PETER R. MACK & CO. INC.
MEMBER FINRA/SIPC
19 EAST 71ST STREET, SUITE 3
NEW YORK, NY 10021
TEL: (212) 744-3939 FAX (212) 744-8484
E-MAIL: PRMCO@AOL.COM
NOTES FROM THE FRONT
September 3, 2009
SAILING WITH TEDDY
Just about 16 years ago in
August of 1993, early in the days of Peter R. Mack & Co., Inc. I published Notes From the Front about my
expectations of the then new Clinton administration and their proposed new
health care reform legislation.
It seems like 1993 redux.
Barack Obama was inaugurated in January of this year and is vacationing at Cape
Cod. Bill Clinton had been inaugurated in January of 1993 and was also
vacationing at the Cape. Just like Bill, who faced a determined Republican
party opposed to health care reform, portrayed in the fictional TV characters
Harry and Louise, Barack is also mired in an endless and confusing debate about
reforming health care, meeting tremendous opposition from the traditional
forces of status quo, as well as from renegade Senatorial and House members of
his own party. The Republican Senator DeMint of South Carolina has led the
charge with his statement that if they can defeat Obama on health care, they
will bring down his Presidency, just as Newt Gingrich in the spring of 1991
declared “the need for hard-line Republicans to begin positioning themselves
now to keep Democrats from winning in the future.”(PBS.org)
Some believe that because of
the failure of the Clintons’ initiative, the subject of health care reform
became a political deathtrap for the Democratic Party, dooming the subject from
consideration for sixteen years.
I remember quite distinctly,
and now with great sadness, the widely-published news photo of Bill and Hillary
sailing with Teddy Kennedy and his wife Vickie, and Jackie O., on the calm waters
of Nantucket Sound. Teddy, it was known, loved sailing, finding calm in the
silent power of the wind and traveling by compass. It gave me a thrill back
then to see them all together, with so much optimism invested in Bill and
Hillary and the promise of change, and the iconic photo of the passing of the
torch from one leading political family to another. One could not see or
especially hear Teddy’s voice without arousing the good, though painful,
memories of Jack or Bobby.
In the intervening years, I don’t recall
seeing any photos of George and Laura sailing with Teddy. They had their own
dynastic political family but preferred the speed and bustle of motorboats,
rather than sailboats, to ply the waters off the coast of Maine.
Barack and Michelle did not get their chance
to sail with Teddy and have an iconic photo taken, or even get to visit with
him in his last few days as they vacationed on his turf. For so many years, the
Kennedy compound at Hyannis was the scene of some joy but mostly sadness, and
that aura and era has now passed. But if there was one political figure in
America for these last 16 years and even pre-Clinton who championed and worked
for health care even to his very end, it was Teddy.
In my own mind, I see Teddy
not as the troubled soul of his earlier years, with his personal transgressions
‘so out there,’ but as a champion of the weak and powerless, who through his
strength, heroism, faith and dedication to public life helped me and the
country to survive the assassinations of his brothers and Martin Luther King
and the destruction of our innocence and dreams. In Puccini’s Madam Butterfly,
Butterfly sings “even a mighty oak can be felled in a storm” but Teddy proved
otherwise. Knocked down and almost out in 1968 with Bobby’s untimely death, and
after Chappaquiddick in 1969, Teddy rose from the ashes to lead the Kennedy
family out of grief back to life. He died as a grandfather – something none of
his brothers could claim – and a beloved husband, father, uncle, friend and
American legend. I and many of my generation and political beliefs will
certainly miss him.
Some now believe that his
passing will unite the divergent voices of health care in a broad, sentimental
reconciliation leading to compromise. In spite of differences, there were many
in the Republican Party such as an Orrin Hatch who were known to be Teddy’s
dear personal friends. I am convinced that there will be a health care reform
bill enacted into law, and it may be called the Kennedy bill, but whatever is
coming, it will be devoid of soul and likely missing the key elements of change
that a healthy, tireless politician like Teddy Kennedy might have accomplished
with his oratory and political gifts and passion.
I think that the debate over
health care has become confused, with most average citizens including me having
little understanding of what’s being discussed. To me, there is just one main
issue: Health care in America is too expensive for average people to afford.
Those individuals who work for corporations or government are provided health
care through a variety of insurers and plans and generally contribute some
portion of salary towards the overall cost. For many, even that partial payment
is barely affordable. The cost to employers is also very substantial and punishing.
In my own small company, we
have a small group plan through Oxford Health Plans, a division of United
Health Group. Premiums have risen in every year since we started in 1991, and
in the plan year that began on May 1, 2009, premiums rose by 17% over the
previous year, while the level of coverage including deductibles, co-pays, and
freedom of choice decreased. The premium for a single person in the current
year is approximately $600 per month, over $7,000 per year. The cost for family
coverage is approximately $20,000 per year, an amount that is clearly
unaffordable for most wage-earners.
I am certain that because of
their size and negotiating strength, large corporations have plans that cost
considerably less than our own, but it is virtually impossible to get a good
plan for family coverage for less than around $12-15,000. Unemployed people or even
self-employed people can’t afford any insurance at all, and that includes
people who leave the security of the large corporation or government job and
have to pick up insurance under COBRA. Two income families generally are
affording health insurance but at a great cost and sacrifice.
