But the project quickly fell off track amid scheduling conflicts and high-profile service outages that threatened to compromise sensitive data. In 2008, Gov. Rick Perry ordered a temporary halt to the project because he said state operations were at risk. Texas made the decision to effectively fire IBM in 2010, and IBM and the state reached an undisclosed settlement this month.
Todd Kimbriel, director of E-Government and IT Services for Texas DIR, said the IBM contract was hampered by the fact that Big Blue sought to perform many of the management and administration functions from off-site, remote locations. "The new contract has made it a preference that the people are on the ground in Austin. We want to have people in our seats with visibility among our staff," said Kimbriel, in an interview.
IBM has said that the state shares responsibility for the project's failure because it failed to perform necessary preparation work, such as application remediation, and didn't always provide support personnel or timely access to its systems.
Reader comments follow:
Why oh why, does it take the dunderheads at the top of the decision making tree so long to come to the inescapable conclusion that "off-site, remote locations" (offshored maybe?) are never going to equal the work performed by hiring and working locally?! You may save in the obviously quantifiable short term, but you pay dearly in the long term when poor quality, but "cheap" work starts to gum up the process. You get what you pay for! Too bad the taxpayers have to pay up for this gross incompetence.
IBM didn’t provide details of job reductions. In 2010, it booked $641 million of “workforce rebalancing charges.” That figure fell to $440 million in 2011, the annual report shows. About 1,650 jobs were cut in the U.S. and Canada last month, according to an employee advocacy group Alliance@IBM, which has been trying to organize IBM employees. Redundant employees may apply for other positions within IBM, severance documents show.
His replacement, Virginia Rometty, earned $8.34 million as head of sales and marketing. That total was up from $6.4 million the previous year, Bloomberg said.
If there’s a downside to IBM’s marketing campaign, it’s that many people don’t quite get what the company does. The “PC maker” has transformed into an amorphous think tank. As a friend of mine who runs a prominent mutual fund recently asked, “What do they actually sell?” ...
The answer to that is less sexy than IBM might have you believe. The company, with annual revenue of $107 billion, still makes tens of billions of dollars per year selling traditional data-center hardware and software. In fact, Toni Sacconaghi, an analyst at Sanford C. Bernstein & Co., estimates that about 20 percent of IBM’s revenue and 40 percent of its profits can be traced to hardware, software, services, and financing on mainframes, the grizzled veterans of corporate computing. Such machines are not analytics dynamos but rather workhorses crunching away at the most mundane tasks. The bulk of the rest of IBM’s business revolves around high-profit software and services, in which the company deploys tens of thousands of people to customers’ sites for what can be very lengthy technology installation and consulting engagements. ...
But, for all the effort IBM has put into portraying itself as the grand pooh-bah of “smart” technology, its success on Wall Street comes down to something much more pragmatic, according to Sacconaghi. “I think what IBM has been able to do is articulate and deliver against an investor value proposition that is really resonating,” he says. “And that is ‘we will not miss earnings; we will tell you how much cash we will generate in the next four to five years, and we will tell you where it’s going.’ There is no other company really articulating a value proposition like that.”
Sacconaghi attributes IBM’s share price surge to confidence the company built up with investors over about a six-year period of delivering steady financial results. Investors think of it “less as a technology stock and more like a high return of cash stock,” Sacconaghi says. Unlike an Apple, IBM’s revenue growth rate has not surged, nor has its financial profile dramatically altered. In short, IBM has wooed investors not with its technological razzle-dazzle but rather its steady hand. “I do think things like Watson and Smarter Planet are kind of aspirational things that investors kind of like,” Sacconaghi says. “But the real resonating factors among investors are the discipline of the financial model and the ability to deliver against it.”
The link below will take 8k out of the existing 20k Germany population. So if you are in a low cost country job security looks pretty good. That is the only place. http://socialbarrel.com/ibm-job-cuts-in-germany-8000-may-be-laid-off/31574/
For me there is only 1 way to eliminate any of this "off shoring" is to stop all visa issuance for any IT related work from a US perspective. Or apply a 3000% tax on their estimated salary when applying for visa's. Also for any job "moved to low cost country" put a 100K tax per job for those. Also do not force the one being replaced to train the cheap labor. That is just a bit tacky. I see no special skills for these visa holders. Just how IBM was able to lobby to get laws stated to support the issuance. Thanks G Bush.
Just think about every computer, phone, TV etc you have bought. Well you have helped China become what they are today. The government in China owns a piece of every company including IBM subsidiaries.
We all have allowed this to happen because we own electing those who make the laws. IBM is just playing the game by those laws. This is just the result of those elections.
In February, the Washington, DC retiree group, the Rusty Blues, had the newly hired IBM Vice President for Government Programs as its speaker. His name is Chris Padilla, and I imagine he enjoys an annual salary exceeding $700,000.
That's much higher than his previous job, -that of Foreign Trade Representative in the US government, paying about $175K. In that job he was responsible for negotiating favorable trade terms for the US.
One wonders - first - if he was up to that politically appointive job, if one looks at his total private sector credentials, involving three US corporations over a period of 15 years.
AT&T has now been a Dow dog for over a decade, because (IMHO) in the years 2000+, it again went into the wrong (i.e. low margin) part of the networking business, and Verizon ate its lunch.
The obvious question for you to ponder is: "Why did IBM hire the guy and quadruple his salary?" Was it for his stellar work at Kodak, Lucent and AT&T? Is it because he walks on water, but couldn't find the right lake?
