Employer health plans: OK to ditch?

It seems clear that change is coming to the U.S. healthcare system. President-elect Barack Obama wants it. Congress wants it. Even the insurance industry says the time is ripe to do things differently.

But not too differently. The idea of doing away with the employer-based insurance system -- which has become increasingly unsustainable for businesses and has resulted in 47 million Americans going without coverage -- seems to be off the table.

"There are very few economists who say that if they were king, the employer-based system is the one they would pick," said Henry Aaron, a senior fellow at the Brookings Institution who specializes in healthcare.

"The problem is that it's not possible to just walk away from the employer-based system. The 180 million people who currently receive coverage from employers would go ballistic." In other words, the crappy insurance system you know is better than the newfangled system you don't. This seems like a lame reason to remain wedded to a system that, by and large, fails to serve the interests of both the American people and U.S. businesses.

According to the Organization for Economic Cooperation and Development, the $6,102 spent per person on healthcare in the United States in 2004 was nearly twice the amount than in most other industrialized democracies and well beyond the average $2,660 of the organization's 30 member nations.

At the same time, the average life expectancy in the United States was shorter (77.5 years) and the infant mortality rate higher (6.9 deaths per 1,000 births) than elsewhere in the developed world.

Clearly we're not getting a lot of bang for our healthcare bucks.

Employer-based health coverage is a historical accident. Businesses began offering it during World War II to attract workers during a government-imposed wage freeze, and the benefit gradually became the primary form of health insurance.

Many large employers now bellyache about healthcare costs. During recent bailout hearings, the Big Three automakers said their Japanese counterparts enjoyed a competitive advantage because workers' health insurance was provided by the government. Yet U.S. businesses have been reluctant to call for radical change in the insurance system.

"Our membership is overwhelmingly in favor of retaining the current employer-based healthcare system," said Anthony Wisniewski, executive director of healthcare policy for the U.S. Chamber of Commerce. "By having an employer-based system, employers can make offerings that allow them to attract the most talented people to their organizations."

That sounds nice in theory. In practice, employers are increasingly opting for cheaper insurance plans with higher deductibles and co-pays, thus saddling workers with a greater share of costs.

According to the Kaiser Family Foundation, 18% of all covered workers now face annual deductibles of at least $1,000, up from 12% in 2007. Among smaller businesses with up to 200 employees, more than a third of workers have deductibles of at least $1,000, up from 21% last year.

I've long believed that something along the lines of expanding Medicare to cover all Americans, not just the elderly and disabled, would be the most effective way of providing insurance to everyone and controlling healthcare costs. But that's not going to happen any time soon, not if the insurance industry has anything to say about it.

An industry trade group recently unveiled a plan for universal coverage that includes requiring all uninsured Americans to buy policies from private insurers. For their part, the insurers would agree to stop rejecting people with preexisting conditions.

But anyone who's ever shopped for coverage in the individual insurance market knows that such policies don't come cheap, and the only way to keep costs down is to take on sky-high deductibles.

Pauline Rosenau, a health professor at the University of Texas, says the U.S. should be looking to the Netherlands for guidance -- about what to do and what not to do.

Until 2006, the Dutch combined employer-based coverage with individual policies as well as a government-administered insurance program. This became unwieldy and inefficient.

The Dutch introduced a system two years ago that did away with employer-based plans and government insurance, replacing them with a mandate that everyone buy individual policies. At the same time, the government said it would play a more active role in keeping prices competitive and thus prevent individual policies from soaring in cost.

"They have a very, very highly regulated system," Rosenau said. "Private insurers have to sell to anyone who wants it, and they have to sell at the same price that they sell to everyone else in a certain geographic area."

She said Dutch insurers supported the change, liking the idea of mandates and no longer having to compete with a government insurance program. Since the new system was adopted, insurance firms have vigorously competed for market share by keeping prices low -- just as the government intended. What wasn't intended was that most insurers would consistently lose money on basic policies, although some have managed to recoup cash by offering supplemental insurance to those who desire it.

