WMC has the corporate solution to health insurance costs…just drop employees

Two high-level executives at separate Wisconsin Manufacturers and Commerce (WMC) member corporations have informed Badger Democracy of a quiet conspiracy within its membership. According to the executives, WMC is promoting a policy which would have private employers completely drop any employer-paid insurance programs by 2014 – forcing employees into (at the moment) non-existent exchanges in Wisconsin.

Rumors of such an action by employers have been circulating since early 2012.   A May 2012 report from Fox News questioned the ethics, and points out the politics of such an action:

A new survey of Fortune 100 companies finds that the health care overhaul, contrary to the claims of its authors, created some perverse incentives for employers to drop workers from company insurance plans…

“The penalties for the employers who drop coverage are very low, and the subsidies for the workers in the exchanges are very high,” said James Capretta, with the Ethics and Public Policy Center.

If the companies indeed take this step, the move would fly in the face of pledges by the law’s backers, including President Obama, that U.S. workers would not lose their employer-provided health plans.

The Fortune 100 “study” by the partisan Republican House Ways and Means Committee published in May, 2012 ignores the net effect of ACA to control health care costs. Two veteran health economists, David Cutler of Harvard and Karen Davis, president of the Commonwealth Fund, have calculated that over the first decade of Obamacare total spending on health care, in part by employers, will be half a trillion dollars lower than under the status quo.

The  House Ways and Means “study” cites no facts to support these cost increases. It merely cites a survey based on the beliefs of the conservative National Federation of Independent Businesses about what they think the impact of the ACA will be:

Consistent with the findings of this report, a separate survey of benefits and human resources executives managing health care costs shows the vast majority of respondents—about 85 percent—said they expect health care costs to rise in the next five years as a result of the law. 68 percent said they plan to re-evaluate their benefits strategy to offset the law’s impacts.

The report ignores the economic reality of the ACA reported in non-partisan studies (i.e. Cutler/Davis above). Rather, the “study” focuses on rationalizing the action of large employers who would drop any employer-funded health plan. In complete ignorance of the economic consequences of such a cynical, political, and ethically challenged action; the US Chamber of Commerce also sounded a warning:

“Despite promises that the health reform law would build on the existing employer sponsored system, the [employer] mandate will in fact undermine it. It will be more affordable for employers to pay the penalty for not offering coverage than to offer coverage
itself. And so, ironically, the employer mandate incents employers to stop offering health care coverage.”

The economic repercussions of such an action would be severe – especially during the current recession. Just what is the cost to employers for health insurance benefits?

The March 2012 report from the Bureau of Labor Statistics breaks it down by the hour. “Employer costs for private industry workers averaged $2.34 per hour worked for insurance benefits (life, health, and disability insurance).” A year of 40 hour work weeks amounts to 2,080 hours per year. The average cost to employers, from BLS data, is $4,596.80. Let’s give corporations the benefit of the doubt – $5,000/year on average for health insurance premiums.

The savings is obvious. The ACA assessment per employee (over 30 employees) for employers who offer no health insurance is $2,000. The average employer would save $3,000/year for each employee (after the first 30) by dumping their health plan, and just paying the assessment.

The cost to the average employee (and the broader economy) would be devastating. A search on the US Government website for health insurance coverage in Wisconsin, based on a similar, employer-provided health plan; show the cost to the employee would be nearly double the cost to the employer. $7,800 in premiums, coupled with a $2,000 deductible…versus $5,000 in cost to the employer.

The following email was sent to WMC spokesman Jim Pugh on Friday AM, September 7:

Hi Jim,

Having spoken recently to a CEO/President of a WMC member corporation in Milwaukee, I was told by this person that WMC is advising its members that to avoid having to comply with the full scope of the Patient ACA in 2014; if the law still is in force, member corporations should drop its employee benefit regarding health insurance. This would force formerly covered employees into the exchange, and more expensive (for them) premiums.

Do you have any comment on this? I will be forwarding any response to the person who gave me the information for a response.
In the absence of a response, I will assume “no comment.”
No reply has been received as of this writing.
The motivation here is simple – ideology and greed. Many corporations (including those led by Badger Democracy sources) are profitable under the current scenario. Indeed, many of the largest are currently paying little to zero in taxes. As medical costs decrease, and the insured pool expands, those costs to the employer will continue to decline (as most non-partisan studies have reported). The motivation and ideology of profit is taking precedence over simple societal, human decency.

