Separation of Corporation and State: Healthcare

by , posted on Saturday, April 3rd, 2010 at 7:59 am

My political career began on a cold evening in the dimly lit labor hall of Laborers Local 362 on Cabin Town Road, in Bloomington, IL.  It was the monthly Democratic Party meeting and I had no intention of speaking. After representatives from other campaigns spoke, I felt the need to represent my 2004 presidential pick.  The words fell out of my mouth with no cadence or inspiration and I’m confident that nothing I said was remembered by the 20-25 attendees who were being pressured by party leaders to send Rod Blagojevich another $500 contribution. But there it was: the 12 words that have somehow come to define my political activism: “The task of my generation is the separation of corporation and state.”

Perhaps the biggest abuse of taxpayer money to bail out a gang of undeserving corporations was the bank bailout. Like many people, I was outraged and nearly driven to put my name back on the ballot when the Democratic-controlled U.S. Congress passed a $700 billion bank bailout to help Bush put the finishing touches on his corporate-state presidency.  But I sat back and waited, overlooking the first year of Obama’s presidency that featured the more bailouts, more blank-check spending on Bush’s wars for profit, a wholesale attack on public education, and now, a healthcare bill written by corporations for corporations.

And so, I have come full circle as my next political steps take me back to the beginning and those first 12 words.  This piece on healthcare aims to show how the will of the people was replaced by the will of America’s Health Insurance Plans (AHIP) while support for Newt Gingrich’s Contract on America grows.  Among those following the health care reform process, it is commonly known that AHIP, the voice of insurance companies on capital hill, has played a significant role in drafting the bill.

I recently wrote a piece in the Beacon Newspaper that makes the argument that the recent passage of  Romney-care is both bad policy and bad politics.  One great place to continue the debate this is right here at where I previously pointed out that my union healthcare package has me paying more than 17% of my paycheck into healthcare, of which 8% (about $4 for every hour that I work) goes directly to shareholders and CEO salaries — not healthcare delivery.

What happened in Massachusetts will happen across the country

I think it is important to begin by observing the fact that a Democratic Senate, House and President just passed a bill that is eerily similar to Mitt Romney’s healthcare plan for Massachusetts.  The Massachusetts experiment has not worked as effective policy; leading to more expensive health care costs.

The spin machine is still selling the recent healthcare bill as a positive historic event. Very few are breaking from the celebratory mood to question the fact that this bill is strikingly similar to the plan written and pushed last October by AHIP.

I do see two good points in the health care bill

The best part of the healthcare bill is the education component. It allows students to borrow Pell Grants directly from the federal government instead of going through a private bank that makes profits off of the loans.  In the past system, the private banks made money while the taxpayers guaranteed the loans, assuming all of the risks.

The other good thing is that it allows the administration to move on.  There is no doubt that the rest of Obama’s agenda would have been stalled if this bill had not passed.  And yet, even while I am writing this, I have to remain skeptical about that agenda.

Why are people calling this bill a “reform” bill?

The recently passed health insurance bailout bill, also known as HR 4872, mandates that we buy private health insurance but offers no cost controls.  The individual mandates mean that individual citizens who do not buy private health insurance will pay a fine. Two years after implementation (2016) that fine would be more than $2,000 per year or 2.5% of your income, whichever is greater.

The bill does, at taxpayer expense, subsidize some of the healthcare costs for people who earn less than 400% of the Federal Poverty Level (FPL).  If you are an individual, and earn less than $44,000 (400% FPL) per year, you will get a little help from the government on a sliding scale when it comes to buying private health insurance.  But many people in this income bracket were already eligible for Medicare, Medicaid, or other healthcare assistance.  The difference is that now you will also be subsidizing CEO salaries and it is likely that many people will see reduced care levels. 

Once again, middle-class workers will shoulder the burden of bailing out executives earning millions of dollars per year.   While I have no problem helping the sick who need it most, I oppose the use of my tax dollars to subsidize people like Ron Williams, the CEO of Aetna, who made $38 million in salaries and bonuses in 2009.

Even with government assistance, millions of middle class families will now be forced to buy health insurance that could cost 9-10% of their income.  That policy would only cover part of their medical expenses. It will probably be too expensive to use because of the high cost of co-pays and deductibles.

In short, insurance companies will be given over $400 billion in taxpayer money to subsidize ineffective insurance products; it is a multi-billion dollar bailout.