"We can avoid their mistakes," Rosenau said. "We need to create a system that allows insurers enough freedom to operate, but at the same time regulates them so they compete on price, not on being able to avoid the very sick."

What's clear is that our own reform efforts should begin without preconditions. The employer-based system isn't our only choice, and we should be open to alternatives (while ensuring that whatever's taken away from workers in terms of an insurance benefit is returned in the form of extra pay or tax credits to cover new expenses).

Ours isn't the only country to face the challenge of offering universal coverage while also reining in healthcare costs. The conversation needs to begin with what's in the best interests of the American people and the best interests of U.S. businesses.

If we're honest with ourselves, I think we'll see that reform can mean healthy change, not just more of the same.

Extracted from:
David Lazarus. LA Times. Dec 10th, 2008.

A war the U.S. must fight

Conflicts in Iraq, Afghanistan and Pakistan will demand President Obama's attention as soon as he takes office, but he also must make time for the war on our border, where the Mexican government is fighting narcotics traffickers. Drug violence has claimed more than 6,800 lives in Mexico in the last two years, and has seeped into scores of U.S. cities that are marketplaces for illegal drugs. This war is as ugly as the others, with beheadings, kidnappings and urban shootouts that threaten the stability of Mexico and the national security of the United States.

The toll is stunning, as documented by Times reporters: 1,300 dead in Ciudad Juarez this year and 350 killed in Tijuana since September. Drug corruption has reached the highest levels of law enforcement in Mexico City, where the country's top counter-narcotics chief was found to be on the payroll of traffickers. And in suburban San Diego, alleged members of a Tijuana drug gang are accused of at least a dozen murders and 20 kidnappings over three years.

Forbes magazine recently asked whether Mexico is a failed state, given its inability to stem the flow of blood and drugs. The state is weak, but not failed. After 70 years of one-party rule, Mexico's executive and legislative branches are evolving, and the country is trying to build an independent judiciary. The problem is that President Felipe Calderon is fighting to retake control from the cartels before ending corruption and impunity. Strong law enforcement agencies and the rule of law have not been fully established.

The drug war is a bilateral problem. According to a recent report by the Brookings Institution, an estimated 2,000 guns make their way from the United States to Mexico every day. Drug consumption in the U.S. has not declined significantly over the last quarter-century, with a total of about 6 million users of heroin, cocaine and methamphetamine. While up slightly since Calderon launched his offensive last year, the street price of cocaine is nonetheless a third of what it was in 1990, indicating a steady supply through the Mexican smuggling routes.

It is in the U.S. interest that Calderon's war succeed, because a failed state in Mexico would mean chaos on the border and more immigration, among other consequences. Under the so-called Merida Initiative, the United States is to provide $1.4 billion worth of interdiction equipment and training to Mexico over three years. Agreements were reached last week on the first delivery, which is expected in January. This should be accompanied by close cooperation between U.S. and Mexican law enforcement. The Obama administration should then step up efforts to interdict southbound shipments of bulk cash, chemicals for methamphetamine production and high-powered weapons. Some weapons come from legal gun stores and shows, but Mexican officials say others are black-market goods from abroad and, apparently, from U.S. Army and National Guard depots. And finally, the U.S. must seriously address drug consumption with funding for prevention and treatment programs. Ultimately, demand drives drug trafficking.

Extracted from:
Anonymous. LA Times. Dec 8th, 2008.

Big Players Scale Back Charitable Donations

The pipeline from corporate America to the nation's charities is starting to dry up, as losses in the stock market mount and the U.S. recession deepens. With many large organizations depending on corporate largesse, their futures are suddenly uncertain.

Billionaires and large banks are pulling back on commitments or scaling back pledges. Some generous givers, such as Bear Stearns Cos., Lehman Brothers Holdings Inc. and Merrill Lynch & Co., have folded or been bought. The pain is spreading to other big institutional donors and trickling down to New York's famously lavish charity-gala scene, which is suffering lower turnouts and fund-raising hauls.

On Monday, the Bill & Melinda Gates Foundation said it would slow the pace of grants next year -- a sign that even the titans of philanthropy are rattled by current economic conditions.

