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Highlights—December 28, 2013

  • Senator Bernie Sanders (I-VT): News December 27. Excerpt: IBM Workers The Vermont Department of Labor has gotten federal help for some, but not all, of the workers let go last summer by IBM in Essex Junction and Williston. “I appreciate that the U.S. Department of Labor ruled on behalf of IBM’s Williston workers. I am dismayed, however, they have not yet ruled in favor of those Vermonters who worked on the Essex Junction cam pus,” Sen. Bernie Sanders said. Sanders contacted the Department of Labor to express his support for all of IBM employees who lost their jobs, The Associated Press, Burlington Free Press and Vermont Public Radio reported
  • Vermont Public Radio: Feds Say Foreign Competition Led To Some IBM Layoffs. By John Dillon. Excerpts: The federal government has determined that about a quarter of the 419 IBM workers laid off last summer lost their jobs due to foreign competition and imports. ...

    The state Department of Labor had petitioned the federal government for the ruling. The decision entitles the workers to additional federal support for retraining programs. Rose Lucenti is the department’s workforce development director. She said 115 IBM employees and contractors who worked at the company’s Williston facility now qualify for the retraining assistance. ...

    Sen. Bernie Sanders has been working with the state to get the additional federal support. Sanders said he’s disappointed that the federal Department of Labor did not provide trade adjustment assistance for all the laid-off IBM workers.

  • Boston Globe: US approves help for displaced Vt. IBM workers. Excerpts: The U.S. Department of Labor authorized former employees of the Williston IBM plant and some other businesses involved in memory design services in that town to participate in a program designed to help workers who have lost their jobs due to foreign competition, state officials said Thursday.

    Meanwhile, officials from the Vermont Department of Labor and the state’s independent U.S. Sen. Bernie Sanders are asking the federal labor department to amend the approval issued earlier this month to include workers from the IBM campus in Essex Junction.

    Labor Commissioner Annie Noonan said in a Thursday release she didn’t know why the Essex Junction workers weren’t included in the Trade Adjustment Assistance ruling. So she said her department is looking for information from displaced workers to support the amended petition

    Sanders said he was dismayed the Essex Junction workers weren’t included. ‘‘I strongly believe all of these workers deserve to receive Trade Adjustment Assistance and I will pursue this matter vigorously,’’ Sanders said.

    Sanders issued a statement on Thursday in reaction to the partial approval: “I appreciate that the U.S. Department of Labor ruled on behalf of IBM’s Williston workers. I am dismayed, however, they have not yet ruled in favor of those Vermonters who worked on the Essex Junction campus. My office has contacted the Department of Labor to express our strong support for all of these employees who have lost their jobs at IBM. I strongly believe all of these workers deserve to receive this Trade Adjustment Assistance and I will pursue this matter vigorously.”

  • Burlington Free-Press: Feds help Williston IBMers, but not those in Essex Junction. State perplexed by federal decision to extend assistance to only 115 of 419 IBM workers who lost their jobs this summer. By Dan D’Ambrosio. Excerpts: The Vermont Department of Labor has gotten federal help for some, but not all, of the workers let go by IBM in Essex Junction and Williston this summer.

    The training and income assistance, offered by the U.S. Department of Labor to workers whose jobs are lost “as a result of companies shipping U.S. jobs overseas,” Sen. Bernie Sanders, I-Vt., said in a statement, is known as the Trade Adjustment Assistance program.

    The VDOL filed a petition on June 21 on behalf of all 419 IBM employees who lost their jobs this summer. On Dec. 4, federal officials approved the request for 115 IBM workers on the company’s Williston campus, but not for the 304 workers on the Essex Junction campus.

  • Winston-Salem Journal: PepsiCo transfers 260 workers to IBM. By Richard Craver. Excerpts: PepsiCo Inc.’s decision to expand its call-center presence in Winston-Salem in November 2010 was greeted with great fanfare and a combined pledge of $800,000 in local and state incentives.

    Fast forward three years, and the Pepsi Beverage expansion has taken a surprising workforce twist.

    About 260 full-time employees – nearly one-fourth of the division’s 1,110 local workforce – were transferred Nov. 15 to IBM as part of PepsiCo outsourcing certain financial-services operations under a seven-year contract.

    PepsiCo also may have become another example of the limited impact of economic incentives since the company never signed the local and state contracts it sought so intently. ...

    PepsiCo said in a statement Thursday that “transitioning these shared services positions from PepsiCo to IBM was made with careful consideration. This transition will enable us to stay competitive and better meet the needs of our business. There has been no net impact on local employment.”

    However, employees who declined the IBM work offer were let go, although they could apply for future PepsiCo job openings as external candidates. ...

    Several new IBM employees expressed concern to the Journal that their jobs could be transferred again to offshore IBM facilities. They said they were told they would be taking a 10 percent pay cut, effective in January, and that any full-time staff that left employment would be replaced by contract employees.

    The employees are not identified for fear their jobs might be compromised.

    PepsiCo deferred comment on the IBM workforce to IBM.

    IBM spokeswoman Trink Guarino said it is company policy not to discuss employee numbers “anytime, anywhere.”

