Home/Alternative Beliefs/Thom Hartmann: How Republicans Quietly Sabotaged Obamacare Long Before Trump Came into Office
Thom Hartmann: How Republicans Quietly Sabotaged Obamacare Long Before Trump Came into Office
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Billions that should go to Obamacare are missing, thanks to senators like Marco Rubio.
Donald Trump suggested that the Affordable Care Act (ACA or Obamacare) was a clever ruse by our first Black president and his Democratic friends to have a successful health-care system in place for his own presidency, but one that was set up to fail in the first year of the next president's term.
Trump said (on 3/10/2017) that this year “would be a disaster for Obamacare. That's the year it was meant to explode, because Obama won't be here. That's when it was supposed to be, get even worse. As bad as it is now, it'll get even worse.”
While most people are rolling their eyes – why would Obama do that, particularly when everybody expected the next president to be Hillary? – there's actually a substantial grain of truth to Trump's assertion. He has identified, however, the wrong culprit as the person who poison-pilled Obamacare for 2017.
That distinction would go to Marco Rubio (and his Republican helpers in the Senate). Let's step back to 2015 for the entire story, which is bizarre and fascinating.
When the ACA was rolled out, telling insurance companies that they had to insure anybody who signed up, regardless of previous conditions or sickness, everybody realized that the insurance companies would probably lose money in the first decade or so, until previously-uninsured-but-sick people got into the system, got better, and things evened out.
To get the insurance companies to go along with this danger of losing money, the ACA promised to make them whole for any losses in any of the first decade's years. At the end of each fiscal year, the insurance companies merely had to document their losses, and the government would reimburse them out of ACA funds provided for by the law.
The possibility of their losing money was referred to as the “risk corridor,” and the ACA explicitly filled those risk corridors with a guarantee of making the insurance companies, at the very least, whole.
And then something happened. As The New York Times noted on December 9, 2015, “A little-noticed health care provision slipped into a giant spending law last year has tangled up the Obama administration, sent tremors through health insurance markets and rattled confidence in the durability of President Obama’s signature health law.”
Rubio and a number of other Republicans had succeeded in gutting the risk corridors. The result was that, just in 2015, end-of-fiscal-year risk corridor payments to insurance companies that were supposed to total around $2.9 billion were only reimbursed, according to Rubio himself quoted in the Times, to the tune of around $400 million. Rubio bragged that he'd “saved taxpayers $2.5 billion.”
And, indeed, he had. But the insurance companies were thrown into a crisis. And, with Republicans in Congress absolutely refusing to re-fund the risk corridors, that crisis would get worse as time went on, at least over a period of a few years.
So the insurance companies did the only things they could. In (mostly red) states with low incomes and thus poorer health, they simply pulled out of the marketplace altogether. This has left some states with only one single insurer left. In others, they jacked up their prices to make up their losses.
As Robert Pear in the Times noted, Rubio's “plan limiting how much the government can spend to protect insurance companies against financial losses has shown the effectiveness of quiet legislative sabotage.”
To add to the political psychodrama, the first hack by Rubio was maintained by Republicans into the 2016 budget, meaning that things got even worse in October, 2016 – the first month of the federal fiscal year when these cuts hit the worse, and, no coincidence, the month before the presidential election.
Rubio's October Surprise was extraordinarily effective. October 2016 saw an explosion of stories in the news about how health insurance companies were either pulling out of ACA exchanges, or jacking their prices up wildly.
Time magazine wrote “8 States Where Obamacare Rates Are Rising by at Least 30%” without mentioning Rubio's role in why. Ditto for NPR's “22 Percent Hike in Obamacare Rates…” and CNN's “Obamacare Premiums Soar By 22%.” If you date-limit just to October of 2016 – the month before the election – you can find hundreds of similar articles. It was a huge story, but somehow Little Marco's role in it all – along with his friends in the GOP – never made it into any of the stories.