Large donors signaling tighter times include David Koch, an executive vice president of Koch Industries Inc., an energy and manufacturing company and the largest private corporation in the U.S.; Sheldon Adelson, the Las Vegas casino mogul; and Maurice "Hank" Greenberg, the former chief executive of American International Group Inc., the large insurer.

The chilled giving atmosphere arrives just ahead of the holiday season, when charities tend to reap the most donations. Lower donation totals threaten a range of organizations, from antipoverty groups to community-based meal providers and major cultural institutions.

In the past, giving has tended to withstand economic turmoil, usually falling just 1%, adjusted for inflation, during recessionary months, said Patrick Rooney, interim director at the Center on Philanthropy at Indiana University. But this time, big market drops are happening at the same time that people typically start planning their end-of-year gifts, Mr. Rooney says.

Mr. Koch, the executive vice president at Koch Industries, of Wichita, Kan., just pledged $100 million to renovate the New York State Theater, which houses opera and ballet performances at Lincoln Center.

But Mr. Koch is turning away solicitations for new gifts. That's because he expects earnings at his company to sink 50% this year amid falling oil prices. "I'm not making any new commitments," says Mr. Koch, who uses dividends from company stock to make donations.

Mr. Greenberg, the former chief executive of AIG, which nearly collapsed before receiving government assistance, has watched assets in his two foundations plunge in recent months.

Anyone with a foundation whose endowment is heavily invested in AIG stock "is taking a bath," says Mr. Greenberg, adding that he intends to fulfill current commitments but that gifts would inevitably be fewer and smaller in the months ahead. "You can't give what you haven't got."

According to Mr. Greenberg's associates, his family foundation is nearly wiped out, with assets declining to roughly $4 million in October from $47.7 million in February. His larger Starr Foundation has suffered a 50% decline, falling to $1.5 billion from about $3 billion over the past two years. Both foundations mainly focus their efforts on education and medical research.

Among the beneficiaries feeling the pinch are Harlem Children's Zone Inc., to which Mr. Greenberg recently pledged $25 million. "I'm spending a lot of time now thinking about how we could replace the kind of support we've received from Wall Street," says Geoffrey Canada, president of the organization, which provides parenting classes and charter schools for poor families. Mr. Canada says he is cutting 10% of his staff of 1,400.

The Starr Foundation will honor its final two $5 million payments to the charity, says Florence Davis, the foundation's president. Still, the foundation is dipping into its endowment's principal to ensure it meets commitments, she says.

Most large foundations say they, too, intend to fulfill pledges. But some are cutting budgets by up to 20% or borrowing from banks and other financial institutions to fulfill multi-year commitments, says Steve Gunderson, president and chief executive of the Council on Foundations, a Washington group that lobbies on behalf of foundations. Foundation endowments have lost about 30% in value, or $200 billion, since the stock market's peak last October, he says.

Other institutional donors, including Wall Street banks, are pulling back, which could affect a slew of charities. Corporate donors gave about $15.7 billion last year to charity, and big banks trail only pharmaceutical companies in total giving, according to the Conference Board.

At a nonprofit conference in New York last week, charity leaders discussed strategies for coping. Among them: Share resources such as back-office space and computers.

But some of the U.S.'s more than one million charities will inevitably fail amid falling revenues, says Paul Light, a professor at New York University's Wagner School of Public Service. "I think we're going to see a substantial number go under," he says. "There's nobody on Capitol Hill who's been talking about rescuing the nonprofit sector."

Mr. Adelson, who supports an array of medical-research and Jewish initiatives, has lost roughly $30 billion in the past year amid a big stock-price drop in his Las Vegas Sands Corp. He recently announced significantly scaled-back gifts to the Birthright Israel Foundation, a group that pays for extended trips to Israel for young Jews.

Mr. Adelson had given $67 million to Birthright over the past two years. But his family foundation said it would only pledge $20 million next year and $10 million in 2010.

A September news release announcing the lower pledge said the gift was "structured to provide an opportunity and a challenge to other philanthropists . . . to play a more significant role in supporting Birthright Israel." Mr. Adelson declined to comment through a spokesman.

