Saturday, January 17, 2009

Two points to ponder.....

From John Curry, January 17, 2009
A note re: CORE's Lloyd Knudsen's excellent speech to the STRS Board yesterday and some further education needed on the part of our Executive Director.....
Mr. Nehf was answering questions from ORTA officers about the PBI program for the STRS investment staff. I think you’ll find his answers quite interesting. Quoting from the current ORTA Quarterly article on page 4 (caps mine), “He [Mr. Nehf] pointed out that only investment staff earned PBIs, and that they were part of a NEGOTIATED CONTRACT. Mr. Nehf said he was not going to BREAK A CONTRACT, but indicated that the PBIs will be part of negotiations again this year."
Lloyd and others....I think Mr. Nehf forgot something here...there are only two contractual employees at STRS....(1) Mr. Nehf himself and (2) Stephen other associates at STRS have a labor contract. What negotiated contract???
Note from Kathie Bracy -- What about this part: "[Nehf] pointed out that only investment staff earned PBIs"? What about those eight NON-investment people (such as the real estate attorney) who were removed from the PBI eligibility list by STRS Board action yesterday? Either Mr. Nehf was misrepresented in the article, or writer didn't report this correctly. Which is it?
Carpe diem!!!

Dennis Leone: A clarification of STRS Board policy

From Dennis Leone, January 17, 2009
While STRS Board members Ramser/Myers/Cervantes/Meuser all say the STRS Board is breaking a PROMISE by suspending the bonus checks. I completely disagree. Two reasons:
1. The wording of the Board policy states clearly that the Board retains the right, at any time, to suspend or modify the bonus plan for any reason. I can’t think of a better reason than a $30 billion drop in assets, can you?
2. If indeed, we are breaking a promise, then the board (minus new board members Burch and Myers, and minus Hayden – who was absent) has no one to blame but itself because it voted 8-1 last March to adopt a new bonus plan (to go into effect on 7-1-08) despite the fact that we had dropped $8 billion in the previous 4 months, and even though the Board was clueless how much we would drop in the final 4 months of FY 08 before the new plan would go into effect. I have told my fellow board members that, in my opinion, it ranks in the top 10 as one of the worst board decisions of the past decade. Extremely short-sighted. The decision of the board yesterday to suspend the bonuses and sharply restrict the level of future bonuses in down years was, in my mind, how the board corrected a decision from last March that never should have occurred in the first place.
Dennis Leone

The elephant finally leaves the room.....

Second Dispatch story in two days, but no credit given to Dr. Leone for spearheading move, nor was CORE mentioned; just a "group of activist retirees"

Payouts will be cut if the teachers' retirement fund falls
Saturday, January 17, 2009
By James Nash

