Russia & the United States:  Two Different Countries, Two Different Styles of Kleptocracy

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Dave Kingsley

Stealing from Taxpayers is Kleptocratic Behavior in Any Government

    After the collapse of the Soviet Union, Russia began to transition from totalitarian communism to an oligarchy of politically connected apparatchiks and mobsters from the Soviet era.  The productive sectors of the economy such as oil and gas and manufacturing were looted in a crude takeover by a powerful criminal cabal including the KGB and high officials of the Communist Party.  There was nothing subtle about it.  The economy was dismantled and carried off by an in-group of thieves and criminal enterprises.  The health and lifestyle of the Russian people dropped precipitously.  There was no longer any pretense about an economy designed for the rise of the workers.  That era was over and kleptocracy became de rigueur.[1]

    As Soviet Communism was failing, the United States was transitioning from a “golden age of capitalism” to a dark age of government regulatory retrenchment, Wall Street dominance, loss of faith in government for the general welfare, a sinking middle class, stagnant working-class wages, and deteriorating population health.  The kleptocratic facet of the current U.S. economic dark age is far more refined than the brutish nature of the Russian oligarchy.  The conditioning of the American people has been sophisticated and in most instances difficult to recognize.

    The kleptocrats of Russia merely took what they wanted right out in the open.  U.S. kleptocrats applied an abstruse intellectual justification for weakening government checks and balances, dismantling regulatory agencies, and privatizing government services.  Mythical beliefs about a nonexistent free market were generated in leading universities and sold to legislators and the public.  Hence, a thing no more real than a unicorn was concocted by academic economists and marketed as the ultimate decision maker.  The idea of “the market” was reified into an entity – an entity has never been observed or measured – endowed by theorists with complete knowledge and the ability to make the best decision about how government should work vis a vis private industry.[2] Indeed, it has been working increasingly well for the rich and powerful.

A Kleptocrat by Any Other Name is Still a Kleptocrat: An Example

Peter G. Peterson: Multi-Billionaire Founder of Blackstone

    The late multi-billionaire Peter G. Peterson along with Stephen Schwartzman, founded the Blackstone Group, a financial services conglomerate.  Mr. Peterson dedicated a billion dollars to the privatization of Social Security and Medicare.  The trillions of dollars expended by the SS Trust Fund and Medicare program make an inviting target for a vulture capitalist.  Unfortunately, Peterson had a stellar reputation inside the Washington, D.C. beltway where cliques of corporate and individual wealth roam. His front groups such as the Committee for a Responsible Federal Budget (CRFB), the Concord Coalition, and the Peter G. Peterson Foundation, jelled into a highly influential network of “go to” organizations for public policy.

    Maya MacGuinness, CEO of CRFB, is frequently the only person quoted when federal budgeting is covered in leading mainstream publications such as the New York Times.  Her mantra is that Social Security and Medicare are leading causes of budget deficits. This is not true and she either knows that and is lying or she is seriously incompetent and ill informed.  Either way, representatives of mainstream media – including PBS – are irresponsible for consulting her.

    Medicare is undergoing rapid privatization, and an increasing amount of public funds are diverted from care to a bevy of private for-profit financial intermediaries.  This has increased the cost of Medicare.  But this increased expenditure is not devoted to better care.  Rather it is siphoned off into shareholder earnings and benefits a few wealthy individuals.

    Medicare wasn’t privatized solely under the influence of Peter G. Peterson.  The Medicare Modernization Act of 2003 included Part D – a prescription drug benefit – and was pushed by Big Pharma.  The insurance industry pushed the act because it included Part C –  privatization of the entire program under what has become known as Medicare Advantage.

    Social Security remains un-privatized and administered at a cost of ½ of 1 percent of revenue.  Wall Street would love to privatize it in the same manner as Medicare and earn huge management fees that would rake off up to 25% of revenue, which has been the experience in the privatized Chile SS program.

Nursing Home Kleptocrats

    Investors have a vast interest in frail elderly and disabled Americans institutionalized in the disgraceful U.S. nursing home system.  They can get by with a minimal, substandard, quality of care while extracting and pocketing optimal amounts of cash.  It is a shabby business carried out by sleazy businessmen in a weakly regulated government funded skilled nursing system.

    A richly funded propaganda machine and political contributions are responsible for a veil of secrecy around the corruption of an industry with little interest in optimal care of the people in their charge and from whom they are expropriating assets that would otherwise be passed to their heirs, thereby causing even more maldistribution of wealth.  While tunnelling excess amounts of government provided revenue through subsidiaries and shell companies, they have effectuated a first-class propaganda machine that has sold lies about financial hardship and underfunding from government.  I even see this lie promoted in peer reviewed journals – mostly from economists.

    Propaganda works.  The industry lobby has an effective PR campaign that leads the public to believe that it is tough to make money running nursing homes.  They rely on the lack of financial literacy among most people by noting a general low operating margin reported by most facilities. These misleading statements regarding nursing home facility cost reports submitted to state regulators and CMS are often taken at face value by academics, the media, and advocates.  Consequently, supposedly peer reviewed publications include findings from data dumps of information taken from facility-specific reports. 

Right Wing Fanaticism Didn’t Shrink Government.  However, It Did Shrink Democracy.

    A well-known anti-government fanatic once said that he wanted to shrink government down to a size small enough that he could drag it into the bathroom and drown it in the toilet.  Cute.  Grover Nordquist is the guy we are talking about here.  Although he is clearly an idiot, politicians have lived in mortal fear of his condemnation and avoided any hint that they might raise taxes – meaning individual and corporate taxes.  Reaganites, Nordquististas,  Paul-groupies (Ron and Rand) and indeed the libertarian extremist, government hating, right-wing of American politics believe that taxes feed “the beast.”  So, they were successful in collapsing individual income tax brackets, lowering corporate income taxes, and devolving taxes to the states in the form of regressive sales, excise, and user taxes.  At the same time, executive branch agencies with the purpose of protecting the public from corruption and abuse and implementing legislation have been weakened considerably.