For those who already have insurance policies through work, many will be locked into their network of providers and doctors without the freedom of physician choice.  These people will end up paying more for their premiums because their existing health care benefits will face steep taxes.  When a company pays more for insurance coverage, the worker typically feels it through a reduced pay raise or, in today’s economy, a pay cut.  For union workers like myself, we will see premiums go up again, ultimately resulting in a lower pay increase.

This health care bill was touted as closing the Medicare Part D doughnut hole, regulating insurance companies and preventing cancellations based on pre-existing conditions. Some people may be reading this piece and thinking: “But at least people who have pre-existing conditions can no longer be denied coverage.”

The talking point sounds like a highlight of the legislation, but there are still many loopholes that allow companies to exclude people who have pre-existing conditions.  An AP story captures it here:

Under the new law, insurance companies still would be able to refuse new coverage to children because of a pre-existing medical problem, said Karen Lightfoot, spokeswoman for the House Energy and Commerce Committee, one of the main congressional panels that wrote the bill Obama signed into law Tuesday. March 23, 2010.

 However, if a child is accepted for coverage, or is already covered, the insurer cannot exclude payment for treating a particular illness, as sometimes happens now.

Other loopholes like this one will continue to leave patients vulnerable to insurance companies that seek to generate profits instead of providing healthcare, further evidence that AHIP more or less wrote the bill.

Gender discrimination and age discrimination are other key shortfalls.  Older Americans can be charged up to three times more than their younger members of the insurance pool, and companies with a predominantly female workforce can be charged higher gender-based premiums.  Many women will now have to buy two insurance policies to have full medical insurance coverage and full reproductive rights.

Finally, it should be noted that the legislation does not “close the donut hole” in Medicare Party D.  In the first year, there is a $250 rebate (2.5%) for those people who fall into the coverage gap (when prescription drug costs exceed $2,830 individuals have to pay roughly $3,800 out of pocket for prescriptions at full price).  Between now and 2020, that gap will be narrowed by 25%, but not closed entirely. 

How has Massachusetts plan failed?

After four years of experimenting with mandates in Massachusetts, we can now confidently state that this approach has not worked.  Since implementation, healthcare costs in Massachusetts have skyrocketed for both individuals and the state (taxpayers) because there are no cost controls. 

Mandates force added expenses, not better coverage.  People in Massachusetts who do not have the money to buy health insurance are charged a $900+ fine (2008 numbers) and still do not have coverage.  According to some blog comments and news stories, the fine is now over $1,000, but for the sake of the national healthcare argument, we need to make it clear that your penalty will be more than $2,000 per year or 2.5% of your income, whichever is greater.

In the federal bill, the only exceptions to this rule are people with religious objections, American Indians people in prison or undocumented immigrants.

For more on Massachusetts plan, read “Mass. Healthcare Reform is Failing Us” by physician, Susanne King.

It didn’t have to be like this

Many Democrats make the argument that “we had to do something and this is the best we could do.”  This argument basically says we only have one choice, and that choice just happens to be AHIP’s plan, not the people’s plan.

While I completely agree that the clock has run out on the healthcare debate, I think this argument presents a set of false choices.  It basically says that the Progressive Change Campaign Committee’s (PCCC) effort to get 51 votes for the public option in the U.S. Senate was meaningless.  It says that the grassroots/labor effort to pass a public option in the House was meaningless.  It says that all of those contributions, phone calls, letters and other grassroots efforts were all meaningless.

I am not a strong proponent of the public option as I prefer to support the simplest concept – extending Medicare to all U.S. citizens, but this easy to understand, intelligent choice was never given to the American people or discussed before the U.S. Congress.  When doctors and nurses pressed corporate Democrat Max Baucus to consider a single-payer, Medicare for all bill, they were forcibly removed and arrested – Watch the arrest videos here.

As the process continued, when push came to shove, even though the votes existed in the House and Senate to pass a public option through the reconciliation process, Rahm Emanuel didn’t twist the arms of corporate Democrats to support a public option.  Instead, he twisted the arms of progressives to back the corporate insurance companies bill.

We can look back at the strategy that was used to pass this bill and be critical of the decision to start the debate in the house; ultimately losing control of the messge by not using the town hall hearings across the country.  I am most critical of the choice to negotiate from the middle (Public Option) instead of negotiating from a position of strength.  We should have started the process pushing for single-payer and negotiating down to a public option.  Lawmakers entered into negotiations pushing a mediocre bill. 

While discussing this very issue with a good friend of mine, Joe Stupec, he reminded me that Rosa Parks didn’t choose to sit in the middle of the bus; she sat at the front of the bus.  She didn’t accept mediocrity and neither should we.