Or, was it a reward for past favors given IBM during trade negotiations under the Bush regime?
I had been using only the EyeMed 'discount' card for quite a few years now, and my one worthwhile optometrist left the profession, no doubt due to the inability to make a living.
My subsequent optometrist produced an inferior product and would not entertain any kind of remuneration. The costs were mostly on me - I think EyeMed gave $5. towards an exam with the 'discount' card - but I persevered this year, with another approved optometrist.
She too was worthless, even after noting the faulty prescription the previous optometrist had produced.
I've given up - THANK YOU IBM! - on the EyeMed 'discount' card, and will in future use another plan that, thankfully, I have access to.
IBM wins, again. No FHA, no vision card. Let's see, that leaves me, in coverage from IBM - oh yes, nothing. Well done, IBM, well done.
As fhawontcutit has been saying for years: We Have A Healthcare Problem. What I'm finding amusing is that FINALLY those who were screwed with the FHA in 1999 are FINALLY waking up, FINALLY.
LOL, didn't save our jobs of course. We all still took the high jump. But it made those last few months, with all the young Indians around (my replacement, to support CICS and MQ, was just barely out of college and had exactly 3 months with IBM before he came to be trained)
The sad thing was that the Indians themselves were very nice young folks, just trying to earn a living like any young person - and it turned out they had no idea we were all getting the axe because of them. They had been told by their management that we were all moving into new and better jobs within IBM - and since most of them only had a few months with the company they actually believed it.
You need to look at which will provide you with more money. Unemployment benefits are pretty modest and your pension will most likely be larger that the unemployment check. So why would you want to collect the smaller unemployment amount rather than the larger pension? If it turns out that in your case unemployment would be larger than your pension, then maybe I could see waiting to start your pension. But keep reading...
I can't think of any other downsides to starting your pension sooner rather than later, and in fact, there are some other reasons not to wait.
If you delay starting your pension, your monthly benefit will go up slightly - about 2% per year. But some simple math says that if you wait one year, it will take 50 years before you reach the break even point and would have been better off by waiting. Are you sure you'll live that long?
Also, if you are married or have dependents, you need to think about your choice for survivor benefits. Until you actually start your pension, your spouse is covered by 50% Pre-Retirement Survivor Protection and will receive 50% of your pension benefit if you die. If you are not married, but have someone else, such as a child, that you want to name as a beneficiary of your pension, they would get nothing if you die before your pension starts.
Once you start your pension, you can change that. You can change the J&S percentage to anything you want from 0 to 100%. You can also choose someone else as your beneficiary. In my opinion, these are reasons you may be better off starting your pension right away.
Just to clarify, once you start your pension, you CANNOT change the J&S percentage or change your beneficiary.
The joint survivor can be any person you choose (e.g., a child) and does not have to be your spouse. The younger the age of the joint survivor, the larger the impact on the pension benefit. If your spouse does not receive at least 50% survivor benefits, the spouse will have to sign a release. I usually recommend selecting 100% joint survivor benefits for the spouse, but individual circumstances may change this.
You can also look at whether moving some of retirement pension to IRA roll over changes the formula or not.
Now 65, Ms. Worth is still working full time; her hopes of retiring at 62 sank along with the 2008 stock market. She does client liaison work for a financial planning firm in Fort Worth, and she still conscientiously puts aside money each month for retirement. ...
This wasn’t how it was supposed to be. ...
There is plenty of reason for all the retirement anxiety. Like Jonnie Worth, many Americans lost tens of thousands, even hundreds of thousands of dollars, when the markets and their 401(k)’s swooned in 2008 — all told, 401(k) plans and individual retirement accounts lost $2.8 trillion in value. Thirty-six percent of American workers age 55 to 64 say they have less than $25,000 in retirement savings, according to a survey by the Employee Benefit Research Institute. (The number is 52 percent for workers age 45 to 54.) Rock-bottom interest rates have squeezed older Americans who rely on interest from their bond or retirement accounts, and many companies, viewing them as too costly, have eliminated or frozen the traditional pensions that guarantee retirees a solid monthly stipend. Today only 17 percent of workers have such defined-benefit pensions, while 39 percent have 401(k)’s; some in those two groups have both, but an unfortunate 53 percent of all workers have neither. ...
Many Americans, she noted, retire at 65 naïvely thinking they can live comfortably just on Social Security and the $100,000 or so they have in a 401(k). If these people follow the advice of financial planners, she said, they will draw 4 percent each year from their 401(k)’s, translating to $4,000 a year. When that is added to the average amount retirees receive in Social Security — $14,700 a year — it translates to $18,700 a year or just over $1,550 a month (or around $33,000 for a couple when both receive benefits). “That’s not a lot,” Ms. Munnell said. She warned that many Americans could slide into poverty in retirement because their nest eggs were so small. ...
Bemoaning the small size of many people’s nest eggs, Mr. VanDerhei said workers with traditional pensions were generally in far better shape than those with 401(k)’s, because pensioners receive a defined monthly benefit for life. In even worse shape, he said, are the majority of workers who have neither a pension nor a 401(k) plan at work.
For workers who can develop an iPhone app, have a command of Salesforce.com, code a website in HTML5 or construct a database with MySQL, the coming months may prove lucrative, according to Bluewolf's findings. The firm saw a heavy demand for these skills in 2011 and anticipates that companies will continue to seek staff with experience in those areas. ...