    The middle- and lower-income classes are not paying lower taxes.  Billionaires and corporations are.  Furthermore, an increasing amount of middle- and lower-class income and wealth is being distributed to families and individuals with the highest level of income and wealth (think “spend downs” in nursing homes).  Along with privatization of government services – especially healthcare – a weakened regulatory system has been conducive to a refined form of looting through Medicare, Affordable Care Act, Medicaid, Pentagon/defense budgeting, and a multitude of other forms of privatization.  Well, maybe not so refined, if we just take a closer look at it.

    Without a robust federal regulatory framework, the rights of Americans are now trampled by special interests who have been able to tilt the tax codes in their favor and takeover government services at costs higher than would be if the services were provided by federal agencies.  One unfortunate result of this form of looting is that Americans are increasingly gouged by health insurers and paying more than their peers in Asia and Europe, but their overall health is worsening. 

The U.S. Supreme Court is About to Seriously Dilute Executive Branch Regulatory Power

    Federal laws can be sweeping and complex.  The Clean Water Act, the Occupational Safety & Health Act, and the Medicare Modernization Act are examples of laws that have induced systemic change in U.S. government and society.  These laws cannot anticipate, nor can they address every contingency in day-to-day implementation.  Congress has traditionally considered technically qualified agency personnel to be responsible for filling in the “gaps” in highly complex legislation.

    Industries affected by major legislative changes have typically fought administrative regulations issued by the EPA, OSHA, FDA, and a host of other regulatory agencies.  They have attempted to blunt regulations through the courts, propaganda, and the political process. However, in the 1984 case Chevron USA, Inc v. The Natural Resources Defense Council, Inc., the Supreme Court enhanced the legitimacy and legality of agency regulations and strengthened Executive Branch oversight.  The Court held that deference should be accorded to administrative agencies with the technical capability and scientific knowledge for addressing ambiguous issues in legislation.

    That precedent is likely to be overturned when the Court hands down decisions on two cases already heard this session: Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce.  The cases concern regulations issued by National Marine Fisheries Service (NMFS) under the Magnuson-Stevens Fishery Conservation and Management Act (MSA).  The forthcoming decisions will address two major questions:

 1. Should Chevron v. Natural Resources Defense Council be overruled?

2. Does statutory silence concerning controversial powers expressly but narrowly granted elsewhere in the statute constitute an ambiguity requiring deference to the agency?[3]

     The six conservative idealogues on the court are expected to answer question 1 in the affirmative and question 2 in the negative. This is a particularly horrendous prospect for the U.S. healthcare system, which has outsourced trillions of dollars to some of the largest corporations in the United States.  These corporate behemoths with very deep pockets or trade associations with vast resources will take their dislike of particular regulations into court and will often find  friendly judges who will interpret regulations in their favor even though they – the judges – will have no scientific credentials to make technial decisions.  This has already occurred in the Alliance for Hippocratic Medicine v. U.S. Food & Drug Administration[4], which was heard before the Supreme Court last week. 

    In that case, a federal judge in West Texas issued a ruling that overrides the scientific research undertaken by the FDA in the approval process for mifepristone (also known as “RU486” and “Mifeprex”) – more commonly called “an abortion pill.”  The S.C. will no doubt find that there is no standing to sue on the part of the anti-abortion doctors.  Nevertheless, the question of whether a judge can override reasonable regulations issued by the FDA will be left open.  That is where this case intersects with the Chevron deference principle that will most likely be overturned.

    This does not bode well for women’s reproductive rights specifically and for healthcare in the U.S. generally.  As these court cases pertain to kleptocracy, a corporate friendly and extreme right-wing majority on the S.C. is in a position to neuter federal agencies and strengthen the hand of kleptocrats.

Summary

    Acts of government sanctioned cheating and stealing from the American people are permeating the multi-trillion-dollar government funded healthcare system.  As government funded medical care is increasingly privatized and corporations in the business become bigger and more powerful than the agencies regulating them, more funds will be diverted illegally from care into owners’ pockets.  For instance, I’ve noticed an increasing number of nursing home facilities maltreating and underpaying employees, which discourages applicants for work and induces turnover.  At the same time, they contract for labor from subsidiaries of their parent/holding companies at an extremely high rate.  We have examples of facilities contracting with related parties for 50 to 63 percent of their labor.  State and federal agencies have failed to even notice let alone deal with this egregiously illicit practice.

    This example of labor contracting is only one of many, many forms of cheating.  MCOs often deny authorization for physician prescribed treatment in their networks to keep their cost below capitation rates.  Hiding and distorting information on cost reports, overcharging for services, upcoding therapy services, funneling funds through shell companies to hide excessive extraction of funds, and pressuring congress through bribes (campaign contributions) to unjustifiably increasing reimbursement, i.e., rent seeking are a few more examples of cheating and stealing.  It should come at no surprise that the American people pay two to three times more per capita for healthcare than the people of our Asian and European peer countries with universal, single payer, government managed healthcare systems.

    My purpose in writing this blog post is to encourage attention to psycholinguistics in advocacy, scholarship, and public discourse in general.  Professionals and scholars are reticent about applying terms such as kleptocratic to behaviors that are best described as that.  The media avoids harsh and condemnatory terminology – even when it called for in describing events and acts.

    Stealing is stealing, thievery is thievery, whether they happen through a home/business break-in, or through cheating on forms submitted to the federal and state governments.  White collar crime is unfortunately placed on a higher plane and is less punishable than street crime generally committed by the poor and powerless members of society. How we describe behaviors and what we call them has significant influence on how they are perceived and treated in political discourse and the criminal justice system.

