Category Archives: Medical-Financial-Industrial Complex

Supreme Court Decision in Loper Bright Enterprises v. Raimondo:  A Blow to Americans’ Health & Our Democracy as We Know It.

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Dave Kingsley

Free Rein for the Increasingly Powerful Insurance Industry in the Increasingly Privatized Medicare & Medicaid Programs

    Make no mistake about it, the Supreme Court this week in Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce [1] handed over supreme power to the corporations of America.  These decisions didn’t just weaken federal agencies, they gutted them. OSHA, CMS, EPA, NLRB and other major regulatory agencies have been incrementally weakened for decades through legislation and raw political power. These cases are the coup de grace for our mortally wounded regulatory agencies.

    In the massive healthcare sector of our economy – funded mostly by taxpayers – major corporations will now be able to ride roughshod over the rights and needs of beneficiaries who have paid for and earned qualification for benefits.  For instance, UnitedHealth, which has exploded to the top of the Fortune 500 in a mere two decades and other insurance behemoths can continue their takeover of Medicare and Medicaid, reduce care, increase cash flow, and ignore attempts by HHS to rein them in.

    Any attempt at regulation by CMS will be challenged in court.  It is likely that regulators will lose.  No matter how rational, technical and scientific the agencies’ arguments are, the Supreme Court will have the final say.  Although nine justices on the court do not have the expertise, the resources, or the time to make appropriate decisions that congress and the courts have historically left to qualified experts in agencies, this Supreme Court will hand down decisions based on the majority’s perverse right-wing, religious ideology.   As Justice Kagan wrote in her dissent:

    “Its justification comes down, in the end, to this: Courts must have more say over regula­tion—over the provision of health care, the protection of the environment, the safety of consumer products, the efficacy of transportation systems, and so on. A longstanding prec­edent at the crux of administrative governance thus falls victim to a bald assertion of judicial authority. The major­ity disdains restraint, and grasps for power.”

    Make no mistake about it, that power will be exercised on behalf of UnitedHealth, CVS, Cigna, Molina, the Ensign Group and any other corporation wanting relief from government oversight.  We are already seeing this in the American Healthcare Association’s judge shopping suit against CMS for regulations requiring adequate staffing in nursing homes (through their Texas affiliate).

The Philosophy and Structure of the U.S. Constitution Provides Ultimate Power to the People – not to the Biggest Corporations & Six Ideologues on the Supreme Court.

    The people pay the taxes to fund government healthcare and elect representatives to enact and implement programs such as Medicaid and Medicare.  And I believe we the people still have the power – if we are willing to exercise it. Last week I was speaking to the National Association of Attorney’s General/Medicaid Fraud Control Units Association in San Diego.  My evaluation of the nursing home industry is not complimentary to say the least. At the end of my talk, I was asked what could be done about the scurrilousness of this industry.  My answer to that is first things first: expose them. Expose them to the media, expose them to legislators, expose them to colleagues, friends, and neighbors.  The American Healthcare Association (AHCA) and LeadingAge perpetually lie and propagandize about finance.  In my view, the pushback on their claims about low nets and thin margins needs to be stepped up. 

    Anyone can see the income statement, cash flow statement, and balance sheet of the Ensign Group – it is public.  Attorney General Jame’s suit in New York exposes a cabal of investors who are not required to disclose their consolidated financial statements.  The Ensign Group has over $500 million setting on their balance sheet – that is double what they had a couple of years ago.[2] The New York AG’s suit against Comprehensive at Orleans indicates cash extraction of 22% on $86.4 million in revenue over approximately three years.[3]

    Does anyone seriously doubt that these examples are exceptions in the whole scheme of things?  They are not.  We have plenty of other evidence to undermine the lies of AHCA and LA.  We need to put that in the face of legislators.  Organize, organize, organize, and relentlessly shove information at Senators and Congresspersons.  No doubt, the majority on the Supreme Court will do what we know they will do.  It will be ugly.  But they need public support to remain legitimate and survive as a credible juristic institution.  If the court continues down its current path, the citizens will eventually change the court.

[1] 22-451_7m58.pdf (supremecourt.gov)

[2] See their 2024 10K filing with the S.E.C. here: https://investor.ensigngroup.net/financials/sec-filings/default.aspx

[3] https://ag.ny.gov/press-release/2022/attorney-general-james-sues-orleans-county-nursing-home-years-fraud-and-resident

The Choice between a Humane Health Care System or an Industrialized Medical System for the Benefit of Shareholders & Executives: What would the People Choose?

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Dave Kingsley

    Elites sneer at the idea that people in general are intelligent enough to make good decisions in democratic elections. This is a disgusting and ill-informed attitude mostly aimed at the middle- and lower-income classes. But historical evidence indicates that people en masse are not as dumb as the self-anointed educated class and the mainstream media would have us believe. 

    Hubris and ignorance on the part of political elites and the intelligentsia have led pollster charlatans, journalists, bureaucrats, and politicians to assume that public opinion is little more than clueless folderol, rife with nonsensical conspiracy theories.  In so many ways, the “people” are viewed by the affluent and college educated classes and opinion influencers in the media as “lesser thans” and “lower types.”

    Machiavelli knew better. As he wrote in Discourses on Livy, “But as for prudence and stability, I say that the people are more prudent, more stable, and better judges than a prince. And not without reason is the voice of the people compared to that of God, for popular opinion has been seen to predict things in such a marvelous way that it is as if some occult power[virtu] enables it to foresee the evil and the good that may befall it.”[1]

    Harry Truman knew better. Among other issues, he ran on the principle of universal, single payor health care and won. Elites, pollsters, and journalists predicted that he would lose in a landslide.   We didn’t get the health care – thanks to the bigotry of Southern Democrats – but we got the people’s opinion about government’s role in medicine for the masses. There is no evidence that it has changed.[2] 

    Women fighting for reproductive rights know better and are winning ballot measures to enshrine those rights in state constitutions across the U.S. Extremist conservative legislators are consistently trying to undermine the efforts of citizens for a “right of choice” through anti-democratic legislative maneuvers.

    In Missouri, where I live and where the Republican majority in the legislature has gone extremist right-wing bonkers, Medicaid expansion was passed by “the people” through a referendum.  Ballot measures on reproductive rights and a minimum wage will be on the ballot in November and will likely pass.

    Oracles from left-to-center-to-right elitist political ingroups were shocked when voters from so-called “red states” voted to enshrine reproductive rights of women in state constitutions.  The media – all the media from right to left – would have you believe that we are a “divided nation.”  We aren’t. But that story is good fodder for television and newspapers.  The truth is most Americans share the same values and want the same things from government.  The broad middle (the overwhelming majority) of the voting public can best be described as ambivalent with some conservative views and some liberal views – mostly commonsensical views.

    I will stipulate that a pathological, narcissistic-sadistic fascist was able to win the electoral college and become president – but like every other Republican since George H.W. Bush he didn’t win the popular vote. He lost by an even wider margin in 2020.  Furthermore, many counties in states like Pennsylvania that Barack Obama won in 2012 by an overwhelming margin flipped to Trump by a wide margin in 2016.  I believe there is an explanation for that – which is ignored by the media and political intelligentsia.

In this Age of Show Business, the Role of Media is to Entertain You – Not Inform You.

    No doubt, in a country with a population of 334 million people (231 million are 18 and older) [3] and 161.42[4] million registered voters, an unstable tyrant can round up tens of millions of ardent, true believer followers. Given the spread of mental illness, fractured egos, instability, financial stress, and other psychologically damaging stresses of toxic capitalism, it should come as no surprise that a demagogue could and would come along and with the help of the MSM drive the electoral process into nonsense and chaos. 

    This should be even less surprising when the demagogue’s persona is the creation of NBC, which is owned by Comcast, one of the most powerful corporations in the oligopolistic media industry. It was, therefore, the mainstream media that led a significant mass of busy stressed-out people into believing that Trump was a kick ass, savvy businessman who could and would straighten things out and lessen their pain.  For years, he was a corporate created caricature foisted onto unwitting and economically hurting television viewers looking for escape. 

