Progress Report: Dick Cheney, Insurance Salesman

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Center for American Progress - Progress Report

 

 

by David Sirota, Christy Harvey, Judd Legum and

Jonathan Baskin

------

 

July 20, 2004

MEDIAJoin the FightHEALTH CAREDick Cheney, Insurance

SalesmanECONOMYHourly Wages Keep Falling

UNDER THE RADAR

 

MEDIA

Join the Fight

 

Media Matters for America #8211; a nonpartisan media

watchdog #8211; today is launching its new Activism

Network where registered members can tap into a range

of hands-on actions to combat the spread of

conservative misinformation in the media. Among other

things, registered users can join user forums and

serve as media monitors to post and debunk

conservative misinformation as it is spewed out

through TV, radio, and newspaper. Go to

www.mediamatters.org and become a media activist.

 

HEALTH CARE

Dick Cheney, Insurance Salesman

 

Speaking at the Medical College of Ohio in Toledo

yesterday, Vice President Cheney called for a cap on

medical malpractice awards. But instead of shilling

for the insurance industry, Cheney's time would have

been better spent in Ohio reviewing this fact sheet on

malpractice from the Ohio Universal Health Care

Network. As it documents, the " solution " proposed by

the White House is really designed to take the heat

off the insurance industry that is fueling the

problem, and bankrolling the Bush campaign. As other

studies document, malpractice caps do little #8211; if

anything #8211; to reduce doctors' and patients'

insurance rates. Insurance industry simply pocket any

money saved. One recent study by the Congressional

Budget Office found that the benefits of capping

malpractice would be " weak " and " inconclusive. "

Meanwhile, such reforms would " undermine incentives

for safety, " while making it " harder for some patients

with legitimate but difficult claims to find legal

representation. "

 

NO LINK BETWEEN CAPS AND PREMIUMS: Vice President

Cheney would have Americans believe there is a direct

link between the insurance premiums doctors pay and

rising health-care costs. Not so. Last year, Weiss

Ratings, Inc., an independent financial services

analysis company, issued a comprehensive study showing

that in 19 states with malpractice caps, physicians

suffered a 48.2 percent jump in their premiums.

Meanwhile, in 32 states without caps, premiums rose by

only 35.9 percent. In other words, there is no

connection between caps and premium rates. Instead,

the premium problem comes from insurance industry

pricing practices that gouge doctors. While

malpractice payouts actually went down by 8.2 percent

between 2001 and 2002, there was no corresponding

decrease in doctors' premiums, meaning the insurance

industry pocketed the difference. #160;The Des Moines

Register points out, " There's simply no correlation

between lawsuits and insurance rates. Rather,

insurance rates are tied to the climate of the stock

and bond market, where insurance companies invest much

of their money. "

 

CALIFORNIA CASE STUDY: The state of California put

medical malpractice caps in place in 1975. A 1993

study of medical malpractice insurance in California

showed the caps had " done little more than enrich

California malpractice insurers with excessive

profits, at the expense of malpractice victims. "

According to a study released in California yesterday,

damage caps now come at the expense of the most

gravely injured.

 

GETTING WHAT IT PAID FOR: Why won't President Bush and

Vice President Cheney address the real issue of

insurance reform? #160;The insurance industry has paid

a pretty penny to protect its interests. Since 2000,

the industry has donated over $67 million to President

Bush and his allies in Congress, twice as much as

they've contributed on the other side of the aisle.

 

CBO PUTS IT IN PERSPECTIVE: The Congressional Budget

Office (CBO) this year found that " even large savings

in premiums can have only a small direct impact on

health care spending--private or governmental--because

malpractice costs account for less than 2% of that

spending. " In fact, an analysis by the CBO shows

capping Medicare malpractice would benefit physicians

and doctors, but would reduce private health insurance

premiums a measly 0.4 percent. Want proof? According

to the CBO, there is " no statistically significant

difference in per capita health care spending between

states with and without limits on malpractice torts. "

 

DEFENSIVE MEDICINE DEFENSE: The White House blames an

increase in health care costs on the defensive

medicine doctors practice. It's a strategy, the

administration says, doctors employ to protect

themselves from lawsuits. Not so, said the CBO report.