[1] Terms such as plutocracy, oligarchy, and kleptocracy are not mere words and are not used in this blog for name calling.  In public discourse words should be taken seriously and utilized in a technically correct manner as scholars in political philosophy would theoretically utilize them.. Kleptocracy is defined as: “ a form of government by individuals who primarily seek personal gain at the expense of those they govern.” Kleptocracy | Definition, Examples, Kleptocratic Leaders, Dekleptification, & Facts | Britannica.”  Given this broad definition of kleptocratic behavior, examples of it abound in the U.S. and are manifested even more crudely in Russia.  Terms such as oligarchy, plutocracy, and kleptocracy can all apply to any one government in any one nation state. Oligarchy pertains to rule by a small number of individuals sans democracy.  Plutocracy is rule by the wealthy – also contrary to democratic governance.  As wealth is distributed away from the masses to a small number of superrich individuals, plutocracy is intensified and becomes more salient in political processes.  Hence, the system becomes more oligarchic because the power is posited in a smaller number of individuals.  The intersectionality of plutocracy and oligarchy is of importance in this discussion.  Furthermore, the correlative increase of rule by the few in their private interest, contrary to the public interest, and the concentration of wealth in a tiny minority leads to corruption on a wide scale.  Therefore, resources that could be dedicated to elevating the health and lifestyle of the masses are diverted to a wealthy few.  For instance, government tax receipts flowing from wage and salary earners have been increasingly and excessively diverted to shareholders at the expense of government services intended to improve the health and welfare of all classes of U.S. residents.  Kleptocratic behavior is expressed in the healthcare system by the proliferating number of financial intermediaries such as insurance companies, pharmacy benefit managers, etc. who drain resources from care without adding effectiveness and efficiency to the overall system.

[2] Reification is a frequent fallacy in pseudoscientific thought processes.  Naming and describing something abstractly do not prove that the thing exists concretely.  The free market as an abstraction is a description of trillions of daily interactions in which people buy and sell things.  It is fallacious to call all of those interactions a thing.

[3] Relentless, Inc. v. Department of Commerce | Oyez

[4] AllianceForHippocraticMedicineComplaint.pdf (windows.net)

How the Health Insurance Industry is Using Disinformation to Take Over and Defraud Medicare

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By:

Dave Kingsley

Corporate Greed in the Post-Truth Age

    Most Americans have never heard of the Better Medicare Alliance[1] – a Washington, D.C. think tank and front group for big health insurers such as UnitedHealth, Aetna, and Humana.  Also, the 2023 Super Bowl TV audience didn’t know who paid for a commercial at halftime claiming that President Biden had plans to “cut Medicare.” The ad included a message urging viewers to call the White House and “tell President Biden not to cut Medicare,”[2] but they – the TV viewers – didn’t know who was asking them to do it. Football fans had to be perplexed.  Medicare beneficiaries were most likely upset and worried by what they saw and heard.

    The ad, funded by Better Medicare Alliance, was a lie.  The truth is that President Biden had no intention and no plan to cut Medicare.  Contrary to what the ad claimed, he was planning to claw back $4.7 billion from UnitedHealth and other insurers for defrauding the program through false billing practices.  One illegal practice health insurers utilize to add unearned value to their Medicare Advantage (MA) reimbursement is called “upcoding.” Because sicker patients are reimbursed at a higher rate, the trick is to find ways to lie about how sick a patient is – to make them look sicker than they are.[3]

    MA beneficiaries tend to be healthier than Traditional Medicare (TM) beneficiaries.  Nevertheless, research indicates that when individuals move from TM to MA, their costs to the program increase.  The important point is that “total Medicare payments to MA plans in 2024 (including rebates that finance extra benefits) are projected to be $83 billion higher than if MA enrollees were enrolled in FFS Medicare.”  Furthermore, payments to MA plans average an estimated 122 percent of what Medicare would have expected to spend on MA enrollees if they were in FFS Medicare.”[4]

    After the Biden Administration’s proposal to recoup stolen money from MA insurers and prevent further fraud, the health insurance industry threw a conniption fit and went into overdrive.  The Super Bowl ad was only one tactic (costing eight figures, it was super expensive).  In addition, they sent their army of lobbyists crawling all over the Washington, D.C. beltway threatening and bribing legislators.  HHS backed down.  The cheating continues and costs the seniors of America – indeed all wage earners – hundreds of billions from their payroll deductions, premiums, co-pays, and nearly $200 out of every Social Security check.

Pulling Back the Curtain on the Washington D.C. Policy Planning Network:  What is the Better Medicare Alliance & Who is Behind It?

    The insidious thing about think tanks set up inside the Washington, D.C. beltway is that they enlist the aid of seemingly legitimate advocates and scholars.  It is hard to know if the advocates and scholars are merely naïve or whether they are self-serving. Perhaps unwitting would be a kinder word. For instance, the Better Medicare Alliance board consists of Dennis Borel, Executive Director of Texans with Disabilities, Caroline Coats, Humana, Inc., Daniel Dawes, Meharry Medical College, Mary Beth Dawes, Former Congresswoman (President & CEO), Joneigh Kaldhun, CVS Health, Dan Lowenstein, Visiting Nurse Service, NY, Richard Migliori, UnitedHealth, Elena Rios, National Hispanic Medical Association, and Kenneth Thorpe, Emory University.

    The organizational structure of these industry front groups is a form of disinformation itself. On the board are big players in the MA industry – Humana, CVS, and UnitedHealth.  Interspersed with the representatives of these health insurance behemoths are executives and professionals from organizations with an ostensible mission to improve society in some manner.

    By placing their imprimatur on an industry lobbying group, NGOs, nonprofits with a stated humanitarian cause, and universities  are participating in a duplicitous tactic to confuse the public about the real purpose of nefarious industry think tanks like Better Medicare Alliance. Their support for various entities with a mission to preserve and strengthen the medical-industrial complex helps divert funds needed for care into the coffers of executives and shareholders.

Privatizing Medicare was Supposed to Reduce Costs and Give Beneficiaries More Choice:  It Hasn’t Worked Out that Way.