Highlighting the importance of website usability, Bluewolf foresees a greater business need for staff with user-experience backgrounds. User-interface and user-experience designers with more than five years of experience should expect a yearly salary between $82,000 and $102,000, on average, according to the study data. Last year's average salary range for the same skill set was $77,000 to $96,000, according to Bluewolf's figures. On the website development side, the demand for HTML5 skills is strong, judging from the average wage jump between 2011 and 2012. Last year's salaries for HTML5 developers averaged between $77,000 and $110,000. In 2012, that range is projected to increase to $82,000 to $119,000. Meanwhile, the need for Flash, Flex and ActionScript talent is decreasing.
Editor's note: What I find astounding is that I personally know of IBM employees, both young and old, with these exact skills who were part of the recent resource action. It's gotta make you wonder if IBM has a clue about the future...
There's no clear explanation for this trend, either anecdotally or in the Bureau's data. Take IBM. In the same week it announced a breakthrough in quantum computing, it laid off more than 1,400 workers. How many of those workers were in science and engineering is unknown, but IBM has steadily cut the number of employees in the U.S. as it expands in other countries.
Selected reader comments follow:
Could it be that the folks who put out this report have an agenda? Could it be that despite all the folks with science and engineering backgrounds who are out of work right now (ask these folks if there is a S&E worker "shortage"...they will tell you what is really going on!) that there are some who wish to further and advance an agenda that says there is a shortage of S&E workers and so we need to recruit from overseas (where the number of S&E workers continues to increase)? As with most things in this world, all you have to do is look at who this serves. Personally, I wonder who paid for this report...
There is no shortage of higher skilled S&E people available, that's a simple deception as stated so companies can hire offshore to save a dollar. I know a guy with a Masters in Mechanical Engineering whose current job is a delivery truck driver.
Yes, kids are able to see this trend. They can see that it takes tons of work and dedication and money just to get a low-paying job with little to no potential for growth. They see others partying and getting basic B.A. Business degrees and being in charge of the engineers making twice as much and not having to study at all. It's a no brainer which direction to go for a better chance of financial security.
As jobs with higher education become less appealing, fewer Americans are going to want to get degrees in those fields. In fact, anyone who has to pay a significant amount to get a good higher education isn't going to want to get degrees in those fields.
I think independent engineers need to work together more to share information and lobby the government so they can at least have a say in H-1B visas and other immigration/work policies. Engineers also need to gain some level of business education so they can treat their career like a business. Engineers tend to be very independent, but not very cooperative with their peers, and that is a disadvantage because their employers have been shown to be very willing to cooperate with each other. Just look at the non-poaching agreement between the tech companies in the Silicon Valley. If engineers worked with each other in the same way, they'd be getting the real market value of their skills rather than the deflated one that is the result of corporation regulation of the market.
As a result those capable of performing these technical jobs are thinking for themselves and taking better deals outside the industry where they are remunerated and respected more, and feel safer. I would not recommend my children to go into S&E and especially not IT (Which is a high stress career and the least protected against overrun by Chindia).
For every US college graduate that US corporations choose to hire, three US STEM students earn a degree from US colleges and universities. Our corporations are destroying the lives of US STEM workers, and our corrupt political leaders are complicit.
It is no secret that Barack Obama's presidential campaigns are funded by the billionaire owners of Microsoft, Google, Intel, Oracle, etc who have made their money by reducing labor costs by replacing US STEM workers with cheap entry level workers from the third world. And is no secret that Barack Obama has been printing up work visas to repay his obligation to the billionaires.
In 2010 when the US was hemorrhaging 750,000 US jobs per month, the Obama campaign was printing up 95,000 OPT visas so that corporate America could hire interns for pennies on the dollar instead of hiring highly educated, well trained US STEM workers.
Not only have US jobs been moving overseas, overseas workers are moving into the US to replace US workers. This has been happening so that the billionaires at Microsoft, Google, etc can make more money by reducing labor costs, and the leaders of the Democratic Party, a party that once concerned itself with the welfare of US workers, like Barack Obama, Bill and Hillary Clinton, Chuck Schumer, and Mark Warner are happily cooperating with the billionaires.
Big employers want Congress to give them a break on pension funding. Business lobbies such as the U.S. Chamber of Commerce and the National Association of Manufacturers have managed to get a pension sweetener attached to a Senate highway bill that, potentially, would reduce required contributions by billions of dollars.
This is the same sort of short-term thinking that got companies such as United Airlines, Bethlehem Steel Corp. (BHMS) and Delphi -- or, to be more exact, their workers -- in trouble. From the shelter of bankruptcy, these employers terminated their pension plans, leaving inadequate funds to pay retirees. The government-run Pension Benefit Guaranty Corp. pays $458 million every month to more than 800,000 retired workers of about 4,300 failed companies. In many cases, insurance didn’t cover the full amount and workers got stiffed. ...
For too long, the pervasive mentality among retirement sponsors, both in the private and public sectors, has been that pension payments can always be put off. This would be true only if employees never aged. No one forced these companies to offer their workers pensions. For those that did, let ’em pay the actuarial rate.
Starting later this year, the Department of Labor will require plan sponsors to disclose specific fees and investment information to plan participants via two related regulations. The first regulation requires 401(k) providers to supply employers with full disclosure on fees by July 1. The second regulation requires that calendar year plans must provide participants with their first set of investment fee disclosures by August 30. In addition, other fees and expenses paid by participants must appear on their September 30 quarterly statement.