Change of policy Investment officers working for the State Teachers Retirement System will see smaller bonuses in lean years, and larger ones in flush times, under a policy adopted yesterday.
• If the pension fund loses money, bonuses automatically decrease 20 percent. If pension values decrease more than 5 percent, bonuses would decrease from the 20 percent up to a maximum of 60 percent when the fund loses 20 percent or more of its value.
• If the fund gains at least 8.5 percent in value, officers' bonuses would automatically increase by 8 percent if the net relative return is between 60 and 99 basis points. Bonuses would increase by 12 percent if the net relative return is 100 or more.
Source: State Teachers Retirement System
Investment officers for the Ohio teachers' pension system will see their bonus checks slashed in lean years, a consequence of the stumbling economy and pressure from retired teachers outraged over six-figure bonuses.
The board of the State Teachers Retirement System voted yesterday to suspend bonus payments for five months before switching to a new formula that will sharply reduce the payouts in years where the pension fund fares poorly.
On the flip side, bonuses will be enhanced in years when the fund thrives.
Ohio's second-largest public pension system had been linking its bonuses to benchmarks. That meant investment officers still qualified for big checks even in economic downturns, so long as their portfolios performed better than market averages.
Supporters of the system said it has helped minimize losses even when investment markets crash.
Some retired teachers called on the pension board to change the formula in the fall after The Dispatch reported that 21 investment officers earned bonuses of $100,000 or more in 2008, with 10 clearing $200,000. The bonuses came on top of base salaries ranging from $170,000 to $270,000.
In a 6-3 vote yesterday with one abstention, the board approved a compromise that will cut bonuses in down years but not eliminate them, which some retired teachers had advocated.
The board sweetened the deal for its investment officers during boom years with a new provision that could add as much as 12 percent to bonus checks.
Under the new formula, the pension fund expects to pay $3.3 million in bonuses this year, compared with the $5.9 million it paid in 2008. Pension officials had planned to award $5.6 million this year.
"I intuitively have a difficult time paying almost the same amount in performance bonuses this year as we did last year, given that the market is down 23 percent," said pension board member Craig C. Brooks.
The three board members who voted against cutting the bonuses noted that the board had approved them last year, and to change the formula now would be reneging on that promise.
"Philosophically, I am very much opposed to the suspension of the promise we made to the employees," said Tim Myers, a board member and teacher. "I don't think I can vote for a plan that goes back on a promise we made to our employees."
Four of the five state pension systems paid merit bonuses last year, but none came close to the level of the teachers' system.
The largest of the group, the Public Employees Retirement System, paid out about $1.3 million last year. That system is not considering any changes to its formula, which bases its bonuses on a three-year average, a spokeswoman said.
The State Teachers Retirement System bonuses have galvanized dozens of retired teachers, several of whom attended yesterday's meeting.
"(The decision) was finally a realization that we're in unique times and when you're in unique times, you need unique solutions," said David Parshall, a retired teacher from the Southwest Licking School System who heads a group of activist retirees. "Promises that have been made to retirees have been broken, and no one has shed a tear."
From John Curry
Note from John....yesterday's story (in case you missed it) follows. Once again, neither Dr. Leone's name nor the name of CORE was mentioned.
[Scroll down for yesterday's story, Teachers' pension system cuts bonuses for investment officers; Friday, January 16, 2009 11:56 AM By James Nash]

Thank you Dr. Leone, Mr. Brooks, Ms. Burch, Ms. Haydn, Mr. Chapman and Dr. Puckett!!!

".....we're in unique times and when you're in unique times, you need unique solutions"
~ Dave Parshall, President of CORE
(Comment on the Jan. 16, 2009 STRS Board vote to suspend the bonus program)

Friday, January 16, 2009

Dennis Leone: STRS Update on January 16, 2009 Board meeting

STRS Update
By Dennis Leone
STRS Retiree Board Member
I am pleased to report that at the STRS Board meeting on January 16, 2009, the Board voted 6-3-1 to suspend the bonus plan involving STRS investment staff members effective February 1, 2009. Beginning July 1, 2009, a new bonus plan will go into effect that will restrict the level of bonuses in future years when STRS loses money in the stock market. Should STRS total assets climb back up to at least $65 billion before July 1 (we currently stand at $53.8 billion), then the new plan will have a February 1 retroactive date. The Board decision also removed eight positions (like the STRS real estate attorney) from the eligibility list for bonuses. The new base salaries for the eight positions will require formal Board action.
The vote: I made the suspension motion. It was seconded by Columbus teacher Tai Hayden. Joining Hayden and me with yes votes were Regina Burch (the Governor’s appointee), Craig Brooks (the State Treasurer’s appointee, and soon to become the appointee for the Speaker of the House and the Senate President), Steve Puckett (the State Superintendent’s appointee) and Jeff Chapman (a retiree member). Voting no were teacher members Tim Myers, Mary Ann Cervantes, and Mark Meuser. Abstaining was teacher member Conni Ramser.
Background: Last month, I recommended that the bonus plan be suspended beginning January 1 due to our significant stock market losses. There was insufficient Board support at that time for this to happen. A number of different options were considered by the Board. This past Wednesday, during a Salary/Benefits Committee meeting, Board member Burch suggested a suspension effective February 1. Board member Brooks drafted the technical language for reductions to go into effect for future bonuses after July 1. Had Ms. Burch not stepped up with her suggestion, had Mr. Brooks not prepared the needed technical language, and had Ms. Hayden not been willing to second a motion, I do not believe the change would have occurred. It deserves noting that at the Board meeting, STRS Executive Director Mike Nehf said he and the staff would support the new plan.
I presented two other motions to the Board that were tabled after Executive Director Nehf said he would cause them to happen administratively. They were:
1. The development of a mechanism to enable the STRS Board and staff to deviate from its passive stock policy when certain stocks go significantly south due to abnormal external circumstances, like fraud. Current Board practice, for example, triggered the automatic purchasing of 92,500 shares of Fannie Mae stock just before the company collapsed and was taken over by the federal government. STRS lost millions. I was of the opinion that this never should have happened.
2. Communicating the STRS Board’s objection to companies that used federal bailout dollars on things like bonus checks, expensive retreats, hunting trips, multimillion dollar CEO contracts, and multimillion dollar severance payouts. The purpose of my motion was as follows: STRS has spent millions purchasing stock in certain companies that have lost public confidence and stockholder confidence due to their fiscal mismanagement. Simply put, such a decline in confidence – and the decision-making that led to it – adversely affects the value of stock STRS has purchased……which in turn affects all of us.
I wish to thank STRS members – both retirees and active members – who have expressed their feelings on the bonus check matter over the past few months. The Board received a very large number of communications. It is very important that so many people took the time to write. I believe the decision that was made was in the best interests of STRS.
Dennis Leone

