Social Security: The Importance of the Election & Deferred Payroll Taxes

Posted on by

By:

Max J. Skidmore

The election is over.  Joe Biden won.  But a serious issue related to the funding of Social Security is hanging over the Biden Administration and the next congress:  will the funds deferred from the payroll tax by President Trump be restored to the Social Security Trust Fund?

Background

The financing for America’s Social Security system comes from a payroll tax, FICA (the Federal Insurance Contributions Act) levied on wages up to $142,800 (for 2021; the amount changes yearly). Wages above that amount do not count for purposes of the system.

The tax is 6.2% deducted from the employee’s wages. The employer matches that amount, thus providing an additional 6.2%.

Those amounts go into trust funds. Benefit payments come out of those trust funds, as do the very small administrative costs. Those costs are extremely low, less than 1% of the amount collected, making Social Security the most efficient such system in the world. 

The rest of the amounts in the trust funds (that is, the amounts left over after paying benefits and paying administrative costs) are invested in government bonds. Those bonds are completely safe, and regularly pay interest back into the trust funds.

Under the law, all benefits must come from the trust funds. So long as FICA taxes keep coming into those funds, there will always be income to pay for some level of benefits. 

Under the Obama administration, during the financial crisis that President Obama inherited, FICA taxes were temporarily suspended in order to make more money available to workers. This did not affect the trust funds, however, because the government replaced the amounts that the trust funds would have received from FICA.

President Trump’s Executive Action Regarding Payroll Taxes

Last August, President Trump issued an executive order delaying the collection of FICA taxes for the rest of the year. This order did not reduce the taxes owed; it only delayed their collection. 

Employers and employees will have to pay the accumulated taxes after the first of the year, and therefore many employers are continuing to collect FICA taxes, and are holding them to provide them to the government when they come due. This prevents them, and their workers, from having to come up with large payments to catch up on the amounts owed. 

The reason for this rather confusing policy has not been made clear. It may reflect a misunderstanding by Mr. Trump regarding how Social Security’s financing operates. 

On the other hand, he may have been making a move toward eliminating the payroll tax, and thus eliminating Social Security. Mr. Trump suggested that this may be his preference, but this cannot happen without a change in the law. Such a change would only be possible if Mr. Trump is re-elected, and if Republicans keep control of the Senate, and gain control of the House.

If the law were to be changed, and the payroll tax eliminated, it would be only a few months before the trust funds would be completely exhausted, and Social Security would be eliminated. Mr. Trump has made no secret of his desire to kill the system, and many Republicans – probably most of those in Congress – agree. Since Republicans did not have the courage to oppose Donald Trump, even those who do not agree with Trump would almost assuredly vote to do whatever it was he proposed.

Democrats all desire to retain the system, and even to expand benefits. Thus, the November 4th election was crucial to Social Security’s future. 

For the system to continue, it was essential to vote Trump out of office, to retain Democrats in control of the House, and to elect more Democratic senators, so that Democrats will control the Senate as well as the House. Now we have some uncertainty due to the two senate races in Georgia.  Those races could be critical for restoration of deferred taxes to the Social Security Trust Fund.

It is impossible to overstate the importance of massive Democratic victories at all levels, if Social Security, Medicare, and many other essential programs are to continue, and if other much-needed programs are to be enacted.  We had some important victories, but not a massive blue wave that we were hoping for.  Now, saving the Social Security System will be a matter of activism and fighting hard for a system so many people depend on in retirement and in other ways.  It will be important to learn your senator’s and congressperson’s phone number and make yourself know to them.

Medicare is Not Socialism

Posted on by

By

Dave Kingsley

Definition of Socialism and its Application to Medicare

Socialism is defined simply as “an economic system in which government owns the means of production.” The Medicare system produces no products and provides no services. The system does not manufacture pharmaceuticals or medical devices, it owns no hospitals or long term care facilities. It employees no nurses or physicians or other health care professionals for the purpose of providing services in a medical care facility. It is a program for underwriting health care risks for individuals who pay into it.

There is nothing socialistic about government management of a pool of funds provided by current and future beneficiaries for the purpose of paying for their medical care. In 2019, the program spent nearly $800 billion. In the current political and economic context, approximately 60% of all funds expended by Medicare is derived from the people receiving care. The other 40% is transferred to the program from the U.S. Treasury. This transfer would be unnecessary if a corrupt political process were not allowing excessive charges for services and products.