    Since 2015 when Trump descended on the escalator in Trump Tower – and after setting up Mexican immigrants as America’s enemy – the media has feasted on his burlesque politics.  Nothing attracts attention like dangerous cartoonish politicians with slapstickish, outrageous performances.  For nearly a decade, Trump has been a prop for feeding the much needed noisy, shallow product on cable channels, morning talk-entertainment shows, and nightly news. Although we “have nothing to fear but fear itself,” fear plus titillation keeps people tuned in.  The corporate need to enhance and protect shareholder value enhances the value of all Trump all the time on cable political entertainment channels such as CNN, FOX, and MSNBC plus all of the NBC, CBS, ABC, and FOX Sunday talk shows.

    The media is responsible for Trump – not public stupidity.  The media has a vested interest in keeping him going.  The public does not. 

Venal Media & Political Forces with Dangerous, Self Interest Designs Have Hijacked Political Narratives through Propaganda, Chutzpah, and Manipulation

    As we have learned from history, industrialists, media, and other powerful institutions (think religion) with the intent to install a strong man and a fascist movement in power for their own benefit, have the capability to misinform the public about real conditions and move them to participate in their own destruction. Once falsehoods are instilled in desperate and unwitting citizens, it is very difficult to tear them down.   

    As the American people are subjected to another round of election time insanity, the MSM is at it again – minimizing the severe pathologies and dangers of Trump and magnifying real and imagined negatives of President Biden.  In their stressful, busy attempts at survival, ordinary people naturally and unconsciously process signals – memes and narratives sometimes subtle, sometimes not so subtle.  It is to the benefit of media corporations to create and maintain an appearance of normality and a “horse race” so that their customers don’t lose interest.  As former President Obama said last week “behavior that used to be disqualifying is now normal.”

Let “We the People” have Honest Information – not Propaganda – and then Let Us Decide

    U.S. leadership values have dragged mass culture downhill since the post World War II robust and optimistic middle-class and Golden Age of Capitalism (circa 1945-1975). Since that time, the former Republican Party has degenerated into a full-blown fascist movement – a phenomenon filtered out of MSM narratives. It is dangerous for the media to ignore the resilience of fascism [5] and concentration of wealth and power in mammoth corporations and super-rich individuals/families.

    The fascists have clearly laid out their agenda. The MAGA Project 2025 will take the American people to a place where an overwhelming majority does not want to go.  It is a blueprint for dismantling the administrative state, stacking the courts, white supremacist rule, repression of dissent, and oppression of the middle and lower classes.  The healthcare program is misogynistic, religiously fundamentalist, and identitarian.[6]

    None of the theocratically fascist program offered to the American people by the fanatics of a movement that could gain control of government in a few months would pass muster in a referendum on healthcare or any of the other scary elements of Project 2025.  The cruelty of the current healthcare system would become cruel in spades.  I believe that the media should be less sanguine about rising fascism for the sake of appeasing shareholders and provide truth instead of pablum to consumers of television and print publications. 

    Furthermore, the Democratic Party should stop its political poll idolatry and naïve idealism about “working across the aisle” and wage a more robust fight.  The overwhelming majority of the American people can see through all of this political theatre and are disgusted.  Why don’t we just have a national referendum on what the people want?

[1] Niccolo Machiavelli (2003) The Prince and Other Writings.  New York:  Barnes & Noble Books, 182.

[2] David McCullough (1992) Truman. New York: Simon & Schuster, p. 532. It is widely believed by historians and social scientists that the American Medical Association blocked Truman’s single-payer, universal, healthcare program by convincing the American people that it was a slippery slope into socialism.  That’s false.  Southern Democrats killed Truman’s proposal for a national health insurance program that would look like the “Medicare for All” proposals devised by progressive Democrats.  The Democrats with a majority in Congress could have passed Truman’s plan and the AMA could not have stopped it.  However, Senators and Congressmen from the former Confederate States had to power to block any legislation that would threaten the racial hierarchy and plantation capitalism of the South.  When it came to healthcare, he American people in general did not share the Jim Crow agenda of the Southern Delegation. 

[3] National Population by Characteristics: 2020-2023 (census.gov)

[4] Number of registered voters U.S. 2022 | Statista

[5] The Allies defeated Hitler and  Mussolini, but fascism has been quite robust and is now more potent than ever. Consider the strength of Marine LePen’s National Front in France and the results of the recent EU elections.  See also: Richard Wolin (2004) The Seduction of Unreason:  The Intellectual Romance with Fascism from Nietzsche to Postmodernism.  Princeton, N.J.: Princeton University Press.

[6] Project 2025 – Wikipedia:

“Project 2025 accuses the Biden administration of undermining the traditional nuclear family and wants to reform the Department of Health and Human Services (DHHS) so that this household structure is promoted.[18] According to Project 2025, state governments should have the authority impose stricter work requirements for beneficiaries of Medicaid,[23] the federal government should promote the Medicare Advantage program, which consists of private insurance plans,[56]: 464–65  federal healthcare providers should deny gender-affirming care to transgender people, and eliminate insurance coverage of the morning-after-pill Ella required by the Affordable Care Act of 2010 (Obamacare).[18] Project 2025’s healthcare plan would also remove Medicare‘s ability to negotiate drug prices.[18]

Project 2025 aims at dramatically reforming the National Institutes of Health (NIH) by making it easier to fire employees and to remove DEI programs. Conservatives consider the NIH to be corrupt and politically biased.[15]

Project 2025 accuses social media networks—directly naming Facebook, Instagram, Twitter, and TikTok—of jeopardizing the mental health and social ties of young Americans by creating a form of addiction. “Federal policy cannot allow this to continue,” it states.”[56]: 5–6 

Philanthropic Foundations, Quasi-governmental Science Organizations, and Universities Often Act as Corporate Shills: How the Industrial Complexes Work.

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Dave Kingsley

President Eisenhower’s Warning

    In his 1961 farewell speech, President Eisenhower recognized danger in the development and growth of a new phenomenon in U.S. economic and political history – a permanent, massively funded, and rapidly growing complex of government agencies, military-related industries, and universities.[1]  His prescient concern was that we would pay for and get more defense than we need; that the military establishment would grow beyond reason and purpose; and that the Pentagon would become a vehicle for special interest power and enrichment – which indeed it has.

    A decade after Eisenhower’s warning about a mushrooming defense network, Barbara and John Ehrenreich suggested that an emerging medical-industrial complex was to healthcare what  the military-industrial complex was to defense.[2] In 1980, the late Arnold Relman, M.D., editor of the New England Journal of Medicine, stated that “The most important development of the day is the recent, relatively unheralded rise of a huge new industry that supplies healthcare services for profit.”[3]

    Industrial complexes like healthcare and defense have proliferated over the past few decades.  We have witnessed the growth of financial services, fossil fuel, agricultural, and a host of other industrial complexes.  These systems are not static.  Rather, they are dynamic, steady state, adaptive, social systems in a constant process of elaboration and complexification.[4]  Consequently, in Washington, D.C., and state capitals these elaborate, special interest networks have become horrifyingly powerful and effective – like nothing seen before. Indeed, this unprecedented facet of U.S. history is a major threat to future generations.  Unfortunately, it is hidden from the public and rarely discussed in the mainstream media.

The Policy Planning Network[5]: A Granular Understanding of “Industrial Complexes.”

    Politicians initiate legislation but not policy.  Rather, they respond to policy proposals from institutions representing special interests.  Agglomerations of these special interests working on policy are always complex systems of interactions between foundations, non-profit entities, e.g. think tanks, for-profit corporations, and powerful individuals.  In general, organizations such as the Brookings Institute, the Cato Institute, the Johan A. Hartman Foundations, the Commonwealth Fund, the National Association of Realtors, the Chamber of Commerce, the Heritage Foundation, the American Enterprise Institute, and the National Bureau of Economic Research are major players in policy percolating through special interest channels at the national level.

    Industries have their own self-serving propaganda organs and armies of lobbyists in the mix of interactions leading to policy proposals.  For instance, the real estate industry is represented by the National Association of Realtors, the pharmaceutical industry by Big Pharma, Hospitals by the American Hospital Association, Wall Street by a hoard of financial-services associations, and so on and so forth – there are too many to count.  When an issue is favorable to conservative causes or private enterprise (not necessarily capitalistic though), the Chamber of Commerce will weigh in with its immense financial resources.

