Sunday, March 24, 2013

Preview: Mad Men - Season Six

The sixth season of Mad Men starts in two short weeks. Before we are immersed in the Summer of Love or political assassinations, let's see where we are, shall we?

Don Draper

Last Seen: Propositioned by a comely young woman at a bar after dropping his bride Megan off to star in a TV commercial.

Forecast for Season Six: Dirty - as in "Dirty Don" looks like he's back. The Don Draper swag is predicated on professional superiority and a cavalier moral attitude toward infidelity. Throughout most of Season 5, Don almost went out of his way to tamp down both; however, as the season pivoted, his mojo returned. At work, the rise of the talented Michael Ginsburg aroused Don's competitive gene, but not to come up with better tag lines for clients, but to bag bigger clients. His volcanic presentation to Dow Chemical was the sign of a man with more mountains to climb. At home, he grudgingly, and against his better instincts, moved his struggling artist wife's career along when it was clear she was going nowhere fast. 

Prediction: Expect Don's marital vows to be severely challenged even as his professional standing reaches new heights. 

Megan Draper

Last Seen: Being fawned over by a director in preparation for an advertising shoot. 

Forecast for Season Six: Sobbing. Megan's arc was the most surprising for me last season. Out of the gate, she came across as very much in control, preternaturally mature and unwilling to put up with Don's bullshit. When she made the fateful decision to quit Sterling, Cooper, Draper, Pryce and give acting another go, things fell apart quickly. Her insecurities quickly percolated to the surface and, instead of making it on her own, she got Don to advance her career. While Don put on a happy face about her career switch, he was non-plussed at her request that he help her, particularly because of all the rotten things she said about advertising. 

Prediction: Megan's going to regret asking for that favor. Don's perception of her has changed, and while her career may take off, expect a lot of lonely nights while Don is "out with clients."

Peggy Olson

Last Seen: Sipping a glass of wine in a motel room in Richmond, Virginia while two dogs humped outside her window.

Forecast for Season Six: Hand it to Matt Weiner, he's not afraid to shuffle the deck with his main characters. Peggy quit SCDP, ending Season 5 as "copy chief" at Cutler, Gleason and Chaough while moving in with her alt-newspaper writer boyfriend Abe. Her storyline is wide open. She could seal her career by coming up with the "You've Come A Long Way, Baby" tag for Virginia Slims (the client for which she was sitting in that Richmond hotel room) or run back to Don with her tail between her legs because Ted's recruitment of her to CGC was more about settling a score with Don than thinking much of her work.  Her relationship with Abe (not to mention alcohol) is shaky too.

Prediction: Door #1: career at CGC takes off, Abe puts a ring on it and Mother Olson doesn't spontaneously combust at the thought of her daughter marrying outside the faith. Door #2: Ted cuts Peggy off at the knees, she stumbles back to Don and things fall apart with Abe. It's Mad Men, which of these two scenarios seems more likely to you?

Pete Campbell

Last Seen: Drowning out the world underneath oversized headphones after convincing Trudy of his need for an apartment in New York City.

Forecast for Season Six: Not good. He called his marriage a temporary bandage on a permanent wound and that pied-à-terre in the City ensures he'll be spending less time with Trudy and Tammy. He can't stoop any lower at work, although we were provided a clue as to what motivates him at this point when he said to Don that he (Pete) too would have a windowed office when the firm expanded to a second floor. Pretty thin reed to hang your life on, but hey, when you find out your paramour is mentally unstable and you get your ass kicked twice in the span of 30 seconds, I guess you take what you can get. 

Prediction: The downward spiral continues as Pete beds random women, nurses his professional grudges and inspires a fake Twitter account for his newly grown side burns. 

Joan Holloway Harris

Last Seen: Parlaying an indecent proposal to sleep with an executive from Jaguar into a 5% partnership stake in the firm. 

Forecast for Season Six: Blue skies. Joan has sacrificed greatly to get to a point where she is not beholden to, or dependent on, anyone. She now has enough money to hire help to care for her son and the professional cache she always wanted. 

