Put Financial Miscreants in Jail

The Justice Department is a squalid, incompetent mess.  It was this way long before Eric Holder, who has disappointed me greatly by not resigning in the second term.  His pusillanimous colleagues in the banking regulatory system are also wonders to behold.  I thought Elizabeth Warren was just great the other day.

http://www.huffingtonpost.com/2013/02/14/elizabeth-warren-bank-regulators_n_2688998.html

The latest publicity concerns what to do when big banks break the law – which of course they do every day, given the hapless state of Justice, SEC, and other regulators.  As Warren pointed out, are the big banks too big to take to trial?  The Fiscal Times today points out that prosecutors are loath to take the big banks on because, for one thing, they don’t want to upset the financial system!  For another, they worry about jobs lost if a bank should fail.  Funny, no one worries about job losses when they prosecute the mafia – and what’s the big difference?

http://www.thefiscaltimes.com/Columns/2013/02/19/Confessions-of-a-Barclays-Banker-Whos-Seen-the-Light.aspx#page1

It’s one thing to charge a bank and get financial compensation for misdeeds – which comes from the shareholders, who are themselves unable to affect the situation.  But true deterrence comes from what happens to the individuals who participate in the misconduct.  The prospect of being jailed should help to concentrate the mind.  Jail terms are what the Justice incompetents need to pursue.  Not being a lawyer, I don’t know, it could be a question of the laws – probably is.  But then the laws need to be changed.

Call me simplistic.  But I’d like to see Obama arise and say, banks commit a lot of felonies.  It is the role of government to pursue them, and to take the individual who commit them, and throw them in jail.  Let’s pass laws that enable us to do that.

I am simplistic, sure I am.  But wouldn’t that be great to hear?

As a student of organizations, I weigh organizational vs. individual activity and responsibility all the time.  It’s so sophisticated to say, “That’s the organizational culture.”  It’s a true statement.  But it is individuals who act within those organizations and who choose to conform to the culture.  Its called Freedom of Choice.  I say, let’s reward poor use of Freedom of Choice with reduced freedom to walk around.  Then let’s see what happens to corporate culture.  It won’t be simple, for sure, but it would be a good start for change.

Let’s concentrate some minds.

Budd Shenkin

Dateline Singapore

2-9-13, getting set to ring in the Year of the Snake here in Singapore, where the majority ethnicity is Chinese.  The Prime Minister gave his speech on the population White Paper yesterday in English (Singapore English is know locally as Singlish), Mandarin Chinese, and Malay.  Malaysians are the second largest group, and Indians the third.  Looks like England left their language, some buildings, Raffles Hotel, but not their countrymen.  We’ll learn more about that tomorrow or the next day at the National Museum, I expect.

We’re here purely as tourists.  We’ve heard only the slightly defamatory slights of Singapore as “tidy” and “clean,” with there being something untoward about prosecuting illegal drug use avidly (OK, I share that) and chewing gum, too.  But then in China, how about all the spitting in the streets, and kids being carried around with their bare bottoms hanging out?  Personally, I’ll take the ban on gum.

I didn’t know what I’d find here, but it reminds me of the future.  Very dense population in high-rises, blocks of apartments with buildings called “flats” with apartments of maybe 1,300 square feet.  I heard on a podcast today, just incidentally, that Singapore and Finland have some of the world’s best schools.  I read in the White Paper that they are trying to forecast demography, how many people should be here.  There are now about 5.8 million I think; they are forecasting something less than 6.9 million by 2020.  Wisely, they say after that they’ll have to revisit the number because the future beyond then is too vague.  They talk about he need for a Singaporan identity, which they have, but the need to be inclusive of immigrants, emigrants who return, and all groups.  Since they are diverse, they feel the need to work on this.

It reminds me of Sweden.  About the same number of people as when I was in Sweden in 1971-2, an advanced country with a small population, and the felt need to hang together and plan without sentimentality, to pick their spots, their strengths, and to aspire to a certain equality within.  The Prime Minister said they shouldn’t grow at any cost, but that they do need to grow, because how else to make the poor less poor?  No one can expect people to give up what they already have, so the pie needs to grow.  It’s a good size for a country – very controllable.  Sweden is very large, but homogeneous, which makes coherence possible.  Singapore is very small, so even if it is heterogeneous, being small, coherence is also possible.  Imagine if Singapore were burdened with the whole rural countryside of Malaysia – the possibility of focus would be so different.

I’m also wondering about Dubai, also a small city-state, and quite controllable – are they using Singapore as an example?  Do they think the Middle East needs a central spot for finance and trade, as Singapore has provided for the Far East?  Turkey is another candidate for a central trading country, but much different in size, with huge differences in culture between cities and rural areas, I think, and many far-flung towns and provincial cities that are much different from Istanbul.  But Turkey is growing very fast.  Enough about Turkey, it’s just another country on the rise in a key area, a crossroads of the world, like the Strait of Mallaca here at Singapore.

There is a theory that political organization is a major prerequisite for growth, with little corruption and the ability to rule reasonably, to protect property, and to give the possibility of success if it is earned.  Singapore gives that, and Sweden does, too.  There should also be the ability of a state to admit those of merit to the ruling and the wealthy class.  The White Paper dealt with that directly, saving that the government needs to protect the meritocracy.

And then there is the skyline – so many impressive buildings, futuristic which reminds me of the sailboat building in Dubai.  Large malls with lots of shops with luxury goods.  No messing around with public order in either place.

We chose to come here because it was on the way to Bali, and Ann wanted to fly Singapore Airlines, so we thought we’d stop a few days.  We had heard it was a sterile place.  So far, it doesn’t seem that way to me.  It’s interesting.