Jay Golan, Birthright's president, says Mr. Adelson never specifically promised the charity he would donate $30 million a year. "In our experience, the Adelsons make their commitments one at a time," Mr. Golan says. "They've been absolutely faithful to the terms and conditions of each one."

Not all giving has disappeared. Some donors, despite taking big investment hits, remain wealthy. Hedge-fund manager John Paulson, whose firm made more than $15 billion in gains last year betting on the housing market's collapse, donated $15 million to the Center for Responsible Lending to fund legal assistance for families facing foreclosure.

Many donations are withering or going away entirely. Fannie Mae and Freddie Mac gave $47 million to nonprofits in 2007. But the mortgage giants were bailed out earlier this year by the government and charitable giving has been delayed "until further notice," a spokeswoman says. The spokeswoman later said Fannie and Freddie will continue to make contributions but plans will be reviewed by the Federal Housing Finance Agency.

Hits to investment portfolios, balance sheets and hedge funds are also damping another fund-raising mainstay: the New York charitable gala. A Leg to Stand On, a New York charity supported by big banks and hedge funds that helps children with missing limbs in the developing countries, took in only $170,000 at its recent "Hedge Fund Rocktoberfest," compared with $320,000 a year ago.

Project Sunshine, an international nonprofit that provides services for hospitalized children, canceled an annual fund-raising dinner that usually attracts about 500 hedge-fund managers amid fears of low turnout, says Joseph Weilgus, a hedge-fund manager and the group's founder. Mr. Weilgus said his charity planned to focus on events with less fanfare. Despite a downturn in the sector, he still expects donations from his industry to remain steady.

Tomorrows Children's Fund, which relies heavily on Wall Street donors to support children with cancer and serious blood disorders, canceled a November gala at New York's Plaza hotel for the first time in its 25-year history, says Lynn Hoffman, the charity's executive director. Gifts are down nearly $1 million from $1.8 million a year ago.

"It's terrible," she says. "I've never seen donations down this much before."

Extracted from:
Mike Spector, Shelly Banjo. Wall Street Journal. Nov 25th, 2008.

Is a United States of Africa possible?

Britain's American colonies did it. Europe's nations did it. Can Africa's disparate countries form their own political union? Jean Ping, the 67-year-old chairman of the African Union Commission, believes they can, despite the troubled history of African unity. Ping, who left his post as Gabon's foreign minister to take the helm of the pan-African body earlier this year, brings a unique personal history to the job. In the 1930s his Chinese-born father, who sold porcelain along Africa's western coast, missed his boat in Gabon and decided to settle in a small fishing village. He wound up marrying the chief's daughter—who became Ping's mother. Now Ping is charged with bringing unity and order to a continent that has seen little of either in its recent history. He recently spoke with NEWSWEEK's Jason McLure at AU headquarters in Addis Ababa about creating a United States of Africa, bringing peace to the Democratic Republic of Congo and Darfur, and his views of American democracy.

NEWSWEEK: There is a debate in the African Union about how long it will take to create a United States of Africa. Libya's Muammar Qaddafi has pushed for its immediate creation. What's your vision?
Jean Ping: For those who want a quick creation it could be three phases of three years. Gradualists talk about 35 years. I think there is a possibility of compromise. We also have a debate on what type of "United States" we will have: be it a confederation, a federation, or a centralized government.

What is the motivation?
We need bigger markets. Some of our countries are too small and too weak. Africa is a big continent full of raw materials. But this big continent is divided by 165 borders into 53 countries. Even the voice of a larger country like Nigeria or South Africa by itself is inaudible in international negotiations on world trade or climate change. But collectively it's impossible to ignore 53 countries with almost one billion inhabitants.

About eastern Congo, the United Nations has said it will send an additional 3,000 peacekeepers, bringing the total troop force to 20,000. Is that enough to halt the bloodshed?
No I don't think so. The U.N. troops are not generally authorized to use force. They are in very bad shape. It is very difficult for them, not only due to their [small] numbers but due to the nature of their mandate, to do what some Congolese and Africans are expecting. That's why civilians are throwing stones at them.