Prediction: I'm still hoping for a happy ending for Joan and Roger - two souls who are (were?) perfect for one another, but after Roger voted 'aye' on the whole lets-get-Joan-to-sleep-with-Jaguar-executive-to-rig-the-competition caper, I'm guessing Uncle Roger won't be seeing much of his offspring (or Joan.)

Roger Sterling

Last Seen: Naked, standing in front of a full-length window showing New York City "Little Roger" while tripping on LSD in a hotel room.  

Forecast for Season Six: Terminal. I'm going out on a limb here, but I think all those years of hard drinking, cigarettes, and now, LSD, will catch up with Roger, which is too bad because he had just found a nice equanimity in his life. Now twice divorced, he seems comfortable in his role as partner emeritus for accounts  and is even showing flashes of interest in the business overall (or at least rubbing Pete's nose in shit). 

Prediction: Either a very swanky funeral or another season of quips and insouciance that only he can pull off. 

Betty Francis

Last Seen: Awkwardly comforting Sally after Sally got her first period. 

Forecast for Season Six: Expect Betty to be down to her fighting weight but to no particular avail. Mrs. Francis is a marginal character now, relegated to petulance toward (depending on her mood) Don, Sally or Henry. In a swiftly changing social landscape, the doting housewife's value is not what it once was.

Prediction: Elbow deep in a box of Bugles and 5 years away from realizing her husband backed the wrong horse when he jumped ship from Rockefeller to Lindsey. 

Sally Draper

Last Seen: See above.

Forecast for Season Six: Season 5 will be hard to top. Sally was introduced to sleeping pills, blow jobs and menstruation. Oh right, continued skirmishing with her increasingly out-of-touch mother, boundary pushing and exposure to a popular culture that is <THIS CLOSE> to melting down the entire country. Good times.

Prediction: Let's just hope she makes it to her high school graduation in one piece. 

Michael Ginsberg 

Last Seen: Whiffing on a Topaz Pantyhose pitch. Being generally annoying. 

Forecast for Season Six: Two things we know young master Ginsberg has - a big mouth and a never ending river of pitch ideas. Can he stop acting like a total nimrod long enough to gain Don's trust? 

Prediction: Best case? Makes Don forget about Peggy and becomes his unquestioned number 2. Worst case? Annoys Don so much he tracks down Paul Kinsey at an ashram in California and brings him back to replace Ginzo. 

Harry Crane

Last Seen: Being both incredibly lecherous (having sex with Lakshmi in his office) and charitable (giving Kinsey a bus ticket to California and the confidence to try his hand at script writing). 

Forecast for Season Six: When Mad Men started, if you had "Harry Crane" in the pool for role players who would survive until Season Six, you probably would have won yourself a nice pot of money. No one else seems to grate and annoy quite like Harry, and yet, he's survived the mergers, take overs and layoffs while barely breaking a sweat (except when he has the good fortune of a bag of food to himself.) 

Prediction: Will happily linger in the background while continuing his extramarital pursuits with vigor. 

Bert Cooper

Last Seen: Green lighting Operation Indecent Proposal. Properly using the term "hanged" (as opposed to "hung") in describing Lane's method of self-disposal.

Forecast for Season Six: Another candidate for a memorial service; though he's good for at least one scene each season where he is made to sound like some sort of advertising Yoda. 

Prediction: May get an an office to hang his expensive art and weird Oriental fuck paintings.  May die. Would anyone really notice? 

Ken Cosgrove

Last Seen: Achieving plausible deniability on the Dow Chemical pitch. Creating a new nom de plume

Forecast for Season Six: With the loss of his partner in crime, Peggy Olson, Ken will either have to warm up to Ginzo or hope Danny makes a return appearance. May jump ship to pursue his love of writing. 

Prediction: Continues to be inoffensive.

Sterling, Cooper, Draper, Campbell (?) Holloway (?) 

Last Seen: Having its coffers filled with money from new accounts and a second floor of office space added to its kingdom.