    “We are a global company with global sourcing options,” she said. “This agreement has just been reached and being sorted out.”

    In the PepsiCo employee memo explain the outsourcing, it said “IBM determines workforce requirements based upon business needs. The company does not discuss layoffs prior to the time a final decision is made.” ...

    Boyd said bringing jobs back to the U.S. “is not a dominant trend” within the call-center sector.

    “This contrasts with the manufacturing arena, where falling U.S. energy costs, skyrocketing factory wages in China and costly and over-extended supply chains are all strong currents helping to wash manufacturing jobs back to U.S. shores.”

    By contrast, Boyd defined the outsourced PepsiCo jogs as “mid-level customer service functions” that IBM, with its global reach, can quickly and easily outsource anywhere around the world

  • Business Insider: Shareholder Sues IBM For Allegedly Hiding China Risks Amid NSA Spying Scandal. By Jonathan Stempel. Excerpts: IBM Corp has been sued by a shareholder who accused it of concealing how its ties to what became a major U.S. spying scandal reduced business in China and ultimately caused its market value to plunge more than $12 billion.

    IBM lobbied Congress hard to pass a law letting it share personal data of customers in China and elsewhere with the U.S. National Security Agency in a bid to protect its intellectual property rights, according to a complaint filed in the U.S. District Court in Manhattan.

    The plaintiff in the complaint, Louisiana Sheriffs' Pension & Relief Fund, said this threatened IBM hardware sales in China, particularly given a program known as Prism that let the NSA spy on that country through technology companies such as IBM. ...

    The lawsuit names IBM, Chief Executive Virginia Rometty and Chief Financial Officer Mark Loughridge as defendants, and says they should be held liable for the company's failure to reveal sooner the risks of its lobbying and its NSA ties.

    "These allegations are ludicrous and irresponsible and IBM will vigorously defend itself in court," IBM spokesman Doug Shelton said in an e-mail.

  • The Sydney Morning Herald (Australia): Myer website crashes during Boxing Day sale. By Ruth Liew. Excerpts: Myer chief Bernie Brookes has apologised to angry online customers who were stonewalled by the retailer's crashed website on the busiest shopping day of the year. Mr Brookes, the outgoing chief of Australia's biggest department store group, said the company was ''really disappointed'' that its website suffered technical difficulties and prevented online purchases.

    ''We've upset quite a few of our online shoppers, and we really apologise for that. We expect to have it [the website] up in the next couple of hours, maybe earlier,'' Mr Brookes told Fairfax Media on Boxing Day. ...

    Myer has pumped tens of millions of dollars into improving its website and online sales functions in previous years, as a growing number of customers opt to buy online. ...

    ''Both IBM internationally and in Australia, and most of our IT team, are working furiously to get it right,'' Mr Brookes said. ''There's 27 days of stocktake sale and there's $175 million worth of stock, so we don't expect our customers to miss out. Of course it doesn't excuse the fact that there's a software error.''

  • The Fiscal Times: How the Right Corporate Culture Can Guarantee Success. By Maureen Mackey. Excerpts: One thing is for sure: Whatever the culture, it matters. “A successful culture is like a greenhouse where people and ideas can flourish,” said Bryant. “It’s where everybody in the organization feels encouraged to speak frankly and is rewarded for sharing ideas about new products, more efficient processes, and better ways to serve customers.” ...

    A successful culture ensures that all employees are treated with respect. Think this is pie in the sky, just words on a page? It ain’t necessarily so.

    “I talked to David Rock, director of the NeuroLeadership Institute, about the impact of being treated with disrespect by colleagues,” said Bryant. “He explained that the experience fires up the same part of the brain as if you were sticking your hand on a hotplate. You tend to forget physical pain over time – but if you’ve ever been humiliated by a boss in front of other people, you remember it like it was yesterday. And every time you remember it, it’s as if you’re experiencing it again.

    “If managers don’t treat their people with respect, those employees go to work in a defensive crouch in order to protect themselves,” said Bryant - hardly the way to get the best out of people.

    Even more compelling in today’s tech reality: “Everybody’s fighting for the most talented engineers, the best coders. CEOs need to ask themselves, How do I create a great work environment where people want to stay? If you treat workers badly, they’ll turn to those ten job offers and grab one of them. Companies must be more thoughtful about their people. Besides – the generation coming up is not going to put up with anything less.”