What about the current ceasefire, signed in Nairobi on Nov. 7?
If the ceasefire is not respected, then we should use force. But those who use force will be Africans, like the countries of the Great Lakes or the African Union. The ex-Interhamwe who are there, the [Hutu] genocidaires who moved from Rwanda to eastern Congo, they are considered by Rwanda to be a threat to their security. This problem, the root cause of the conflict, should be solved. I am confident we can solve it. If this problem is solved there are no more reasons for [renegade Tutsi] Gen. Laurent Nkunda to fight, because he says he is fighting to protect the Tutsi of the Congo.

The African Union has voiced concern about the International Criminal Court's genocide indictment of Sudanese President Omar al-Bashir, saying it could prevent Sudan from implementing the 2005 Comprehensive Peace Agreement between the North and South. Why?
We in the African Union, we have to fight impunity. But we say that the step taken by the International Criminal Court is not going to help the situation. We have decided to ask the U.N. Security Council to suspend the implementation [of the indictment] for 12 months. The second thing is we have asked the Sudanese government to prosecute those who are responsible for crimes.

How would President Bashir's government be able to prosecute those involved? You can understand why outsiders would be skeptical.
Well I don't want to go into details, but is it a genocide in Darfur? The U.N. Security Council sent a mission there in 2005 and the conclusion of that mission is that there is no genocide. There are crimes against humanity and war crimes. Crimes against humanity and war crimes are very important, but there is no need to use 'genocide' if it is not proven.

Somalia has been without a functioning central government for 18 years. Is it time to discuss partitioning the country into separate parts if there is a chance that will bring peace?
We can't go in that direction, otherwise we'll light the whole continent on fire. We know that Puntland and Somaliland [in northern Somalia] are peaceful. But it doesn't mean you should go and break Somalia into a hundred pieces. Somalia should be a peaceful country with a government like any other. For 18 years there has been disorder in Somalia on land, and it didn't bother many people. Now it's bothering them because of its extension on the sea. Piracy is one of the results of Somalia being 18 years without any government. You also have terrorism and arms and drug trafficking. The root cause of all this is that Somalia has no government.

What about Somalia's transitional federal government? It's going on its fifth year, controls just a small part of the territory, and doesn't have any functioning ministries. Has the international community made a mistake in backing them?
I don't think backing them was a mistake. I just think that this government does not work. The president is fighting with the prime minister. The parliamentarians are outside the country in Nairobi. It's very difficult to understand. You come to help people and they don't help themselves.

Do you think the commitment to democracy in some African countries has been weakened by the rise of China, which has raised the living standards of its people without democracy? Do countries like Ethiopia or Sudan look to that as a model?
The AU charter says that we should promote democracy, good governance, and human rights. Don't forget that before the 1990s the African continent was ruled by single-party states. It was said that democracy was a disease, that to build a nation you should have an authoritarian regime. There is a misconception that some leaders have that democratizing means weakening the state. It's not necessarily true. We are facing some difficulties, but we are 53 countries, and if your image of the continent is that of Zimbabwe or Somalia, it's not fair.

How do you think Africans view Barack Obama's victory?
There are many expectations. First of all, I think democracy in the United States gives hope to everybody. I mean, an African-American being elected? It would never happen in Europe.

Do you think in their hearts many Africans thought Obama would lose?
We were convinced that he would lose. This shows the strength of democracy in America. Most of those who elected Obama are white. The second thing is that there are expectations that Obama will bring a different way of ruling the world. It seems that America is not going to continue to rule the world with a stick.

President Bush was unpopular overseas because of Iraq, Guantánamo, and now the financial crisis. But he's also committed an enormous amount of money—$15 billion in his first five years—for HIV/AIDS and other diseases. Is it fair to say that Bush has been better for Africa than President Clinton because of the amount of money for AIDS initiatives?
No. Before Clinton, the U.S. had no Africa policy. The continent was left to its former colonial rulers. Clinton brought focus to Africa. And Bush maybe increased it.