AMR had hoped to dump its pension obligations on the Pension Benefit Guarantee Corporation, a government agency funded by insurance premiums on traditional pension plans offering defined benefits to retirees. The PBGC would then have been responsible for providing pension benefits to American employees, but the agency does not cover retiree health insurance and by law has limits on how big a monthly pension it could pay. All employees, but especially pilots and others with negotiated benefits far higher than the PBGC limit, would have lost future income. And with the largest pension termination ever potentially adding $10 billion to its responsibilities, the PBGC, already facing obligations amounting to $26 billion more than projected income, would have been pushed closer to crisis. ...
The breakthrough is a tentative victory for both PBGC and the TWU, but it is also part of a trend that endangers the retirement security of not only airline employees but also all American workers. Most seriously, half of all workers have no employer-funded retirement plan. But the dramatic change from defined benefit plans to 401(k) plans shifts risk to workers, who are left with plans inferior in virtually every other way as well.
The bad news starts with good news: People are living longer, healthier lives. Fifty years ago, the average person lived about 14 years after retirement. Now, it's 20 years -- more than 40 percent longer. But today's pensions aren't 40 percent bigger. Calls to cut Social Security and Medicare add to the concern.
Since people are living longer, many say "they" should just work longer. The fact is, people already are. Since the mid-1990s, the average retirement has been deferred by two years. That was before the market collapse; now folks expect to work even longer. Unfortunately, almost 40 percent of current workers who expect to work until age 70 will find they cannot, according to a Transamerica Retirement Survey released last year. ...
For most people, personal savings and Social Security are the only retirement funds they have. If workers do have a retirement plan, these days it's probably a 401(k).
These were originally designed in the 1970s to supplement pensions, but for most folks they're now the only employer-provided option. In theory, they sound great -- it's your money and you decide how much and how to invest. Unfortunately, most of us aren't very good at that. People tend to set aside less than they need and they get worse results than professionals (even when they invest with professionals). According to a recent report, the average 401(k) balance for someone 55 or older is $234,000. That sounds like a lot of money -- until you try to fund 20 years of retirement with it. Or if, just before you hoped to retire, the market drops 20 percent. ...
So what can we do? We can start by working to preserve the plans we already have. I hear lots of claims that (aside from public-sector workers) "nobody has a traditional pension anymore." That's just plain wrong: More than 75 million Americans still have defined-benefit pensions.
Also contrary to the conventional wisdom, in the private sector, 80 percent of people in defined-benefit plans are still earning benefits -- their plans aren't frozen. People who have traditional defined-benefit plans feel more secure than those who don't -- and they are. One study found that households without defined-benefit plans are six times more likely to be poor than households that have them. ...
Retirement shouldn't be a race to the bottom. Unfortunately, some of those without good pensions think other people should lose theirs. "Beggar thy neighbor" is not a way to make us more secure. Instead of envying those with some security, we should be developing new options -- options for employers and employees to share responsibility for saving and to reduce the administrative and marketing costs of retirement plans.
While freezing a pension plan is rarely a good thing for employees, certainly it is better than terminating a plan. With a freeze, at least the workers and retirees will get all of the benefits that they have earned up to the date of the freeze. Had American terminated the plans and dumped the obligations onto the Pension Benefit Guaranty Corporation, pension benefits would have been subject to the PBGC’s benefit limits, which likely would have resulted in pension cuts for higher-paid and longtime employees. A freeze also preserves special early retirement benefits – in a plan termination, pensions taken early are greatly reduced.
Fortunately, there’s an easy solution. Rather than curtailing public and private pensions, New York and other states could save millions of workers from impending poverty by creating public pensions for everyone.
While the recession bears some blame for the looming retirement crisis, experts agree that the primary cause is more fundamental: Most workers do not have retirement accounts at work. Over half of the workers in New York State, more than four million people in 2010, do not participate in retirement plans with their current employers, while over half of American workers do not have pension plans at work.
Alliance Reply: This is the REAL policy of IBM. Lie to the employees, no matter what. IBM has been doing this for several years. You see, IBM Corporate determines what you will be told. IBM Corporate policy determines what will happen to you. A collectively bargained union contract is the ONLY document that can alter the power of IBM's policies and level the playing field between IBM workers and Corporate management. Until IBM workers organize and fight to HAVE a union contract, IBM will never "be straight" with you. Believe it. Encourage your soon-to-be former co-workers to join Alliance@IBM and fight for a collectively bargained contract.
Alliance Reply: Sorry for your job loss...and we say again: This is the REAL policy of IBM. Lie to the employees, no matter what. IBM has been doing this for several years. You see, IBM Corporate determines what you will be told. IBM Corporate policy determines what will happen to you. A collectively bargained union contract is the ONLY document that can alter the power of IBM's policies and level the playing field between IBM workers and Corporate management. Until IBM workers organize and fight to HAVE a union contract, IBM will never "be straight" with you. Believe it. Encourage your soon-to-be former co-workers to join Alliance@IBM and fight for a collectively bargained contract.
I have been with IBM quite a long time. I saw things change from where almost no one ever got fired to now. In the 90's IBM was in big trouble; there was talk of breaking the company up and things had to change. They did, but things have continued to change--drastically.
I guess IBM can come up with any business strategy they want. They have chosen to shift work overseas more and more, even at the expense of customer service. They obviously have decided the savings more than offset the disadvantages (poorer quality, lost customers etc.). I hope, and expect, in the long term their strategy will be proven wrong; at least to the extent they are following it.