Budd Shenkin

Health News

For anyone who thought Obamacare meant an end to something, no way.  It did break a logjam in health policy, but there will be so much more to come.  Obamacare started out with an announced vision that it was health care costs that were hog tying American business - the old observation that 10% or so of the cost of a car went for health insurance.  But Obamacare then veered almost completely into universal coverage as the concern, and paid off the various constituencies that would have to have their ox gored in any significant cost savings reform -- hospitals, pharma, insurance companies, etc.

But we are now reaping the whirlwind.  We can't get universal coverage because costs are too high.  The fight will go on, and won't reach a significant conclusion until reorganization and cost control is accomplished.  I think it will take 20 years, with the next 10 being the biggest grind.

Also from the news - nurses against mandatory flu shots.  Ah, the nurses!  Our jobs first!  Health second!  True to form.  Even USA Today takes a better position!



The New York Times: A Cruel Blow To American Families
The Internal Revenue Service has issued a hugely disappointing ruling on how to calculate the affordability of health insurance offered by employers. Its needlessly strict interpretation of the Affordable Care Act could leave millions of Americans with modest incomes unable to afford family coverage under their employers’ health insurance but ineligible for subsidies to buy coverage elsewhere (2/2).
USA Today: Flu Vaccine Mandate Protects Patients' Rights: Our View
Because so many of the most susceptible people are in hospitals and long-term care facilities, it's imperative that health care workers not spread the infection. In too many places, however, too many workers are balking at flu shot requirements, with potentially tragic consequences (2/3).
USA Today: Forced Flu Shots Provide No Cure: Opposing View
America's nurses strongly encourage health care workers and patients to get vaccinated. But nurses, joined by many physician organizations and researchers, reject the notion that vaccination is a fail-safe solution to prevent the spread of the flu virus. We oppose forced vaccinations or the related mandate that those who decline the shots must wear masks or risk losing their jobs (Karen Higgins, 2/3).

High Deductible Health Plans - 700 words of wisdom

Last month I posted a 4,000 word article on HDHPs.  Since then I have written a different article with the same message of only 700 words.  Here it is.

 

Obamacare – In Danger of Failing The Middle Class

The mantra of the Obama Administration has become, “help the middle class.”  Obamacare has already done that in many ways – kids on parents’ insurance policies, no preexisting conditions exclusion, etc.  But next year could be a problem, when those currently uninsured will become insured. 

The near-poor will be fine – they will receive Medicaid at no cost to themselves, with comprehensive benefits and no deductibles and no copays.  The problem will be with those just above them in income.  Yes, they will be insured, but the insurance many of them receive will likely be High Deductible Health Plans, born in 2003 under the Bush Administration, with terms so onerous that the middle class will continue to suffer.

HDHPs became popular because reforms that would lower costs by increasing efficiency would require cooperation among several elements supplying medical care – insurance companies, hospitals, medical specialists, durable supply makers, etc.  And since one element’s inefficiency is another’s paycheck, not much has gotten done. 

So to keep their health insurance costs down, employers have had to purchase HDHPs for their employees.  Premiums have decreased, yes, but only because much of the costs have been transferred to the least powerful element of the health care system – the patient.  Each year patients with HDHPs have to pay at least the first $1,200 per person or $2,400 per family out of pocket, except for preventive services.  The yearly limits on expenditures max out at $6,050 per person or $12,100 per family, on top of the cost of the insurance premiums. These huge costs could be a disaster for the very citizens the Obama Administration most wants to help survive and prosper.

HDHPs are bad health policy.  Yes, costs recede, but only because patients receive less care as they are dissuaded by price from visiting the doctor.  Early detection of illness is thus defeated, and screening tests and immunizations are neglected (even though the deductible doesn’t apply to prevention – people simply decrease their use of everything under HDHPs.)  

In addition, HDHPs do not attack the most excessively priced and excessively utilized health care areas – hospital care, specialist care, technological tests and procedures.  Instead, HDHPs seek to minimize utilization of the biggest bargain in medicine, primary care.  Research shows that 80% of costs are racked up by 20% of families, mostly in hospitals.  Research also shows that to drive down the costs of these 20% we need more, not less, primary care.  Yet HDHPs cut away primary care muscle and leave the overpriced fat.

Moreover, HDHPs promote what is called “adverse selection” of patients.  The healthier and wealthier “cream” of the population will choose HDHPs, figuring they will probably not need much care.  They thus leave the pool of conventional insurance, which means the costs of conventional insurance rises, and those with chronic diseases – asthma, diabetes, cancer, etc. – wind up paying more.

There is still a chance to change this picture.  Deductibles, copays, and maximum expenditures could be reduced, or made non-applicable to primary care visits.   Price competition could be introduced for hospitals only, or for procedures – some insurance companies are already starting to do this.  Yes, costs need to be reduced, but HDHPs look for savings in all the wrong places, simply because of political expedience. 

If nothing is done, consider this scenario for a family with a sick child.  A financially well-off family will go to the clinician with little impact on their finances.  A family on Medicaid will go to the clinician with no charge.  But a working or middle class family with an HDHP policy will have to think long and hard before making the wrenching decision whether or not the child is “$100 sick,” with possibly hundreds of dollars more to follow in tests ordered by the clinician.

Reducing the cost of health care is difficult because inevitably someone’s ox will be gored.  But strong executive action can achieve lower costs with better quality, without victimizing the working and middle classes yet again.  HDHPs need to be recognized for what they are – the detritus left behind by conservative economists and the Bush Administration.  They need to be either left behind, or revised beyond the point of recognition.

Budd Shenkin, MD, MAPA