For instance, the Medicare Modernization Act in 2003 created a prescription drug benefit (Part D) and included a provision that prohibited negotiation of pharmaceutical prices by the Center for Medicare and Medicaid Services. Through enforcement of proper management of costs by providers, and reasonable charges for costs, the 40% transferred by the Treasury could be eliminated, thereby making the program fully funded by the beneficiaries.

Subsystems of the Long-term Care System: Array of Corporate Models, Government Agencies, Legislatures, and Advocacy Groups

Posted on by

By Dave Kingsley

Private Equity is One Model in an Array of Business Models Comprising the Long-term Care Provider Subsystem.

It is practically de rigueur these days to focus on private equity ownership of “nursing home chains” as the leading culprit in lowering the quality long-term care.  I am noticing this tendency on the part of progressive politicians, researchers, advocates, and activists.  No doubt, major private equity buyouts of long-term care chains have proven lucrative to PE firms and their investors while they have been disastrous for patients, families, employees, taxpayers and communities.

    Nevertheless, complex, dynamic social systems cannot be reduced to a few variables.  In science that is known as reductionism – a fallacy.  Far too many factors are overlooked when systems are reduced to a few variables or a single subsystem.  The system of long-term care facilities is complex and dynamic with a large number of interacting and reinforcing subsystems. 

    The corporate subsystem itself is comprised of a variety of ownership structures.  In addition to PE firms, long-term care corporations are organized as publicly listed holding companies, Real Estate Investment Trusts, family trusts, family offices, and limited liability corporations.  Most of the firms operating long-term care facilities are closely held and the public has no access to their financial statements.

    Approximately 25% of long-term care corporations are 501(c)(3) nonprofit entities.  A small number of nonprofit run facilities are high quality facilities.  Although the nonprofits have, on average, slightly higher scores on measures of quality, e.g., higher RN hours, lower number of complaints, and abuse and neglect cases.  However, many nonprofit operations are substandard.  For instance, the Evangelical Lutheran Good Samaritan chain runs on of the largest chains in the United States and has a poor track record and lower than average scores on measures of quality.

Major Subsystems of the Long-term Care System

    In addition to corporations reimbursed for providing care, federal and state legislatures, government agencies, trade associations, and advocacy organizations are major subsystems of the long-term care system. My research and observations have led me to hypothesize that these systems interact in a manner that reinforces the fundamental model of care that has been standard since inception of publicly funded long-term care, which is “the total institution.”

    Evidence for this hypothesis will be presented over time on this blog.  Also, I believe that too much focus on the PE subsystem distracts from the impact of macroeconomic trends since the 1970s. Economic and managerial philosophy has shifted finance from an auxiliary role in corporate governance to the dominant role.  The purpose of corporations has become finance rather than production of goods and services.  The long-term care system is part of the larger economic system which has become increasing characterized by management that values investors and treats stakeholders as resources to be exploited.

    Furthermore, the legal structures of trusts and corporations are designed for tax avoidance, debt, and asset protection and enhancement.  High net worth individuals can utilize these structures to pass more of their wealth to heirs and keep it out of the grasp of the IRS.  Not only does this system allow wealthy individuals and families to extract middle- and low-income assets for their own benefit, it allows them to avoid their obligations to the society that enriches them.

So-called “Nursing Home” Corporations and Government Agencies Are Acting Like They Didn’t Know The COVID-19 Pandemic Was Coming. They Should Have Known.

Posted on by

By Dave Kingsley

It is Overwhelmingly Clear that Key “Nursing Home” Institutions Should Have Known What Was Coming.

CNN is reporting 274,121 COVID deaths in the U.S. as I write this post. It is estimated that 40% of these victims are long-term care patients and employees; hence, approximately 109,648 patients and staff in long-term care facilities have died from COVID throughout the pandemic.  Had  responsible parties in the system been prepared and acted responsibly, these deaths could have been prevented.