  • Glassdoor IBM reviews. Selected reviews follow:
    • A frustrating post acquisition process.” Anonymous Employee (Former Employee). I worked at IBM full-time for more than 3 years. Pros: Brand recognition, history, past stability. Cons: IBM has an incredible amount of bureaucracy, process and overhead. The things needed by a team to bring their software to market are often wildly decentralized into sub-kingdoms that have the ability to halt progress of inconsequential technicalities. It is largely a company run by legal, finance, and self-declared process. Advice to Senior Management: Shake it up; get back to innovation and place all decision making needed to execute within the teams/groups. Empower the teams to make things happen, and get out of their way when they do. Do not manage the business through constant fear of taking chances or risk. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • Good company—all about the stockholders.” Software Developer (Former Employee). I worked at IBM full-time for more than 8 years. Pros: Compensation, work/life balance, supportive of telecommute, decent benefits. Cons: Offshoring, higher-paid folks are targeted for layoffs. Commonplace to see Peter-Principal upper level management. Yes, I would recommend this company to a friend.
    • Crappy Company” Senior Software Engineer (Current Employee), Bangalore (India). I have been working at IBM full-time for more than 5 years. Pros: Can have a very comfortable life with minimum stress and work max 1-2 hours per day. Cons: Need to lick boots to survive...actual productivity does not matter relation ship with boss, manager, language / regional background matters. Advice to Senior Management: It's useless. No, I would not recommend this company to a friend.
    • Only the top executives get ahead” Financial Analyst (Former Employee), Rochester, MN. I worked at IBM full-time for more than 5 years. Pros: Great learning experience was somewhat flexible. Cons: No compensation for extended overtime; pay under going rate compared to other same size employers; lack of opportunity to advance. Evaluations limited due to "IBM quota system". Age a factor to being employed here. Advice to Senior Management: Start caring about those that make this company run instead of lining your pockets at their expense. Morale was terrible and is getting worse No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • Not so good—no focus on people management whatsoever” Senior Engineer (Current Employee), Hopewell Junction, NY. I have been working at IBM full-time for more than 10 years. Pros: Decent salary, flexible work schedule. Cons: No focus on people management, too many managers or leaders interfering with actual work, bonuses not good, stock options very rare, atmosphere depressing, very limited career advancement opportunities. Advice to Senior Management: There needs to be some effort put in to trying to make employees happy/happier. Focusing only on technical issues is not enough. The technical work is the easiest thing to achieve - it is the communication between management and employees that seems to be severely broken. Management needs to understand that by the time someone comes with another offer in hand, it's usually too late to convince them to stay. In my case, it's not the money that has me upset—it's the total lack of respect for the employees that makes me angry. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • Working at IBM” Project Manager (Former Employee), Boulder, CO. I worked at IBM full-time for more than 10 years. Pros: Some of great things about working for IBM are the ability to work from home. I think this allows you to get online and check on projects or email anytime of the day or night. I liked working on a global team of great people. Cons: Some of the cons are working on internal accounts; they will do anything to save money including running outdated software on very old hardware and having you fix or make excuses for why this is okay. No recognition of band=aiding the old apps and hardware. Advice to Senior Management: When you move work to India, at least let the people go find other jobs internally, and don't say you do. It's wrong. I applied for over 100 positions after getting the release and not one call! Wrong! No, I would not recommend this company to a friend.
    • IBM BCRS is a good place to learn new things and prepare for a career path elsewhere.” UNIX Systems Administrator (Current Employee), Sterling Forest, NY. I have been working at IBM as a contractor for more than a year. Pros: Work with skilled professionals who are willing to teach. On-the-job training is standard and valuable. Possible to get hired with only a high school education. Possibility to work your way up from non-skilled to skilled positions. Lots of technology and the chance to learn by doing. Chance to learn customer support skills and work with a team. Looks good on the resume if/when you decide to move on.

      Overtime opportunities. If you are skilled, you may get called at home and get overtime pay.

      Well worth it if you don't have a job and can't find a better one elsewhere.

      Cons: No room for promotions. Salary increases are rare. Negative atmosphere, with many co-workers highly unsatisfied with the company. "Promotions" mainly happen when someone retires or dies. Company is not growing. Promotions generally consist of going from hourly to salaried for a 15% raise, then you end up working a lot of unpaid overtime.

      Company prefers to replace employees with contractors. Coming in as a contractor, IBM will not hire you directly until years after you've well-proven your skill and reliability. Going from contractor to IBMer is often a reduction in salary in exchange for better benefits. Skilled contractors get furlough (unpaid vacation) for a few weeks if BCRS doesn't meet their numbers. Unskilled contractors can get months of furlough.

      Skilled and experienced administrators tend to leave after only a few months for better pay elsewhere.

      BCRS is not growing; they are shrinking. They've laid off most people they could till it is mostly a skeleton crew, then hired a few to reduce disasters.

      Advice to Senior Management: I recommend recruiting workers directly from local colleges and high schools. Emphasize the on-the-job training and welcome unexperienced workers who are willing to learn. Recommend hiring interns, since many people don't stay long anyway. If possible, offer more opportunities for advancement.

    • Software Engineering Intern” Software Engineering Intern (Former Employee), Bucharest (Romania). I worked at IBM as an intern for less than a year. Pros: I love the fact that every task can be broken down to a series of smaller tasks which are then each solved and put back together for the overall solution. I also think it's great what we can work in just about every type of industry. I hate badly structured projects (code and phase-wise) and confusing POA.

      Cons: I have been with IBM since 2011. While it may be the workplace for some it is not fitting towards the environment that I wish to be in. Their learning resources are very limited due to the age gap of employees. Well seasoned employees retire before completing the training of new employees which leads to inadequate skill levels. The technology is very old and out dated, and as a developer you do not feel like you are contributing since the components are so separate from each other.