    MA is a creature of the Medicare Modernization Act of 2003. The right-wing of American politics accomplished a coup by setting Medicare on the road to privatization.  Currently over 50% of all beneficiaries have selected it over Traditional Medicare ™.  Federal policy is unfortunately driving Seniors into MA by allowing manipulative practices such as low premiums and a few benefits not available to TA beneficiaries.  Seniors are being led like lemmings into the arms of the insurance industry by disinformation and deceit. Organizations like the AARP in partnership with health insurers like UnitedHealth are the Pied Pipers.  

    MA is one of the most serious threats to the health and well-being of American seniors.  It robs money from care and transfers it into the pockets of investors and executives.  Many beneficiaries are happy with low premiums and add-ons not available under traditional Medicare such as Silver Sneakers plus some dental and vision care.  I can understand why many people who have it are pleased with their coverage.  It works for healthier beneficiaries until it doesn’t.      

    If MA beneficiaries should incur a costly service that is not in network, their assets could be wiped out.  Some retirees have no choice in the matter.  If their company or institution includes health insurance as a retirement benefit, it is most likely MA. Furthermore, I can’t blame anyone who is trying to avoid the premiums for supplemental coverage under traditional Medicare.  Avoiding bankruptcy and depletion of assets through a catastrophic sickness makes perfect sense for TA beneficiaries. But the supplemental insurance is a heavy burden that could be avoided if the Medicare program weren’t diverting so much funding to MA (see discussion below).

Seniors and People with Disabilities Would not be Struggling as Much If Big Health Insurance were not Stealing from Them.

    For seniors and disabled Americans to lose nearly $200 per month of their Social Security and choose between a large payout for supplemental or the risk of bankruptcy, is an injustice when privatized healthcare is stealing hundreds of billions of Americans’ tax dollars, payroll deductions, and hard-earned money through out-of-pocket expenses. The Physicians for a National Health Program (PNHP) has estimated that MA overcharged taxpayers by a minimum of 22% or $88 billion and potentially up to 35% for a total of $131 billion in 2022. If the high end of the estimate were correct, all of Part B premiums ($131 billion in 2022) or Part D premiums ($126 billion in 2022) could be covered by excessive corporate extraction of funds from Medicare.[5]  

    UnitedHealth is noting $25 billion in cash and cash equivalents on its 2023 balance sheet, CVS has noted $12 billion, and Humana is noting $5 billion. They have multiples of these amounts in long-term and short-term investments; they spend hundreds of billions on stock buybacks, dividends, and board and executive compensation. By digging into their assets, the cash rich health insurance business would be able to charge fair prices and stop their criminal behavior without much of a dent in a reasonable return on their investments.

In this Dark Age of Plutocracy, the Superrich & Corporations are Lying and Blaming Government & Ordinary Americans for Poor Healthcare and Excess Expenditures

     Americans earning wages and salaries are being subjected to a corporate network of disinformation and gaslighting.  President Biden is blamed for cutting Medicare when he is in fact attempting to protect the program.  The growing elderly population is blamed for federal debt and deficits when Medicare and Social Security have little impact on the federal budget (SS has none and over half of MC is paid through payroll deductions, premiums, and co-pays).  The nursing home industry blames taxpayers for failing to provide them with enough money to adequately care for the elderly and disabled patients in their beds while they spin a false hardship narrative.

    The Medical-Industrial Complex has established a network of front groups with a duplicitous message of doing good for Americans and has enlisted the aid of do-gooder nonprofits, universities, and individuals. This system and its apparatchiks aren’t all that clever.  Their organizational tactics are rather easy to discern.  The problem is that it is happening stealthily behind the scenes in Washington, D.C. and the 50 state capitals. The media is ignoring it. We intend to expose it and encourage everyone we can to join us in that endeavor.

[1] https://bettermedicarealliance.org/

[2] You can see the ad here: https://www.ispot.tv/ad/2UHG/better-medicare-alliance-cutting-medicare-thats-nuts.

[3] Reed Abelson & Margot Sanger-Katz (2023), “Biden Plan to Cut Billions in Medicaid Fraud Ignites Lobbying Frenzy,” https://w.w.w.nytimes.com/2023/03/22/health/medicare-insurance-fraud.html?searchResultPosition=1.

[4] Medicare Payment Advisory Commission (MDPAC), 2024, p. March 2024 Report to the Congress: Medicare Payment Policy – MedPAC

[5] Physicians for a National Health Program, (2023), Our Payments their Profits: Quantifying Overpayments in the Medicare Advantage Program. MA Overpayment Report (pnhp.org)

WHY DO THE  AMERICAN PEOPLE TOLERATE A POOR PUBLIC HEALTH SYSTEM ALONG WITH BAD HEALTHCARE THAT COSTS SO MUCH?

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By:

Dave Kingsley

Unchecked Bigness is One Factor Threatening our Democracy & Our Health

    Big corporations and big unions can be and indeed are in many cases bad for our health.  For instance, UnitedHealth, Centene, Cigna, CVS, and other healthcare-related corporations in the top 30 of the Fortune 500 have interjected themselves into our publicly funded medical care system as financial intermediaries and major influencers of government policy.[1]  Their motivation is protecting and enhancing shareholder value in the uniquely privatized, taxpayer funded U.S medical delivery structure.  They make money from sickness not wellness.  Prevention does not add to their bottom line, but treatment is quite lucrative – never mind the public interest.

    Big unions, which initially have laudable missions and continue to do much good, sometimes tend to degenerate into self-serving actors without concern for the health and well-being of the public.  This is particularly the case when our federal, state, and local governments attempt to protect our health from the dangers of fossil fuel.  Public efforts to stop irrational projects such as the Keystone pipeline often fail due to the power of the building trade unions in concert with industrial interests.[2]  The United Auto Workers and the big three auto manufacturers have successfully tapped the brakes on the Biden Administration’s planned transition to electric vehicles. Air quality and the threat to humanity from climate system meltdown are secondary to the short-term interests of big unions and gas engine manufacturers.