    Some of these powerful entities like the John A. Hartman Foundation and the Commonwealth Fund[6] hold forth as “do gooder” organizations with no other mission than the public good.  With vast amounts of wealth pouring into their foundations, they have piled up huge amounts of capital on their balance sheets.  Since, they are required to dispense only 5% of their revenue to individuals and organizations related to their ostensible missions, they have in fact become status quo maintenance organizations and investment firms looking for optimal returns. Furthermore, they serve the interests of private wealth by ensuring that policy remains from the center to the center right. Major foundations are intent on ensuring that policy is not transformative, will not threaten the status quo, and will not upset the current distribution of wealth and power.

    In reality, these powerful players in Washington policy making are tax shelters for superrich individuals and their families who desire to keep their vast wealth out of the hands of the IRS and to maintain considerable control over public policy.  The most influential foundations typically solicit financiers and corporate executives to sit on their boards.  Representatives of labor, consumers, and the poor are not found on the boards of dominant special interest influencers in Washington, and the policy they induce reflects that fact.   

A Case Study of the Policy Planning Network: Commissions, Think Tanks, and Trade Associations that Help Keep So Many Institutionalized Elderly and Disabled “Nursing Home Patients” in Dire Conditions.

    How does a nation deal with the embarrassment of indecent and inhumane treatment of the elderly and disabled in government funded institutions run by private industry?  Recent and ongoing history tells us that the Nation’s elected representatives and agency heads have passed the problem off to foundations, think tanks, trade associations, and quasi-governmental science entities (i.e., to industrial complexes). 

    For instance, the incredible incompetence and indifference to prevention and infection control in nursing homes before and during COVID was referred to the Mitre Corporation – a shadowy Washington entity with roots in military intelligence and other defense activities. The John A. Hartman Foundation initiated a commission by the National Academies of Science, Engineering & Medicine (NASEM)[7] in 2020.

    Consequently, we’ve had two nursing home commissions in very recent history: the NASEM Commission and the Mitre Corporation Commission, both of which glossed over the nastier side of the industry, which is the dominant side.  Neither commission covered any territory that would result in holding the industry accountable for substandard worker treatment and pay, overall low quality of care, excess extraction of funds for shareholders, unsavory, unethical, far too often criminal owners, and problematic financial reports. 

    To the contrary, the commissions seemed sympathetic to the industry’s false claims of financial hardship and lack of government support.  Indeed, the Mitre Commission concluded that the industry needed more help in the form of personal protection equipment and other government assistance.  The industry’s excuses for the deaths of 200 employees and 2000 patients were never questioned by either commission.

Whitewashing & Window Dressing[8] the Inhumane Treatment of Disabled and Elderly Americans.

   The NASEM Commission has been institutionalized as the Moving Forward Coalition – a think tank funded by the John A. Hartman Foundation. The two nursing home commissions and the subsequent MFC are basically “tweaking-organizations,” which propose changes at the margins without a serious threat to the status quo.  Furthermore, The American Healthcare Association (AHCA) and LeadingAge (LA) – the well-funded and powerful nursing home trade associations –  and other private industry representatives appear to have a dominant position in the organization.  Special interests dominate the steering committee and are represented on all the other MFC committees.[9]

    Advocates and scholars serving on the two major commissions and the MFC tend to be passive and compliant with the industry’s self-serving wankery. The systemic problems of corruption and commoditizing of human beings for the sake of cash flow are ignored while the committee members engage in pretentious noodling over meaningless technical issues and “pie in the sky” ideas that will not be implemented.[10]  

    Like most major philanthropic corporations, the John A. Hartman Foundation is a vehicle for tax avoidance and superrich control over public policy.[11] The Mitre Corporation board is primarily a mix of current and former military intelligence officials and for-profit corporation managers and executives[12] with a displaced mission to grow their organization and enhance their power. 

    Interestingly, it is very easy to find the bios of the Mitre board members, which are on their website, but finding the bios of the John A. Hartman Foundation board takes some work.  Although board members’ names are listed on the JAH website, their bios are not. However, one can safely say that consumer, poverty,  and labor representatives are notably absent from these types of foundation boards.

Summary

    Important policy affecting the rights and welfare of the American people is generally generated in an interrelated system of foundations, special interest think tanks, trade associations, advocacy groups, and former high level government officials.  The money and power behind this policy planning network is controlled by super-rich individuals/families and corporations for the purpose of protecting their wealth and maintaining control over government policy. 

    The power wielded by the American power elite through their lavishly funded network in Washington and state capitals is unrecognized by the media and hidden from public view. This system will not change without exposure initiated by scholars and honesty from those who willingly participate in it. 

    The corruption and deceit in the making of policy – including nursing home and healthcare policy – is pervasive and intensifying.  Extensive system change begins with exposure.  The Tallgrass Economics blog and the nonprofit Center for Health Information and Policy have a mission to expose policymaking on behalf of the rich and powerful at the expense of ordinary Americans.  We will be discussing do gooder foundations, think tanks, trade associations, and advocates who assist them in policy contrary to the best interests of the public.

[1] https://www.archives.gov/milestone-documents/president-dwight-d-eisenhowers-farewell-address

[2] https://www.nybooks.com/articles/1970/12/17/the-medical-industrial-complex/

[3] https://www.nejm.org/doi/full/10.1056/NEJM198010233031703

[4] See Walter Buckley, (1960) Sociology & Modern Systems Theory

[5] Professor G. William Domhoff, an acolyte of C. Wright Mills described the major foundations, think tanks, trade associations, and other entities and individuals initiating policy on behalf of corporations and the wealthy as “the policy planning network.” See, G. William Domhoff (2010), Who Rules America: Challenges to Corporate and Class Dominance, pp. 85-115.

[6] The Commonwealth Fund board includes a representative from UnitedHealth and Margaret Hamburg, former FDA Commissioner in the Obama Administration among a bevy of board members from investment banks, private equity, and other for-profit businesses.  Dr. Hamburg also serves on the board of a pharmaceutical company for which she receives compensation in the amount of $500,000 per year.

[7] Seventy percent of NASEM funding is from government agencies while 30% is from private sources.  The NASEM reputation has been sullied due to funding and influence from industries with a stake in the outcome of its commission studies.  For instance, the Sackler’s donated $19 million to the agency prior to a study on opiates. In 2011, Purdue Pharma and the Sackler’s were rewarded with a study that minimized the danger of opioid pharmaceuticals of the type manufactured and distributed by Purdue Pharma, see e.g.: https://www.nytimes.com/2023/04/23/health/sacklers-opioids-national-academies-science.html  In contacting NASEM for the purpose of determining how individuals were selected for their nursing home commission, I found them to be removed from public purview and operating behind a veil of secrecy.  I could find out absolutely nothing.

[8] “Window Dressing” is used as a verb transitive in this context rather than as a noun – as in “they are window dressing an injustice.”

[9] https://movingforwardcoalition.org/committees/

[10] For instance, the effects of replacing “resource utilization groups” (RUGs) with a “patient driven payment” (PDPM), a major issue  in pervasive over billing practices, has been taken up by the JAH and MFC. This is a technical argument beyond the grasp of legislators, the lay public, and journalists that will do very little to stop the industry rip off and will certainly not improve the lives of patients.

[11] For an in depth analysis of major charitable organizations and the superrich, see:  David Wagner (2000), What’s Love Got to Do with It? A Critical Look at American Charity, pp. 89-115.

[12] https://www.mitre.org/who-we-are/our-people/our-leadership

Capitalism Exists Only Weakly in America These Days. Consequently, An Economic Dystopia Has Developed

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Dave Kingsley

Words & Mindsets Matter: It is Time to Change the Narrative

    The U.S. economic system is in bad shape. Economic growth is sluggish, wealth has become badly maldistributed, and government policy has been tilted in favor of Wall Street and capital at the expense of Mainstreet and labor. Because of a perverse, toxic, mythical free market mindset –  generated by economic departments in elite universities [i], –  the public has been conditioned to swallow a “government is bad, corporations are good” mantra. This potent narrative has had unfortunate social and political consequences. These consequences are becoming increasingly serious.