Any corporate entity or lobby which participates in this type of activity, which would be ruinous to a broader economy, should be vilified for the cynical ideologue they truly are. Wisconsin Manufacturers and Commerce, The US Chamber of Commerce, and any of its GOP lackeys are showing their true priorities – profit. At any cost.

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WMC, Corporate Conservatives pushing the lie of government regulation costs

A filing with the Wisconsin Public Service Commission this week requested the deregulation of public utilities. In its filing, the “Compete Coalition” cites the need for “free market” principles to reduce costs to consumers:

“Electricity consumers can only win if Wisconsin takes steps to reduce the adverse impact of protected monopolies and adopts laws and policies allowing competitive market forces to provide incentives for increased efficiencies, lowest available costs, and environmental improvements.”

The Compete Coalition is a front group for Washington DC lobbyists affiliated with three powerful firms – Wexler & Walker PPA, The Nickles Group, and Covington & Burling LLC. Each of these firms individually spend tens of millions of dollars annually on behalf of corporations looking to influence energy, health, and financial legislation. In addition, Compete Coalition members contribute millions more to this lobbying effort. The group’s request with the PSC is, in reality, self-serving, and holds no benefit for taxpayers or consumers. Further study reveals this to be the case with Wisconsin Manufacturers and Commerce (WMC) and conservative lawmakers’ calls for regulation reform.

In its 2011-2012 Legislative Policy Agenda, WMC lists “foster a competitive regulatory environment” as first priority. According to WMC, regulation easing and reform:

…will improve the business climate by
reducing the costs and barriers to business expansion and job creation, imposed by government.

On July 26, 2012, WMC praised Congressman Reid Ribble’s (R-WI 8th CD) “Midnight Rule Relief Act,” passed by the House as part of the “Red Tape Reduction and Small Business Jobs Creation Act” (HR 4078). Ribble’s Act would serve to:

…have an economic impact of $100 million or more annually with the exception for emergency health, safety, criminal, and national security purposes.

Just one day before, Ribble spoke in support of the bill; citing the high cost of regulation and impact on job creation. In the remarks, Ribble speaks from experience as a small businessman – suggesting that data to the contrary be ignored in favor of his anecdotal testimony.

Yesterday (August 23, 2012) Green Bay Rep. John Klenke (R-88th) issued a statement praising an activist Appeals Court opinion striking down EPA authority to strengthen coal emissions standards. According to Klenke’s statement:

These mandates are also costing thousands of jobs yet provide marginal  environmental benefit.”

Conservative think-tanks and “scholars” have published their own studies supporting policy advocates like WMC, and conservative legislators like Klenke.  The most highly regarded and cited study was commissioned by the Small Business Association Advocacy Office in 2010, “The Impact of Regulatory Costs on Small Firms” by Nicole V. Crain, Lafayette College. The study quantifies the regulatory costs to business at $1.75 trillion. For conservative legislators and corporate, free market advocates, that number is gospel. In reality – it misses the big picture, ignoring significant data. Just how does regulation impact jobs and the economy?

For the first time, in 2011, The Office of Management and Budget (OMB) issued a report to Congress on the costs of regulation and unfunded federal mandates. The key findings show that current regulation benefits far outweigh the costs to taxpayers:

1. The estimated annual benefits of major Federal regulations reviewed by OMB from October 1, 2000, to September 30, 2010, for which agencies estimated and monetized both benefits and costs, are in the aggregate between $132 billion and $655 billion, while the estimated annual costs are in the aggregate between $44 billion and $62 billion.

2. Some rules are estimated to produce far higher net benefits than others. Moreover, there is substantial variation across agencies in the total net benefits produced by rules. For example, the air pollution rules from the Environmental Protection Agency (EPA) produced 62 to 84 percent of the benefits and 46 to 53 percent of the costs.Most rules have net benefits, but several rules have net costs, typically as a result of statutory requirements.

To reiterate – the benefit to taxpayers of current regulations and mandates far outweighs the costs – particularly EPA regulations. Benefits measured include medical/health benefits as life expectancy and cost savings, environmental safety and protection, and actual costs of programs. These benefits include protections and benefits to business – not just consumers.