    • IBM microelectronics division” Anonymous Employee (Former Employee). I worked at IBM full-time for more than 10 years. Pros: Always working on something different. Always something new and exciting (exciting by engineers standards). The people there are great to work with. Cons: No job security. Lay-off occur all the time without warning and not much reason. Layoff are based on company performance and nothing at all with your performance or contribution.
  • Glassdoor IBM Canada reviews
  • AlterNet: 50 Is the New 65: Older Americans Are Getting Booted from Their Jobs -- and Denied New Opportunities. Age discrimination could be headed for you, sooner than you think.
New on the Alliance@IBM Site

Job Cut Reports

  • Comment 12/29/13: This article has been posted before, yet as an IBMer laid off in 2009 after 25 years (many in management) I was shocked by the insights in http://www.netnetweb.com/blog/top-10-reasons-why-ginni-rometty-will-fail-ibm%E2%80%99s-new-ceo. As for the continual and massive layoffs of IBM workers (especially in America), I believe #5 in the article is the #1 reason.

    What matters to the execs (any with a moral backbone are long gone by now) is making their short-term bonus objectives, regardless the long-term impacts on IBM. In an ongoing game of "chartsmanship," where execs, fed by their ambitions and greed, take any actions short of illegal or immoral ones to "make the numbers."

    We were once rewarded for providing outstanding customer service, thus we would "under promise" and "over deliver"; unlike today when the standard is to "over promise" and "under deliver." Short of an absolute miracle I see no chance of IBM becoming the great, customer-focused company it once was. -Laid-Off-in-2009-

News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
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  • Kaiser Health News: Consumers Beware: Not All Health Plans Cover A Doctor's Visit Before The Deductible Is Met. By Julie Appleby. Excerpts: If you buy one of the less expensive insurance plans sold through the health law’s marketplaces, you may be in for a surprise. Some plans will not pay for a doctor visit before you meet your annual deductible, which could be thousands of dollars.

    "This could be the next shoe to drop, as people don't realize that if they're buying a bronze plan, they may have to pay $5,000 out of pocket before it contributes a penny," said Carl McDonald, senior analyst with Citi Investment Research, speaking at a Washington, D.C., conference last month. ...

    Bronze and silver plans -- which have lower monthly costs but typically, higher deductibles -- are the most likely to require consumers to spend that amount themselves before the insurer pays any claims. There is no nationwide data on how many do that. But in seven major cities, half of bronze plans on average require policyholders meet the deductible before insurers help with the cost of a doctor visit, according to an analysis by eHealthinsurance.com, a private online marketplace, for Kaiser Health News. Patients in those plans who haven’t yet met their annual deductible would have to pay the full cost of the visit, unless it was for a preventive service mandated by the law. A typical office visit can run $65 to $85, while more complex visits can cost more. ...

    Meeting the deductible before most coverage kicks in is common in the individual market, but differs sharply from job-based health insurance. More than three-fourths of the insurance plans offered to Americans with coverage through their jobs pay a substantial chunk of the cost of doctor visits without the worker having to meet the annual deductible first, according to the annual survey of employers by the Kaiser Family Foundation. (KHN is an editorially independent program of the foundation.) ...

    Plans that list a price for a doctor visit followed by the phrase "after the deductible is met" mean the consumer must pay the full deductible before getting doctor visits for a small copayment. Additional information can be found by clicking the "details" button and reading the summary of benefits. Consumers can also call insurers directly or look up the information under the policy name on an insurers’ website.

  • The Denver Post: Colorado health exchange deluged with last-minute insurance buyers. By David Olinger. Excerpt: Connect for Health Colorado was deluged by procrastinators Monday who decided to buy private insurance under the federal Affordable Care Act. Monday was the deadline to obtain private policies, many subsidized by federal credits, that take effect Jan. 1. "We are experiencing very high volumes at our call center today," spokesman Ben Davis said.
  • Daily Kos: I signed up for health insurance, told my GOP Congressman about it, and made the local news. By foresterbob. Excerpts: My healthcare saga began in 2002. That’s the year that I left full-time employment and went into the cruel world on my own. No longer did I have a group plan selected by an employer. I had to shop for my own coverage. At first it was easy. When my COBRA coverage ended in 2003, I chose a $1,000-deductible plan that cost me about $210 per month. No big deal; I could easily afford it.

    But each year the dreaded renewal letter arrived, and the premiums increased by leaps and bounds. In years when my age was divisible by 5, the increases were stunning in their scope. I could do the math. Before long, the premiums would be beyond my ability to pay.

    I cheered when Obama was elected, and I cheered when Congress began to consider changes to our healthcare system. Then I watched in dismay as the debate wore on. Single payer was taken off the table, and the surviving proposals were watered down to suit the egos of various elected officials. The early provisions of the Affordable Care Act were of no help to me. Somehow, I needed to hold on until 2014. I didn’t make it that far.

    In early 2011, I was paying $463 per month for a plan with a $2,600 deductible. In eight years’ time, my premiums had more than doubled, and so had my deductible. But the big shock was yet to come. When my renewal letter arrived, I was politely informed to begin remitting $756 instead of $463 – a staggering 63% increase. My health insurance was going to cost more than my house payment! That was my line in the sand. I had told myself that I would drop my insurance if it ever got that expensive.