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Today's PBI "bonus" vote...who voted for what....

From John Curry, January 16, 2009
A little more info re. the vote at today's STRS Board meeting to suspend the bonuses for the investments staff...
1. Making the motion to suspend the bonuses beginning Feb. 1 was....Dennis Leone.
2. Seconding the above motion was....Tai Hayden.
3. Those Board members voting to support Dr. Leone's motion were: Regina Burch, Tai Hayden, Craig Brooks, Jeff Chapman, and Steve Puckett.
4. Those Board members voting against the suspending of the PBI investment bonuses were: Tim Myers, Mark Meuser, and Board Chair, Mary Ann Cervantes.
5. How did Conni Ramser vote on this issue....well, she abstained.
6. Also, included in the above, was the removal of 8 persons from the PBI (bonus) eligibility list including... the real estate attorney!
A more detailed report on the above vote will follow but...I think you should know whom to praise and whom not to praise for their votes on this issue today.
P.S. ....I wonder why Ms. Ramser abstained on this issue? Maybe you can ask her! I would encourage you to express your appreciation to the Board members mentioned in #3 above....the opposite for those who wanted to keep the bonuses(#4 above)... and Ms. Ramser, be the judge!
Board members who voted to suspend the bonuses:
...Dennis Leone:
...Craig Brooks:
...Tai Hayden:
...Regina Burch:
...Jeff Chapman:
Board members who voted against suspending the bonuses:
...Tim Myers:
...Mark Meuser:
...Mary Ann Cervantes:
Board member who abstained from voting:
...Conni Ramser:

At LAST! Bonuses (PBIs) suspended! Thank you for a very smart (and charitable) decision, Board!

More specifically, thank you DENNIS LEONE, CRAIG BROOKS, REGINA BURCH, TAI HAYDEN, JEFF CHAPMAN AND STEVE PUCKETT! Thank you for Doing The Right Thing. You will never know how many lives this will touch. KBB
From John Curry, January 16, 2009
Subject: ***BULLETIN- Finally...SOME on the STRS Board have come to their senses!!!!!!! Bonuses have been SUSPENDED!!!!!!!!!***
Board member, Dr. Dennis Leone, brought this issue of suspending bonuses [performance-based incentives, or PBIs] up before....only to be ignored by the majority of the Board. Now, however, the board is singing a different tune, aren't they???? Isn't it strange how many times this practice tends to repeat itself? The actual vote will be revealed quite soon - and when it does you will find out who voted for and against the continuance of the six digits bonuses. When it is revealed I think some letters of congratulations and some letters of disgust are definitely in order. Finally...some sanity has been restored at 275 East Broad Street in Central City!!!!!
We, at Concerned Ohio Educators (CORE), have been strongly pushing for the bonuses to be suspended while the OEA and OFT backed board members (in the past) were strongly opposed to the suspension of the bonuses. ORTA (Ohio Retired Teachers Association) has not taken sides on this what else is new? I wonder what brought about this "change in heart" among the majority on the board? I wonder!
P.S. Affordable healthcare was also "a promise" to many retired educators and their spouses, wasn't it?
Teachers' pension system cuts bonuses for investment officers
Friday, January 16, 2009 11:56 AM
By James Nash


