Progressive Breakfast: From Wall Street to Wisconsin to Health Care For All

Does the road to health care reform run through Wisconsin? Could the shape of health reform to come be based on a Wall Street model?

Maybe, if you believe the reports that the health care reform outline circulating on the hill includes a scheme for a health insurance exchange [1]. CNN's Money & Main St.:

What’s the point of an exchange? Well, it would set some ground rules for how insurance is bought and sold, just as there are rules for how stocks are traded in the market. For example, insurers wouldn’t be allowed to sell policies that exclude pre-existing conditions. Individuals could choose between a newly formed public health insurance option and private plans, encouraging competition among insurers. Furthermore, the exchange would make it easier for consumers to comparison-shop policies.

In other words, the exchange would help create a more equitable, controlled health insurance market. At least that’s the theory–but one perhaps worth gambling on. Because we’ve seen what happens when an opaque market, such as OTC derivatives, is allowed to run wild. I certainly don’t want to take as much risk with my, your and future generations’ health.

Congress may be borrowing from Wall Street, but Obama is taking a closer look at Green Bay, Wisconsin [2]. Washington Post:

What Obama is likely to hear in Green Bay is testimony to the value of digital records, physician collaboration, preventive care and transparency, say those most involved in Wisconsin's innovative approach.

"There's been a fairly steady progression of quality" in areas such as diabetes care and cancer screening, said Chris Queram, executive director of the Wisconsin Collaborative for Healthcare Quality, which publishes statewide performance measures. "Every physician believes he is doing the very best for their patients, but when they see data that their group is not practicing at the same level as across the state, it's a real positive motivator to improve."

Aside from the relatively new "health insurance exchange" idea, the somewhat older idea of tampering with tax-free health benefits [3] is still in the mix as Congress comes up with a recipe for health reform. USAToday:

The biggest tax break in America — tax-free health benefits from employers — could be scaled back to pay for President Obama's overhaul of the nation's health care system.

Tax-writing committees in Congress are considering a cap on the tax break, so that higher-income employees or those with generous insurance policies would pay taxes on part of their value. Senate Finance Committee Chairman Max Baucus, D-Mont., who plans to unveil his health care proposal next week, has said he favors limiting the tax break.

History does indeed repeat itself. The American Medical Association is reprising its role on the ongoing saga of health reform (which dates back as far as Teddy Roosevelt and Progressive Party), by announcing its opposition (again) to a public health insurance plan. NY Times:

As the health care debate heats up, the American Medical Association is letting Congress know that it will oppose creation of a government-sponsored insurance plan, which President Obama and many other Democrats see as an essential element of legislation to remake the health care system.

The opposition, which comes as Mr. Obama prepares to address the powerful doctors’ group on Monday in Chicago, could be a major hurdle for advocates of a public insurance plan. The A.M.A., with about 250,000 members, is America’s largest physician organization.

While committed to the goal of affordable health insurance for all, the association had said in a general statement of principles that health services should be “provided through private markets, as they are currently.” It is now reacting, for the first time, to specific legislative proposals being drafted by Congress.

Talk about transformational. Doctors and insurance companies are now on the same side.

The NY Times' Nicholas Kristof [4] recounts a Canadian woman's health care sfory, remembers the past and declares "This time, we won't scare."

Who's Got Green Shoots?

Green Shoots? Depends on whom you ask. But green shoots are not sturdy oaks. The Federal Reserve says that economic activity is still weak [5]. BBC:

The Fed report said that economic conditions were weak or deteriorated further although five regions said the downward trend was moderating.

It added that labour markets were not recovering, with wages flat or falling.

The report, known as the beige book, is based on a survey of regional Fed banks and it is compiled eight times a year.

The latest report covered the period from mid-April to mid-May.

"Contacts from several districts said that their expectations have improved, though they do not see a substantial increase in economic activity through the end of the year," the beige book report said

The reported indicated the retail spending remained weak, with consumers steering clear of luxury items and new car purchases.

For some Americans, the shoots are only greener in somebody else's yard [6]. They must be. Because there's not a lot of green out there, in the form of paychecks or credit. CNN:

Small business owners expect to see an upswing in the economy over the next three months, according to a recent survey of National Federation of Independent Business members, but big problems remain in areas like credit availability and employment.

The NFIB's June "optimism index" report, released this week, found that nine of the index's 10 index factors were improved or unchanged from May's report, which marked a positive surge in entrepreneurs' outlook on the economy. But some key indicators remain grim: A growing number of those polled said business loans are harder to get now than they were last quarter, the worst reading for that statistic since the 1980-82 recession.

For all the talk about appointing a "pay czar" and devising new rules for executive compensation, it's questionable how much (if any) change is happening. Treasury Secretary Timothy Geithner says the government won't directly limit executive pay [7], but will seek ways to encourage shareholders to do the right thing. AP:

Talking tough but stepping gently, the Obama administration rejected direct intervention in corporate pay decisions Wednesday even as officials argued that excessive compensation in the private sector contributed to the nation’s financial crisis.

Instead, the administration plans to seek legislation that would try to tame compensation at publicly traded companies through shareholder pressure and less management influence on pay decisions.

At the same time, the administration drew a sharp line between the overall corporate world and those institutions that have tapped the government’s $700 billion Troubled Asset Relief Program.