Indoctrination, Manipulation & Conditioning of the American People

   Why are we, the American people, passive and compliant in the face of an assault by special interests on our dignity and well-being?  The deterioration of service and quality at excessive prices is not only happening in healthcare.  We see it in airline travel, brick and mortar and online retail, technology (computers, software, and apps) – you name it.  Predatory economics have become the name of the game, which is simply this: “How can we lower quality and squeeze more out of customers/patients through lying and deceitful propaganda?”

    Customers and patients are not at fault. The dystopian part of the U.S. economy did not come about as the result of a revolution.  The wealth and political power of investors, owners of vast amount of assets, and corporations have been able to move economic behaviors incrementally and deceitfully from the unthinkable to the normal.  Propaganda and duplicity by forces with the resources to falsely convince the public that they are living in the best there is in the best of all possible worlds have been effective.  People tend to trust officious and authoritative, i.e. powerful organizations and individuals.  So, they hunker down and take it as they get fleeced through small incremental price increases and lower quality of goods and services.

    The primary healthcare industry business model can be compared to the air travel industry.  They incrementally lower quality and add value to revenue for investors at the expense of patients and consumers of medical goods.

    Through dissemination of false advertising and stories promoted by industry PR, the mainstream media – perhaps unwittingly – is helpful to corporate predators. As airlines herd passengers around like cattle and stuff them into increasingly uncomfortable flying tubes at ungodly prices, the media takes up the airlines’ cause by spreading the image of travelers as “unruly.”  The poor airlines are forced to put up with all those bad people.  Should I believe that or my lying eyes? I have traveled on the airlines extensively over the past 60 years.  I used to love it.  Now I hate it.  Furthermore, mostly what I see are cooperative, well-behaved people trying to adapt and endure the indignities, discomfort, and stresses heaped on them by extremely profitable, oligopolistic, and deregulated airlines.   

     Industries have leveraged highly sophisticated techniques of mass psychology for the purpose of pacifying the traveler, nursing home patients and their families, customers of health insurance corporations, users of computer applications, and so forth.  You probably don’t know that A Place for Mom is owned by private equity, that they don’t choose the best place, rather they choose the place that will pay them.  Did you know that the ostensibly pro-retiree-AARP’s deal with UnitedHealth is designed to lead the elderly down a primrose path into the waiting arms of the health insurance industry while the pro-beneficiary-Medicare program is destroyed?

    When you don’t see that the fine print included autorenewal, too bad. That’s your problem.  You have a serious glitch and need help.  That’s been outsourced to the Philippines.  Good luck with that. You didn’t know that the 5-minute life flight from Taos to Albuquerque cost $70,000 and was out of network? Now you’re stuck with the bill and will never find out what a reasonable price would be and why it’s not covered by your Medicare Advantage plan. You hear that those unfortunate, underpaid nursing home corporations are not making enough money to treat us and family members humanely. You could check their finances and verify what they are saying but the government allows them to operate behind a veil of secrecy. 

Big Government is Not Always Bad

    As the bottom ninety percent of Americans in income and wealth make their slow descent into economic serfdom, government agencies that are supposed to protect us have been neutered and checked by the politics of self interest and pseudoscientific economic theory.  Nonsense from major university economic departments, indeed from the overwhelming majority of economists, has been adopted as gospel by politicians and the media. Despite of the obvious failure and detriment from this proto-religious canon, it continues unabated and is as strong as ever.  The EPA, FTC, and other major government regulators have been reduced to going along to get along. This all while the ecosystem is collapsing, public health is deteriorating, and wealth and power is increasingly concentrated in fewer entities and individuals.

    The free-market, trickle down, government-busting theories of faux libertarians such as Hayek and Friedman have proven to be a chimera.  But that has become the underpinnings of U.S. government and economics.  Political power resides in the so-called center right to center left.    The Democratic Party and the Republican Party are both responsible for deregulation of corporations and privatization of government services.  It was President Carter that deregulated air travel, trucking, and banking industries. He kicked off a deregulation craze that has left the American people in an extremely vulnerable position.  President Reagan was a fanatical government hater and adopted the right-wing worship of corporations along with a cynical view of people that our-constitutional government is designed to serve.  The Democrats have made a little noise about the dismantling of government but have for the most part gone along with it and have even participated in it.

What Can the American People Do About Their Economic Plight?

    The first step in changing a corrupt system is exposing it.  The first step in exposure is to stop believing propaganda.  The AARP is not a friend of retirees – they are selling us out with their UnitedHealth partner.  A Place for Mom is not interested in your mom – they are looking to turn a quick buck.  Prevagen is snake oil.  Balance of Nature is a worthless capsule.  The FEC is allowing false advertising and consequently you can be robbed of your hard earned money at CVS and Walgreens. All the available evidence we can amass tells us that the nursing home industry is quite lucrative for investors. But the investors’ narrative of financial hardship is dominating the conversation.  Let’s put a stop to that.

    The second step in systems change is changing the narrative. Government is not bad – it is good.  Regulation is important.  Not long ago, I confronted some state legislators at a hearing about weak oversight of nursing homes and their finances.  That hadn’t been done before in that particular legislative committee.  Advocates need to take a strong stand in exposing fraud. 

The status quo is not OK.  Believe it. Demand change. Pick up the phone. Send emails and get your friends, neighbors and relatives to call and write.  Politicians respond to volume.  So, learn about an issue and organize people to confront  senators, congresspersons, and state legislators.  Get people to pressure the media to stop selling lies.  Learned helplessness is our enemy.  If you think that Medicare Advantage is a good deal, it may be for you, but down the road all Medicare will be controlled by a few insurance conglomerates. They will continue to create financial intermediaries such as pharmacy benefit managers for the purpose of adding value to their revenue at the expense of our care.