Instead, ordering more expensive tests " may be

motivated less by liability concerns than by the

income it generates for physicians. "

 

DOCTORS NOT DRIVEN OUT: The administration has often

claimed that recovery caps were also necessary because

" lawsuits are driving docs out of the practice, which

means there's less availability. " While there are

isolated markets with problems, a report by the

General Accountability Office found that nationally,

" reductions in supply by health care providers could

not be substantiated or did not widely affect access

to health care. " In fact, in Pennsylvania and West

Virginia #8211; two of the 19 states supposedly in a

" full-blown liability crisis, " the number of doctors

per capita has actually gone up over the past six

years, according to the GAO. Bob Herbert of The New

York Times took a look last month at how the Bush

administration is cooking up the myth of a crisis.

 

ECONOMY

Hourly Wages Keep Falling

 

A major indicator of economic growth contradicts Bush

administration claims the economy is " moving in the

right direction " and paints a troubling picture of the

supposed Bush " recovery. " Despite gains in

productivity and corporate profits, Sunday's New York

Times reported, " The amount of money workers receive

in their paychecks is failing to keep up with

inflation. " According to the nonpartisan Economic

Policy Institute (EPI), " real hourly and weekly

earnings have fallen for six out of the last seven

months, " with those averages dipping sharply in June.

#160;(The American Progress looks at whether much of

the " job boom " is just hype.) The Bush administration

claims its economic policies are " expanding the pie, "

but EPI senior economist Jared Bernstein, asks, " where

are the slices going? " Indeed, it seems like

" Everything really is going up #8212; gas prices,

corporate profits, soda pop prices, gross domestic

product, medical prices, household debt, milk prices

#8212; except your salary. " As the Wall Street Journal

points out this morning, the economic " recovery " is

tilting to the wealthy in America, with lower-income

Americans still feeling the squeeze.

 

JUNE SWOON: Last Friday, four days after Vice

President Cheney informed Americans that " wages have

been rising, " the Bureau of Labor Statistics " reported

that hourly earnings of production workers -

nonmanagement workers ranging from nurses and teachers

to hamburger flippers and assembly-line workers - fell

1.1 percent in June, after accounting for inflation.

The June drop, the steepest decline since the depths

of recession in mid-1991, " represents the second

straight month there has been a significant decline.

Real hourly earnings fell 0.8 percent in May.

 

DOWNTURN COULD STALL ECONOMIC GROWTH: Despite

continued job growth, the downturn in wages could " put

a dent in the prospects for economic growth, " because

ordinary workers might not be able " to spend money at

a healthy clip, undermining one of the pillars of the

expansion so far. " The NYT reports, " the current slide

in earnings is a big blow for the lower middle class.

Moreover, the absence of lower income households could

also weigh on overall economic growth. " Bush Commerce

Secretary Donald Evans ignored the unpleasant

statistics in a speech last week, exhorting Americans

to be more " optimistic, " and stating, without any

evidence, that Bush's economic vision " could bring the

strongest economic performance any of us has ever

seen. "

 

JOBLESS RECOVERY: EPI's study shows the " first and

most important factor " contributing to stagnating

wages " is the lingering effect of the formerly jobless

recovery. " Though employment has grown recently, so

many jobs have been lost since Bush took office #8211;

we're still 1.2 million jobs short of peak numbers in

March 2001 #8211; that considerable " slack " remains in

the labor market. The June 2004 unemployment rate is

5.6 percent, the very same rate it was in November

2001, when the current recovery began.#160;Much of the

" slack " isn't accurately conveyed by data because

unemployment statistics do not properly explain " the

shortfall of jobs that has built up over the last

three years. " According to BLS statistics, since June

2000, " the number of adults considered 'not in the

labor force' - those who don't have jobs and are not

looking for them - has grown by about 4.4 million, to

66.6 million. " That means unemployment figures (8.2

million Americans) capture less than two-thirds of the

picture. Overall, the NYT reports, " the work force

participation rate has dropped to 82.8

percent#8230;the lowest rate since 1987. " (The

upside-down economy takes a bite out of middle-class

wallets; see this American Progress backgrounder for

more.)

 

MORE McJOBS: President Bush says " Higher growth and

higher productivity are leading to better-paying jobs

across America, " but once again his claim is not

backed up by the facts. Economists indicate growth has

occurred in " largely lower-paying jobs, " whose

substandard quality " appears to be putting downward

pressure on wage growth. " And Bloomberg reports Wall

Street is beginning to take notice. David A.