    Before letting go, I did two things. I went to my doctor for a thorough checkup, including a blood test. And I applied for a very-high-deductible plan that would keep my monthly payment in the $400 range. Given that I was still insured, the insurance folks got a copy of the blood test, which they proceeded to search line by line until they found something wrong with me. Out of two pages of data, there was a single thyroid reading was outside of “normal” range (side note: there’s nothing wrong with my thyroid; it was simply their excuse to make me pay that outrageous premium). They’d found their so-called preexisting condition, and denied me access to the new plan with the lower premium. With the help of my doctor, who wrote a letter on my behalf, I appealed.

    I still remember where I was when I got the phone call. I had just driven across the country to do forestry work in the Pacific Northwest for three months. It was an utterly miserable July day on the Olympic Peninsula of Washington. Rain was coming down, and all the trees and underbrush were soaking wet. Water was making its way through and around my rain gear. I’m about ten miles from the nearest cell tower, and barely had a signal. My appeal had been denied, said the distant voice. My choice was to pay the $756 premium or do without insurance. I said, “Terminate the policy.” ...

    With the plan chosen, I began the process of creating an account at healthcare.gov. As I progressed through the various steps, the system even located my paper application. Along the way, I was required to make several decisions. I was asked how much money I expect to earn in 2014. As an independent consultant, I can only guess. The earnings estimate is used to calculate your subsidy, but you are allowed to decrease the size of the subsidy you accept, in case your earnings turn out higher than expected. In my case, the subsidy was going to pay about two-thirds of my $570 monthly premium. I chose to err on the side of caution, selecting a $200 subsidy for a net cost of $370 per month. Once I made those decisions, I was set. In less than an hour, I had been approved for health insurance. ...

    As I began walking towards Rep. Scott, a reporter stopped me. Would I mind saying a few words into the camera, he asked. I told him that I wanted to talk to the Congressman first. I managed to be second in line to speak. He recognized me from the previous time. I was courteous, and as succinct as I could manage. My message was that the website that he had just maligned in his speech was now functioning. I had obtained health insurance for half of the cost of the plan that I dropped two and a half years ago. Rep. Scott admitted that one of his relatives had recently obtained lower-cost coverage, too. But he still thought that Obamacare is a mess and needs to be replaced with something else; and he referred back to the point he’d made in his speech about the five million people whose plans were cancelled, or had become much more expensive.

    I answered him thusly:

    Okay, you say that there are 5 million who are hurt in some manner by the ACA. What about the 40 or 50 million uninsured citizens, many of whom live in your district, who stand to benefit from the ACA as it is currently written? I’m one of those 50 million. Let’s make the law better instead of repealing it.
  • Washington Post: Shopping for health insurance is hard. Understanding it is even harder. By Sarah Kliff. Excerpts: Fewer than one in four uninsured Americans felt confident they understood nine basic insurance terms, like "premium," "coinsurance" and "maximum out-of-pocket" charges. For those who currently have coverage, that number hovered around 49 percent, with just fewer than half of those holding policies right now feeling like they had a good handle on these nine terms. ...

    Researchers found in this study, which relied on a sample of over 7,000 non-elderly adults both with and without insurance, that many struggled with these nine health insurance terms.

  • Washington Post editorial: The Affordable Care Act’s free-market economics. First, President Obama’s Affordable Care Act (ACA) forced millions to switch their insurance plans. Now, critics say, those people can’t keep their doctors, either. Another broken promise? More proof the ACA is a disaster?

    Not quite: As with all of those canceled policies, this “outrage” isn’t good evidence that the law is flawed, no matter what the president may have promised.

    The issue is that some of the people who must switch health plans are transitioning into policies with narrow networks that don’t always include the doctors, hospitals and other providers they used before. Anecdotes have emerged of people parting with physicians they’ve trusted for years.

    Yet, even for people who have never switched plans, this sort of thing happened well before the ACA; insurers constantly negotiate with providers over inclusion in coverage networks and payment rates. Doing so is one way insurers can keep costs down in the individual insurance market. In the past, other ways to control costs included skimping on benefits and turning away the sick and the old. Now, the ACA is about to stop the last two practices, a key, and popular, feature of the law. That leaves trimming provider networks as one of the last tools open to insurers to restrain premiums. ...

    The ACA won’t leave everyone better off. There will be a few people who will end up having to pay more than they used to for access to networks of comparable size. There are also some places that don’t have enough competitors in the marketplace, which means some people won’t have every option.

    Still, Republicans, many of whom claim to favor market approaches to expanding health-care coverage but oppose excluding patients with preexisting conditions, can’t credibly balk at the natural results of competition organized under those very principles. No one can expect low premiums and near-unlimited service, particularly in a system designed to spread costs around so that the sick and the old can finally obtain decent health coverage from private insurers. That’s not a mistake. It’s economics.

  • Washington Post: Beneath health law’s botched rollout is basic benefit for millions of uninsured Americans. By Lena H. Sun and Amy Goldstein. Excerpts: Adam Peterson’s life is about to change. For the first time in years, he is planning to do things he could not have imagined. He intends to have surgery to remove his gallbladder, an operation he needs to avoid another trip to the emergency room. And he’s looking forward to running a marathon in mid-January along the California coast without constant anxiety about what might happen if he gets injured.