Decent medical care includes identification of possible and probable infectious diseases.  But that has been pervasively lacking in the profit and nonprofit long-term care system.  That is despicable and inexcusable.  If corporations extracting wealth from long-term care didn’t know a disease was coming that could kill a high proportion of people in their care, they should have known. “In the United States, in 2013, the Bill & Melinda Gates Foundation conducted a comprehensive review of worldwide data and predicted that a pandemic would occur during the next decade, most likely due to coronavirus.”[1]

The word was out in December of 2019 that a novel virus was spreading in China and causing some drastic government action by the Chinese government.  U.S. intelligence services were well aware of the spreading virus by late 2019.  By January of 2020, anyone reading major newspapers should have been aware that a global pandemic was probable.  Asian countries were aware of the spread of a coronavirus and taking extraordinary action to shut it down – which they did.

What did the U.S. long-term care industry do while China, Singapore, Hong Kong, Taiwan, and South Korea were taking action to block the spread of COVID?  Corporations extracting an extraordinary amount of cash from facilities for their investors continued business as usual. They did not have sufficient personal protective equipment stocked when the pandemic hit; they had no protocol in place for protecting patients and staff; they failed to put a testing program in place; and, they had no plan for acquiring separate buildings for quarantining infected patients and staff.  This lack of preparation for preventing an infectious disease under any circumstances is inexcusable, but in the face of a deadly, rapidly spreading pandemic, it is an atrocity.

Based on the architecture of long-term care facilities and the fragility of patients forced to live in close proximity, a tragedy was waiting to happen. Furthermore, staff continued to pass between the community and facilities without testing, PPE, and a clear understanding of the dangers involved with the disease.  Long-term care corporations set their patients up as “sitting ducks” in the spread of a highly contagious and novel virus for which no vaccine was available.  This deadly medical malpractice occurred with the acquiescence of the CMS, state regulatory agencies, and local health departments. 

    It was gross negligence for responsible parties not to recognize as early as December 2019 that COVID-19 would be a threat to the million plus patients in U.S. long term care facilities and take action to protect them.  All responsible parties, including long-term care providers and government agencies at the federal, state, and municipal level should be investigated and held accountable by a commission independent of those corporations and agencies.

[1] Solano, J. et al. (2020), “Public Health Strategies Contain and Mitigate COVID-19:  A Tale of Two Democracies.” The American Journal of Medicine, Vol 133, No 12, 1366. Renowned infectious disease expert Laurie Garrett and most other scientists involved with novel diseases – especially the coronavirus family of virus – were warning about the likelihood of the emergence of a virus like COVID-19.  See Laurie Garrett and The Coming Plague at https://www.lauriegarrett.com/the-coming-plague.

PREDATORY ECONOMICS 101: PRIVATE EQUITY IS PART OF THE NURSING HOME OWNERSHIP PROBLEM, BUT NOT THE WHOLE PROBLEM

Posted on by

By: Dave Kingsley

Family Trusts and Other Legal Entities Are Major Investors in Skilled Nursing Facilities

There are many ways that vast amounts of wealth are being processed through nursing home financial plumbing for the purpose of shielding it from the IRS and adding value to accumulated capital.  Private equity has become the focus of discussion regarding nursing home ownership and neglect of patient care in in this process. Indeed, the notorious Carlyle Group takeover and bankrupting of HCR ManorCare will have a permanent place in nursing home lore.

    However, exclusive attention on private equity as the cause of shareholder over stakeholder management, distorts reality, which is this:   nursing home ownership is structured for shielding wealth of high net worth individuals (HINWIs – pronounced “hin wees) from taxes while adding value to their assets. Many financial structures are in place for making nursing home ownership a process piping system for avoiding taxes and creating more private wealth with public funds.

    I will be blogging about many forms of entities owning a share of the nursing home business in the United States. This post is about the “family trust.” In an analysis I have undertaken of owners listed by CMS for 344 long-term care facilities in Kansas, I found that 15% of the private, forprofit facilities had a family trust listed in the ownership hierarchy – several in some instances.  In researching NH ownership in various parts of the U.S., I have noticed that family trusts appear frequently as owners (usually indirect owners). 

    These legal entities allow wealthy individuals and families to shield their wealth from taxes and to pass assets tax free to heirs.  They also provide protection from creditors. So, taxpayers are denied their fair share of revenue from businesses they fund while wealth becomes increasingly maldistributed and concentrated in a tiny fraction of the U.S. population.

    As Nicholas Shaxson pointed in the The Finance Curse, transformation to a financialized economy received a boost in the 1970s through state and federal legislation. Legislatures created financial mechanisms such as the LLC for the purpose of tax avoidance, limited liability, and financial secrecy. Indeed, the state of Nevada has been dubbed “The Cayman Islands” of the United States.  It is not uncommon to find many LLCs in the network of operators, shell companies, and real estate incorporated in Nevada (or Delaware).