Rosenberg, chief North American economist at Merrill

Lynch, wrote that " The vast majority of net new jobs

created have been in the low-wage sectors of the

economy, and income growth has been disappointing. "

Stephen S. Roach, chief economist at Morgan Stanley,

reached a similar conclusion: " While there has been

some improvement on the hiring front in recent months,

the quality of such job-creation has been decidedly

subpar#8230;Unless that changes, the risks to a

sustainable economic recovery will only intensify. "

 

 

 

 

 

CIVIL LIBERTIES #8211; NO FIRST AMENDMENT IN VEGAS?:

Reuters reports, " singer Linda Ronstadt was thrown out

of the Aladdin casino in Las Vegas on the weekend

after dedicating a song to liberal film maker Michael

Moore and his movie 'Fahrenheit 9/11.' " The Las Vegas

Sun reports Aladdin President Bill Timmins had her

forcibly removed, ordering " security guards to escort

[her] off the property " and her belongings removed

from her hotel room. Timmins told the singer " she was

no longer welcome at the property for future

performances. "

 

IRAQ #8211; GOVS TELL OF SHORTAGES: The New York Times

reports, " with tens of thousands of their citizen

soldiers now deployed in Iraq, many of the nation's

governors complained on Sunday to senior Pentagon

officials that they were facing severe manpower

shortages in guarding prisoners, fighting wildfires,

preparing for hurricanes and floods and policing the

streets. " Gov. Dirk Kempthorne (R-ID), the departing

chairman of the National Governors Association, said

" he was worried about the deployment of 2,000 members,

or 62 percent of his National Guard, who are now

training in Texas for a mission in Iraq. " His

spokesman said, " In the past we've been able to call

on the National Guard. We may not be able to call on

these soldiers for firefighting capabilities. "

 

AGRICULTURE #8211; STIFFING BLACK FARMERS: Reuters

reports that a new study by the nonpartisan

Environmental Working Group [EWG] documents how the

Bush administration has gone to extraordinary lengths

to stiff black farmers. In 1999, " under the Clinton

administration, the federal government agreed to

compensate black farmers for decades of racial

discrimination that shut them out of billions of

dollars in federal subsidies. " Specifically, the U.S.

Department of Agriculture agreed to pay at least

$50,000 to each eligible black farmer. However, the

USDA later rejected payments to 82,000 of the 94,000

black farmers who applied -- or about 87 percent, with

USDA paying only $800 million of the $2.3 billion

settlement. EWG and the National Black Farmers

Association " criticized the Bush administration,

saying it aggressively fought the black farmers'

claims. " It pointed out that the Justice Department

spent 56,000 hours at a cost of $12 million to oppose

some of the compensation claims. See the full study at

EWG's website.

 

VOTING #8211; PROTESTING A FAULTY SYSTEM: Come

November, more Americans are going to be voting

electronically. And many aren't happy about it.

" Voters took to the streets in 19 states last week to

protest paperless electronic voting machines. In the

coast-to-coast " Computer Ate My Vote " rallies,

citizens showed what activists say could become

widespread dissent against nonverifiable ballots if

this year's presidential election becomes another

close call. " In the haste to switch to electronic

voting, many worry, the process has become less secure

and reliable. The San Jose Mercury opines, " Congress

should be getting into the act. It compounded the

problem by appropriating billions of dollars for

touch-screen systems without demanding security and

accuracy features and without creating a credible

certification process. And bills to demand a

voter-verified paper audit -- one by Rep. Russ Holt, a

New Jersey Democrat, and another by Sen. John Ensign,

a Nevada Republican -- have been bottled up. "

 

#160;Don't Miss

DAILY TALKING POINTS: Wages Not Keeping Up With

Inflation

 

COLUMN: Bush and Race: Policies Matter

 

COLUMN: Is America Losing It's 'Big Heart'?

 

ECONOMY: American Progress fellow Scott Lilly explores

whether the so-called Bush " job boom " was really just

hype.

 

9/11: American Progress backgrounder on all you need

to know before the 9/11 Commission issues its final

report later this week.

 

AGRICULTURE: New report says USDA stiffing black

farmers.

 

Contact The Progress Report:

pr.

 

 

 

 

#160;Daily Grill

 

#8220;Wages have been rising.#8221;

 

#8211; Vice President Cheney, 7/12/04

 

VERSUS

 

" The Bureau of Labor Statistics reported that hourly

earnings...fell 1.1 percent in June.. The June drop,

the steepest decline since the depths of recession in

mid-1991, came after a 0.8 percent fall in real hourly

earnings in May....Thee decline in the hourly rate

last month cut deeply into workers' pay. "

 

#8211; NYT, 6/18/04

 

#160;Daily OutrageThe Bush administration continues to

claim malpractice caps will lower insurance rates,

even though most empirical data contradicts that

claim.

#160;Archives

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