    These plans are possible, says Peterson, who turned 50 this year and co-manages a financial services firm in Champaign, Ill., because of a piece of plastic the size of a credit card that arrived in the mail the other day: a health insurance card.

    Peterson is among the millions of uninsured Americans who are benefiting from the Affordable Care Act, the 2010 law that launched far-reaching changes to the U.S. health-care system and is President Obama’s premier domestic achievement. ...

    And as New Year’s Day approaches, and with it, health insurance, their frustration is trumped by gratitude. “I get these messages from acquaintances on Facebook saying, ‘Let me keep my doctor,’ ’’ Peterson said. “Well, what about those of us who didn’t have health insurance before? . . . I have been walking a tightrope and have had some twists and falls off of it. To not have to worry about this anymore is a tremendous relief.” ...

    Getting Americans health insurance is at the heart of the health law, the most significant change in health-care policy since the 1965 creation of Medicare, the federal program for the elderly, and Medicaid, the federal-state program for the poor and disabled. Such a dramatic expansion in coverage had eluded presidents, including Republican Richard Nixon and Democrat Bill Clinton, for decades. ...

    Amy Torregrossa is 27, lives in San Francisco and creates Web tools for political candidates. She has been without insurance only since July, when coverage through her boyfriend’s company ended because he changed jobs. In the months since then, Torregrossa has found that “it’s really scary to not be covered.” She has a congenital heart defect and a history of high blood pressure. She no longer runs, she said, because “if I twist my ankle or get hit by a car . . . any doctor visit is so expensive.”

    When California’s insurance exchange opened Oct. 1, she was among the first to sign up, picking a $310 silver plan. She made sure her cardiologist was in the insurer’s network and plans to schedule a checkup for early next year. ...

    For Adam Peterson, awaiting gallbladder surgery in Illinois, the dark tunnel without insurance began about six years ago, when he decided to forgo health coverage because he needed the cash to set up his financial services business. The cost of that decision hit home in March, when the emergency surgery to remove a gallstone cost him $27,000.

    When he went to HealthCare.gov this fall, the online system at first balked at verifying his identity — an essential step. It took a few calls to a help line before anyone called back. But just before Thanksgiving, he managed to enroll in a top-tier plan with a monthly premium of $475.

  • The Commonwealth Fund: What’s Behind Health Insurance Rate Increases? (PDF) An Examination of What Insurers Reported to the Federal Government in 2012–2013. By Michael J. Mccue and Mark A. Hall. Abstract: The Affordable Care Act requires health insurers to justify rate increases of 10 percent or more for nongrandfathered plans in the individual and small-group markets. Analyzing these filings for rates taking effect from mid-2012 through mid-2013, insurers attributed the great bulk—three-quarters or more—of these larger rate increases to routine factors such as trends in medical costs. Insurers attributed only a very small portion of these medical cost trends to factors related to the Affordable Care Act. The ACA-related factor mentioned most often, but only in a third of the rate filings in this study, was the requirement to cover women’s preventive and contraceptive services without patient cost sharing. But, the insurers who point to this requirement or other ACA-related costs attributed only about 1 percentage point of their rate increases to the health reform law.
  • New York Times: Placing Odds on Your Health (and Its Cost). By Anna Bernasek. Excerpts: What is the chance that you will rack up big health care bills in 2014?

    For the typical American adult under 65 who does not have health insurance, the total of all health care bills would be $2,700. That’s according to calculations by Milliman, an actuarial firm.

    The obvious problem is that you can’t know in advance if your costs for the year will be typical. If you are unfortunate enough to have a costly medical problem, you could end up with far higher bills. Milliman calculated that 5 percent of the population will incur bills, absent insurance, exceeding $47,300.

  • New York Times: 2 States May Seek Refunds From Health Site Creator. By Rick Lyman. Excerpts: Two states that hired the same lead contractor to build their online marketplaces for health insurance under President Obama’s Affordable Care Act have experienced so many problems and delays that they are threatening to withhold millions of dollars in payments to the company and even seek refunds.

    Massachusetts health officials said they will meet in early January to decide whether to suspend payments to the company, CGI Federal, which has also been criticized — and questioned during a congressional hearing — for its central role in building the problem-plagued federal health insurance exchange. The state may also seek a refund from the firm, which is an American subsidiary of the Canadian-based CGI Group.

    Already, Vermont has refused to pay $5.1 million of its contract with the company and is trying to get hundreds of thousands of dollars refunded. The two states’ problems with CGI were reported by The Boston Globe.

News and Opinion Concerning the "War on the Middle Class"
Minimize "It is a restatement of laissez-faire-let things take their natural course without government interference. If people manage to become prosperous, good. If they starve, or have no place to live, or no money to pay medical bills, they have only themselves to blame; it is not the responsibility of society. We mustn't make people dependent on government- it is bad for them, the argument goes. Better hunger than dependency, better sickness than dependency."

"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.