Although I have my job for now, I'm sure I will be gone long before then. I am not going to disparage workers in other countries; they didn't force IBM management to go this route and they want to make a living too. However, I don't believe IBM is entitled to tax breaks etc. when they are shifting so many jobs overseas.
I also think they should be willing to come clean on their goals and not be circumventing things like the WARN act. Obviously, they could handle the whole situation with regards to reducing US headcount much better. In the past IBM felt their employees were their most important asset. Definitely not anymore.
The only advice I can give anyone at this point is don't fall in love with your job or your company. Don't assume you will be with the company for many years--assume you won't. As a professional I will continue to do my job, but my loyalty to and respect for IBM is long gone. Even if you generally are very doubtful about unions (like me), you should at least consider joining. If nothing else, it can help you know what you can (and cannot) expect in your relationship with this company. Yeah, you can probably get that information from them for free, but providing it isn't really free to them. -NotTheIBMIJoined-
France has been called the best healthcare system in the world by the World Health Organization. And if there's something everyone in the US seems to agree on, it's that US healthcare, well, horribly sucks, although they strongly disagree about why and what to do about it. And yet, to me, the similarities are glaring:
First of all, the French healthcare system is built on a large, highly-regulated private sector. Unlike Britain's NHS, the government doesn't own everything. Some hospitals are public, but many are private and for-profit. Indeed, there are publicly-traded hospital chains, just like in the US. Most doctors and nurses work in private practice. Even most of the ambulances are private. The sector is highly regulated and subsidized to be sure, but that's also true in the US.
Secondly, there's a crucial feature at the heart of the French healthcare system that is also at the heart of the US healthcare system--and that all US wonks hate: employer-provided insurance.
France has had a US-style employer-based healthcare system since the end of World War II, but the Couverture Maladie Universelle (literally: universal healthcare coverage), the government program that covers people who can't get insurance, was only enacted in the late 90s (ah, global macro booms). Given how tantalizingly close Bill Clinton was to passing universal healthcare in the early 90s, it's easy to imagine a parallel universe where Americans had universal healthcare before the French, again something you wouldn't guess from reading stories on French healthcare. ...
Which begs the question: with such striking similarities, how come the outcomes are so different? Most importantly, how come the US healthcare system is so expensive and the French healthcare system so manageable? ...
After mulling this on and off for many months since I've been thinking about this, I think the defining thing is: costs. Costs are just much higher in the US. You see this with doctors: American doctors just make way, way more money than French doctors, which drives up costs across the board. The reason why American doctors must make more money than French doctors is because medical school in France is free and medical school in the US is really, really expensive. I don't have any figures, but I wouldn't be surprised if what the median starting doctor pays in student debt in a year is more than what the median starting French doctor makes in a year. ...
All of this is a roundabout way of saying that my neophyte impression is that the French and US healthcare systems, rather than being these wildly different systems operating from wildly different premises, are actually pretty similar. It just so happens that one is much, much more expensive than the other, and that's what leads to these very different outcomes. Now, why is that? The process is well-understood: France (and other countries) simply set prices low by political fiat. The US doesn't, and so has very high prices.
In the WaPo article they make a big deal of the costs of individual procedures like MRI being over a thousand in the US compared to $280 in France, but this is a simplistic analysis, and I think it misses the point as most authors do when discussing this issue. The reason things costs more is because in order to subsidize the hidden costs of medical care, providers charge more for imaging and procedures. For instance, Atul Gawande, in his New Yorker piece “The Cost Conundrum” wonders why it is that costs are higher to treat the same conditions in rural areas and in a major academic centers like UCLA than at a highly specialized private hospitals like the Mayo Clinic? I think the reason is it’s not nearly as expensive to administer and provide care for a select group of insured midwesterners at the Mayo than it is to provide care to the underserved in the poor areas of inner-cities and in poor rural locations. ...
As a result, to pay for excessive care of the uninsured, all procedures, all tests, all imaging, and all hospitalizations cost more. Caring for inpatients and the uninsured is expensive, so the costs are transferred to the prices of outpatient elective care and procedures which are often administered in a fee-for-service model. Hospitals have an incentive to provide as much outpatient elective care as possible in order to offset these other costs and to generate revenue. The providers that perform procedures or expensive testing then become far more expensive to pay as they are the major revenue generators for the hospital (hence surgeon vs pediatrician pay). Especially because in order to generate more revenue they are paid based on how many procedures they perform. All the incentives are towards more utilization, more procedures, more revenue generation. This is the hidden tax of the uninsured.
In a way, we have universal healthcare already, but we pay for it in the most irresponsible and costly way possible. We wait for small problems to become emergent, treat them in the most expensive outpatient provider possible (the ER), and then when we can’t pay the bills for the uninsured, we transfer the balance by increasing the costs of the care of insured patients showing up for their cholecystectomies or back surgery. Tack on the costs of defensive medicine and the fear of being sued unless everything is done to cover your ass, and you have a recipe for extremely costly care.
Other factors figure into higher costs as well, including hugely higher costs of medicare administration since Bush privatized it, higher prescription drug costs since Bush passed medicare part D and prevented bargaining with drug companies, and our incredibly high ICU expenditures at the end of life. The McKinsey report on excess costs demonstrated most of these issues in 2008. This is not news. The US spends far more on medical administration, outpatient/ambulatory care (with hospital-based outpatient care increasing most rapidly in costs), drugs, doctors salaries, and end-of-life care than we should as a percentage of our GDP.