    In the 1990s, the state of South Dakota became the place to set up a family trust.  In a move to attract business, the state legislature passed laws that provide a haven for super-rich families to hide and protect wealth in a variety of trusts, e.g. “irrevocable family trusts.” However, the wealth sheltered in these trusts will be invested for obvious reasons (e.g., growing assets faster than inflation). So, the nursing home ownership networks frequently include one or more family trusts.

    Although trusts are a major type of investor in skilled nursing home facilities, there are others such as “the family office” (a financial manager for immensely wealthy individuals and their heirs), the Real Estate Investment Trust, and LLCs set up by wealthy individuals for purposes of tax avoidance, opaqueness, and, of course, earning a return on investment. This blog will be shining a light on the financial piping system set up to circulate wealth for tax avoidance and return on investment while frontline care is denied resources for high quality of care.

Predatory Economics 101: Extremist Money Behind Supreme Court Nominations Affects Nursing Home Care, Medicare, & Other Programs for the Elderly

Posted on by

By Dave Kingsley

Dark Money Behind Court Nominations & Amicus Briefs Are Aimed at Deregulation

Senator Sheldon Whitehouse gave a brilliant presentation at the Senate hearing for Supreme Court nominee Amy Barrett that is must viewing for advocates concerned about regulation of the nursing home industry and protection of programs for the elderly. I’m uploading the video of his seminar on the flow of dark money into nominations and amicus briefs.

No one knows for certain where all the money flowing into nonprofits presenting amici briefs is originating, but there is considerable evidence that the Koch organization, and other wealthy pro-corporate organizations are providing much of it. Why? The majority on the court has a theocratic, radical free market and pro-corporation ideology. I would define them as a theocratic corporatocracy. They derogate the 1st Amendment separation of church and state while catering to conservative business organizations such as the Chamber of Commerce and a large number of other such organizations seeking deregulation.

The nursing home lobby fits comfortably into this mélange of business interests seeking restraints on the government’s power to protect customers, patients, communities, and the environment from profiteering predators – the way I would describe most nursing home corporations. Make no mistake about it, liability of operators will be greatly limited when employees and patients suffer due to their neglect. Cases before a theocratic-corporacratic 6 to 3 majority which involve damage to stakeholders will more often than not be decided in favor of corporations.

If you carefully listen to and watch this video, you will hear and see Senator Whitehouse explain that out of eighty cases involving corporate interests, eighty were decided by a 5 to 4 majority in favor corporations rather than in the best interests of citizens. When Barrett joins the court, it will become a 6 to 3 supermajority.

What We Can Expect: Looking Back, The Pattern is Clear

As stated above, the eighty cases analyzed by Senator Whitehouse were all decided in favor of the corporate-religious network by five to four. He has dubbed the five member majority as the “Roberts Five.” These cases fall within four categories: 1. Unlimited dark money in politics, 2. Denigration of the civil jury, which has an obligation to apply the law and not cater to monied interests, 3. Weakening of regulatory agencies, and 4. Voting rights.

No doubt, looking forward, Barrett will be expected to decide in favor of overturning Roe v. Wade, National Federation of Independent Business v. Sibelius ( ACA) and Obergefell v. Hodges (gay marriage). However, looking back at the pattern of the Roberts Five decisions, all four categories of cases impinge on the ability of advocates and activists to protect patients. Regulatory actions and laws designed to protect vulnerable elderly and disabled patients are likely to be found unconstitutional by the court as it has been reconstituted during the Trump administration. Suppression of voting rights will make it more difficult to elect state legislatures sympathetic to the cause of patients rather than investors.

DON’T WORRY ABOUT NURSING HOME CORPORATIONS: THEY ARE DOING FINE

Posted on by

   By Dave Kingsley

Don’t worry about the financial impact of COVID-19 on the nursing home industry.  Corporations paid to provide long-term care appear to be doing well financially.  In this post, I want to begin a discussion of the industry’s and regulators’ failure to protect patients from a scourge they should have known was coming.  Unfortunately, nursing home owners are not being held accountable.  Quite to the contrary, they are being financially rewarded as victims of the pandemic.