  • New York Times: Inequality for Dummies. By Bill Keller. Excerpts: For starters, economic inequality is manifestly real, growing and dangerous. The gulf between the penthouse and the projects is obscenely wide. Obama cited some of the startling numbers: The top 10 percent of Americans used to take in a third of the national income. Now they gobble up half. The typical corporate C.E.O. used to make 30 times as much as the average worker. Now the boss makes 270 times as much as the minion. Many factors have led to this trend, including the offshoring of work to low-paid foreign labor, the automation of everything from manufacturing to meter-reading, a tax code that allows the accumulation of riches at the top, the slow growth of educational attainment, the demise of strong unions, a collapse of the social contract.

    The alarming thing is not inequality per se, but immobility. It’s not just that we have too many poor people, but that they are stranded in poverty with long odds against getting out. The rich (and their children) stay rich, the poor (and their children) stay poor. President Obama’s speech on Dec. 4, widely characterized as his inequality speech, was actually billed by the White House as a speech on economic mobility. The equality he urged us to strive for was not equality of wealth but equality of opportunity.

    A stratified society in which the bottom and top are mostly locked in place is not just morally offensive; it is unstable. Recessions are more frequent in such countries. A widely praised 2012 book, “Why Nations Fail,” argues that historically when the ruling elites have pulled up the ladder and kept newcomers from getting a foothold, their economies have suffocated and died. “The most pernicious fact of inequality is when it translates into political inequality,” said Daron Acemoglu, a co-author of the book and a Massachusetts Institute of Technology economist. “That means our democracy ceases to function because some people have so much money they command greater power.” The rich spend heavily on lobbyists and campaign donations to secure tax breaks and tariff advantages and bailouts that perpetuate their status. Not only does a dynamic economy stagnate, but the left-out citizenry becomes disillusioned and cynical. Sound familiar?

  • New York Times opinion: The Plight of the Employed. By Paul Krugman. Excerpts: Mike Konczal writes about how Washington has lost interest in the unemployed, and what a scandal that is. He also, however, makes an important point that I suspect plays a significant role in the political economy of this scandal: these are lousy times for the employed, too.

    Why? Because they have so little bargaining power. Leave or lose your job, and the chances of getting another comparable job, or any job at all, are definitely not good. And workers know it: quit rates, the percentage of workers voluntarily leaving jobs, remain far below pre-crisis levels, and very very far below what they were in the true boom economy of the late 90s...

    Now, you may believe that employment is a market relationship like any other — there’s a buyer and a seller, and it’s just a matter of mutual consent. You may also believe in Santa Claus. The truth is that employment is, in many though not all cases, a power relationship. In good economic times, or where workers’ position is protected by legal restraints and/or strong unions, that relationship may be relatively symmetric. In times like these, it’s hugely asymmetric: employers and employees alike know that workers are easy to replace, lost jobs very hard to replace.

    And may I suggest that employers, although they’ll never say so in public, like this situation? That is, there’s a significant upside to them from the still-weak economy. I don’t think I’d go so far as to say that there’s a deliberate effort to keep the economy weak; but corporate America certainly isn’t feeling much pain, and the plight of workers is actually a plus from their point of view.

  • The Guardian: ALEC calls for penalties on 'freerider' homeowners in assault on clean energy. By Suzanne Goldenberg and Ed Pilkington. Excerpts: An alliance of corporations and conservative activists is mobilising to penalise homeowners who install their own solar panels – casting them as "freeriders" – in a sweeping new offensive against renewable energy, the Guardian has learned.

    Over the coming year, the American Legislative Exchange Council (Alec) will promote legislation with goals ranging from penalising individual homeowners and weakening state clean energy regulations, to blocking the Environmental Protection Agency, which is Barack Obama's main channel for climate action. ...

    Eick told the Guardian the group would be looking closely in the coming year at how individual homeowners with solar panels are compensated for feeding surplus electricity back into the grid.

    "This is an issue we are going to be exploring," Eick said. He said Alec wanted to lower the rate electricity companies pay homeowners for direct power generation – and maybe even charge homeowners for feeding power into the grid.

    "As it stands now, those direct generation customers are essentially freeriders on the system. They are not paying for the infrastructure they are using. In effect, all the other non direct generation customers are being penalised," he said.

    Eick dismissed the suggestion that individuals who buy and install home-based solar panels had made such investments. "How are they going to get that electricity from their solar panel to somebody else's house?" he said. "They should be paying to distribute the surplus electricity."

    In November, Arizona became the first state to charge customers for installing solar panels. The fee, which works out to about $5 a month for the average homeowner, was far lower than that sought by the main electricity company, which was seeking to add up to $100 a month to customers' bills.

  • Wall Street Journal: Big Rally to Pump Up Wall Street Bonuses. By Justin Baer And Julie Steinberg.
  • New York Times opinion: Why Corporations Might Not Mind Moderate Depression. By Paul Krugman. Excerpts: A lot people have the instinctive reaction that it can’t be possible — that businesses would prefer to have stronger demand, even if it means that they have to pay their workers more and treat them better. And maybe that’s true. But it’s by no means an open-and-shut case. ...

    You see, from a profits point of view it’s not a depressed economy at all. Look at profits versus compensation of employees (that’s wages and benefits combined) since the slump began at the end of 2007; both are expressed as indexes with 2007Q4=100...