Complaints about out-of-network costs were among the most common found in a state investigation of consumer complaints. The probe found cases in which consumers took pains to seek treatment from doctors and hospitals in their plan’s network, only to learn after they got a bill that an out-of-network surgeon or anesthesiologist had assisted in their care. Additionally, a growing number of insurers have changed how they reimburse for out-of-network care, shifting a larger portion of the cost to policyholders. That can lead to surprises like the one faced by Sharon Smith – a Syosset, N.Y., woman whose insurer paid only $2,500 toward an $18,000 surgery on her son performed by an out-of-network provider, as KHN reported in a story last month.
Some of the bills documented in the report resulted from emergency room care, while others came from scheduled treatments, often at in-network facilities. Among the examples it cited: One consumer, who got approval for an in-network surgery, was stunned to find out that an out-of-network surgeon assisted, leaving the patient facing a $7,516 bill. Another received an $83,000 bill from an out-of-network plastic surgeon who reattached his finger at an in-network emergency room.
Employers should be clear with workers about what limited health benefit plans do—and don't—cover in the event of a serious illness or accident, consumer groups are warning. The warnings are a reminder that limited benefit plans—known as "mini-med" plans—are still legal because hundreds of employers and insurers have received federal waivers to continue selling them until 2014. Consumer Reports magazine describes mini-med plans in a new report as "legal but inadequate," and even categorizes them as "junk" insurance. ...
Coverage limits can be as low as $1,000 annually. Some mini-med plans pay for just four doctors' visits per year. "Mini-meds appeal to large employers in industries such as retail, food service and temporary staffing agencies who want to be able to tell their employees, 'I have something for you.' But in reality, these plans are extremely limited in their coverage," says Nancy Metcalf, senior program editor of Consumer Reports.
Industry experts have said that electronic health records could generate huge savings — as much as $80 billion a year, according to a RAND Corporation estimate. The promise of cost savings has been a major justification for billions of dollars in federal spending to encourage doctors to embrace digital health records.
But research published Monday in the journal Health Affairs found that doctors using computers to track tests, like X-rays and magnetic resonance imaging, ordered far more tests than doctors relying on paper records.
Already in effect:
Even when employment rebounds to pre-recession levels, a return to previous levels of employer-sponsored health insurance is unlikely. Well before the start of the recession, a steady decline of employer health coverage was underway with fewer firms offering coverage and fewer workers taking up coverage—likely because of rising health care costs. Both of these trends continued during the recession and contributed to the decline in employer coverage between 2007 and 2010. The core threat to employer health coverage is health care costs increasing faster than wages, which makes employer coverage unaffordable for a larger share of the workforce, particularly low-wage workers. For example, among children and working-age adults with incomes below 200 percent of poverty—$44,100 for a family of four in 2010—the proportion with employer coverage dropped from 42 percent in 2001 to 24 percent in 2010.
Many people who lost employer coverage during 2007-2010 obtained public health coverage. National health reform, with its major expansion of Medicaid and new subsidies to purchase nongroup insurance, will further extend coverage to the growing ranks of Americans without employer health coverage.
In addition to concierge medicine, the wealthy have a variety of plush options to choose from when it comes to their health care. Some hospitals are competing for wealthy clients by offering perks like butlers, fancy beds, beautiful views, and fine food. Some of New York-Presbyterian's luxury hospital rooms can cost patients $1,000 to $1,500 per day.
"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.
But now one of our two major political parties has taken a hard right turn against education, or at least against education that working Americans can afford. Remarkably, this new hostility to education is shared by the social conservative and economic conservative wings of the Republican coalition, now embodied in the persons of Rick Santorum and Mitt Romney. ...
For the past couple of generations, choosing a less expensive school has generally meant going to a public university rather than a private university. But these days, public higher education is very much under siege, facing even harsher budget cuts than the rest of the public sector. Adjusted for inflation, state support for higher education has fallen 12 percent over the past five years, even as the number of students has continued to rise; in California, support is down by 20 percent. One result has been soaring fees. Inflation-adjusted tuition at public four-year colleges has risen by more than 70 percent over the past decade. So good luck on finding that college “that has a little lower price.” ...
After all, over the past 30 years, there has been a stunning disconnect between huge income gains at the top and the struggles of ordinary workers. You can make the case that the self-interest of America’s elite is best served by making sure that this disconnect continues, which means keeping taxes on high incomes low at all costs, never mind the consequences in terms of poor infrastructure and an undertrained work force.
And if underfunding public education leaves many children of the less affluent shut out from upward mobility, well, did you really believe that stuff about creating equality of opportunity?
So whenever you hear Republicans say that they are the party of traditional values, bear in mind that they have actually made a radical break with America’s tradition of valuing education. And they have made this break because they believe that what you don’t know can’t hurt them.
Moyers calls the book “the best account I’ve seen of how politicians rewrote the rules to create a winner-take-all economy that favors the 1% over everyone else, putting our once and future middle class in peril.”
The show includes testimony of middle class Americans at a Senate hearing about the impact of hard times on families, as well as an essay on how Occupy Wall Street reflects a widespread belief that politics no longer works for ordinary people, including footage we took at the OWS rally from October-December 2011.