Forecast for Season Six: Money, and lots of it. What was once housed in a hotel room at The Pierre is about to blow up, if only Dow Chemical will let Don pitch napalm to the masses. This means new employees, new sets and of course, with Lane's demise and Joan's ascension, a new name.

Prediction: SCD(C/H) becomes the 'it' advertising firm of 1967-8. All of this newfound revenue will undoubtedly corrupt and leave wanting all of those poor tortured souls whose real (and existential) struggles we unpack like verses from the Torah.

Season 5 recap here:

Those are my thoughts, what are yours? Share them in the comment section and be sure to follow me on Twitter @scarylawyerguy.

Saturday, March 23, 2013

Book Review - Pound Foolish

Anyone vaguely familiar with the stock market, mutual funds and other financial instruments knows the caveat “past performance is not an indicator of future results.” The Great Recession, various “Black” days of the week on Wall Street, the S&L crisis of the late 1980s and other calamities put people on notice that investing money in the “market” is risky, but in her new book, Pound Foolish: Exposing the Dark Side of the Personal Finance Industry, Helaine Olen argues that the financial-services-industrial-complex has failed ordinary Americans, selling them a proverbial bill of goods by providing bad (and often contradictory) advice, all while lining their own pockets with commissions and management fees. 

Some of Olen’s villains are well known personalities – Suze Orman is castigated for preaching market returns while keeping most of her own money in municipal bonds, of emphasizing frugality while she lives a luxe lifestyle and shilling branded products to gullible types who she reproves for spending above their means. Joining Ms. Orman in Olen’s penalty box is David Bach, who is mocked for having made his fortune by advising people to invest money saved by cutting back on small indulgences like lattes, and Dave Ramsey, a folksy deficit scold who declared bankruptcy many years ago but is, in Olen’s view, a hypocrite for warning others against taking the same out when debt becomes too burdensome.

Others are faceless, but no less worthy of Olen’s ire. Mutual fund companies that sell “targeted” retirement investments and companies that automatically enroll you in a 401(k) plan are flamed for failing to draw employees’ attention to the fine print or making automatic paycheck deductions high enough to achieve meaningful returns. The author finds little favor with a parade of obscure financial consultants who traffic in free dinners that are used to hawk annuities or trade show operators whose booths are inhabited by charlatans hawking the equivalent of financial snake oil. Olen frames these individuals as rapacious and unethical, trafficking in the hopes and dreams of gullible sorts (many in their 50s and 60s) who lack the sophistication to know they are being duped. 

This is not to say that this small army of investment gurus does not deserve criticism; clearly, they do. All too often, small investors are at sea. Another Olen target is CNBC's Jim Cramer, who famously told people in early 2009 to get out of the market entirely if they needed money over the next 5 years; fast forward to today and the Dow recently passed its all-time high. Anyone who followed Cramer’s advice likely took a significant hit; however, had they simply held on to their portfolio, most, if not all of their gains would have been recouped. Olen's criticism of Cramer is pointed, calling the idea of shorting his "buy" calls as one of the few stock strategies she considered employing; however, in dinging Cramer, Olen stretches to prove her point. The one stock she cites as a Cramer miss (MGM) may have fallen between his buy recommendation and the publication of her book, but by the time I wrote this, the stock was up from that same initial point. 

One thing Cramer does emphasize, and Olen fails to give due credit to is the need to do “homework.” If people blindly jump into stocks he (or anyone for that matter) recommends, who is to blame?  Mutual fund prospectuses focus on 3, 5 and 10 year averages, and there is ample research available on all but the most obscure over-the-counter stocks, but “the market” is not monolithic; even as it rises, it does not do so uniformly. Some sectors perform better than others and stocks do not march in lock step – whether one is managing her own money or having someone else do it, the Internet has made an enormous amount of information available to people if they care to use it, but Olen does little to note this basic fact. 