Acknowledging "extraordinary times" in the economy, leaders of the pension system for retired Ohio teachers this morning pared back the six-figure merit bonuses given to many investment officers.
The board of the State Teachers Retirement System voted to suspend the bonus payments from February through June.
After that, the bonuses will be cut in bad economic times, but enhanced when pension investments thrive.
The pension board's 6-3 vote mollified many of the activist retired teachers who had complained about large bonuses paid to investment officers even in lean years. Last year, the pension paid nearly $6 million in performance bonuses to 89 investment officers, with 10 receiving $200,000 or more.
"In these tough economic times, I wouldn't think they would expect these kinds of bonuses," said Marie M. Fetters, a retired teacher from the Miami Trace Local Schools in Fayette County.
Pension board Chairwoman Mary Ann Quilter Cervantes, a Lucas County teacher, voted against suspending the bonus payments.
"We need to be a reliable employer," she said. "This is a switch on our word."
Board member Jeff Chapman, a retired teacher, responded that the pension's health-care fund is going broke.
"I'm also sensitive to the fact that it's a promise, but these are extraordinary times," Chapman said.

Chiding the Board and the Executive Director: Lloyd Knudsen's speech to the STRS Board, January 16, 2009

Hello, my name is Lloyd Knudsen. I was a 30-year teacher in the Woodridge Local Schools of Summit County. I was unable to attend the December Board meetings when the topic of our STRS staff being given the Friday after Thanksgiving off was briefly discussed. I have a few comments I would like to share about that topic.
It is my understanding that the STRS staff has ten paid holidays in their labor contract and that the Friday after Thanksgiving is NOT one of them. It is also my understanding that our Executive Director, Mr. Nehf sent each Board member a letter in September informing them that he was considering giving the staff that day off as an extra paid day. Then in October, he sent another letter to each Board member saying HE had indeed decided to give the staff that day off. I feel pretty confident past Board meeting minutes will show no formal Board approval of this decision. It was purely Mr. Nehf's personal decision.
Now, whether you feel the staff getting an extra paid day off is a big deal or not--there are several very troubling issues about this whole scenario.
One, we have our Executive Director knowingly violating the labor contract between STRS and its employees; and two, we have our Executive Director knowingly making a decision that violates established written Board policy. Page 53 of the Board Policy Manual expressly prohibits the Executive Director from: (a) changing his own compensation or benefits without Board approval, and (b) awarding employees salaries or benefits that are not part of a Board-approved plan.
I recently read in the ORTA Quarterly that Mr. Nehf had addressed the ORTA Board in November. Now mind you, November was the same month he was about to give the STRS staff their extra paid day off. Mr. Nehf was answering questions from ORTA officers about the PBI investment program. I think you'll find his answers quite interesting. Quoting from the article on page 4, "He (Mr. Nehf) pointed out that only investment staff earned PBIs, and that they were part of a NEGOTIATED CONTRACT. Mr. Nehf said he was not going to BREAK A CONTRACT, but indicated that the PBIs will be part of negotiations again next year."
Mr. Nehf's explanation to ORTA about PBIs should have been the same explanation given to the STRS staff. He should have said--I will not break a negotiated contract and the topic of an extra paid day off can be negotiated in the future. And, I'll see all of you at work on the day after Thanksgiving!
I personally believe our Executive Director, Mr. Nehf is a good and honest man who brings a wealth of pension fund experience to STRS. I just happen to believe in this instance he has made a business decision that is just wrong.
It was also interesting to note that Mr. Nehf mentioned the name of former Executive Director, Herb Dyer in his reasoning for giving the staff the extra paid day off, saying both Herb Dyer and Damon Asbury had often approved it. Now, that is the same Herb Dyer that essentially told retirees when they came to complain at STRS Board meetings, to go home and let him run STRS. Obviously the names and faces of the STRS management have changed since those days, but sadly it seems, the same Herb Dyer (it's OUR money to spend) attitude still exists here.
To me the most troubling aspect of this whole scenario is this Board's response to it. Other than Dr. Leone, no other Board member objected to Mr. Nehf's "considered" plan. Even after Dr. Leone sent Mr. Nehf and every other Board member a letter detailing his objections to it, still no other Board member objected to Mr. Nehf's plan. The Executive Director gave each of you advanced warning that he was about to do something that would violate the STRS employees' legally-binding labor contract and that was explicitly contrary to written Board policy. And after all that, you as a group, our STRS Board, still had no questions, no comments, no criticisms, and certainly no corrections for Mr. Nehf or of his plan. That to me is unbelievable and from this retiree's perspective truly sad.
This Board prides itself on wanting to speak with "one voice". On this particular issue, it certainly has. And that voice was one of silence. I don't think you fully realize when this Board loses its voice, every active and retired teacher across the state of Ohio loses his or her voice, also. But then again, maybe you do realize that and that's the way this Board wants it. In Herb Dyer-"ese" you're still telling us all -- to just go home.
Thank you for allowing me the opportunity to speak to you today.
(Photo: Lloyd Knudsen)