Only the Times, back the previous year, had really given much coverage to the story, noting, “[B]ecause of Mr. Rubio’s efforts, the administration says it will pay only 13 percent of what insurance companies were expecting to receive this year. The payments were supposed to help insurers cope with the risks they assumed when they decided to participate in the law’s new insurance marketplaces.”
Meanwhile, federal judge Thomas Wheeler of the US Court of Federal Claims, ruled recently (as reported last month by Forbes) that the feds actually have to pay back – to the tune of about $8 billion – the moneys lost by health insurance companies operationg in good faith.
But it's way too late; dozens of nonprofits started to provide health insurance through the exchanges have already gone bankrupt, and the health insurance giants are both subsuming their smaller competitors and merging like there's no tomorrow. Additionally, Wheeler's ruling is certain to be appealed – meaning it's in limbo for the moment.
So, yes, Donald Trump is right that Obamacare had been sabotaged, in a way that would virtually guarantee at least some level of crisis by 2017. Where he's sadly, paranoiacly wrong is in attributing that sabotage to President Obama.
Democrats should have been screaming bloody murder for the past 2 years. Maybe they can start now, every time a reporter or Republican says, “Obamacare is failing…”
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In Quebec, co-ops and non-profit businesses account for 8-10 percent of GDP.
Business owners gather at an elegant Montreal event center to celebrate the 20th anniversary of a large-scale economic partnership. The former chief of Quebec’s largest bank is the guest of honor.
Sidewalks bustle with people walking in and out of homes, offices, bank, pharmacy, workout studio and coffee shop at Montreal’s Technopole Angus, a development that already sports 56 business with 2500 employees and will eventually encompass a million-square-feet of real estate.
Morning-shift workers unload barrels of paper onto conveyor belts emptying into giant shredding machines on the shop floor of Recyclage Vanier, a Quebec City firm specializing in secure disposal of confidential documents.
A line snakes down the street for a matinee at the Cinema Beaubien, an art deco moviehouse in a quiet Montreal neighborhood. Taxis line up across the street waiting for customers who will soon be getting out of the early show.
Leonard Cohen’s gravelly voice rings through the taproom at La Barberie Brewery, located near Quebec City’s business district. Its Belgian-style saisons and blackberry blanc beers are enjoyed throughout the province. A few blocks away, an 18th-century monastery inside Quebec City’s historic walls has recently opened its doors as a hotel and spa.
Welcome to everyday life in Quebec, Canada’s second largest province with 8.2 million people. Yet these scenes of economic activity are different in a notable way from similar ones occurring throughout North America. Each enterprise involves a cooperative or non-profit organization, which together make up 8-10 percent of the province’s GDP. More than 7,000 of these “social economy” enterprises ring up $17 billion in annual sales and hold $40 billion in assets (Canadian dollars). They account for about 215,000 jobs across Quebec.
Quebec’s social economy (also translated as “solidarity economy”) extends far beyond the province’s two major cities and includes manufacturing, agricultural cooperatives, daycare centers, homecare services, affordable housing, social service initiatives, food coops, ecotourism, arts programs, public markets, media and funeral homes. The capital that fuels all this economic activity comes from union pension funds, non-profit loan funds, credit unions, government investment and philanthropy.
“We always say the social economy is simply the formalization of the commons. It’s social ownership, the goal of which is a sustainable, democratic economy with a market—instead of a market economy,” explains Nancy Neamtan, co-founder of Chantier de l’Economie Sociale, a network of social economy organizations whose anniversary banquet is described above. “Our mission is building a broader vision of what the economy actually is.”
“When Chantier started out, a lot of people said it wouldn’t work. We had unions, women’s organizations, green groups, and many thought it was too diverse,” Neamtan says. “But it does work.” Evidence for her assertion is visible all around—Chantier’s office is tucked into a six story building that takes up most of a city block, all of which is filled with social economy organizations.