And here is where I part company with much of Pound Foolish. The author's points are well taken but not particularly insightful and largely excuse uninformed investors for blame in the shortcomings of their investments. Is it any wonder that a segment of the population that is noted as believing that 30% annual returns are “normal” would have a misguided view of what their actual returns are more likely to be (annualized gains of 5-6% over the long run would be considered quite good). It is also unsurprising that gurus who peddle “get rich” schemes premised on specious ideas like flipping real estate or anticipating hyper-inflation by hoarding gold are able to prey on the masses, but where is the personal responsibility of knowing when something is too good to be true?

The same contradictions Olen highlights are found in her writing. For example, while she rightly bemoans the disappearance of company pensions in favor of the 401(k), she also notes that most people do not have either the wherewithal or financial knowledge to set their retirement deductions at a level appropriate to their future needs. That may be so, but most pension plans require an investment far higher than the 3% default rate she cites as typical for those who have money automatically deducted from their paychecks. So how is it that these workers would be able to survive off the more meager wage they would earn if pensions were still ubiquitous? Moreover, while criticizing mutual fund companies for high load fees or turning their “target” funds into “fund of funds” products that just invest in their own instruments, pensions are also run by someone who makes investment decisions that may or may not end up being good. Don’t get me wrong, I think pensions, with their guaranteed benefits, are a better retirement option than 401(k), but the idea that simply because someone else is managing your money by definition makes them suspect is simply untrue, something Olen’s writing strongly implies.

There are plenty of other pieces of low hanging fruit to pick apart in Pound Foolish, from Olen's “first world problem” of not saving money by cutting her New York Times subscription because the pocketed savings went into other expenses (plus, she really likes reading the NYT and its website put up a paywall) to her overuse of the word "eschew" and odd obsession with referencing the appearance of people she interviews. Late in the book she thinks it obvious that her political sympathies lie with the Occupy Wall Street crowd but there was nothing in the previous 200-odd pages that indicated she was a left-leaning 99 percenter. 

Olen has a particular hard on for Bach's “latte factor” strategy. While she rightly points out that Bach’s figures are probably unrealistic, she poo poos the broader message – that cutting out small indulgences can lead to a decent return on investment. Why throw the baby out with the bathwater? So what if not buying a latte everyday won’t make you a millionaire? Suddenly, we’re sneezing at the more modest $173,000 one would save?  Similarly, in criticizing Ramsey’s hypocrisy regarding bankruptcy, she fails to note recent changes in bankruptcy law that make it harder to discharge debt or the impact declaring bankruptcy has on your long-term credit score. Both of these factors would be important for a person to contemplate before making such a momentous decision, but Olen prefers to hone in on Ramsey’s do-as-I-say-not-as-I-do attitude.

On the other hand, Olen cites a blizzard of data to show that entry and exit points into the market matter for total return, but then uncritically parrots the advice of a (one assumes Olen-approved) financial planner who recommends investing only in Treasury Inflation Protected Securities (TIPS); never mind the fact that investing in only one product, regardless of what it is, is unwise, TIPS are not a panacea anyway. Vanguard’s TIPS fund has returned a negative amount in 2013, and its 10 year return is lower than the company’s S&P 500 fund, even with the massive Wall Street downturn in 2008-9. This is not to say TIPS are bad; indeed, I have money invested in inflation-protected bonds, but it is more to the point that diversification of your investments is the best way to mitigate the risk of loss and increase the chances (not the guarantee) of strong returns.   

The same is true of Olen's lengthy meditation on the housing market. There is no question that "flippers" and banks that made "liar loans" bear a great deal of responsibility for the creation of the housing bubble; however, like any commodity, when one buys into the market matters. Those who purchase real estate at or near a bottom will see a far greater return on investment than those who buy near or at a top. People re-entering the housing market now are, over the long run, far more likely to see an accumulation in equity than those who bought in 2005 or 2006. Of course, for those who view a home not as an investment but as a place to live for 20-30 years, these considerations are less consequential.