    Over the past few decades, the productive economy consisting of manufacturing, and small and medium sized businesses of all sorts has been been diminished, while the financial services industry has blossomed into a dominating economic force.  The valuing of maximized short term returns for shareholders over a healthy economy and the public interest is a barrier to a real capitalist system for a democratic society.

    By leveraging their immense wealth, massive corporations and the superrich have rigged the political system in their favor. Consequently, politicians have become increasingly venal and driven solely by campaign contributions and protecting their tenure in office. The media’s shallow and transitory coverage of this system is highly influenced by deceitful, sophisticated, and well-funded propaganda.

    As an ardent capitalist with considerable experience in the business world, I’m horrified by what is passed off as capitalism these days.  What we are witnessing is not truly free market capitalism functioning in accordance with the U.S. constitution and a democratic society.  Nor are we experiencing the proper role of government in regulating business for the purpose of protecting and enhancing population health and welfare. Federal, state and local legislatures are failing the American people while politicians scramble to meet the narcissistic needs of the wealthy and powerful who keep them in office.

    For instance, healthcare now constitutes 20% of the U.S. economy, much of which is not productive.  Practically all healthcare is underwritten by taxpayers with burdensome out of pocket expenses for patients.  But about half of national expenditures on medical services are excessive and extractive in the form of dividends, executive pay, stock buybacks, and price manipulation.  That is why about 10% or less of GDP in capitalist countries like Canada, France, the UK, Japan, and Korea is due to healthcare – these countries have government run medical care,

     Unlike the residents of our peer countries, Americans can and do go bankrupt due to medical expenses.  An inferior medical program for poor people doesn’t exist in the typical developed country, but that is what Medicaid is in the U.S.  It should not be acceptable to deny access to medical care because of poverty while the wealthy have concierge care and while taxpayers fund government largess for enriching the already rich (For instance, the CEO of UnitedHealth has been receiving at least $30 million per year in compensation).

Ethical Deterioration: A Consequence of a Financialized, Winner Take All Economy

    Yesterday, the former president of the United States claimed on television that the loans he received through deceit and fraud were justifiable because he paid the loans back and that his behavior was victimless.  Both statements are false,[2] and he knows that.  But let’s assume that he paid the loans back. Is the “crime” still victimless?  What are the effects of a powerful political leader’s cavalier attitude toward business ethics?  What does this behavior signal to the rest of the country?

    I’ve noticed over the past few decades that conflicts of interest and other unethical behavior are increasingly met with indifference in business, science, the media and practically every other institution of society.  Unethical data manipulation in scientific studies – especially in pharmaceutical research – is more widespread than we heretofore imagined.[3]  Individuals are lying or ignoring their egregious conflicts of interest and getting by with it.[4]

    Some behavior considered unethical – even illegal –  in the past has been legalized and normalized.  For instance, stock buybacks are a form of insider trading and a practice that was illegal until 1982. In September, Cigna announced a $10 billion stock buyback, which propelled their shares up 17% on the day of the announcement.[5] “Swiss giant Novartis announced plans to buy back up to $15 billion worth of its shares over two years, while US-based Bristol-Myers Squibb also authorized a $15 billion buy back.”[6]  These examples are merely the proverbial tip of the iceberg. Major medical care corporations are expending hundreds of millions worth of their excessive returns from taxpayer funded healthcare programs each year on stock buybacks and dividends instead of investing it in a more fair, efficient, and effective medical delivery system.

If we are going to change the economy for the better, we have to change narratives that undergird a “government is bad,” “privatization is good,” Belief System

    It is the duty of thinking Americans to look honestly at the real economic system and call it what it is – an increasing conglomeration of taxpayer capitalized enterprises with stagnant wages and a sinking middle class. It is up to all of us to stop ignoring reality and believing this economic system is “the best there is in the best of all possible worlds.”

    When I speak to professional groups and legislators, I make it a point to emphatically tell them that UnitedHealth, Centene, The Ensign Group – indeed the entire network of pharmaceutical, nursing home, health insurance, and privatized hospital systems – are not capitalistic enterprises.  Strange libertarianism and Friedmanomic fanaticism have taken over our economy and our lives with very little pushback.

    No doubt, a large proportion of my audiences consciously believes what I’m saying, but subconsciously doesn’t believe it.  Narratives work well when the public has been inundated with signals that are processed subliminally.  The dominant flow of memes coming from industrial propaganda sources through the media, education system, and day-to-day political-economic activities are effective because they are met with little organized resistance.

[i] Basically, I’m referring to the University of Chicago Economics Department and the late Milton Friedman – their star scholar – and the other economic celebrities and universities all across America mimicking the fanatical Chicago School free market ideology, which subsumes the “efficient market hypothesis,” “the agency theory of management,” “the virtues of deregulation,” and the notion that policy for diverting income and wealth to the superrich will “trickle down” to the lower SES quintiles.

[2] See, e.g.: Dan Alexander, “Donald Trump’s Great Escape: How the Former President Solved His Debt Crisis,” Forbes, July 20, 2022. 

[3] See, e.g.: Charles Piller, “Probe of Alzheimer’s studies finds ‘egregious misconduct,” Science, Vol. 382, October 2023, p. 251.  The journal Science is delivered to my home weekly.  Issues consistently include articles pertaining to cheating by scientists and the necessity for journals to retract articles submitted by the culprits that are caught.

[4] An example of conflict of interest that I discovered and fought to no avail occurred in the Gerontology Department at Kansas State University.  Professor Gayle Doll was the administrator of a state grant providing incentive funds to nursing homes who were improving their “homelike culture.”  Professor Doll also served on the board of one of the largest for-profit nursing home chains in the State of Kansas to which she awarded incentive funds.  My complaints about this egregious conflict of interest were met with indifference by officials and advocates.

[5] This was announced in the New York Times business section, which I read daily.

[6] Nick Dearden, 2024, Pharmanomics: How Big Pharma Destroys Global Health. New York: Verso, p.63.

PRIVATIZED HEALTHCARE: A FREE MARKET OR A FIXED MARKET & FREE RIDE FOR CORPORATIONS?

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By: Dave Kingsley

Time to Debunk the “Free Market Myth.”

    The American, healthcare system operates on the faulty assumption that private corporations will deliver medical care more effectively and efficiently than government. The pseudoscientific belief that a “free market” system will result in a higher caliber of service at a lower price is serving as justification for outsourcing medical care to corporate America. Consequently, the American people are paying more for medical care than U.S. peer countries and getting less care overall.

    The free market myth is easily debunked for several reasons: (1) the healthcare market isn’t competitive – prices are set through politics rather than through competition in a real market;[i] (2) investors extract excessive cash through financial engineering and political influence without reinvesting a reasonable amount for long-term improvement and innovation; (3) an oligopolistic trend is leading to a small number of powerful and dominant players in the marketplace; and 4) patients are not consumers and cannot negotiate prices for their medical care.

   When speaking to legislators or professional organizations, I’m becoming increasingly emphatic in telling them that outsourcing medical care to private industry is not capitalism. They need to quit thinking that it is. Furthermore, there is no evidence that government  does a worse job of running medical care systems.  Conversely, there is evidence that public run hospitals and nursing homes are managed better and at a lower cost than profit seeking entities. Indeed, handing over medical care to the likes of UnitedHealth, CVS/Aetna, and nursing home corporations has resulted in rigged markets, suppressed labor, and overpriced goods and services.  Economic power and the concentration of markets into an ever smaller number of corporate behemoths are draining healthcare resources into upper income wealth and harming the health and well-being of U.S. citizens.

The Trillion Dollar Medicaid Program is Dominated by Five Corporations: That’s an Oligopoly – not a Free Market

    An oligopoly is a structure in which entry into the market and prices are unduly influenced by a few big players.[ii] Although, the government – via the taxpayers – provide all of the funds for the massive Medicaid program, five corporations manage half of all state Medicaid funds.  As managed care organizations (MCOs), UnitedHealth, CVS/Aetna, Centene, Elevance, and Molina –  the “Big Five.”[iii] – are receiving half of the dollars flowing into Medicaid.