    My purpose in this post is to highlight the subsidization of the industry through immediate cash infusions while nursing home personnel have been forced to work in the same low paid jobs without adequate personal protective equipment.  This is an initial post in a series of posts in which I will provide information gleaned from the 2nd quarterly reports of three different types of publicly listed nursing home corporations – privately held corporations’ financial information isn’t available because they are not required to file reports with the SEC.

    If the public thinks providers of nursing home corporations are financially strapped due to the COVID pandemic, they will be dissuaded from that perspective by the 2nd quarterly 10-Q reports filed by a sample of publicly listed corporations. Consider the financial reports of the following representative corporations:

The Ensign Group

    The Ensign Group, a holding company, owns the fifth largest nursing home chain in the United States.  The company was formed in 1999 and, based on SEC filings, has demonstrated a robust growth and strong financial performance.  According to its 2020 2nd Quarter report (10-Q)[1], its earnings of $.78 per share was a 100% increase over the prior year quarter.  Revenues for the quarter were $584.7 million and increase of 18.6% over the prior year quarter.  Net income for the quarter was $43.1 million, an increase of 99% over the prior year quarter.

   Apparently TEG was doing so well, the corporation decided to return $110 million it received from the federal government under the CARES Act[2], which was basically a handout to America’s corporations for keeping them solvent even though nursing home companies had a guaranteed price and ongoing revenue.  Furthermore, they benefitted from the Payroll Protection Program and the HEROES’ Act intended to help companies keep employees paid and enough capital to maintain solvency.  Although, the TEG balance sheet indicates that the company has $210 million in cash and $302 million in accounts receivables, it still took perhaps a 100 million dollars of PPP money and a host of other CMS supplemental payments.

Ventas Real Estate Investment Trust

    Ventas Real Estate Investment Trust (REIT) is illustrative of one of various types of corporations dependent on revenue from skilled nursing facilities.  REIT’s in the nursing home business are a special type of commercial real estate, but they are also a special type of skilled nursing home corporation.  Although they buy and lease facilities, they actually lease to contractors such as Brookdale from whom they often buy facilities and lease them back while also maintaining an interest in and control over operations. Furthermore, REITs have an operational interest in skilled nursing facilities.  Ventas describes its business this way: “We primarily invest in senior housing, research and innovation, and healthcare properties through acquisitions and lease our properties to unaffiliated tenants or operate them through independent third-party managers.”

    According to Ventas’s 10-Q[3], the COVID pandemic has not been financially disastrous due to the injection of funds from the CARES, PPP, and HERO’S acts.

    “In our healthcare triple-net leased properties portfolio, we collected substantially all rent due in the first and second quarters. This cohort of tenants has benefitted from significant government financial support to partially offset the direct financial impact of the COVID-19 pandemic on healthcare providers. Nationally, hospital inpatient admissions and surgeries have rebounded, although still below pre-COVID-19 levels, depending on the particular market.”

Brookdale Senior Living

Brookdale Senior living is the largest operator of senior living properties.  The company has sold most of its real estate. 

During months ended June 30, accepted $33.5 million of cash from CARES Act.  During July 2020 company applied for additional grants Emergency Funds based on 2% of portion of 2018 gross revenue from patient care

Under the CARES Act, the Company has elected to defer payment of the employer portion of social security payroll taxes incurred from March 27, 2020 to December 31, 2020. One-half of such deferral amount will become due on each of December 31, 2021 and December 31, 2022. As of June 30, 2020, the Company has deferred payment of $26.5 million of payroll taxes and presented such amount within other liabilities within the Company’s condensed consolidated balance sheet.[4]

As of June 30, 2020, total liquidity was $600.2 million, consisting of $452.4 million of unrestricted cash and cash equivalents, $109.9 million of marketable securities, and $37.9 million of additional availability on revolving credit facility.

Eric Carlson of Justice in Agency statement

    Eric Carlson, of Justice in Aging served on the so-called “Independent Nursing Home COVID-19 Commission,” and was the only member who refused to endorse the commission report resulting from a series of secret meetings between July and September.  I say good for him!  I say shame on those other members who either fully or partially endorsed a report that allowed the Trump Administration and nursing home corporations escape responsibility for dereliction of their duty to protect nursing home patients during the COVID-19 pandemic.