The only surprise in this book is having spent 236 pages telling us about all the ways the financial services industry screws us out of our hard earned wages, Olen is silent on what she thinks are proper ways to invest money. This is surprising considering she wrote a recurring column on the subject for the Los Angeles Times. Perhaps this is because there does not seem to be a logical audience for her book. People disinclined to fall for financial scams don't need to be told to avoid them and people who are will not be dissuaded by Olen's opinion. So long as *one* person profited from the Latte Factor or Jim Cramer's stock calls, others will justify following the same advice, even at their peril. 

Not that anyone asked my opinion, but I was always told that the basic foundation of sound financial planning should emphasize investment, savings and diversification with the understanding that even if you do “everything right” you are still not guaranteed a successful outcome. Armed with these facts and having done one’s homework on where (and what) to invest in, the need for advice from financial gurus, much less Ms. Olen's book, is largely unnecessary.

Saturday, March 16, 2013

Bitter Pill: Health Care In America

Steven Brill has written an invaluable piece of investigative journalism for TIME Magazine, Why Medical Bills Are Killing Us, that is a must read for anyone interested in understanding why a country that spends more than 27% more per capita than any other industrialized nation for its health care yet has millions uninsured, 60% of its personal bankruptcies caused by unpaid medical bills and fails to deliver the outcomes that should come with expending nearly one-fifth of our gross domestic product on this one basic service. 

Most of Brill's 24,105 word story is told through the medical bills of random Americans, people who suffered everything from a minor slip and fall ($9,418) to terminal cancer ($902,452) and other maladies in between. And through this storytelling, we learn about the wild discrepancies in how patients are billed, the gross mark ups hospitals charge for everyday items like ointment ($108 for a tube that costs a few dollars), niacin pills ($24 each off a retail cost of 5 cents) and gauze pads ($77 per box), and a system that includes few controls or disincentives for this type of usurious conduct.

If there is a villain in Brill's story it is someone few people have probably ever heard of - the "chargemaster"- a quintessential "man behind the curtain" whose spreadsheet of pricing determines what you are billed, for everything from the latest cancer drug to a simple Tylenol.  But here's the thing, what you are billed, or more accurately, what you, your insurer, or Medicare pays differs depending on who is writing the check - and therein lies the rub. An uninsured 64 year old person is charged more than $6,500 for 3 CT scans that the same patient, had she been a year older and covered by Medicare, would have been charged $825, and with little in the form of a co-pay instead of being obligated to pay the entire bill.  The article is littered with these examples, not just of the compare/contrast between costs charged to the uninsured (or the privately insured for that matter) and Medicare, but of the haphazard and hard to justify rationales for why hospitals, particularly non-profits, have operating margins (and executive salaries) that compare favorably with obscenely successful private corporations. 

When pressed to explain why its chargemaster fees diverge so wildly, the hospital executives Brill interviewed were either evasive ("the issues related to health care finance are complex for patients, health care providers, and government entities alike …") or hid behind patient confidentiality (even though Brill was not asking about specific patients, but rather, general billing procedures). But these charges have real world implications because of the enormous pressure applied to patients who are charged these exorbitant rates. A woman Brill profiles was handed a bill for more than $21,000 for an ambulance ride to a hospital and about three hours of treatment (most of it waiting to be examined) after she complained of chest pains which turned out to be a simple case of heartburn. This included several $200 tests (Medicare pays less than $14 for the same procedure) and $995 for the four mile ambulance ride.  It was not until the woman hired a "medical billing advocate" that the hospital halved her bill (although the ambulance company was not as generous). Of course, hospitals rarely advertise the fact that prices can, in some cases, be negotiated down if one has the wherewithal to dispute those charges (or the money to hire a medical-billing advocate, an industry whose ranks are sure to grow); however, nothing is guaranteed. One of the patients Brill profiled was sued by her hospital over a $7,400 bill and was unwilling, through court-ordered mediation, to reduce the charges. Ultimately, the woman was put on a $20/week payment plan for six years. Another woman, a widow whose husband died of cancer, went through more than a year of negotiations with all manner of health care providers, doctors and hospitals over what was initially a more than $900,000 bill, getting discounts and waivers that whittled her final cost down to about $142,000, a fee she covered mostly by selling a piece of inherited property and cashing out a life-insurance policy. 