    Mega corporations such as UnitedHealth and CVS/Aetna are rapidly growing healthcare conglomerates spreading their influence across the entire healthcare industry through sales of Medicare Advantage and a wide array of other products and services in the $5 trillion healthcare sector of the U.S. economy.  Molina, Centene, and Elevance have focused more on Medicaid in growing their businesses than the “big two,” but are nevertheless finding lavish returns in the Medicaid space.

    The rapid growth and size of these MCOs presents the typical hazards of oligopolistic market structures: price fixing, continuous reduction in quality of service for the purpose of increased extraction of capital for shareholders, rent seeking through political lobbying, and media influence.  In 2000, none of the big five were in the top 30 of the Fortune 500.  By June of 2023, all but Molina had advanced into the top 25. 

    UnitedHealth with $324 billion in revenue is the 5th largest corporation in the U.S. behind Walmart, Amazon, Apple, and Exxon Mobil.  CVS/Aetna, slightly behind UnitedHealth with $322 billion in revenue, is 6th on the Fortune 500.  Elevance is ranked at 22 ($156 billion in revenue) and Centene is at 25 ($144 billion in revenue).[iv] In the past few years these companies have engaged in stock buybacks worth tens of billions, paid their CEOs from $20 to $30 million per year (not to mention board members and other executives), paid robust dividends, have had impressive increases in the value of their stock, and have expended huge sums in national and state legislatures and political campaigns for pursuing their interests over the public interest.

Medicaid is Characterized by Weak Regulation and Discrimination Against Low Income Americans

    Medicaid is poverty medicine.  It is lower tier medicine and far too often provides low quality and neglectful care.  Only the very poor can get Medicaid and in many states – including where the big five have contracts – beneficiaries are humiliated by government officials in the process of proving they are poor enough to qualify for benefits, and suffer the same humiliation in maintaining eligibility.

    Powerful corporations with weak federal and state regulators opens the door to abuse of people who qualify for Medicaid benefits.  The HHS Office of Inspector General has found that denials are excessively high and that states are doing far too little to monitor the common practice of denying care for the purpose of increasing returns on capitated rates.[v]

    In a free market, consumers have bargaining power.  If they are not satisfied with a price or the quality of a product or service, they can take their business elsewhere.  Furthermore, it is assumed that the two parties haggling over prices have equal access to all the information of relevance in the negotiations. In the rigged U.S. health care system, the lowest income strata eligible for healthcare benefits are stigmatized as lazy and dishonest. Their strength in the political process is nonexistent.

    In an oligopoly, choices are few and collusion between the providers regarding pricing puts buyers at a disadvantage.  Opportunities to shop around and haggle over the prices of medical procedures are not feasible when buyers depend on professional advice provided by sellers – often in emergency situations. Benefits and distribution of funds throughout the system are not driven by the power of people to bargain. Rather it is a system of winners and losers in the political process. In the current corrupt political process, wealth is power. Therefore, residents in the lowest economic strata have the least amount of power and are treated accordingly.

Rent Seeking

    Rent seeking is a synonym for excessive extraction – a technical economic term which refers to companies that “seek to gain added wealth without any reciprocal contribution of productivity.”[vi] In the case of Medicaid, U.S. residents have a right to receive the quality of care for which they are paying at the best possible price.  Unfortunately, there are no real evaluations of what taxpayers  are receiving given the amount of their tax dollars going to investors and lavish executive and board compensation.[vii]

     Corporations can take excess cash from public funded healthcare when industry lobbies buy unjust influence over the political process.  In 2023, United Health alone spent $1,246,462 on political contributions and $8,990,00 on lobbying.[viii] When U.S. campaign and lobbying expenditures are added up, contributions from corporations in the health insurance, real estate, finance, hospital, and nursing home industries sum to billions in political payouts for enhancing shareholder value at the expense of healthcare quality and equity. 

It’s All About the Narrative, Nay the Propaganda

    No other economically advanced country in the world has a separate medical system of inferior quality for poor people, denies access to a large number of poor citizens it is supposed to serve,  and diverts immense amounts of the program’s funds to the wealthiest citizens.  The U.S. does this very thing with very little pushback from the public. Why?

    A narrative without opposition simply works.  Misguided, faux conservatives have a simplistic view that can be reduced to this:  “Government bad, profit seeking corporation good.”  Whether it’s libertarianism, extremist-rightwing-Christian Nationalists, or conservatives in general, all forms of private enterprise are considered special and even holy among some groups.  President Reagan was responsible for selling the idea that government was responsible for societal problems and that we needed to look to capitalist enterprises to save us.

    Chicago school economics which are more theology than science and its patron Saint Milton Friedman became de rigueur in the 1970s.  The notion that government should step back and turn over its functions to corporations caught on with a boost from Ronald Reagan and Margaret Thatcher.  Throughout the 1980s Friedmanomics jelled into a fanatical and aggressive “starve the beast” movement. 

    Even the New Democrats formed in the Clinton era bought into the need to scale back previously institutionalized and cherished New Deal and Great Society programs.  During his administration’s ostensible “reform of welfare,” President Clinton announced that the “era of big government is over.” Most of the scaling back was directed at poor peoples’ programs.

The Consequences of Government Funded Healthcare Privatization are Dire & Getting Worse

    Most Americans have heard that the U.S. spends two to three times as much on healthcare per capita than peer countries in Europe and Asia.  Also, a large proportion of the population feels the burden of health insurance premiums, co-pays, and deductibles.  In peer countries, bankruptcy due to medical bills and total lack of access to medical care for millions do not occur.  Taxpaying residents of the U.S. are forced to choose between necessities such as food and needed medication for diabetes and other illnesses.  Corporations force the people responsible for their revenue, i.e., the taxpayers, into these dire situations while they pay CEOs tens of millions of dollars in revenue, buyback tens of billions of dollars in stock and pay robust dividends to investors.    

The corporate exploitation of Americans is not inconsequential.  The amount of wealth passed up from lower SES groups to the wealthiest Americans is creating a dangerous maldistribution of overall wealth in the U.S. economic system.  Indeed, life expectancy is declining, public confidence in institutions of government is weakening, and democracy is becoming less sustainable. The question is, “When will taxpayers say enough?” UnitedHealth, CVS/Aetna, and the variety of other corporations profiting from Medicaid, Medicare, Obamacare, and a plethora of tax write downs will grab whatever the traffic will bear.

[i] For excellent insights into pricing through politics (i.e., “rent seeking), see Nobel Prize winning economist Joseph Stiglitz’s discussion The Price of Inequality, pp. 28-51.

[ii] For a more elaborate discussion of the meaning of oligopoly and the implication of this market structure for a specific sector such as healthcare see: https://www.investopedia.com/terms/o/oligopoly.asp.

[iii] See for instance.: https://ccf.georgetown.edu/2021/02/23/medicaid-managed-care-2020-results-for-the-big-five/

[iv] These data are from: https://fortune.com/ranking/fortune500/2023/search/.

[v] https://www.oig.hhs.gov/oei/reports/OEI-09-19-00350.pdf

[vi] https://www.investopedia.com/terms/r/rentseeking.asp

[vii] It is important to note that shareholders, executives, and board members are particularly well compensated when stock prices rise.  Therefore, stock buybacks are driven by placing the culture of wealth enhancement over a culture of service to the public, employees, and communities.

[viii] https://www.opensecrets.org/orgs/unitedhealth-group/summary?id=D000000348

The Nursing Home Industry-Brown University Collaboration:  Science or a Sign of Growing Corporate Abuse of Power?

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By:

    Dave Kingsley

The Growing Importance of Data

      The time has come for citizens to recognize the corrupting influence of university-industrial relationships and to organize efforts to call them out.  In a democracy, data generated in taxpayer funded healthcare systems should be controlled by the public through a democratic process. If corporate wealth and power are determining factors in who has access to healthcare data and/or who is recognized as legitimate analysts and interpreters of government information, the American people will be sitting ducks for manipulation, and exploitation.

    Growing problems resulting from big data and A.I. call for pushback by concerned scientists and citizens in general. Computing power and speed, massive collections of data, and technologically sophisticated data analytics will increasingly play a major role in the fairness, quality, and control of the U.S. healthcare system.  Control over these processes by industrial interests through manipulation of government agencies, universities, and political actors will result in inefficient, costly, corrupt, and inequitable healthcare.