    Mr. Carlson gave the following reason for his refusal to endorse the report: “With limited exceptions, these recommendations … do not address accountability of nursing homes and their operators.” Having spent a considerable amount of time analyzing the report thus far, I would say that he is correct.

    Not only did CMS use the report to excuse its own inept and failed response to the COVID-19 pandemic, it also ignored failure of the industry and expectations from nursing home corporations in the future.  The Trump Administration failed to hold corporations accountable.  Furthermore, they have been providing generous subsidies through the CARES, PPP, and HEROES Acts passed by congress in March to keep employees paid and businesses from bankruptcy.

[1] https://investor.ensigngroup.net/sec-filings/sec-filing/10-q/0001125376-20-000134

[2] Two major pieces of legislation, the CARES Act, and the HEROES Act, which include cash grants, support for employees, and deferred payroll taxes are responsible for injecting hundreds of millions of dollars into the three corporations featured in this post alone.  The text of the acts can be found at:  https://www.congress.gov/bill/116th-congress/senate-bill/3548/text?q=product+actualizaci%C3%B3n; https://www.congress.gov/bill/116th-congress/house-bill/6800/text.  Detailed information from the income, balance sheet, and cash flow statements of major publicly listed nursing home corporations’ cash and equivalents, earnings, and liquidity indicate a rather strong financial position after several months of a nationwide pandemic.

[3] https://ventasreit.gcs-web.com/static-files/5ea1570e-14fd-45f6-8e31-15237eb49016

[4] https://brookdaleseniorlivinginc.gcs-web.com/static-files/0213cc1d-9228-4f8c-a7d4-273a1943197c

CMS REPORT PRODUCED BY ITS NURSING HOME “INDEPENDENT CORONAVIRUS COMMISSION” IS HORRIFYINGLY DEHUMANIZING AND PROPAGANDISTIC

Posted on by

    By Dave Kingsley

The Center for Medicaid and Medicare Services released the report from its “independent”[1] “Coronavirus Commission for Safety and Quality in Nursing Homes”[2] yesterday (September 17th). The CMS press release announcing availability of the report[3] was a cynical, venal, propagandistic use of the commission’s work as cover for dereliction.

    Federal and state agencies charged with overseeing the nursing home system and the industry to which the care of our frail elders and disabled have been entrusted failed in their responsibilities.  The commission report is their exoneration.  In essence, the lives of our elderly and disabled brothers and sisters have been devalued and their future health and well-being placed in jeopardy.

    The title to the CMS press release was worded as follows: “Independent Nursing Home COVID-19 Commission Findings Validate Unprecedented Federal Response.”  The Trump Administration gave itself a pat on the back with unbelievable lies in its description of the contents of the report, which very few people will take the time to read.  For instance, Seema Verma was quoted as saying, “The Trump Administration’s effort to protect the uniquely vulnerable residents of nursing homes from COVID-19 is nothing short of unprecedented.”

    Does this sound like Donald Trump, who claims that he created the greatest economy in history and never tires of claiming that he has done more than any other president in practically every policy area?  By now everyone should understand that the current president is a cruel psychopathic narcissist and a pathological liar with no empathy?  Seema Verma is a quintessential toady who remains in her position by adhering to a dangerous autocrat’s demand for fealty.

    Verma made the obligatory “dear leader” praise of Trump by saying “President Trump sought to refine our approach still further as we continue to battle the virus in the months to come.”  How, I might ask, did he do that?  She went on to say this about the commission:  “Its findings represent both an invaluable action plan for the future and a resounding vindication of our overall approach to date.”  

    In fact, the report is page after page of technocratic proposals and pretentious jargon.  On their face, these proposals are innocuous.  My questions about this classic piece of “inside the beltway wankery” are:  “Why weren’t these things being done prior to the pandemic, or at least being done in January when the administration was warning the Senate Intelligence Committee about a coming pandemic that could rival the 1918 Flu?”

    In the days ahead, I’ll be blogging about the contents of the so-called independent commission report.  I want to encourage a conversation among advocates, scholars, and activists about the following issues:

  • The role of the nursing home industry (including the nonprofits) in the COVID-19 nursing home tragedy, which was excised from the commission’s report and perhaps altogether from its work.

  • The economic/financial context of the nursing home industry in 2020.  The evolution of capitalism to financialization and management theory to transaction and agency has had a major impact on the mission of real estate and other industries in the long-term care business.