Thursday, January 15, 2009

Eli Lilly to Pay $1.4 Billion for Illegal Drug Marketing Ohio’s share to be $32.1 million

(COLUMBUS, Ohio) – In what is believed to be the largest-ever health care fraud settlement, Eli Lilly and Company will pay more than $1.4 billion to settle allegations of illegal drug marketing involving the anti-psychotic drug, Zyprexa. Ohio Attorney General Richard Cordray announced today that Ohio played a lead role in the negotiations, joining with several other states and the federal government to reach the agreement in principle with Eli Lilly.
“Eli Lilly engaged in an off-label marketing campaign that improperly promoted the use of Zyprexa,” said Attorney General Cordray. “They were promoting the drug for uses that were specifically not approved by the Food and Drug Administration.”
Eli Lilly will pay the states and the federal government a total of $800 million in damages and penalties to compensate Medicaid and various federal healthcare programs. In addition, the United States Attorney for the Eastern District of Pennsylvania has charged Eli Lilly with a misdemeanor violation of the Food, Drug, and Cosmetic Act. In a plea agreement filed with the Court, Eli Lilly has agreed to pay a $615 million criminal fine to resolve the charge.
The total state and federal recovery for the State of Ohio will be $32.1 million. That amount includes $19 million to reimburse the federal share of Medicaid. The remaining $13.1 million will be returned to the State of Ohio. Cordray specifically cited the work of his predecessors, Jim Petro, Marc Dann, and Nancy Rogers, who pressed the case forward and helped achieve this resolution.
Zyprexa is one of a newer generation of antipsychotic medications (called atypical antipsychotics) used to treat certain psychological disorders. Between September 1999 and December 31, 2005, Eli Lilly promoted the sale and use of Zyprexa, primarily through a marketing campaign called “Viva Zyprexa,” for certain uses which the Food and Drug Administration had not approved. The campaign promoted Zyprexa not only to psychiatrists, but also to primary care physicians for such unapproved uses as the treatment of depression, anxiety, irritability, disrupted sleep, nausea, and gambling addiction.
In implementing the campaign, Eli Lilly also provided payments and other things of value to physicians and other health care professionals. As a result of the promotion, physicians prescribed Zyprexa for children and adolescents, for dementia patients in long term care facilities, and in unapproved dosage amounts. Those are all uses that were not medically accepted indications for which state Medicaid programs would approve reimbursement.
As part of the settlement, Eli Lilly will enter a Corporate Integrity Agreement with the United States Department of Health and Human Services, Office of the Inspector General which will closely monitor the company’s future marketing and sales practices.
This settlement is based on four qui tam cases that were filed or consolidated in the United States District Court for the Eastern District of Pennsylvania by various relators - private parties that filed actions under state and federal false claims statutes.
A National Association of Medicaid Fraud Control Units team participated in the investigation and conducted the settlement negotiations with Eli Lilly on behalf of the settling states. Joining the team members from the Ohio Attorney General’s office were representatives from Massachusetts, New York, Delaware, New Jersey, Texas, and Illinois.