An Example of Industry-University Collaboration in Real Time

     An insidious collaboration between the American Health Care Association (AHCA) and the Brown University Center for Gerontology & Healthcare Research (BU CGHR) serves as an example of how a university and industry can team up to thwart efforts by advocates to improve the quality of nursing home care.

 I have written about the Brown University-AHCA relationship in a previous blog post (here). However, a colleague recently sent me an article jointly authored by AHCA representatives and employees of BU CGHR which greatly increased my concern over the blatantly self-serving and corrupted nature of industry influenced research.

    The article[1], published in the Journal of the American Geriatrics Society, included six authors, four of whom are employees of the AHCA.  Ostensibly, the purpose of the article was to address the need for and cost of legislation requiring an increase in minimum staffing.  The authors concluded (based on their statistical analyses which I consider questionable at best) that the legislation would cost an additional $7.25 billion.  On page 7, they advance the usual deceptive AHCA hardship narrative that “SNFs operate under tight operating margins (median 0.7% in 2019), and margins have declined since 2013.”  They conveniently ignore cash flowing to investors through home office allocations and networks of related parties such as real estate, labor contracting, and a host of other subsidiaries.

    Even the lead author of the article is an AHCA employee.  Nevertheless, the article conflict of interest statement noted that “The authors report no financial conflicts of interest.” Saying that there is no conflict of interest in this publication is about as Orwellian as saying “War is Peace” (see: Brown University policy on conflicts of interest in university affiliated research (here).

    The conflict-of-interest statement included in the article describes the AHCA, as “the largest national trade association representing skilled nursing ….facilities.”  This is a clever filtering of reality through the most positive lens possible.  In fact, the AHCA represents not “facilities,” but chains of facilities owned by investment banks, private equity firms, real estate investment trusts, publicly listed C corporations, and other legal/financial corporate types..  Most of these corporations have multi-billion or multi-million-dollar revenues.  Furthermore, the AHCA has a large political PAC for influencing legislation on behalf of corporations funding them.

Science, Statistics, & Research Integrity

    When an industry can leverage the cachet of a venerable academic institution and produce dubious statistical models and write articles favorable to entities with a financial interest in the outcome of research, human rights and adequate healthcare will inevitably become secondary to cash flow.  Money takes precedence over healthcare, suffering is increased, and lives are shortened.

    Advocates and scholars must speak out about the Brown University collaboration with AHCE and other such industry-university relationships.  The role of government, think tanks, and philanthropic foundations in these relationships should not be overlooked either.  We cannot be passive. The problem of data control and manipulation by industrial interests will only deepen and become more serious and destructive as A.I. becomes available.  

    Let’s have a much-needed discussion about science and research integrity.  Let’s separate science from scientism.  Observational studies of complex, dynamic, social systems based on data dumps are beset with fallacies and they are easily manipulated.  Therefore, poor research with the imprimatur of a leading university unjustifiably undermines efforts to improve the quality of nursing home care.  When the nursing home industry chooses to withhold corporate financial information from the public, we cannot accept studies regarding staffing as scientific.  By providing only partial information, the industry and its lackies in Universities cannot claim to be basing their claims on scientific evidence.

[1] Hawk T., White EM, Bishnoi C. Schwartz LB, Baier RR, Gifford DR. Facility characteristics and costs associated with meeting  proposed minimum staffing levels in skilled nursing facilities. J. Am Geriatr Soc. 2022; 1-10. Doi: 10.1111/jgs. 17678.

The AHCA/NCAL & Brown University Long Term Care Data Cooperative: A Horrifying Move by the Nursing Home Industry to Control Nursing Home Data Analytics.

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What is the Long Term Care Data Cooperative?

    The lavishly funded American Health Care Association/National Center for Assisted Living publishes Provider Magazine – a very slick piece of propaganda, the purpose of which is promotion of the nursing home industry.  In the November/December 2022 issue, the magazine included an article entitled Where Innovation Meets Data: The Long Term Care Data Cooperative.

    This newly minted institution is, according to the author, “the first of its kind in the world.” The author provided – unwittingly, I’m certain – a scary and chilling description of this so-called “innovation:” “Formed in partnership by AHCA/NCAL and Brown University and funded by the National Institute of Aging, the Cooperative is an effort to improve the quality of care within skilled nursing care centers through a new – and collaborative – approach to gathering and sharing patient data.” 

    According to the article this is a “large-scale effort” in which any long-term or post-acute center can enroll.  The data will apparently come from multiple electronic record (EMR) software vendors “into a single repository of information.”

Who Gets the Data?

    Given the industry’s money and political power, advocates, researchers, and activists should be very wary of any flow of data through the health care system controlled by the AHCA/NCAL.  I can think of no other government data set collected from taxpayer funded contracts that is controlled by an industry as opposed to the funding agency.  This cooperative – industry front organization – will provide the data to “vetted federally funded researchers.” 

    And how will the vetting process work?  According to the article, it will work this way:  “Researchers will need to move through an extensive approval process to gain access to the Long Term Care Data Cooperative, which will include input from participating providers, who have the opportunity to review each application and decide on appropriate uses of data.”

Advocate, Researchers:  Reread the Above Quote and Think Seriously About It!

    If providers and the AHCA/NCAL decide who has access to the data and how it is used, this entire enterprise will benefit the industry without any commitment to evaluation of care on behalf of the U.S. taxpayers.  Those of us with an allegiance to science, integrity, and research ethics and who have had access to large government datasets, can quickly recognize how scientifically and ethically flawed this process is.

    Think about what the industry has been able to pull off with the imprimatur of Brown University and the National Institute of Aging.  A government agency is funding industry control over data that belong to the people of the United States.  This has huge scientific, democratic, and moral implications.  This is not the way the government should work, and as far as I know, has ever worked in relationships with qualified researchers.

Why is Hospital Data So Accessible While Nursing Home Data is So Inaccessible?

    My department chair at Kansas University Medical Center asked me to design a course on large datasets and statistics – essentially a data analytics course for PhD students.  I did that. In that endeavor, I used the H-CUP hospital dataset, which I purchased each year for $300 from the Agency for Health Quality & Research (AHRQ).  The file included approximately 200 variables and eight million cases (de-identified patient data).

    The process for obtaining this dataset is rather simple (see:  https://hcup-us.ahrq.gov/).  Researchers simply need a legitimate purpose for using the data and be willing to sign a data use agreement.  No hospital corporation had any role in vetting users of the data nor a say in the the nature of the research.  Although I retired from KUMC, I can continue to obtain the data and have indeed ordered it on occasion.

Democracy Requires Openness and Information to Which the Public Has Access

    When residents of a country are shut out of the flow of information critical to knowledge of how their taxes are utilized, they have no say in governance, and, therefore, no real democracy.  They cannot advocate intelligently and effectively for their rights as funders of programs that should benefit them.  When they are kept in the dark and subjected to what monied interests choose to tell them, they lose their right to expect a competently run program for which they are paying.

    When powerful industries withhold, misrepresent, and misuse data, the taxpaying public will of necessity be cheated.  In a democracy, residents have a right to know the results of programs which they need and for which they are paying.  However, as authoritarianism grows, concentrated wealth and power increasingly filter information. 

    The AHCA/NCAL misrepresents financial data on behalf of its corporate members with impunity.  They not only get a pass on their lack of integrity, their claims regarding providers’ financial hardships due to low Medicaid reimbursement are repeated by some well-known economists in peer reviewed journals.  Never have I seen evidence provided for these claims.  Conversely, I can produce, and have, produced an abundance of evidence to the contrary.

    It is critically important that advocates, activists, and, hopefully, journalists confront the industry’s misrepresentations.  Their propaganda is deadly.  Rather than provide adequate care, too many nursing homes extract maximum cash while providing minimal care.  It seems to me that AHCA/NCAL-Brown University data enterprise is configured to continue that unsavory characteristic of long-term care industry.

THE HEALTH CARE INDUSTRY:  CONCENTRATED WEALTH INEVITABLY TRANSFORMS INTO CONCENTRATED POWER

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It is estimated that healthcare expenditures in the United States have grown to twenty percent of GDP.  In 2022, the Bureau of Economic Analysis indicated that U.S. GDP had grown to $25.46 trillion (https://www.bea.gov/news/2023/gross-domestic-product-fourth-quarter-and-year-2022).  Hence, we can assume that in 2022, approximately $5 trillion was expended for U.S. healthcare.