  • The disturbing movement among major bioethicists to devalue the lives of elderly Americans and advocate for medical care rationing due to a misguided and erroneous belief that the 65+ population is a threat to the U.S. economic system. 

[1] It is important to note that the word “independent” was not in the official title for the commission, but CMS placed the adjective before the “Corona Virus Commission for Safety and Quality in Nursing Homes” in a press release for the purpose of capturing the cachet of members and the imprimatur of their organizations as a propaganda ploy.

[2] https://edit.cms.gov/files/document/covid-independent-nursing-home-covid-19-federal-response.pdf; see the full report here: https://edit.cms.gov/files/document/covid-final-nh-commission-report.pdf

[3] https://www.cms.gov/newsroom/press-releases/independent-nursing-home-covid-19-commission-findings-validate-unprecedented-federal-response

WILBUR MILLS, FOUNDING FATHER OF THE CURRENT NURSING HOME SYSTEM, WAS A WHITE SUPREMACIST AND SEGREGATIONIST

Posted on by

By Dave Kingsley

     The late Congressman Wilbur Mills, Chairman of the Ways & Means Committee from 1958 to 1974, was arguably one of the most powerful congressmen in the history of the U.S. House of Representatives.  During the 1950s and 60s, Mills guided federal legislation out of which the nursing home system as we know it today was spawned. He was also an ardent segregationist and white supremacist.[i]

    The power of Southern Democrats in guiding the conceptualization and passage of Medicare and Medicaid determines to this very day how citizens will be treated in federal/state funded long-term care. This is too often overlooked in histories of welfare medicine in the United States.[ii]

    In their zeal to protect Jim Crow and plantation capitalism, the one thing that segregationist senators and congressmen fought most ardently against was federal power.  For the immensely powerful Mills and his Southern brethren, preservation of the racial hierarchy of the South was a cri de Coeur. “States’ rights” were synonymous with the right of Southern states to preserve strict apartheid and maintenance of African Americans in subservience and an inferior economic and social status.[iii]

    Sponsorship of the Kerr-Mills Act in 1960 with Senator Kerr of Oklahoma was an early foray for Mills into major long-term care legislation.  This act was also a precursor to Medicaid and, therefore, to welfare medicine in the United States. Several major facets of this initial “poor people’s medical care” was incorporated into Medicaid and have presented disturbing barriers to a fair and just medical system throughout the last six decades.

   The odious feature of “Means testing” in early nursing home related legislation is a significant characteristic of Kerr-Mills. This is a process through which people prove they are poor enough to qualify for government assistance.  Hence, those not poor enough to qualify would need to “spend down” their assets before qualifying for federal/state assistance.

    The concept of the “medically indigent” was introduced into U.S. medical care through Kerr-Mills.  The importance of a stigmatizing medical category – codified into health care law – cannot be underestimated.  Along with state power in and control over Medicaid, recipients are incessantly confronted by bureaucratic barriers and personal indignities that beneficiaries of all other government subsidized medical care avoid.  The United States is the only advanced, industrialized society that places poor people in an inferior medical care status.

    In addition to means testing, state funding with federal matching funds characterized financing of Kerr-Mills.  Southern Democrats could see the handwriting on the wall and maneuvered as much power to the states as possible. Because states do not have the same fiscal resources to fund Medicaid as the federal government, state legislators and bureaucrats treat Medicaid as lower tier medicine.  Funding is lower and medical care is typically inferior.

    The federal government has unlimited resources and the United States has the wealth to fund an alternative system that provides a truly home-like nursing home environment such as the Eden Alternative and Greenhouse models.  However, states’ rights as a philosophical position has not weakened appreciably among conservative states.  Huge federal programs such as Medicare and Social Security represent federal power, which is an anathema to conservatives.

    Furthermore, state power over regulation and state bureaucracies’ propensity for supporting industry opaqueness hampers the public’s perception of how operators and the investors owning them fulfill their obligation. It is much easier for the industry to capture government at the state level and direct the actions of legislators.  Hence, weak federal oversight and the power of trade associations in all 50 states must be attacked by advocates and activists. 

    It is important to include the impact of systemic racism into any plan and narrative for change. The nursing home system as it has evolved cannot be fixed because it’s not broken.  It is working like it was intended to work.[iv]  It is time to demand that all funding and regulation be the responsibility of the federal government.