    Support those think tanks in Washington that you know are on our side.  The Committee to Preserve Social Security & Medicare is fighting for us.  The Committee for a Responsible Federal Budget and the Concord Coalition are working to reduce Social Security and Medicare benefits. I know these organizations well and have dealt with all of them.  The Committee for a Responsible Federal Budget and the Concord Coalition were organized with the backing of the late multi-billionaire Peter G. Petersen who was on a crusade to privatize Social Security & Medicare.[3]  If you think that his legacy is not a major negative influence in your life, you would be wrong.  Furthermore, politicians and the media are treating the Washington network he left behind with deference and respect it doesn’t deserve.  Believe it! Fight it!

[1] In 2000, none of these companies were in the Fortune 500 top 30.  Now UnitedHealth is the 5th largest corporation in the U.S. and 10th largest in the world.  CVS is the 6th largest U.S. corporation and healthcare related corporations make up one-third of the top 30 U.S. companies in the Fortune 500. 

[2] I spent a career in labor relations on management’s side of the table.  Most of the unions with which I negotiated were building trades unions such as sheet metal workers, operating engineers, laborers, pipe fitters, boiler makers, and electricians in mining, construction, and heavy manufacturing.  I believe that unions are good thing until they aren’t.  The companies I worked for believed in good faith bargaining, but we took strikes and work stoppages that were counterproductive for the union members, companies, and the public. At this stage of our economic system, I don’t think that we can leave the plight of workers to the unlikely event that they will organize and improve their standard of living.  Politicians need to step up. I do not want to overlook the good that labor unions have contributed to the working classes.  They have fought for health & safety, an end to child labor, better pay and benefits so richly deserved by the people without whose labor corporations would not exist.  I think that they still fight hard for social justice.  We have much more good from the labor movement than bad.

[3] Working with the Committee to Preserves Social Security, the Gray Panthers, and other groups I have spent countless hours over the decades in Washington, D.C. fighting the duplicitous cabal of Peter G. Petersen funded think tanks and other Wall Street back entities trying to grab off the $trillions in tax-funded programs for investors.  It’s a tough fight and one that is undermined by organizations that appear to be do-gooders but are really representing the other side.

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

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By:

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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By:

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 Nursing Home Industry’s Accounting Firm is Providing Propaganda for Low Staffing Standards

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Dave Kingsley

    What’s in a Number?

    The major accounting firm of Clifton, Larson, & Allen (CLA) has concluded that CMS proposed nursing home staffing standards will cost the industry $6.8 billion in additional labor costs.[1]  Without the proper context, a big number like $6.8 billion has a big impact on legislators, the media, and the public in general. In the proper context, this is not a big number.  It is in fact a de minimus increase in overall costs to the industry – mere noise in the data.

    By the time the standards are implemented, total spending on Medicaid will have reached $1 trillion.  Approximately 20% or $200 billion of total Medicaid dollars will be allocated to long-term care. Medicare will expend an additional $100 billion for skilled nursing care.[2] These are conservative estimates, but even low-ball statistics reduce the impact of $6.8 billion to insignificance.   Based on CLA’s estimate, nursing home operating expenses will increase by around 2% of revenue derived from taxpayers.  Given waste from overpayment, widespread mismanagement, and weak government oversight in the taxpayer funded nursing home system, there will be little to no impact on providers’ bottom line because of CMS weak standards.

    Furthermore, overall industry revenue from reimbursement for direct care is enhanced by a host of tax subsidies for depreciation, interest, and other write downs on taxable income.  Money owed and not paid to the government is cash flow – it is money that can be used to make more money or to pass along to investors and executives. 

Guns for Hire:  How A Major Accounting Firm Serves as a Propaganda Arm of the Nursing Home Industry

   One would expect  ethical, competent accountants to provide an objective report on returns to nursing home investors. But that is not what CLA is doing for the nursing home industry. Typically, they base their claims about industry hardships on facility cost reports – specifically on net operating income.  This is laughable for several reasons. 

    The practice of separating facility specific net income from parent corporation financial reports, i.e., income statements, cash flow statements, and balance sheets, suggests that CLA is intentionally distorting the financial picture of the industry. Expenses at the facility level include related parties and home office allocations.  I suggested to a legislative committee a couple of weeks ago that they look at transfer pricing rather than the usually low or negative net operating income reported by facilities, which lease their property from another subsidiary of their parent corporation.  Triple net leases are standard in the industry.  Hence, facilities pay maintenance, taxes, and insurance on property they don’t own.  This makes the net operating income for the property subsidiary quite robust.

    As corporate finance has evolved with tax policy, net income is not a measure of “profitability” or return on investment.  This is especially the case in asset intensive industries.  The nursing home industry is not merely a healthcare industry.  Rather it is primarily a real estate and finance business.  With large amounts of write downs for, among other things, depreciation and interest, direct care revenue is greatly enhanced by tax subsidies.

    Real estate alone results in huge federal and state tax expenditures. For instance, in 2014, Amazon’s net profit was -$241 million –note: that is negative $241 million.  It would appear to nonfinanciers that Amazon was losing a lot of money.  Harvard finance professor Mihir Desai pointed out that “Amazon’s EBIT, however, was $178 million, and the difference of $419 million represents taxes, interest, and currency adjustments.”  Professor Desai asked, “What about EBITDA?”  Amazon had $4.746 billion in depreciation and amortization.  Consequently, their EBITDA of $4.924 billion was “a far cry from the net loss of $278 million. So Amazon generated lots of cash, as measured by EBITDA, but had losses according to profitability measures.”[3]

    Of course, Amazon is not in the nursing home business.  But the same principles apply.  Perhaps Amazon is more asset intensive than we find in the LTC/SKN industry, but real property is a major factor in providers’ cash flow. 

    With the entry a couple of decades ago of limited liability corporations (LLC), real estate investment trusts (REITs) and private equity firms (PE) the ground shifted under the feet of regulators and advocates.  The industry has become financialized through ancillary subsidiaries providing labor, insurance, therapy, and other goods and services, which has resulted in increasing extraction of cash without a correlative increase in quality of care.  None of this enters the CLA picture of the industry.  There appears to be no focus on what facilities are paying related parties for goods and services.  Nor do we know how to evaluate the quality of care based on pricing.  This is astounding but is nevertheless overlooked by legislatures, government agencies, and many of the largest advocacy organizations such as the AARP, NCOA, NIH, the so-called Moving Forward Coalition. 