In the taxpayer funded, privatized, medical care system in the United States, the growth of corporations with revenues from Medicare, Medicaid, Obamacare, and other tax subsidized healthcare (e.g., employer provided health insurance) has been astounding. The size and number of healthcare related corporations listed on the Fortune 500 top 30 in 2020 compared to 2000 is a reflection of the dominance and power of companies such as UnitedHealth, CVS, McKesson, Cardinal Health, and others appearing in the 2022 Fortune 500 top 30.

As the table below indicates, absolutely no healthcare related corporation was ranked among the top 30 corporations in revenue in 2000. In a mere two decades, nine of the 30 largest U.S. companies were in some facet of the medical/healthcare sector. Note the following corporations in the table and their Fortune 500 2022 ranking: CVS Health (4), UnitedHealth Group (5), McKesson (9), Amerisource Bergen (10), Cigna (12), Cardinal Health (15), Walgreen/Boots Alliance (18), Elevance Health (20), Centene Corporation (26).

Given the money in politics and decreasing capacity of government agencies to monitor and hold corporate behemoths accountable, the growth of health/medical related enterprises should be alarming. These are not capitalist enterprises. Rather, they are government sponsored enterprises much like Fannie Mae and Freddie Mac and should be regulated as such.

Furthermore, money is power and much of the “inside the Washington, D.C. beltway” activity related to studies, commissions, and general policymaking involving academics and other professionals has been rigged through power politics to insure the perpetuation and preservation of the participants – hence, preservation of the status quo. Let’s take the nonprofit Better Medicare Alliance as an example. This front group has roped in scholars, professional associations, and other duped entities in a cooperative effort to sell Medicare Advantage to the public on behalf of the industry.

Currently, the Biden Administration is attempting to reduce Medicare Advantage billing fraud that will save the Medicare Trust Fund billions. That legitimate and laudable effort on the President’s part was attacked in an ad during the last Super Bowl. The ad was paid for by Better Medicare Alliance. Check out this outfit’s “ally list” and its list of “scholars.” Conflicts of interest involving scholarship, corporate board service, and coopting of scientific institutions by superrich foundations with Wall Street leaning board members should be exposed along with a network of think tanks presenting a charade for the purpose of enhancing revenue from government programs.

FORTUNE 500 RANKINGS:  2000 & 2022
RANK
(2000)		CORPORATIONREVENUE*RANK (2022)CORPORATIONREVENUE*
1General Motors18.91Walmart572.8
2Walmart16.72Amazon469.8
3Exxon Mobile16.43Apple366.8
4Ford Motor Co16.34CVS Health292.1
5General Electric11.25UnitedHealth Group287.6
6IBM8.86Exxon-Mobile285.6
7Citigroup Inc8.27Berkshire Hathaway276.1
8AT&T6.28Alphabet257.6
9Phillip Morris Inc6.29McKesson238.2
10The Boeing Company5.810AmerisourceBergen214.0
11Bank of America5.111Costco195.9
12SBC Communications4.912Cigna174.1
13** 13AT&T168.9
14The Kroger Co4.514Microsoft168.1
15State Farm Insurance4.415Cardinal Health162.5
16Sears, Roebuck, & Co4.116Chevron162.5
17AIG4.117Home Depot151.2
18Enron4.018Walgreens/Boots Allian.148.6
19Teachers Insurance & Annuity3.919Marathon Petroleum141.0
20Compaq Computers3.820Elevance Health138.6
21Home Depot3.821Kroger137.9
22Lucent3.822Ford Motor Co136.3
23Procter & Gamble3.723Verizon133.6
24Hewlett-Packard3.724J.P. Morgan Chase127.2
25MCI World Com3.725General Motors127.0
26Fannie Mae3.726Centene126.0
27K Mart3.627Meta118.0
28Texaco3.628ComCast116.4
29Merrill-Lynch3.529Phillips 66114.9
30Mogan Stanley Dean Witter3.430Valero Energy108.3
* In Billions of dollars. **#Number 13 not noted on Fortune 500 list.

UnitedHealth Corporation is Piling Up Cash & Buying Back Stock. But the American Peoples’ Health for Which they are Paid to Improve is Deteriorating

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The Basics of UnitedHealth Financial Performance in 2022

With revenues of $324.2 billion in 2022, UnitedHealth (UH) is the fifth largest corporation in the United States (behind Walmart, Amazon, Apple, and CVS Health). Practically all of UH business is related to tax-funded health care such as Medicare and Medicaid. As one of the largest players in the move toward Medicare and Medicaid managed care, this company has had phenomenal growth in the past two decades (as have CVS Health and Centene Corporation).

UH revenue increased by 26% between 2020 and 2022 (from $257.1 billion to $324.2 billion). The company’s 2022 balance sheet notes $23.4 billion in cash and cash equivalents – an increase of $2 billion over 2021.

Capital Resources & Uses of Liquidity: No Indication of Allocation to Employee Wages & Working Conditions, R&D, or Improved Care

The Company’s 10-K states that “Increased cash flows provided by operating activities were primarily driven by changes in working capital accounts and increased net earnings.” (page 28). Given UH’s massive revenues from government expenditures and a robust operating margin of 8.8%, taxpayers, need to be aware of how the company’s surplus capital is allocated. Like any corporation, UH has debt obligations but expects to finance those from current operations. So, accumulated capital is available for other purposes.

On page 78, the 10-K indicates that he board of directors (which includes Washington, D.C. policy maven and healthcare influencer Gail Wilensky – see below) authorized expenditures of $7 billion for common stock repurchases in addition to $5 billion in 2021 and $4.5 billion in 2020. So, the company pumped up its share price during COVID-era by repurchases of stock totaling $16.5 billion.

In addition to a 2022 stock repurchase of $7 billion, UH increased the company’s quarterly cash dividend $5.80 per share to $6.60 per share. With 950 million share outstanding, approximately $6.27 billion in cash was paid to shareholders. Over 20% of the stock is owned by three asset management firms – Vanguard (8.44%), BlackRock (7.4%) and FMR LLC (5.165) – indeed, Institutional investors/asset managers own the bulk of the equities market. Retail investors own less than 10% of the equities traded on U.S. exchanges.

Stock Buy Backs Were Illegal in the U.S. Until 1982. They Should Still be Illegal – Especially When They Are Repurchased With Earnings From Tax Funded Medical Care

Stock repurchases are a thinly veiled form of stock manipulation and insider trading. Furthermore, this form of financialization of corporate activity benefits a small number of very wealthy Americans but is damaging to the overall economy. Earnings passed through to shareholders without retaining cash for employees, R&D, and long term investment puts downward pressure on economic growth and wages and fuels maldistribution of wealth, which has reached crisis proportions in the U.S.

Taxpayers have a right to fairness and equity in the use of capital earned through tax funded healthcare. They must demand that stock repurchases stop. Furthermore, the people of the U.S. have a right to a fair allocation of excess cash earned through healthcare for which they are taxed.

Board Members & Executives Should Be Held Accountable: It’s Not Their Money

Until the early 1980s, executives were compensated mostly in the form of salaries. As executive and board compensation has evolved, salary is now a small part of corporate compensation. Most executives and board members receive pay in the form of stock options and incentive stock awards. Philosophically, executives merit compensation if they enhance shareholder value and corporate financial success. As this philosophy has taken hold in the U.S. over the past 40 years, these rewards have become disconnected from productivity.

The boards and executives of healthcare corporations are focused on earnings and cash flow in the short term – not on reinvestment of excess earnings in long term improvement in the health of the U.S. population. As a matter of fact, life expectancy has been declining in the U.S. Although most states have contracted with these mammoth corporations to improve the cost and output of Medicaid systems, there is no substantial evidence that is happening. Furthermore, Medicaid, the poor peoples’ medicine they are charged with improving, is still stigmatizing and dehumanizing.