[i] I have a more expansive discussion of Mill’s influence in the development of the U.S. nursing home system in my chapter, “Implementation of Medicaid-Funded Long-Term Care: The Impact of Prior History on the Development of the Nursing Home Industry,” in Max Skidmore & Biko Koenig (2019) Anti-Poverty Measures in America: Scientism & Other Obstacles.  Washington, D.C.: Westphalia Press.

[ii] Rare exceptions to the failure of social scientists to understand the impact of race on government medical care policy are Jill Quadagno (2005) One Nation: Why the U.S. Has No National Health Insurance. New York:  Oxford University Press; and Gerard Boychuk (2008), National Health Insurance in the United States & Canada.  Washington, D.C.:  Georgetown University Press.  Social science and history that overlooks the fundamental fact that had there been no slavery, no Jim Crow, and no ongoing systemic racism, the U.S. healthcare system would look far different.

[iii] In 1956, Congressman Mills was a signatory to the Southern Manifesto, which was signed by all senators and congressmen from the former states of the traitorous Confederacy.  In the document, the segregationist legislators argued that legally mandated school desegregation, as required by Brown v. Board of Education encroached on the rights of States and of the people.

[iv] I want to thank my colleague and fellow activist/advocate Ester Holzendorf for this conceptualization of systems adversely impacting poor people and racial minorities.

How’s Your Retirement Account? Paul Ormond’s is Doing Just Fine!

Posted on by
Paul Ormond: Carlyle Group‘s HCR ManorCare CEO

Paul Ormond Managed HCR-ManorCare Into Bankruptcy & Walked Away With $116.7 Million

These days, one of the major problems facing retirees is adequate savings and retirement funds for survival throughout their later years of life. Not a problem for former HCR-ManorCare CEO Paul Ormond. After he managed the third largest nursing home chain into bankruptcy, he was awarded with an astounding golden parachute – ostensibly for retirement benefits.

According to Skilled Nursing News Mr. Ormond, who left ManorCare in September 2017 was, “…owed $116.7 million under the prepackaged bankruptcy plan by which Quality Care Properties, Inc. (NYSE: QCP) will take over the Toledo, Ohio-based skilled nursing provider.” (https://skillednursingnews.com/2018/03/manorcares-former-ceo-owed-millions-bankruptcy/.) 

The Carlyle Group is one of the biggest and most predatory private equity firms on the planet. It engineered a takeover of HCR-ManorCare in 2007 and the looting began. Property was sold off and leased back by operations. Like all PE takeovers, most of the deal was leveraged with debt loaded on the victim company, i.e, HCR ManorCare.

The CG – HCR-ManorCare saga is a story yet to be fully explicated. It is a project on which we are currently working. It is important that the damage done to skilled nursing by financiers be compiled systematically, organized, and made available to the public.

Workers’ Doing The Backbreaking Work Have No Retirement

One salient feature of American free enterprise after the Reagan Revolution was the demise of company provided defined benefits pension programs, i.e. after a set number of years of employment, employees were vested and could count on an annuity from retirement until death. As the economic paradigm shifted toward a radical free market form of capitalism (I use the term capitalism quite loosely here), the responsibility for funding retirement fell on the shoulders of employees through defined contribution programs such as the Roth IRA and 401(k).

The frontline nursing home workers without whose hard work economic rewards for the financiers at the top of the ownership hierarchy would not be possible generally have no retirement benefits. The shift to defined contributions was an excuse for corporations to end defined benefits programs. Consequently, affluent Americans have most of the defined contribution accounts with sufficient funds for a satisfying retirement.

As Monique Morrissey of the Economic Policy Institute stated in her comprehensive report, “The State of American Retirement: How 401(k)s have failed most American workers:” “For many groups—lower-income, black, Hispanic, non-college-educated, and unmarried Americans—the typical working-age family or individual has no savings at all in retirement accounts, and for those that do have savings, the median balances in retirement accounts are very low” (https://www.epi.org/publication/retirement-in-america/).

DID YOU KNOW?

From 1997 to 2005, Federal Reserve Chairman Jerome Powell was a partner at The Carlyle Group, where he founded and led the Industrial Group within the Carlyle U.S. Buyout Fund. From 2005 until he was appointed Chair in 2017, Chairman Powell was involved in finance and service on Bipartisan Policy Committee and the Federal Reserve Board.

Federal Reserve Chairman Jerome Powell