But government regulations are “job killers…” Are they? The Bureau of Labor Statistics (BLS) documents statistical reasons for business closings and layoffs. In the most recent release of Mass Layoff Statistics (MLS) (August 14, 2012), the numbers clearly show that government regulation has a very small impact on employment.

In 2011-2012, Government Regulation/Intervention  accounted for 8 of 3,100 Mass Layoff events (.2%). By contrast, 301 layoff events were caused by “insufficient demand” (10%).

In 2011-2012, Government Regulation accounted for 1,218 separations (individuals) out of a total of 563,447 separations (.2%). “Insufficient demand” caused 38,788 separations (7%).

A five-year study published in 2010 by the BLS shows the data is consistent. From 2006-2010 there were 3,815 Mass Layoff Events; 26 were a result of Government Regulation (0.7%). Of 851,767 separations, 7,843 were a result of regulation (0.09%). This data is based on surveys of the affected businesses.

The facts do not bear out the argument against necessary regulation; nor do they support deregulation as a cost/job saving mechanism. In fact, the very Crain/SBA study being cited by conservatives as proof of economy – killing regulatory practices appears to be a fraud.

Sidney Shapiro, Professor of Law at Wake Forest Law School, examined why the $1.75 trillion regulatory costs  cited in the Crain/SBA study (link above) far exceeded the $62 Billion cited by the OMB study (link above).

Crain’s calculations for the regulations not covered by OMB’s report appear to be based largely on a decidedly unusual data source for economists – public opinion polling, the results of which Crain and Crain massage into a massive, but unsupported estimate of the costs of “economic” regulations.

That’s right – they extrapolated data not from actual statistics, but opinion polling. The skewering of the study continues.

Crain and Crain have refused to make their underlying data or calculations public – apparently even withholding them from the Small Business Administration office that contracted for the study — it is difficult to know precisely how they arrived at the result that economic regulation has a cost of $1.2 trillion dollars, comprising more than 70 percent of the total costs in their report.

Secret data based on opinion polling. Not a good source for an economic “study.” It turns out even the source of the poll used disputes the validity of the data from the poll.

…their numbers are based on the results of public opinion polling, specifically a poll concerning the business climate of countries that has been collected in a World Bank report. The authors of the World Bank report warn that its results should not be used for exactly the type of extrapolations made by Crain and Crain, because their underlying data are too crude.

The self-serving attacks by the corporatic Robber Barons aimed at regulation have no valid place in a responsible debate on governance. The very studies they commission and cite are a fraud. The data are sifted and sorted to support a foregone conclusion, receive no peer review, and are used for one purpose – to influence gullible, ideologically driven legislators.

As Ronald Reagan once said, “…facts are stubborn things.” Things too ignored today by conservatives.

(BD note: WMC and Congressman Ribble were contacted for a response to this article by phone and email on August 22, 2012. They did not respond)

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The Mining Bill – Schultz stands firm, and what Fighting Bob would say…

On Wednesday, February 29, Wisconsin State Senator Dale Schultz issued a statement that remains one of the only responsible, non-partisan, and thoughtful actions by a Republican in the 2011-2012 Legislative Session. Schultz listened to his constituents, the residents who would be affected by mining, statewide testimony, scientific experts, and stated that he could not “in good conscience” support any of the current legislation on mining now before the Legislature. With the GOP majority merely a single vote, this made the Mining Bills in the Senate and Assembly (sb488 and ab426“all but dead.”

The previous hearings on the mining bill  have offered hours of testimony (Mellen, and Platteville hearings can be viewed at the preceding links to wiseye) and ideas both opposed to and supporting mining in Wisconsin. Even amongst those supporting mining, they do so consistently with a keen eye on environmental and local economic issues. One need only compare the testimony given in those hearings with the statement of “compromise” issued by Rep. Vos and Senator Darling  ; to realize that unlike Schultz and Senator Bob Jauch, the GOP is only concerned with making the mining industry in Wisconsin happy – and eventually very, very wealthy at taxpayers’ (and the environments’) expense. Vos, Darling, and the rest of the GOP Legislators (with a little “prompting” from bill advocates Wisconsin Manufacturers and Commerce) have scheduled a final hearing on BOTH bills in the powerful Joint Finance Committee on Monday, March 5. All GOP Senators (save Dale Schultz) have now signed on as sponsors or co-authors of the bill. The heat has been turned up on Dale Schultz with the session coming to a close on March 15. The voices of those Wisconsinites giving personal and expert testimony have been set aside, in favor of an out-of-state, corporate profiteering agenda.