Each year, recipients are forced to run an administrative gauntlet of humiliating and frustrating reapplication that is much different than anything higher SES Americans experience in application for entitled health care. It appears that heart disease, poor prenatal care, diabetes, drug addiction, and other major chronic and acute diseases have not been reduced by Medicaid managed care. Nor is there evidence that a massive shift of U.S. healthcare dollars to corporations will lower the outrageous per capita cost of healthcare.

Despite failure to improve the overall healthcare of Americans, corporate boards continue to reward executives with lavish salaries and shareholders with high dividends. They justify that on financial grounds – not on success in improving overall health of the people.

Concentrated Wealth Leads Inevitably to Concentrated Power: Connecting Dots Inside the Washington, D.C. Beltway

Corporations are vying in the Washington, D.C. maze of politics, lobbying, and corruption to capture as much of the trillions in Medicaid, Medicare, Obamacare, and other forms of government healthcare expenditures. They can pay for the influence they need in chasing ever increasing expenditures for healthcare.

I noticed that one Gail Wilensky, PhD is a UH board member. This caught my attention because Dr. Wilensky is a very influential policy maven about town in Washington. She has a very thick resume consisting of scholarly publications, served as a chair of MedPAC, held other high level government positions, and is generally a highly respected healthcare influencer. However, she receives about a half million in compensation per year as a UH board member and has accumulated over 51,000 shares of UH stock, which closed at $481.90 today (3/27/2023). Hence, the stock that she hasn’t sold and is still holding is worth about $24.6 million.

Dr. Wilensky also serves on the board of Quest Diagnostics and a smaller healthcare corporation (ViewRay). The following is her biography appearing on the Quest Diagnostics website:

“Dr. Wilensky, is a Senior Fellow at Project HOPE, an international non-profit health foundation, which she joined in 1993. From 2008 through 2009, Dr. Wilensky served as President of the Defense Health Board, an advisory board in the Department of Defense. From 1997 to 2001, she was the chair of the Medicare Payment Advisory Commission. From 1995 to 1997, she chaired the Physician Payment Review Commission. In 1992 and 1993, Dr. Wilensky served as a deputy assistant to the President of the United States for policy development relating to health and welfare issues. From 1990 to 1992, she was the administrator of the Health Care Financing Administration where she directed the Medicare and Medicaid programs. Dr. Wilensky is a director of UnitedHealthcare Group and ViewRay, Inc. She served as a director of Manor Care Inc. from 1998 until 2009, Gentiva Health Services, Inc. from 2000 until 2009, Cephalon Inc. from 2002 to 2011 and SRA International, Inc. from 2005 to 2011. Dr. Wilensky also served as a Commissioner of the World Health Organization’s Commission on the Social Determinants of Health and as the Non-Department Co-Chair of the Defense Department’s Task Force on the Future of Military Health Care. She has been a director of Quest Diagnostics since January 1997. Dr. Wilensky has extensive experience, including in strategic planning, as a senior advisor to the U.S. government and private enterprises regarding healthcare issues and the operation of the U.S. healthcare system.”

Dr. Wilensky is merely one example, one individual among the ethically challenged thousands, caught up in the government-to-corporation-to government loop. Going from Senate staffer to the Senate Finance committee and on to K Street and a lobbying job for Big Pharma, United Health, or some other powerful Wall Street entity has become normalized. The American people are paying the price for the consequent maldistribution of power and wealth in taxes and poor health. The poor pay more.

Centene Corporation’s Annual Financial Report Indicates That Poverty is Profitable for Investors

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The Biggest Player in Poverty Medicine Had a Banner Year in 2022

    Among all U.S. corporations, Centene Corporation is ranked 20th in revenue. It is also a major player in the Medicaid Managed Care business.  The other leading corporations contracting with states in the $800 billion Medicaid program include United Health, Aetna/CVS, Anthem, and Molina. Most states have moved or will be moving to managed care and contracting with an MCO.  The big five have approximately half of that business now.  It is likely that the Medicaid MCO market will become increasingly concentrated and oligopolistic over the next few years.

    Centene can be said to be solely in the Medicaid managed care business.  According to its recently released annual 10-K report to the Securities and Exchange Commission, 97% of Centene 2022 revenues of $144 billion were derived from Medicaid and Medicare contracting – practically all of it from Medicaid.  The company’s cash flow statement notes $6.3 billion net cash from operating activities, which is a major indicator of “profitability.”  However, that is not the whole story regarding enhancement and protection of shareholder value.

Taking Care of Shareholders by Keeping Stock Price Propped Up

    Cash and cash equivalents on Centene’s balance sheet increased from $10.8 billion in 2020 – the early stages of the ongoing COVID pandemic – to $12.7 billion at the end of 2022. Taxpayers need to ask questions about how that hoard of cash is allocated.  I have tracked the company’s stock since late November of 2021 when the equities market began to tank.  It closed at $73.77 on November 29, 2021 and has been quite resilient despite the market decline since that time – trading in the high $70s and $80s.

    The strength of Centene’s stock price is most likely due to a $3 billion stock buyback. In 2022, the company’s board “authorized increases to the Company’s existing stock repurchase program, including $3.0 billion in June 2022 and an additional $2.0 billion in December 2022.” (see page, 34 of 10-K*).  With those increases, the Company was authorized to repurchase up to $6.0 billion.

    Stock repurchases, which are thinly disguised forms of stock manipulation/insider trading, were unfortunately deregulated during the Clinton Administration.  This financial maneuver benefits only shareholders and executives and does nothing for long-term investment in workers, R&D, patient quality, and other productive activities.  The benefits for executives and board members who have been awarded generous stock options involve strategies for exercising their right to sell stock based on insider knowledge (of which the public is unaware).

    Since the financial deregulation allowing loose rules about stock buybacks a corporate buyback frenzy has been underway. Free money handed out by the Federal Reserve from 2008 until Fed Chair Powell reversed course to quell inflation pumped $trillions into speculative finance, much of which was borrowed for stock repurchase. Consequently, the U.S. economy has been damaged and wealth has become increasingly maldistributed by the diversion of cash to a wealthy few that could be reinvested in long-term growth benefitting employees and overall economic growth. It seems to me to be the height of governmental irresponsibility to not regulate this kind of activity on the part of corporations which are rewarded for managing poor peoples’ health care.

Politically Powerful Board Members & Executive Board Compensation

    The revolving door from government to business is starkly obvious on the Centene board, which includes two powerful former congressmen – Tommy Thompson and Richard Gephardt. Mr. Thompson is also a former Secretary of Health and Human Services.  The Centene Proxy Statement for 2022 has not been issued to the public yet (we expect to see it within a month).  However, the 2021 Proxy Statement indicates that Mr. Thompson’s compensation in cash and stock totaled $403,046.  Mr. Gephardt’s compensation totaled $426,923.  The fine print below the compensation table states that both Mr. Thompson’s and Mr. Gephardt’s compensation included use of the company aircraft and other perks.

Executive Compensation

    The late Michael Neidorff had been Chief Executive and Chairman of the Board in 2019, 2020, and 2021 with compensation for those years of $26.4 million, $24.9 million, and $20.6 million respectively.  His replacement, Sarah M. London joined the board in 2021 as vice chairman and received 2021 compensation of $15.2 million.  The seven top executives received a total of $80 million in compensation in 2021.

Conclusion

    Medicaid expenditures in the U.S. will reach $1 trillion within the next few years.  Along with expenditure on military activities, this poverty program will remain one of the two biggest programs funded by U.S. income tax payers.  With expansion of Medicaid under the Affordable Care Act, we anticipate that growth of tax-funded  poverty medical care will be rapid in the years ahead.  This raises the question of evaluation of these expenditures and public discourse about the quality of care.

    My initial foray into availability of state and federal data regarding the effectiveness and regulation of MCOs leaves me with considerable doubt about what taxpayers and legislators know about outsourcing medical care for poor people.  It is not difficult for me to uncover the inordinate executive compensation packages, stock buyback information, and financial performance metrics reported by major providers.  However, medical and ethical, questions arise regarding the justification for cash out to investors and executives given the care provided.  I will be sharing my research pertaining to Medicaid expenditures on this blog in the weeks, months, and years ahead. 

*The Centene 10-K can be accessed at https://investors.centene.com/all-filings?cat=1.