From John Curry, January 15, 2009

UnitedHealth in $350 million reimbursement settlement

From John Curry, January 15, 2009
NEW YORK, Jan 15 (Reuters) - UnitedHealth Group Inc (UNH.N: Quote, Profile, Research, Stock Buzz) will pay $350 million to resolve class action lawsuits over reimbursement for its out-of-network medical services, the health insurer said on Thursday.
The settlement resolves litigation filed on behalf of the American Medical Association, health plan members, health care providers and state medical societies.
The settlement comes two days after UnitedHealth struck an agreement with the New York state attorney general following a probe into the independence of its database used to set reimbursement rates for patients' medical bills.
The $350 million will fund the settlement for health plan members and out-of-network providers in connection with procedures performed since 1994. UnitedHealth will be released from claims relating to its out-of-network reimbursement policies dating back to 1994.
The settlement is subject to court approval. UnitedHealth, the largest U.S. health insurer by market value, said it would pay for this settlement with cash on hand, with the accrual included in its results for the fourth quarter of 2008.
Combined with the agreement with the New York attorney general, UnitedHealth said it believes it has resolved issues related to its physician charge databases. (Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn)

Read full article here:

Medicare Advantage and Obama's statement today on ABC's This Week..........

From John Curry, January 11, 2009
STRS should have second thoughts about adopting a Medicare Advantage program...the following contains just one of the reasons. John
1/11/09 ABC's interview with Obama on "This Week"
"STEPHANOPOULOS: So how do you pay for health care?
OBAMA: Well, you know, these are going to be major challenges. And we’re going to have to make some tough choices. Now, what I’ve done is indicated to my team that we’ve got to eliminate programs that don’t work. And I’ll give you an example in the health care area. We are spending a lot of money subsidizing the insurance companies around something called Medicare Advantage, a program that gives them subsidies to accept Medicare recipients, but doesn’t necessarily make people on Medicare healthier. And if we eliminate that and other programs, we can potentially save $200 billion out of the health care system that we’re currently spending, and take that money and use it in ways that are actually going to make people healthier and improve quality. So what our challenge is going to be is identifying what works and putting more money into that, eliminating things that don’t work, and making things that we have more efficient. I’m not suggesting, George -- I want to be realistic here -- not everything that we talked about during the campaign are we going to be able to do on the pace that we had hoped."

Tuesday, January 13, 2009

Quote of the Day

From John Curry, January 13, 2009
Quote of the Day

“For the past ten years, American patients have suffered from unfair reimbursements for critical medical services due to a conflict-ridden system that has been owned, operated, and manipulated by the health insurance industry.” This agreement marks the end of that flawed system.”

~ Andrew Cuomo - Attorney General of New York
- January 13, 2009

Click image to enlarge.