Not all of these social businesses are new—some of the credit unions, cooperatives and union pension funds go back a hundred years. “But they were largely invisible to many people until the name social economy became popular,” Neamtan adds.
Quebec’s social economy ranges from a video game creator’s cooperative to a social integration program for Haitian immigrants to a coop grocery in a remote town on the Gaspe peninsula to a network of 8000 home healthcare workers, half of whom were on welfare before being trained for the field. Here are more examples showing the range of these enterprises:
Groupe Paradoxe: Chantier de l’Economie Sociale’s 20th Anniversary celebration was staged in a renovated church run by Groupe Paradoxe, which teaches at-risk young people job skills in the booming audio-visual presentation, events and meetings industries.
Desjardins Group: The banker honored for his work at Chantier’s banquet was former president of the Desjardins credit union, founded in 1900 and today the province’s largest financial institution.
The Nitaskinam Cooperative: Also on hand at the banquet was Nitaskinam, an Inuit-run cooperative which designs clothing inspired by art of the Atikamekw people, which has doubled from three to six members in its first year. “The social economy is our traditional economic model and fits with our values,” explains co-founder Karine Awashish, who is also an economic development official of this tribal nation. “I see good opportunities for us to create new social economy jobs in forestry, health services, tourism, arts festivals and youth projects.”
UTILE Student Housing Cooperative: One of the youngest entrepreneurs at the banquet, Laurent Levesque, helped launch a student housing development organization with other activists involved in the headline-grabbing 2012 Quebec Student Strike, collaborating with Chantier de l’économie Trust. “Students pay 70-80 percent more in rent on average,” he explained, “which creates an inflationary spiral” that hurts not just them, but their low-income neighbors. With start-up capital from the Concordia Student Union and further funding from social economy partners like Desjardins and the province of Quebec, UTILE is set to break ground on apartments for 160 students.
Technopole Angus: It’s no coincidence that that the Desjardins credit union has a branch in the new Technopole Angus sustainable urban village, which brings opportunities to a working class neighborhood that was rocked when the Canadian Pacific Railway shuttered its machine shops in 1992. A number of historic brick structures were repurposed, and new eco-friendly buildings constructed, with more planned for the project’s phase II. The community will eventually include 500 affordable housing units, 450,000 square-feet of office space, 20 local shops, four public squares, a bike-pedestrian main street and a one-acre urban farm growing organic produce.
Recylage Vanier: A non-profit organization started 30 years ago by two out-of-work men who realized the recycling industry could benefit the disadvantaged as well as the earth, Recylage Vanier offers training for people struggling to find work because of low job skills, recent immigration, substance abuse, mental illness, disability, or other challenges. Jobseekers arrive here for a 24-week program that emphasizes work readiness and life skills as well as on-the-job experience. Most are long-term unemployed, who have been sent by the Quebec employment bureau and social service groups.
“They have to get along with a boss, get along with colleagues, master simple tasks and then take on new ones with more responsibility, all the way up to driving a forklift,” says Nicolas Reeves, one of Vanier’s managers. For the final four weeks, they split their time between the recycling plant and job hunting with the help of staff counselors. About 85 percent of graduates find work, and 10 percent seek further education, according to Reeves. Recylage Vanier faces stiff competition from two private companies in the field, so clients who value the organization’s mission are important to their success—including the province of Quebec, which provides about half their business.
Cinema Beaubien: This is non-profit neighborhood moviehouse explicitly proclaims its mission to “defend the primacy of persons and labor over capital in the distribution of its surpluses and incomes.” The cinema’s importance as a community gathering spot can be witnessed in the long lines at the ticket booth, where patrons merrily chat with one another rather than staring at their phones. Taxis wait across the streets to whisk moviegoers to their next destination, about half of which are from the Taxi Coop Montreal. (In Quebec City, all taxi drivers belong to a cooperative.)