    It is time that advocates step up and demand that we get a thorough, objective, financial analysis of the industry rather than a continued reliance on the AHCA/NCAL and their paid accounting firm. The nursing home lobby has no compunction about putting out ridiculous financial information because they know they can get away with it. That is a shameful, disgraceful situation.  It will do us no good to argue about the minutia of reimbursement (think RUGs versus PDPM) and ignore the bigger issue of nonfeasance, misfeasance on the part of CMS, state agencies, and legislatures.

CLA Propaganda Serves as a Barrier to Quality of Care

    CLA is paid to support the nursing industry’s hardship claims and to help further a very effective narrative of low net income, financially struggling owners/investors, and stifling over regulation. Legislative hearings attended by industry lobbyists, government representatives, and advocates often seem like a gathering for singing kumbaya and exuding effusive niceness.  Legislators and most other speakers and attendees are willing to sit through hours of mind-numbing rate setting minutia, e.g., complex incentives paid to facilities willing to provide a minimal amount of care.  Hours pass without anyone addressing highly questionable financial practices and faulty cost report data.

    Furthermore, legislators don’t understand that the nursing home industry has been transformed in a mere two decades.  The mom-and-pop nursing home is far gone.  A few nonprofit facilities that are not part of a chain still exist, but we are uncovering serious grifting in even some of those places.  In the for-profit sector, sophisticated financiers are leveraging a variety of legal and financial innovations such as the limited liability corporation (LLC) Umbrella Partnership Real Estate Investment Trust (UPREIT), private equity, and other legal, financial structures  to extract optimal cash flow with minimal expenses for care.

    The nursing home system is about money.  It has become fully financialized.  Real estate and finance override healthcare.  The only way that the industry can maintain such a disgusting and pathetic system is to hide the truth from “we the people,” and create a propagandistic narrative for protecting the interests of financiers and realtors.  The AHCA is very good at deception.  But one of their most effective tactics is to hire a large accounting firm to do their dirty work for them.

[1] CLA (2023) “CMS Proposed Staffing Mandate:  In-Depth Analysis on Minimum Nurse Staffing Standards.

[2]https://crsreports.congress.gov/product/pdf/IF/IF10343#:~:text=In%202021%2C%20Medicare%20spent%20%2492.6%20billion%20on%20SNF,payments%20attributable%20to%20SNF%20and%20home%20health%20care.

[3] Mihir A. Desai (2019) How Finance Works: The HBR Guide to Thinking Smart about the Numbers.

Kansas City Public Television & the Damaging Consequences of Nursing Home Misinformation

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Dave Kingsley

Cavalier Distribution of Unsupportable Financial Information Causes Physical Harm and Shorter Lives

     Kansas City Public Television (KCPT) is presenting an upcoming program entitled “The State of Aging in Kansas City.”  The program as advertised includes a panel discussion and a documentary film. I was shocked to see false claims by the American Health Care Association –  the industry lobby – included in the promotional material for the program.  For instance, the promo repeats AHCA falsehoods that “nearly 60% of nursing homes are operating at a financial loss” and that “Nearly three of every four facilities are concerned about closure due to staffing shortages.” 

    This is blatantly false information and serves to shield the industry from responsibility for widespread neglectful care of patients while investors are earning robust returns. It is obvious that KCPT has given the for-profit nursing home industry a major amount of influence in the development of their promotional material without fact checking the industry’s financial claims or consulting with credible scholars and advocates engaged in nursing home research. 

    Any widespread distribution of nursing home financial misinformation is a devastating blow to efforts at significant reform of the Medicaid and Medicare funded skilled nursing business. Therefore, patients in poorly run nursing homes continue to experience unnecessary pain, discomfort, and shortened lives because of lobbyists’ propaganda.

    The industry’s bogus hardship claim is a primary barrier to changing the despicable way elderly and disabled patients are treated in so many long-term care facilities.  The AHCA has immense resources to spread a false narrative –– with $128 million in 2021 revenue (https://www.aha.org/system/files/media/file/2022/11/2021-aha-form-990.pdf) and affiliates in all 50 states.  Hence, the “we can’t afford to do better” defense serves to undermine serious demands by advocates for stricter regulation and an increase in the quality of care.

    Public television has unwittingly placed its imprimatur on industry propaganda.  There is scant evidence that the nursing home industry is experiencing widespread loss.  Conversely, an abundance of available evidence suggests that historically and during COVID, the nursing home business has been and remains highly lucrative.

Responsible Journalism and Integrity Requires a Correction by KCPT

    Apparently, “The State of Aging in Kansas City” will kick off with a town hall & panel discussion on September 5th.  The town hall and a documentary will be shown on KCPT on September 14th.  Although I was consulted by the independent filmmaker about a year ago who asked that I meet with him to discuss nursing home finance.  I did that on a couple of occasions, but I did not know exactly what his project was about.  He did say that he was working on a documentary for public television.  I didn’t think much about it until I saw the promo and his name attached to the documentary.

       The filmmaker told me he had nothing to do with the promotional material and directed me to the person who was responsible for it.  I sent that person – who will also MC the townhall meeting –  a lengthy email explaining the problems with the information in his promo to which I attached couple of articles that I had authored with my colleague Charlene Harrington, Professor Emeritus at the University of California, San Francisco.  His response was, in my view, terse and dismissive.

    I have not seen the documentary and cannot speak to its contents.  Hopefully, it will help the public with an understanding of the issues facing patients, families, advocates, scholars, and legislators in understanding how we can arrive at a fair return to investors for an acceptable level of care.  At this time, we cannot do that because of the raw, rank, political power of the nursing home, hospital, real estate, and finance industries (i.e., medical industrial complex) inside the Washington, D.C. beltway and the 50 state capitols.