There’s no clearer example of the collusion between government and corporate finance than the Citicorp-Travelers merger, which — thanks to the removal of Glass Steagall — enabled the formation of the financial behemoth known as Citigroup. But even behemoths are vulnerable; when the meltdown hit, the bank cut more than 50,000 jobs, and the taxpayers shelled out more than $45 billion to save it.
Senator Dorgan tells Moyers, “If you were to rank big mistakes in the history of this country, that was one of the bigger ones because it has set back this country in a very significant way.”
Now, John Reed regrets his role in the affair, and says lifting the Glass-Steagall protections was a mistake. Given the 2008 meltdown, he’s surprised Wall Street still has so much power over Washington lawmakers.
“I’m quite surprised the political establishment would listen to groups that have been so discredited,” Reed tells Moyers. “It wasn’t that there was one or two or institutions that, you know, got carried away and did stupid things. It was, we all did… And then the whole system came down.”
Those details, it turns out, are copious. The government submitted more than 1,600 pages of documents, including a complaint, five "consent" agreements and dozens of exhibits. Yet it still isn't clear whether Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and Ally Financial will actually spend $25 billion to meet their obligations under the deal. The settlement, first announced Feb. 9, came after a 16-month investigation by state and federal officials, including the Department of Justice and the Department of Housing and Urban Development, into widespread reports that banks used forged or "robo-signed" signatures to speed foreclosures, as well as committing other loan abuses in the servicing of home loans. ...
Introducing its case, the Justice Department wrote that the banks' "misconduct resulted in the issuance of improper mortgages, premature and unauthorized foreclosures, violation of service members' and other homeowners' rights and protections, the use of false and deceptive affidavits and other documents, and the waste and abuse of taxpayer funds." ...
Whoever pays for the relief, it still won't reach most homeowners. According to an estimate by Ted Gayer of the Brookings Institution, about 500,000 underwater homeowners could qualify for partial loan forgiveness, or "principal reduction." As of January 1, 11.1 million homes were underwater, according to the data analysis company Core Logic.
AIG received the biggest bailout of any company during the 2008 crisis. The company had sold insurance-like contracts that were supposed to pay out if certain mortgage-backed investments went bust. When the investments tanked, AIG couldn't afford to pay the companies that had purchased the contracts. The government bailed it out so that it could pay them and prevent a market panic over the potential losses.
Damon Silvers, former vice chairman of the oversight panel, said the tax break unfairly benefits private AIG stockholders, including executives who were paid in stock options, at the expense of taxpayers. "By doing it this way, substantial amounts of money leaked out to the benefit of private parties who really should not be benefiting from public policy in this way," Silvers said. He said the waiver gives AIG an unfair competitive advantage.
Good news? Take closer look. The entire gain came from increases in stock prices. Those increases in stock values more than made up for continued losses in home values. But the vast majority of Americans don't have their wealth in the stock market. Over 90 percent of the nation's financial assets -- including stocks and pension-fund holdings -- are owned by the richest 10 percent of Americans. The top 1 percent owns 38 percent. ...
Yale Professor Bruce Ackerman and Anne Alstott have proposed a 2 percent surtax on the wealth of the richest one-half of 1 percent of Americans owning more than $7.2 million of assets. They figure it would generate $70 billion a year, or $750 billion over the decade. That's half the savings Congress's now defunct Super Committee was aiming for. Instead of standing empty-handed while Santorum and Romney dominate the airwaves with their regressive Social Darwinism, Democrats need to be reminding Americans of what's happening in the real economy -- and what needs to happen. The wealth gap is widening into a chasm. A surtax on the super rich is fair -- and it's necessary.
What can the president control? This year, Republicans are saying Obama has not done enough to promote domestic drilling, but the U.S. drilling-rig count is twice as high now as it was in 2009. With the exception of a spike in 2008, the current rig count is higher than any year since the early 1980s, according to figures compiled by WTRG Economics. ...
Perhaps no politician has done more to put the onus on the president than Gingrich, who says he has a plan to reduce gas prices to $2.50 a gallon and offset the loss of output that might result from an attack on Iran, which exports about 2.5 million barrels of crude oil per day. “There’s no way we could increase production that much,” said Verrastro of the CSIS. “But the facts be damned. It’s election season.” ...
Other issues have been raised that have little or nothing to do with current gas prices. Approving the Keystone XL pipeline, rejected by Obama with its current route and highlighted by Gingrich on Monday as a useful move, would not add to current oil supplies; it would only add to the excess pipeline capacity from Canada that is expected to last until 2016. Renewable energy such as wind and solar makes the electricity grid cleaner but has nothing to do with oil prices. Electric cars could help, but it is likely that their sales figures will fall short of administration goals. And higher U.S. production will cut U.S. oil imports and ease the pressure on global demand, but the United States will remain a major oil importer for many years.
This is what work looks like now. It’s been this way for so long that most American workers don’t realize that for most of the 20th century, the broad consensus among American business leaders was that working people more than 40 hours a week was stupid, wasteful, dangerous, and expensive — and the most telling sign of dangerously incompetent management to boot.
To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.
It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief. ...
How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.
What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.
Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.
It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact. ...
These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen. ...
I hope this can be a wake-up call to the board of directors. Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.
During the tenure of Mr Blankfein, Goldman not only constructed the “big short” – in the words of Goldman’s longtime CFO David Viniar – against the mortgage market – netting the bank $4bn in profit in 2007 – but it also continued to sell mortgage-backed securities to investors at par. This behaviour caught the ire and attention of Congress, which hauled Mr Blankfein and Mr Viniar over the coals. ...