Donna Seaman to STRS Board: You have golden opportunities this week

From Donna Seaman, January 13, 2009
Subject: Opportunities
Happy New Year, STRS Board. Please take this opportunity, at the first STRS board meeting of 2009, to begin the first step toward earning trust, respect and credibility with your constituents, Ohio's retired teachers!
You have an opportunity on Weds., Jan. 14, to completely abolish the performance based incentive program, which the board initiated, and to send a message to the investment staff that they are not the prima donnas they think they are. They have lost billions of dollars in investments for STRS. They have not earned, and do not deserve, bonuses of any kind!
You have the opportunity on Thursday and Friday, to censure Mr. Nehf for his inappropriate gift of Black Friday off for staff, and to admonish him to follow guidelines for established contractual work days.
You have the opportunity to being listening to Dr. Leone's suggestions and concerns, and for once, respect his advice and motions.
You have the opportunity to consider the timing of your agenda items? Are these times appropriate and convenient to retirees who attend STRS meetings? Or are those times convenient to you, board members, who have virtually no respect or consideration for retirees?
You have the opportunity to listen to and consider the public outcry generated by the governmental bailout of the banks who proceeded to use that money for bonuses and "retreats." You can show your wisdom by following Pennsylvania's example of abolishing incentives for its state investment staff.
You have the opportunity, Board members, to show us again, whether your decisions are based on what is good for STRS employees, or instead, what is good for retirees! What golden opportunities you have this week!
Donna Seaman, 2002 retiree
(Click image to enlarge.)
(Click image to enlarge.)









Monday, January 12, 2009

Need some more reasons to not adopt a Medicare Advantage are a few as of Aug. 1, 2008 from AFSCME - Ohio SERS mentioned!

From John Curry, January 12, 2009

In particular, I would like to extract several "Whereas's" and list them first.

Public employers are particularly vulnerable to the MA sales pitch [sound familiar, STRS Board members?] because of the new Governmental Accounting Standards Board rule that requires them to project and publish their costs for retiree health coverage into the future--a powerful incentive to cut benefits and replace coverage with cheaper health plans; and

The states of West Virginia and Pennsylvania, the Ohio School Employee Retirement System, the City of Houston and the Michigan Teachers Retirement System are just some of the public plan sponsors that have already replaced Medicare and their own supplemental coverage with MA; and

PFFS plans have many drawbacks compared with traditional Medicare, such as higher cost-sharing for medical, hospital and nursing home care; a reliance on the insurer’s appeals process rather than Medicare’s; a greater tendency to deny claims and fewer doctors and hospitals who accept plan coverage; and

Resolution No: 15
38th International Convention
Moscone West
July 28 - August 1, 2008
San Francisco, CALIFORNIA

Opposing Medicare Privatization

Congress created Medicare in 1965 because more than half of all Americans over 65 had no health insurance and private insurers said they could not provide affordable coverage to seniors and the disabled and still make a good profit; and

Medicare has kept its administrative costs below 3 percent a year for over 40 years because it is a federal program that spreads risk over 44 million beneficiaries and requires no marketing outlays or profit margins, while private insurers have administrative costs that average 14 percent or more; and

The original Medicare program offers a standardized package of hospital and medical benefits that is guaranteed by the U.S. government and pays providers on a fee-for-service basis; and

In the 1980s, Medicare also started covering beneficiaries in private health maintenance organizations (HMOs) because Congress thought managed care might save money for Medicare; and

Congress expanded the program in 1997 to include additional types of managed care such as preferred provider organizations (PPOs) as well as private fee-for-service (PFFS) plans; and

All these private plans are designed to replace the entire package of Medicare benefits (Parts A and B), not merely supplement Medicare in the way that Medigap policies and most employer-paid plans do; and

The cost efficiencies of managed care plans were generally negated by the costly medical needs of older people, causing many plans to cite insufficient profits and drop out of the Medicare market; and

WHEREAS: Between 1997 and 2003, private plans never signed up more than 15 percent of Medicare beneficiaries because the majority preferred the traditional Medicare program that allows them to go to virtually any doctor or hospital; and

To encourage private plans to remain in the Medicare market and move Medicare toward privatization, the Bush administration and its congressional allies enacted the Medicare Modernization Act (MMA) in 2003; and

The MMA included a new drug benefit provided only by private insurance companies, rather than traditional Medicare, as well as a demonstration project scheduled to begin in six cities in 2010 that would substitute a voucher for purchasing insurance in the health care marketplace; and