    For those of us who spend a good proportion of our waking hours in an attempt to counter industry propaganda and provide objective, scientific information, public television misinformation, dispensed to its widespread viewing audience, is like a kick in the solar plexus. It is very difficult to overcome corporate falsehoods in this post-truth era, but it is psychologically devastating when the hard work in attempting to do that is undermined by local public television.

Labor Conditions in the Nursing Home Industry:  An American Disgrace

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Dave Kingsley

What is U.S. Policy Regarding a Living Wage for Healthcare Workers

   It is difficult to establish exactly what CMS and state agencies are doing these days to audit, investigate, and regulate the nursing home industry.  But I think we can safely say that it is very little.  One thing we know is that the long-term care business is labor intensive.  Hands on, direct care is the sine qua non of nursing home operations.  Without the workers who risked their lives during COVID (approximately 2000 died because of the pandemic), corporations could not have continued to earn robust returns for their investors.

    Labor issues in the nursing home industry are escaping notice of legislatures, the media, scholars, and reform commissions.  Consequently, the public in general is unaware of the injustices perpetrated on workers in the form of poverty wages and poor working conditions – including violation of labor rights under the National Labor Relations Act.  Although operators were provided with lavish amounts of COVID relief, it appears that workers did not share in these allocations even when large amounts of revenue were extracted on behalf of investors.

High Poverty Areas of the U.S. and Poverty Wages:  The Injustice of Place and Internal Colonization

    Large regions within the United States such as the Mississippi and Arkansas Deltas, South Texas, and Appalachia, and large ghettos and barrios are beset with high levels of poverty, low economic development, and a dearth of opportunities through education and upward mobility.  These areas lack cultural amenities and healthcare access.  The poor whites residing in the poorest areas of the U.S. have been losing ground in their overall health and life expectancy.  In some places, people of color are in the majority and have historically had poor health care access and shorter lives.

    One would think that an injection of government funds through long-term care services and other healthcare programs e.g., Medicare and Medicaid would significantly contribute to a rise in the standard of living in these impoverished, economically underdeveloped places.  In other words, the trillions of dollars in federal and state budgets dedicated to healthcare should provide an economic boost to economically disadvantaged areas. However, rather than contributing to development of impoverished counties and regions, the long term care industry is exploiting them through excessively low wages.

Magnolia, Arkansas and the Greenhouse Cottages of Wentworth Place

    Greenhouse Cottages of Wentworth, Magnolia, Arkansas

In my last blog post, I wrote about the shockingly low wages paid to CNAs doing 80% of the work in Alta Vista Nursing & Rehab –  an Ensign Group facility (see “NAFTA and Working Home Wages in the Rio Grande Valley”).  Most nursing home corporations along the corridor consisting of cities such as Brownsville, Harlingen, McAllen, and other cities with sister cities across a bridge to Mexico are paying poverty wages while extracting robust amounts of earnings and COVID relief money (more about them in a later post).

    I am hypothesizing that pricing and reimbursement of industry for services are uniform across states without regard for the price of labor and yet set a floor under returns to the industry that advantages investors. Conversely, labor costs are allowed to float in local labor markets.  This is an injustice.  Labor in poor areas is suppressed while rich areas benefit from wages at the high end.  As I collect data on wages, hours, and working conditions in the nursing home industry, I’m seeing this pattern.  Let’s take Greenhouse Cottages of Wentworth Place in Magnolia, Arkansas as an example.

    Magnolia is a community of 10,000 people located in Columbus County, Arkansas, which is one of the poorest counties in Arkansas with poverty level nearing 25%.  The county is not far from the Louisiana border in South Central Arkansas.  Greenhouse Cottages of Wentworth Place is a large facility with 135 beds and 2022 revenue of $11,648,420.  Based on its income statement, the facility had operating income (operating net) of $719,547.

    In addition to operating income, $522,998 in nonpatient revenue from COVID relief was noted on the facility’s income statement.  Hence, with a net income of $1,242,998, the company had a 10.7% net income in 2022.  However, the company claimed $7,198,189 in expenses to its real estate entity, therapy services company, home office allocations, and employee leasing (i.e., outsourcing labor to its labor contracting service).  $6,163,519 of claimed related parties expenditures were allowed by the state.

Wages at the Greenhouse Cottages of Wentworth

    An examination of wages for the Greenhouse Cottages of Wentworth reveals exceeding low nursing wages for a company with an impressive net income and huge payouts to subsidiaries of the parent corporation.  In 2022, the average RN wage was $34.48.  Looking at RN wages at the facility for years 2016 through 2022, the average hourly wage for RNs increased from $31.62 to the 2022 wage of $34.48.  If $31.62 in 2016 kept pace with inflation, it would be equivalent to $39.61 in 2022.

    In 2016, CNAs were paid $10.57 at the facility.  That low base amount rose slightly above inflation over the years ($13.93 versus $12.49 in 2021).  In 2022, CNA pay averaged $15.71 due to President Biden’s Executive Order raising the minimum wage for federal contractors to $15.00 per hour. 

    Over the three years that COVID was raging, the facility received $3,548,321 in COVID relief.  There is no evidence that this was shared with the workers.  I suspect that we will find that to be a standard practice throughout the nursing home industry.

Is a Huge Increase in Reimbursement Justified without Consideration of Workers

    As lobbyists and propagandists for the industry with negligeable pricing research and  evidence continue to claim that reimbursement is too low, CMS proposes that operators be rewarded with a $2.2 billion increase due to a 6.4% “net market basket update to the payment rates” (see “CMS SNF Final Rule Seen as Insufficient for Payment Rates While Advancing Unfair Measures, Skilled Nursing News, July 31,2023).  Given massive amounts of COVID relief funneled into the industry and ongoing subpar pay for the direct care workforce, we need clear and decipherable data and rationale for this increase.