Mr Smith’s letter lays bare the acute need that Goldman faces: to either once and for all do what it must, to live up to its supposedly sacred principals – including actually putting its clients first – or stop the charade that can be found in every aspect of its public communications, including Mr Blankfein’s page-long response to Mr Smith’s piece. If Goldman cares any more about returning to a position of leadership on what remains of Wall Street – and it may not – the bank had better fix this problem, and fast. ...
Goldman has been in and out of trouble its whole existence. It almost went out of business because of self-inflicted wounds in the Depression, again in 1970 with the bankruptcy of the Penn Central Corporation, in 1987 when the bank was nearly indicted after one of its most senior partners was arrested on suspicion of insider trading and in 1994 when massive trading losses almost did it in and some 40 partners voted with their feet and left. This is another such existential moment for Goldman. The sad thing is the bank’s leaders don’t seem to realise it.
“It makes me ill how callously people talk about ripping their clients off,” he wrote in an opinion piece for The New York Times. He said he had seen five managing directors refer to their own clients as muppets in an environment that prioritised extracting the maximum profit from them. “When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch,” Mr Smith wrote. “I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.”
Why is all this so dangerous? Think of the recently deceased James Q. Wilson's "Broken Windows" thesis, which he largely used as his model for "blue collar" crime. Wilson thought that it was necessary to tackle even small signs of crime and decay in a community in order to prevent larger, more system criminal activity from emerging. You see a broken window, you go after the culprit. In the elite white collar crime context we have been following the opposite strategy of that recommended under the theory.
As the economist/criminologist Bill Black recently noted in a piece discussing Wilson's theory, the whole story of the past two decades has been that we have persistently excused those in finance who persistently break the windows. Indeed, we have praised them and their misconduct.
But as Black has noted, "The problem with allowing broken windows is far greater in the elite white collar crime context than the blue collar crime context. The squeegee guys make tiny amounts of money and are hated and politically powerless. The mediocre financial CEO who engages in accounting control fraud because it is a 'sure thing' causes the bank to report record (albeit fictional) profits and becomes wealthy and politically powerful. He uses his wealth to make charitable and political contributions that make him far harder to sanction. He claims that any crackdown on him is 'class warfare' by 'neo-Bolsheviks'."
We live in a world of instrumentalism—it’s all about achieving the goal. An instrumental orientation drives corrupt behavior. Business school students, more interested in the credential than in learning, cheat more than other students, research shows. Companies seeking profits first and foremost cut corners in hundreds of ways. They do this every day, in many industries, all over the world.
Unless and until we collectively stop worshiping winning above the process required to prevail, nothing is going to change. There will be some clucking over the Smith piece, and then things will go back to normal—at Goldman Sachs and all the places that could have been the subject of a similar piece, but weren’t.
It’s well documented that the nation’s biggest banks routinely “robo-signed” legal papers to keep up with the wave of foreclosures brought on by the housing bust. But the new report from the inspector general of the Department of Housing and Urban Development reveals that those shoddy practices often came at the direction of managers at the banks, and that employees in some cases were judged by how fast they could get new foreclosure filings out the door.
“I believe the reports we just released will leave the reader asking one question: How could so many people have participated in this misconduct?” David Montoya, HUD inspector general, said in a statement. “The answer: simple greed.” ...
At Bank of America, for instance, performance reviews revealed that employees often were judged based on how quickly they worked and how many files they churned through, the HUD report stated. One manager noted in an employee review: “Your stats so far this year are as follows: Affidavits 46.97 per hour (standard is 49 per hour), Assignments 54.74 per hour (standard is 51 per hour) and DocEx 49.67 per hour (standard is 46 per hour).” ...
At Wells Fargo, according to the report, numerous employees hired as so-called robo-signers had little or no education beyond high school and little or no experience in banking or real estate. One employee with the title of “vice president of loan documentation” had previously worked at a pizza restaurant and as a bank teller. Another had been a department store cashier and a day-care worker.
But the rise in gas prices has almost nothing to do with energy policy. It has everything to do with America's continuing failure to adequately regulate Wall Street. But don't hold your breath waiting for Republicans to tell the truth.
As I've noted before, oil supplies aren't being squeezed. Over 80 percent of America's energy needs are now being satisfied by domestic supplies. In fact, we're starting to become an energy exporter. Demand for oil isn't rising in any event. Demand is down in the U.S. compared to last year at this time, and global demand is still moderate given the economic slowdowns in Europe and China.
But Wall Street is betting on higher oil prices in the future -- and that betting is causing prices to rise. The Street is laying odds that unrest in Syria will spill over into other countries or that tensions with Iran will affect the Persian Gulf, and that global demand will pick up as American consumers bounce back to life.
These bets are pushing up oil prices because Wall Street firms and other big financial players now dominate oil trading. Financial speculators historically accounted for about 30 percent of oil contracts, producers and end users for about 70 percent. But today speculators account for 64 percent of all contracts.
Bart Chilton, a commissioner at the Commodity Futures Trading Commission -- the federal agency that regulates trading in oil futures, among other commodities -- warns that too few financial players control too much of the oil market. This allows them to push oil prices higher and higher -- not only on the basis of their expectations about the future but also expectations about how high other speculators will drive the price. In other words, a relatively few players with very deep pockets are placing huge bets on oil -- and you're paying.
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