WaPo's Ezra Klein [8] asks: Is The Administration Embracing a "Lock the Barn Door After the Horses Are Out" Theory of Financial Reform?

The administration's regulatory proposals won't be released till next week, so it's hard to say precisely what this "pragmatic spirit" means in practice. But plainly read, it seems like Geithner is saying that the administration has decided against using this moment for a wholesale reform of the financial regulatory structure, and instead is contenting itself with addressing only the specific issues that led to the current crisis. That's not the optimal approach.

The next financial crisis, of course, won't look exactly like this financial crisis. It's unlikely to be the product of a housing bubble, or unpriced risk in the securitization market. Addressing those topics might be important, but it's a bit like cordoning off the stove after your toddler has already burnt his hand. Worth doing, but the lesson has probably been learned.

There are, of course, regulatory flaws that contributed to this crisis and could well contribute to a subsequent catastrophe of a different sort. Systemic risk, for instance, is likely to contribute to any serious crisis. But there's much about our regulatory system that we know to be insufficient but that wasn't specifically implicated in the 2008-2009 meltdown.

And we shouldn't ignore all of it.

Dude, Where's Our Energy Bill?

Congress is working on a way to make the president's health reform package a reality, but the AP reports that Congress is backing off of President Obama's clean energy goals [9].

Both the House and Senate are considering legislation that would establish the first national requirement for electric utilities to generate a certain percentage of their power from renewable energy - from wind turbines and solar cells to biomass and geothermal sources.

To gain wider congressional support, the proposals have been whittled back. They now pale in comparison to what Obama repeatedly has maintained is feasible and necessary to shift the nation away from coal and other fossil fuels and to clean energy sources. This shift, he argues, is needed to combat climate change and make the nation more energy independent.

The Senate Energy and Natural Resources Committee is expected on Thursday to approve energy measures that call for 15 percent of the country's power to come from renewable sources by 2021. A huge climate bill, likely to be considered in the coming weeks in the House, would require 20 percent renewable energy use by 2020.

Nothing near that amount will actually be achieved by the mandate - or even required - because of compromises made to exempt some utilities and allow others to substitute efficiency improvements for a large chunk of the renewable energy requirement.

Mother Jones' David Morris [10] asks: Why Does the Climate Bill Look Like It Was Stolen From the Republican Playbook?

"Command and control" is a military term the Republicans long ago appropriated to caricature and condemn Democratic programs. Republicans like to contrast the Democrats' embrace of a command and control, regulation-based you-will-do-as-I-say-or-else strategy with their own, presumably, more effective market-based we-will-make-it-worthwhile-for-you-to-do-what-we-want approach.

Nowhere is the phrase "command and control" used more often and with more passion than when Republicans attack environmental regulation. The 2008 Republican Party platform, for example, declares, "Republicans caution against the doomsday climate change scenarios peddled by the aficionados of centralized command-and-control government."

Auto Bailout Update

The auto industry bailout rolls on, and Christian Science Monitor reports that the new Chrysler won't be liable for any of stuff made by the old Chrysler [11] (and still owned by the old Chrysler's customers.):

Chrysler's bankruptcy will leave lots of people empty-handed. Among them are accident claimants who seek compensation when a faulty Chrysler vehicle causes injury or death. Under terms approved on June 1 by U.S. Bankruptcy Court Judge Arthur J. Gonzalez, the "new" Chrysler emerging from bankruptcy won't be liable for product defect claims involving any cars sold before it came into existence.

This issue drew only minor attention during the recent jockeying by various groups over whether the U.S. Supreme Court should intervene in the case. Now that the justices have stayed out of the case, and Chrysler's alliance with Italy's Fiat (FIA.MI) closed on June 10, it appears that anyone with a pending injury claim against Chrysler has no hope of a recovery. What's more, under Gonzalez's order anyone injured in a future accident involving the 31 million Chrysler vehicles currently on the roads is also barred from suing the newly constituted Chrysler for compensation.

A looming question now is whether a postbankruptcy General Motors will win the same liability protections. In filings accompanying the failed effort to persuade the Supreme Court to review the Chrysler case, groups representing consumers and accident claimants noted that it "could provide the roadmap for subsequent bankruptcies in this troubled economy," including GM's. About 74 million GM vehicles are now on U.S. roads, according to the Insurance Institute for Highway Safety.

Whether GM get a similar deal remains to be seen, but administration officials overseeing the auto bailout say there's no "magic bullet" for the auto companies [12]. Mclatchy.

Breakfast Sides

Pentagon employees have been enjoying some major perks over the years, including millions of dollars in free travel from countries, companies and trade groups wanting to do business with the U.S. military. But get this. It's legal, according to officials. AP:

Defense officials say the arrangement is legal, saves taxpayers money and is carefully monitored to ensure there are no conflicts of interest. But government watchdogs say it allows donors to subtly exert influence for a small investment compared with the potential gain.

Between 1998 and 2007, hundreds of outside sources, including athletic shoemaker Nike Inc., the Chinese government and pharmaceutical giant Johnson & Johnson, footed the bill for more than 22,000 trips at a cost of $26 million, according to an analysis of government travel disclosure records by the Center for Public Integrity in Washington.