The MMA renamed the private plans program Medicare Advantage (MA), formerly Medicare+Choice, and significantly raised reimbursement rates so that private plans now get subsidies that average 13 percent more per person than traditional Medicare, with some plans receiving as much as 50 percent more; and

These big subsidies to private plans are paid with taxpayer dollars, as well as with higher Part B premiums for all Medicare beneficiaries, and have resulted in record profits for insurers like Humana and UnitedHealthcare; and

High pressure sales tactics and unethical marketing practices have increased participation in private plans from less than 15 percent to more than 20 percent of Medicare beneficiaries, with most of the growth in PFFS plans; and

PFFS plans have many drawbacks compared with traditional Medicare, such as higher cost-sharing for medical, hospital and nursing home care; a reliance on the insurer’s appeals process rather than Medicare’s; a greater tendency to deny claims and fewer doctors and hospitals who accept plan coverage; and

This growth comes at the expense of the traditional Medicare program because the high cost of MA subsidies is hastening the Medicare trust funds’ projected shortfall and preventing benefit improvements for the majority of Medicare participants; and

Insurers have recently started marketing their MA plans to large employers, promising to share their federal subsidies if employers take their retirees out of Medicare and the employer’s supplemental plan and replace them with an MA plan; and

Public employers are particularly vulnerable to the MA sales pitch because of the new Governmental Accounting Standards Board rule that requires them to project and publish their costs for retiree health coverage into the future--a powerful incentive to cut benefits and replace coverage with cheaper health plans; and

The states of West Virginia and Pennsylvania, the Ohio School Employee Retirement System, the City of Houston and the Michigan Teachers Retirement System are just some of the public plan sponsors that have already replaced Medicare and their own supplemental coverage with MA; and

The vendors of such plans continue to attempt to lure AFSCME affiliates to join MA plans.

That AFSCME oppose the privatization of Medicare, including the expansion of unreliable and costly private Medicare Advantage plans and the voucher demonstration project scheduled to go into effect in 2010; and

That AFSCME support congressional legislation to rollback Medicare’s subsidies to private plans, create a level playing field with traditional Medicare, and cancel the voucher demonstration; and

BE IT FINALLY RESOLVED: That AFSCME actively oppose efforts by public jurisdictions to replace Medicare and employer-sponsored retiree health coverage with unreliable and unsustainable Medicare Advantage plans, thereby protecting the future of both Medicare and employer-sponsored retiree health care.

Randy Perreira, Executive Director and Delegate
Richard Onishi, President and Delegate

OSU Retirees Assn. Jan. 2009 newsletter discusses Medicare Advantage

From John Curry, January 12, 2009
Below is a page from the Jan. 2009 Ohio State University Retirees Association newsletter. Note the "circled" portion of the flatbed scan. Credit goes to the wisdom of those retirees at The Ohio Council of Higher Education Retirees (OCHER) who really "know the score" when it comes to Medicare's what THEY have to say: "It is extremely important to continue the focus on the privatization issue and to reverse legislation that has promoted it."
Here's a link to this Jan. 2009 newsletter:
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Sunday, January 11, 2009

Photograph of Secret Facility Revealed!
Columbus (AP) - Planning continues on the secret new State Teachers Retirement System maximum security facility in an undisclosed location somewhere in the United States.
"Yes," indicated STRS spokesperson I.M. Leech, "we were quite concerned about being stormed and overtaken by radial terrorist retired teachers. Therefore, for the safety of our valuable and irreplaceable employees, for whom no expense is too great, we will not reveal its location. Suffice to say, with the massive walls, along with the electrified fence, attack Dobermans in the kill-zone, machine gun emplacements, mine field, and homicidal guards, we feel we can ensure no STRS employee or board member need fear being seen or spoken to by a retiree."
The cost of the new facility remains a closely guarded secret.
"As is obvious," continued Mr. Leech, "any disclosure of our finances by any means compromises our security and will embolden terrorist elements. Therefore, and into the future, all further requests for any kind of financial disclosure will be rejected." Rumors of extensive purchases of artwork and sculptures for the new facility could not be confirmed.
Larry KehresMount Union Collge
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