La Barberie Cooperative Microbrewery: Operating as a worker cooperative for the past 20 years explains the success of this brewery and brewpub, says general manager Jean-Francois Genest, who joined La Barberie three years ago after running his family’s bookstore and later converting another bookstore into a cooperative. “The co-op is a good plan to keep a place going. Sharing the profits means you attract the best workers. For our part, we try to make their jobs as interesting as possible, offer more holidays and higher pay.” Emilie DuMais, who’s tended bar here for eight years, notes, “You have much more ambition working for yourself than working for someone else.”
Le Monastere des Augustines: A convent dating back to 1700s in the heart of Quebec City’s walled city has just opened as an elegantly renovated hotel, spa, museum and conference center. It is organized as a non-profit in accordance with the social mission of nuns still living there to promote holistic health and spiritual renewal. Besides tourists, spa patrons and participants in corporate meetings, guests also include activist groups holding retreats and health care workers seeking a reprieve from the stress of their jobs.
RISQ: In 1997 Chantier created RISQ (Reseau d’Investissement Social du Quebec), which has invested $25 million in technical aid and capital for social economy businesses, resulting in: 1786 new jobs, 5,119 jobs maintained and job training for 1527 marginalized workers across Quebec, according to their calculations. RISQ financial analyst Nathalie Villemure, who worked for many years in private banking, notes that they see fewer defaults than commercial lenders. “These people have a cause bigger than themselves, so they work harder and we help them find solutions.”
Fiducie: In 2007 Chantier launched Fiducie, a $50 million “patient capital” (or slow money) fund that provides long term, non-guaranteed loans of $50,000-1.5 million to promising cooperatives and non-profits with less than 200 employees. “We don’t expect to see anything in repayment for 15 years,” says General Manager Jacques Charest. Thirty million of the investment came from union pension funds with the rest from the federal and provincial governments.
What We Can Learn from Quebec’s Social Economy
While Quebec possesses a distinct culture and history, the emergence of a strong social economy across the province provides practical lessons for other places.
Recognize the Social Economy When You See It
Cooperatives and non-profit initiatives already exist throughout the US and most other countries, so the first step is seeing, naming and claiming the social economy as part of the commons we all share.
Look Widely for Inspiration & Ideas
Neamtan points out that the American tradition of community organizing was a big influence on their early work, especially community development corporations (CDCs) that arose to tackle problems of disinvestment in urban neighborhoods. The Dudley Street Initiative, which transformed a low-income community in the Roxbury district of Boston, was a particular inspiration for her. The proliferation of cooperatives in the Basque and Catalonian regions of Spain provided another model for bottom-up economic development.
Social economy initiatives benefit from the longstanding sense of solidarity in Quebec, where French speakers were discriminated against and their local economy dominated by English-speaking Canadians, Americans and English. A analogous situation can be found among racial and social minorities, and in rural and deindustrialized regions where economic power is wielded from outside.
Tap the Power of Government
Government agencies have been a partners and funders in many projects through the years. Social economy initiatives often arose even when conservative politicians were slashing government programs to provide a more humane alternative to strictly market-oriented development. Legislation passed by the left-center Parti Quebecois in 1997 gave the social economy movement a big boost by offering local governments more leeway in supporting community and cooperative efforts to create jobs and promote entrepreneurship.
Partner with Unions
“The labor movement boosted the social economy by making the choice in the 1980s not to just negotiate contracts but to create jobs and support civic enterprises,” explains Neamtan, which led to the creation of the landmark Quebec Solidarity Fund, an $11-billion-dollar pension fund, of which 65 percent is invested in small- and medium-sized Quebec-owned businesses.
Partner with Faith Organizations
Historically, the Catholic church controlled many aspects of life in the province, and priests enthusiastically promoted cooperatives and non-profit institutions as models of the church’s social teaching. By the end of the 20th century when the church’s influence waned in the face of increasing secularization, social economy organizations found numerous opportunities to set up shop in closed churches and convents. The church remains an ally, Neamtan notes, “especially now that Pope Francis talks all the time about the Solidarity Economy.”
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