Really, is AHIP’s plan the best we could do after a year of negotiating and fighting for reform?  With several successful models for a workable healthcare plan available to draw on for reference, was this the best we can do?

If we don’t speak up and state clearly our objections to this less than mediocre approach, we are in effect saying it is OK to pass something that will not work.  If we the people lower the standard that we have for legislators, they will continue to live up to those sub-standard performance levels that have become all too common.

It seems that the only thing that mattered was what AHIP wanted because they had the money to make political contributions and hire an army of lobbyists.

Why did the people fail and the corporations win?

The simple answer is that those who benefit most from legislation have the money to pay for lobbyists, pay for campaign commercials, and pay off politicians with contributions. 

In the fight to reform healthcare, the healthcare sector (this term lumps together insurance companies, HMO’s and pharmaceutical companies) spent millions to get their way.  According to, the healthcare sector spent $57 million on political contributions to both political parties in 2009 alone.  To compliment that number, they spent over $576 million on lobbying expenses.  These numbers do not include the last quarter’s filings when the full-court press was on to pass something.

In addition to money, revolving-door relationships allow former congressional staffers, and even former Congresspersons, to take up jobs on K Street as lobbyists and maintain their list of connections just as if they were still working for an elected official.  Perhaps the most prominent and powerful person in the healthcare discussion was AHIP CEO, Karen Ignagni. 

Karen Ignagni started her Washington career at the Social Security Administration working as a health policy analyst before working with the Senate Labor and Human Resources Committee.  Later, Ignagni signed up with the AFL-CIO to find ways to improve employee healthcare benefit packages and most recently accepted a position with AHIP as their chief lobbyist.  Last year she earned $1.9 million in total compensation.  She patiently used her union connections to push her agenda.  It was a simple agenda really, killing the public option and securing more taxpayer money for her clients. 

At the end of this long, drawn-out fight, I kept asking myself why labor bought into something that will ultimately hurt our members.  After researching Karen Ignagni’s background, it became more and more clear that her experience with labor was probably critical to the bill’s passage. 

Will we lose or gain seats because this heath care bailout passed?

On the political front, Democrats should have learned a lesson from Massachusetts.  According to an article found in the Columbia Journal Review, one woman who voted for Senator Brown in the recent election to replace Senator Kennedy said this about healthcare:

“I know the plan is all wrong,” she said. What exactly was wrong? It was just like the one in Massachusetts, which makes people buy unaffordable insurance, she explained. Her daughter makes $32,000 working two jobs and can’t afford coverage; she pays the penalty for not having it.

Even though Republicans have no plan to fix the broken healthcare system, they will be able to successfully ignite their poorly-informed base through false claims of socialism.  Democrats who wanted change and voted for change will be unmotivated to vote for the lackluster, corporate agenda that favors the wealthy, powerful corporations who continue to buy access to the decision makers. 

Perhaps the only hint of socialism might be what Howard Fineman calls, “Socialism, Chicago Style”.

But the one thing that you can’t call it is “socialism.” If this is socialism, then Warren Buffett is Karl Marx. It is, rather, a monument to the political philosophy of Chicago – indeed of America – which declares that big business deserves to make a lot of money (a lot of it from the government itself) in the name of doing some good for the citizens.

You’ll notice that, while the GOP’s tea partiers are in a frenzy, most of the health-care industry is not. The stock market didn’t tank when Obama signed the bill, and health-related stocks have been beating the overall average. That is because much of the health-care industry is going to make out big under the new law. Insurers, hospitals, doctors, and drug companies will get 32 million new government-subsidized customers. Most of the new regulatory burdens they’ll have to shoulder are ones they’ve decided they can live with, or figure out how to neutralize sooner or later.

The political ramifications this bill will have for the Democratic Party, have yet to play out. We can be sure that the 2014 start date for insurance mandates is carefully timed to fall after the 2012 presidential re-election campaign.  So we can expect to hear a lot of talk about fixing pre-existing conditions, but unless healthcare activists become better informed and very loud, we won’t hear a word about the mandates.

What do we do about it?

This is probably the best question yet.  I know we have to stop swallowing every time the Democratic Party feeds us a line that we know is untrue.  By writing this piece, I hope I have made it clear that I won’t tow the line when party leaders are pulling us towards a cliff.  We have to speak up and let others know the truth.  You can do that by sharing your ideas with friends and neighbors, by writing letters to the editor, by passing along blog posts like this when you see something you like, or even writing or commenting on them yourself. We need to put all the ways we use to reach people to use in this conversation.

