations, if approved by the legislature and Gov. Deval Patrick, would make Massachusetts the first state to end the practice of paying health care providers for each office visit, laboratory test or procedure. Instead, primary care physicians, specialists and hospitals would group themselves into networks that would be responsible for a patient’s well-being and would be compensated with a flat monthly or annual fee known as a global payment.
A critical flaw in the current system -- and one that must be addressed in any overhaul -- is that the same people who refuse to pay for a recommended course of action are the ones who consider the appeal of that decision. And, lo and behold, they usually end up agreeing with themselves! In more than two decades of medical practice, I have spent countless hours trying to get various services covered by payers. One encounter -- when I tried unsuccessfully to get a stomach-acid lowering pill approved for a patient who needed it -- ended up as an example of twentieth-century frustration in Letters of the Century.
"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.
In light of this highly publicized investigation into tax evasion, I’ve been wondering just why anyone needs or wants a Swiss bank account. For African dictators, international arms traffickers and terrorists, the answer is pretty obvious. And there are certainly citizens of countries whose own banking systems are so precarious, and the risks of persecution for any number of reasons so great, that a Swiss bank account may provide welcome security.
But the U.S. is not one of those countries. Despite our recent banking woes, the U.S. has plenty of financial institutions with impeccable balance sheets. It has a legal system second to none that provides ample confidentiality and due-process protections. But it doesn’t offer ironclad secrecy in the face of a legitimate, court-sanctioned subpoena, which means it doesn’t lend itself to tax evasion.
That is evidently why California billionaire Igor Olenicoff parked hundreds of millions of dollars with UBS, and subsequently pleaded guilty to a felony count of filing a false tax return. His former UBS banker, Bradley Birkenfeld, pleaded guilty to conspiracy and testified that UBS bankers prospected for wealthy U.S. clients eager to avoid taxes at art shows, musical performances, yachting regattas, golf and tennis tournaments—anywhere “rich people hang out.” They even served as couriers to avoid money transfers that might be detected by U.S. surveillance, according to Mr. Birkenfeld’s testimony.
While retirees represented by the United Auto Workers will have a partially funded health care trust managing their health benefits, more than 50,000 retirees represented by three unions—the IUE-CWA, the United Steelworkers and the International Union of Operating Engineers—will have no money from the automaker to fund the more than $3 billion in health care obligations. ...
To that end, the union published advertisements in major newspapers Tuesday, July 14. In a half-page advertisement in The Wall Street Journal, Debra Turner, a 51-year-old GM retiree with multiple sclerosis, stands next to a wheelchair with a caption that reads: “This Wheelchair Is My Future Once the U.S. Treasury Stops My GM Health Care.” The ad, perhaps unintentionally, also underscores the very argument GM has made—namely that health care costs for retirees who are not eligible for Medicare are too costly for the company to maintain
The Journal's take -- "We like profits as much as the next capitalist. But when those profits are supported by government guarantees or insured deposits, taxpayers have a special interest in how the companies conduct their business" -- is actually more in keeping with that of Robert Reich, who says that "Goldman's resurgence should send shivers down the backs of every hardworking American who has lost a large chunk of retirement savings in this economic debacle, as well as the millions who have lost their jobs.... Goldman's high-risk business model hasn't changed one bit from what it was before the implosion of Wall Street."
Second, it shows that Wall Street’s bad habits — above all, the system of compensation that helped cause the financial crisis — have not gone away.
Third, it shows that by rescuing the financial system without reforming it, Washington has done nothing to protect us from a new crisis, and, in fact, has made another crisis more likely.
Over the past generation — ever since the banking deregulation of the Reagan years — the U.S. economy has been “financialized.” The business of moving money around, of slicing, dicing and repackaging financial claims, has soared in importance compared with the actual production of useful stuff. The sector officially labeled “securities, commodity contracts and investments” has grown especially fast, from only 0.3 percent of G.D.P. in the late 1970s to 1.7 percent of G.D.P. in 2007.
Such growth would be fine if financialization really delivered on its promises — if financial firms made money by directing capital to its most productive uses, by developing innovative ways to spread and reduce risk. But can anyone, at this point, make those claims with a straight face? Financial firms, we now know, directed vast quantities of capital into the construction of unsellable houses and empty shopping malls. They increased risk rather than reducing it, and concentrated risk rather than spreading it. In effect, the industry was selling dangerous patent medicine to gullible consumers.
Goldman’s role in the financialization of America was similar to that of other players, except for one thing: Goldman didn’t believe its own hype. Other banks invested heavily in the same toxic waste they were selling to the public at large. Goldman, famously, made a lot of money selling securities backed by subprime mortgages — then made a lot more money by selling mortgage-backed securities short, just before their value crashed. All of this was perfectly legal, but the net effect was that Goldman made profits by playing the rest of us for suckers. And Wall Streeters have every incentive to keep playing that kind of game.
The huge bonuses Goldman will soon hand out show that financial-industry highfliers are still operating under a system of heads they win, tails other people lose. If you’re a banker, and you generate big short-term profits, you get lavishly rewarded — and you don’t have to give the money back if and when those profits turn out to have been a mirage. You have every reason, then, to steer investors into taking risks they don’t understand. And the events of the past year have skewed those incentives even more, by putting taxpayers as well as investors on the hook if things go wrong.
Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC. Sample posts follow:
We all have to play nice-nice with our GR (global resource) peers. and when your GR team lead sends notes to IBM US mgmt that they need MORE WORK from their US counterparts, IBM mgmt. rolls over and gives them more work. Reminds me of an old CCR song: Fortunate Son.
And when you ask them, how much should we give? Ooh, they only answer more! more! more. What a sad, pathetic, f'ng company.
What's more pathetic is how India is not held accountable since they are Sam's chosen ones and how anyone who reports problems with India are considered anti-team, racist and uncooperative.
The sacred cows over in India aren't cattle, they're the "office boys" pretending to be IT professionals working for IBM. What a sad, pathetic f'ng company indeed.
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