In recent years, we have seen
corporations shed full time employees in favor of outside consultants, not only
with global outsourcing, but in the domestic US as well, in order to avoid
adding new employees to the health cost roster. As insurance costs continue to
escalate, this trend will grow and employment numbers will worsen, leaving more
people without health insurance. General Motors was forced to declare
bankruptcy in large part because of employee health care costs.
As we listen to the public
debate, the implication seems to be that the uninsured are mainly members of
the “illegal immigrant class”, rather than actually often being students, young
workers and working class citizens. At the rate costs are increasing, growing
numbers of ordinary, working people and their children outside of Medicare and
Medicaid will be without health insurance because they just can’t afford it.
In my opinion, the only
solution to controlling costs and providing health care to most people, would
be to include every citizen under Medicare even if they are below 65 years of
age, or Medicaid if their income levels fall below the “Federal Poverty Level”,
which is currently around $23,000 of
annual income for a family of four including two children. I assume that these
programs come under the “universal health insurance “or “public option”
nomenclature that everyone is talking about.
As one who participates in
Medicare and a supplementary private insurance program, I feel that my wife and
I have the best medical care available in today’s world at a highly affordable
price. All those in the media and on the political right, and people selected
for TV news seen screaming at town hall meetings to “keep the government out of
my Medicare” don’t know what they’re talking about. Even “the money honey”, Maria
Bartiromo on CNBC doesn’t seem to understand that Medicare is a voluntary
program open only to older people. (In an interview, she stridently demanded to
know of Rep. Wiener of New York why he wasn’t in Medicare rather than the Congressional
plan. Wiener appears to be in his early 40’s. She had no clue!)
In fact, none of the CNBC
broadcasters seem to know much about the subject at all, even though they lead
a daily debate actively seeking to preserve the status quo. They, of course,
are covered by General Electric’s health care insurance. (GE owns CNBC). I’m
certain that they have no idea what it costs or any details. For those of my
readers who might not be familiar as well, I will explain. Under the present Medicare
system open only to people over 65, those of us who are eligible pay premiums
to the government for our basic health insurance which is a very generous
program, and for those who wish to expand the basic coverage of Medicare,
private insurers such as Blue Cross/Blue Shield, and United Healthcare (through
AARP) provide different plans at variable rates to get coverage in excess of
Medicare’s. These plans are known as “Medigap.” In my own personal experience,
the cost for my wife and me is less than half of that of the plan available
under my company, and the coverage includes everything. Adopting Medicare for
all would allow for private insurers to stay in the game and to compete with
each other to gain “Medigap” business. Medicare premiums are also adjusted by
incomes, so that there is some needs-based adjustment, which seems very fair.
There are those who say that
the Government can’t run a health care program, but from my own experience, I
see that Medicare claims are processed quickly and seamlessly integrate with
the private insurance companies. I think even Doctors I talk to share the same
feelings. From my own experience with Oxford and other private insurance
companies in the past, I would have to say that the U.S Government does a
better job.
This seems like such a simple
solution that I remind myself of Ross Perot who ran for President in 1992, and
probably cost George H.W. Bush his re-election and brought us the Clinton
Presidency. Perot would stand before the camera in front of an easel displaying
charts, and in his Texas twang would say “it’s simple” and then go on to
explain his own simplistic solutions to pretty complex problems.
Well, to me, it is simple.
The best way to control costs is to have individuals involved in the purchase
of their own health insurance, rather than having to deal with insurers through
their employers’ corporate benefits’ departments, under plans and coverage chosen for them by
others. It should be obvious to everyone that publicly held corporations are in
business to make money for shareholders, so when conflict and tension arises
between profits and management compensation on the one hand, and medical costs
for Mr. Jones’s illness on the other, Mr. Jones loses. Contrary to the odds of
flipping a coin, Mr. Jones will lose every single time. It always comes up tails.
Anyone who feels that insurance medical board
personnel, who work for a for-profit corporation and whose own compensation and
advancement within the insurance company depends on increasing profits - i.e.
being a good employee - will look out for patients’ interests first, is badly
mistaken. Government medical boards acting under properly proscribed
legislation, however, would carefully adhere to the law, and if compassion and
discretion is written into the law, those government appointees will administer
the law properly and fairly (unlike those imagined “death panels” of Sarah
Palin’s nightmares which are more likely to be located in the private sector
rather than Washington). As much as I like my solution, however, I am pretty
certain it won’t be the plan that gets passed by Congress and signed into law
later this year. Incremental change is less threatening in this confused,
difficult time.
President Obama has announced
a speech to a joint session of Congress on Wednesday, the 9th of
September, in which he will presumably lay out a new strategy to regain control
of the debate and the initiative. I hope for the market and the country that we
can get some meaningful change and that the struggle does not diminish the
Obama Presidency. I believe that improved and less costly health coverage is a very
important element in stimulating economic recovery and employment growth and will
satisfy the markets. On the other hand, an inability to make any meaningful
progress on a health reform plan and a rebuke to President Obama will
undoubtedly stun the markets. Now that Congress is coming back into session,
events will unfold very rapidly.
Peter R. Mack
September 3, 2009
