The Lessons of Obama’s Deal

Just finished watching the PBS special Obama’s Deal on demand and I am now enlightened:

Big Pharma Trumps Big Insurance

That’s right people, in case you were curious, its OK to make Big Insurance your enemy but don’t f*ck with Big Pharma.  Just ask the Obama administration.  From an article published on the Fox Business web site published four days after the new health care (cough) reform was passed:

"I was unable to find anything in there that would cause me to have anxiety if I were a shareholder in a pharmaceutical company," said Ira Loss, a senior health-care analyst at the research firm Washington Analysis.

Of course not Mr. Loss!  Early in the health care reform process Obama’s administration made a deal with big pharma including:

1. Americans will be prevented from buying cheaper pharmaceuticals imported from Canada (or any other country).
2. Pharmaceutical Companies have been given 12 years exclusive rights on medications before alternative (a.k.a. generic) drugs can hit the market and bring prices down.
3. The Federal Government will be prevented from using its immense buying power through Medicare and Medicaid from negotiating lower prices on pharmaceuticals.

The last one is the real kicker.  That’s right folks, we gave a no holds barred route to pharmaceutical companies right into the pocket of every single tax paying American.  Consider the following from an article by The Center for Public Integrity:

Securing approval of the Medicare Prescription Drug Improvement and Modernization Act of 2003, legislation termed "historic" and "breakthrough" by PhRMA, is considered to be among the pharmaceutical industry's most substantial victories. The law yielded the first prescription drug coverage under Medicare — a benefit that according for 2006 through 2015 is likely to cost the government more than $1 trillion according to March 2006 Congressional Budget Office estimates. The legislation was passed after a sustained lobbying campaign in the states and in Washington, D.C.

But wait,  the plot sickens…

One of the law's controversial aspects is a provision that bars the federal government from negotiating price discounts with drug companies. An October 2003 study by two Boston University researchers found that 61 percent of Medicare money spent on prescription drugs becomes profit for pharmaceutical companies.

I have a feeling that the pharmaceuticals will be making a crap load more than $1 trillion over 9 years.  Oh – by the way – when the article says “will cost the government $1 trillion” they mis-spoke.  Legislation never costs the government anything – it costs the American tax payer. 

Interesting how legislation aimed at controlling the cost of healthcare aims at slowing the increase in insurance costs but does nothing to containing the much larger cost of prescriptions.  As a matter of fact, between the Bush legislation from 2003 and Obama’s vast expansion of it, everything has been done to ensure we will all be paying much more for prescription medications – even if you don’t take any!

When do we get the change we can believe in?

Boo Hoo for British Pensions or Any Other Investors in BP

You Have Got to Be Kidding

1. How ridiculous is it to hear British politicians and the PR about how we should go easy on BP because of all the pensions that are invested in BP and all the people they employ.

Here is where we can see true capitalism at work and can see how that is different from a free market system.  No matter what else you may have heard or seen defining capitalism in a positive free market light – capitalism is not the same as a free market.  Capitalism is the idea that money or capital rules.   It has the concept that you can accumulate money and then once you have it you can then put it in a bank or some other investment and get a return for being nice enough to give your money to someone else.  Your money will “work for you”. 

The sad and unfortunate truth is that money has never done a days work for anyone.  I invite you to lay a stack of 20’s on your kitchen sink and see if it will do the dishes for you.  True that you can take your stack of 20’s, go find someone who knows how to wash dishes and probably get them to do the dishes for you.  This is not the same as your money working for you – this is using your money to increase the amount of work that you can get done in a given period of time.  That is the correct use of capital and it involves responsibility on your end: You have to find the right person, ensure the job is done correctly etc.

British pensioners should have known that prior to this tragedy BP had over 700 safety violations at other facilities (vs Exxon that only had 1 in the same time period).  I am sure there were other signs of gross incompetence and negligence that the pensioners, their representatives and BP employees should have been on top of.

But they weren’'t and now they should suffer the consequences just like the banks and their investors should have.  In a truly free market, where those with capital are treated the same under the law as anyone else, there would be no caps or other legal protections on the damage claims against BP.  As a matter of fact if this were true the lawsuits from this could be enough to put BP out of business or cause enough serious harm that would be enough to deter any oil company from failing to take the proper steps to ensure something like this does not happen again.