Secondly, you need to get politically active.  I know first hand what it is like to run for office while holding down a full-time job.  But the fact is nobody is going to do this work unless we get involved and start doing it.  I highly recommend Progressive Democrats of America as a place where you can almost always count on candidates being vetted to ensure they represent the will of the people.   If there is no PDA chapter in your neck of the woods, start one.  If you don’t have a good candidate to work for where you live, try making phone calls for a PDA-endorsed candidate anywhere in the U.S.

Third, put your money, time and vote where your mouth is.  This means we tune out the “lesser of two evils” argument and stop voting and volunteering for those who say they are for working families every election cycle, and then vote against working families on important legislation.  The simple truth is that a politician fears only one thing, losing his or her seat.  They need to tune in to that fear and listen to what we are saying, or face those fears and lose the next election. 

Fourth, contribute the time, talent and skills that you can.  If you can’t run for office, can you tell your friends to vote for a highly qualified candidate?  If you can’t donate, can you attend a city council meeting or two?  If you are not good at talking to people or in front of groups, can you write letters to the editor?


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5 Responses to “Separation of Corporation and State: Healthcare”

  1. jimrhodes says:


    Well said and thank you.

  2. jelohman says:

    Excellent piece, John. Of course the reason AHIP won this battle is the $46 million in campaign contributions given to our politicians by the insurance industry. You can say a lot of bad things about our politicians, but they ain’t cheap. Worse, though, is that our corrupt political system is going to ultimately destroy America. Only public funding of campaigns will save it.

    Jack E. Lohman …

  3. ChicagoMuslim says:

    Good Article. It convinced me to donate to PDA. However I have 2 quibbles John

    Quibbble #1) We progressives been trying to vote for good candidates for some time. ..but so called “Progressives” from Marcy Kaptur, Bernie Sanders, Russ Fiengold, Anthony Weiner, Alan Grayson all the way to Dennis Kucnich supported this bill.

    Quibble #2) You say we should ‘tune out the “lesser of two evils” argument and stop voting and volunteering for those who say they are for working families every election cycle, and then vote against working families on important legislation’

    But is this realistic? You yourself supported a senatorial candidate that didn’t exactly have the progressive positions on a host of issues, including health care. With this logic the “Progressives” I cited above should be voted out since HIR was a pretty important legislation and all of them voted for it.

    Can you clarify?

    I wish we could do more than just trying to vote for good candidates. This is a human rights issue. The progressive leadership should have had organized huge marches (during Summer of last year) like the ones organized by the Immigration Reform movement. Heck I bet we could have gotten more people than MLK did during the civil rights era.

    I wish I could see the light at the end of this long dark tunnel our country is in.

    • John Laesch says:

      Chicago Muslim,

      Thanks for the comments and quibbles. I’ve been thinking about many of these questions myself lately. First, I wanted to talk about Hoffman a bit. For us to make an argument that government can be an effective administrator for healthcare or anything for that matter, I think we need a guy like Hoffman fighting to keep the system free from corruption. A single-payer system run by political hacks (not healthcare experts) would not work – or run as effectively as Springfield or FEMA under Bush. Additionally, working for Hoffman confirmed what I already knew – we need to find a new electoral path that can get progressives elected without compromise. The Hoffman campaign was run very “cookie-cutter style.” I have never been part of that so it was interesting to learn from.

      I have been thinking that what we need is an effective strategy. I think this is what is missing from Progressive leaders in Washington – the Feingold’s and Kucinich’s and from activists. I can’t speak for Kucinich – he does speak for himself here –

      The fact is the administration made a strategy mistake and the people of America will now pay for it. I would not have made the same decision that Kucinich did because at the end of the day, it is not about me, it is about those American people who can not afford the current or future healthcare system.

      If the people are going to have a voice and we are to succeed at democracy, the agenda, political power, donations and activists are all going to have to come “from the people.” So, we have to change quite a bit and I hope to post something that lays out some of these ideas in more detail in the near future – something that should be subject to peer review and tough questions as you have posed here.

      Take care,

  4. aicram62 says:

    My quibbles are that Progressive Democrats still receive funding from the Democrats,and therefore are supported by corporations. I would vote Green.

    If you want to work on getting HR676 passed educating the public who don’t know a THING about this, fliers, wearing the white ribbon for healthcare, collecting petitin signatures etc join us here

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