    Profits took a hit during the financial crisis, but have soared since then, and are now 60 percent above pre-crisis levels; meanwhile compensation has grown hardly at all, and indeed fallen in real per capita terms.

    The point is that we have a depressed economy for workers, but not at all for corporations. How much of this is due to the bargaining-power issue is obviously something we don’t know, but the disconnect between the economy at large and profits is undeniable. A depressed economy may or may not actually be good for corporations, but it evidently doesn’t hurt them much.

    Now, about the political economy: I don’t think we have to believe in a cabal of CEOs trying to keep the economy depressed. All that we need is for the big money to find the state of the economy OK from its point of view, so that politicians who listen to that money lose interest in the unemployed. You can round up a who’s who of CEOs for Fix the Debt; you can’t even get started on a power-list drive to Fix the Economy. And so it remains unfixed.

  • New York Times: Cook Islands, a Paradise of Untouchable Assets. By Leslie Wayne. Excerpts: Picture a paradise where you can be lawsuit-proof. A place to hide your hard-earned assets far from the grasp of former or soon-to-be-former spouses, angry business partners or, if you happen to be a doctor, patients who might sue you.

    Lawyers drumming up business say they have found just the place: the Cook Islands. And, thanks to a recently released trove of documents, it’s become clear that hundreds of wealthy people have stashed their money there, including a felon who ran a $7 billion Ponzi scheme and the doctor who lost his license in the Octomom case. ...

    The Cayman Islands, Switzerland and the British Virgin Islands capture headlines for laws and tax rates that allow multinational corporations and the rich to shelter income from the American government. The Cook Islands offer a different form of secrecy. The long arm of United States law does not reach there. The Cooks generally disregard foreign court orders, making it easier to keep assets from creditors, or anyone else. ...

    A close study of the Cook Islands documents by The New York Times and the international consortium shows that these trusts are popular with the wealthy in Palm Beach, Fla., New York and Hollywood. The trust owners include people who have been convicted of Medicaid fraud, Ponzi schemes and bilking employee pension funds. Many others are simply rich.

    The documents described a Cook trust held by Denise Rich, former wife of the disgraced trader Marc Rich, who was pardoned on the last day of the Clinton presidency. Her trust contained more than $100 million in assets, including her yacht, the 157-foot Lady Joy; a Learjet 60; and a Swiss bank account. In addition, more than $116 million in assets of the Cordish family of Baltimore, which owns one of the nation’s largest privately held real estate conglomerates, were held in Cook trusts. ...

    There is also Dr. James Naples, a Texas podiatrist who pleaded guilty in 2004 to federal charges of obstructing justice in connection with treating cancer patients with a pesticide and then billing Medicare and insurance companies. Another Cook trust holder is Dr. Richard Edison, a Fort Lauderdale, Fla., plastic surgeon, called “Dr. Dread,” who was sued after five patients at his Florida plastic surgery clinic died and he left a medical sponge in a woman’s breast. After the 2004 death of a patient, the Florida health department restricted his medical license.

  • Washington Post: GRAT shelters: An accidental tax break for America’s wealthiest. By Zachary R. Mider. Excerpts: Sheldon Adelson makes no secret of his disdain for the estate tax. ...

    A gravel-voiced man whose accent recalls his blue-collar Boston roots, Adelson, 80, has just rung the bell at the New York Stock Exchange. Shares of his Las Vegas Sands Corp. are at a five-year high, making him one of the world’s richest men, worth more than $30 billion.

    Federal law requires billionaires such as Adelson who want to leave fortunes to their children to pay estate or gift taxes of 40 percent on those assets. Adelson has blunted that bite by exploiting a loophole that Congress unintentionally created and that the Internal Revenue Service unsuccessfully challenged.

    By shuffling his company stock in and out of more than 30 trusts, he has given his heirs at least $7.9 billion while legally avoiding about $2.8 billion in U.S. gift taxes since 2010, according to calculations based on data in Adelson’s filings with the Securities and Exchange Commission.

    Hundreds of executives have used the technique, SEC filings show. These tax shelters may have cost the federal government more than $100 billion since 2000, says Richard Covey, the lawyer who pioneered the maneuver. That’s equivalent to about one-third of all estate and gift taxes the nation has collected since then.

    The popularity of the shelter, known as the Walton grantor retained annuity trust, or GRAT, shows how easy it is for the wealthy to bypass estate and gift taxes. Even Covey says the practice, which involves rapidly churning assets into and out of trusts, makes a mockery of the tax code.

    “You can certainly say we can’t let this keep going if we’re going to have a sound system,” he says with a shrug. ...

    Goldman Sachs disclosed in a 2004 filing that 84 of the firm’s current and former partners used GRATs. Blankfein has transferred more than $50 million to family members with little or no gift tax due, according to calculations based on his SEC filings.

If you hire good people and treat them well, they will try to do a good job. They will stimulate one another by their vigor and example. They will set a fast pace for themselves. Then if they are well led and occasionally inspired, if they understand what the company is trying to do and know they will share in its sucess, they will contribute in a major way. The customer will get the superior service he is looking for. The result is profit to customers, employees, and to stcckholders. —Thomas J. Watson, Jr., from A Business and Its Beliefs: The Ideas That Helped Build IBM.

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