It is time for all who believe in government of, by, and for the people; whether Republican, Democrat, Progressive, Socialist, or Independent to rally to the defense of Dale Schultz and all of Wisconsin. This movement continues to make history, and the momentum and passion must be sustained if a better politic in Wisconsin is to evolve. History is on our side. We have been here before, turned away the forces of greed and corporatics, only to have lost that momentum. Let us not lose this moment to complacency or despair; rather take the lesson of history to forward the cause.

In 1874, the Wisconsin Legislature enacted the “Potter Law” in response to growing railroad monopolies. The railroads were given free rein to govern themselves, with virtually no state or federal regulation and access to public land. On April 28, 1874, Governor Taylor signed the Potter Law, and the railroads immediately responded. Alexander Mitchell (Chicago, Milwaukee, and St. Paul RR) and Albert Keep (Chicago and Northwestern RR) released a statement that their companies were both going to “disregard” the new law, as the state of Wisconsin was infringing on their right to practice business as they saw fit. Never mind that Potters law regulated rates and practices for fairness, discrimination, and “free passes” for elected officials (a common form of bribery); the company knew its business, and the state had no right imposing.

The case went to the Wisconsin Supreme Court, and on September 25, 1874, a landmark decision was written by Justice Ryan. In it, he stated that “corporations should exist as subordinates of the state which is their creator.” The ruling was upheld by Federal Appeals and US Supreme Courts. Potter’s Law stood…until the next election.

In an unprecedented (at that time) assault on Democracy, the railroads utilized their own newspaper media and communications (along with party bosses owned by the railroads) to publicly smear Governor Taylor, inventing stories of bribery and calling supporters of Potter’s Law “The American Karl Marx.” Their plot (and investment) worked. Taylor narrowly lost his re-election bid, and in the following session the Legislature repealed Potter’s Law. This sequence of events proved inspiring to Robert M. LaFollette in his early years as a politician.

LaFollette battled against corporate, “Robber Baron” crusaders with profit as their only goal – and their attempt to buy influence and legislation amounting to a hostile takeover of democracy, public land, and the public coffers. As is the case today, the influence these corporatics held over the political and fiscal state of our nation was immense.

In LaFollette’s second inaugural speech he stated, “The real danger to Democracy is in the corrupting influence of powerful business organizations upon the Representatives of the people. The real cure for the ills of democracy is more democracy.”

The direction of legislation being forwarded by the current incarnation of the GOP eerily echoes legislation being passed a century ago. LaFollette observed “…all legislation in this era in the direction of exploitation of resources was under the claim of creating opportunity and increasing population.”  Read jobs, and benefitting the “job creators.”

It is our obligation in this movement to bring “more democracy” to the people. LaFollette won, and Wisconsin won a century ago by the direct actions of the people. That is our strength, which, as in LaFollette’s day, no amount of money could overcome. The movement will succeed, if we make it so through our actions – the Mining Bill is proof of that fact. Through public protest, outcry, engagement, and testimony this bill akin to the “Robber Baron” age will likely stall – the centerpiece of the current GOP. Take to heart these words of Robert M. LaFollette, from his “Defense of Free Speech” address to the US Senate in October of 1917, fighting a charge of sedition for speaking against war:

“Our government…is founded on the right of the people freely to discuss all matters pertaining to their government…How can that popular will express itself between elections except by meetings, speeches, publications, petitions, and by addresses to the representatives of the people? They must have the right to the freest possible discussion of EVERY question upon which their representative has acted, every measure he has supported, every vote he has cast, every speech he has made.”

The road government followed into 1924 led us into the Great Depression, as Progressives like LaFollette were voted down in Washington by powerful corporate interests. The collapse of the Market proved what plutocracy and despotism end up meaning for the middle class. The direction we are headed in today proves that the GOP is willing to reject that historical fact for the benefit of its 1% benefactors.

Just as the 1932 election ended that gilded age; let the end of this Mining Bill and the 2012 recall and regular elections prove to be the end of this gilded age. Lest the current GOP succeed in its destruction of the promises of the “New Deal”, the “Great Society”, and the Great Progressive era of Wisconsin a century ago.

Remember the history of this state, this movement, and what that promise holds for future generations. The Republican (and some Democratic) Party members by and large have forgotten…it is our duty to remind them.