Those chargemaster costs also serve a more surreptitious purpose. As Brill illustrates, non-profit hospitals use these inflated figures as a means of promoting their charity care in places like Mike Allen's Playbook, a daily "tip sheet" published by the online site Politico where the American Hospital Association lobbied against a bill in Congress that would have cut hospital payments. The AHA claimed such a law would jeopardize more than $39 billion its members provide in charity care. As Brill notes, that figure is based on the wildly inflated chargemaster rates, which, if compared to what Medicare pays, would shrink that figure down to just $3 billion, or less than one-half of 1% of those hospitals' combined annual revenue. With operating margins that range between 10-12% and not-uncommon seven-figure salaries for its high-level executives, surely, Brill argues, the idea that trimming what hospitals charge their patients would not be unduly burdensome. 

Of course, hospitals find many places to wring profit from their work. Whether it is purchasing doctors' practices or its competitors, hospitals can bargain from a position of strength when it comes to reimbursement rates it offers insurance companies. Hospitals also find great value in the equipment they use. For example, a hospital can recoup its costs on a CT scanner within a year and then pile on pure profit over the rest of the productive life (estimated to be 7-10 years) of those machines. Moreover, tests like CT scans are used far more liberally in the U.S. and at a higher cost than in other countries. To take one example, Brill mentions that even Medicare, which reimburses at a significantly lower rate than private insurance, still pays four times more for a CT scan than what is charged in Germany even as doctors in the U.S. order 71% more of these tests. 

When it comes to health care, there are many points along the continuum where the industry sticks its snout in the trough. Medical device makers turn enormous profits on everything from run of the mill walking canes ($21.97 billed to Medicare for a product that goes for $12 on Amazon) to neuro stimulators (wholesale price? $19,000. Price billed to patient? $49,237). A cancer drug Brill estimates was made, tested and marketed for between $300-$500 is sold to hospitals for $3,500, who then turned around and bill patients more than $13,000 for a dose. Like those non-profit hospitals, drug makers like to tout their philanthropy, but as Brill notes, for a company like biotech giant Genentech, which claims to have given away $2.85 billion in free medicine since 1985, that is based on the price it sells its medications for, not what it costs to produce. Looked at through this lens, that figure represents less than 1% of the company's sales, not nothing, but not much to crow about either. Brill also debunks the argument that regulating what drug companies can charge for their products would affect their investment in research and development by noting that most drug companies generate healthy profits even in places like Europe, which has far more stringent price controls and that net revenue, to take one example at cancer drug maker Grifols, was more than 32% in 2012 - a figure that includes its R&D and a sum that would be marginally impacted by tighter controls over what it could charge for its drugs here in the U.S. 

All of this matters because no other single industry hovers over our economy like health care. Not only does it account for nearly 20% of our economy, it is a massive employer projected to have 10 of the 20 fastest growing occupations between now and 2020. Even in a place like New York City, which is synonymous with high finance, twice as many hospitals (8) as banks (4) are among its 18 largest private employers. As our population ages and the broad expansion of coverage under the ACA take root, how health care is delivered, at what cost and how it is paid for will become larger and larger issues that will require thoughtful decisions divorced from the hysteria of "death panels" and "socialized medicine." 

When it comes to recommending changes, Brill argues that controlling cost is the most obvious place to look. As he points out, to do so would be to accept what happens in reality anyway -  hospitals collect anywhere from 20 to 60 cents on every dollar they bill anyway - largely because of the baked in "discounts" to its chargemaster fees given to insurers and Medicare. The only people paying full price are the uninsured, who, not coincidentally, are least likely to be able to afford the cost of care anyway. Debt hangs over these unfortunate souls and cripples them while hospitals farm out collections to agencies with little motive to cut a deal. Even when the ACA becomes operational, the law does little to address spiraling costs. While insurers must justify large (more than 10%) increases in their premiums, doctors and hospitals are not under the same obligation and are free to continue using their exorbitant chargemaster rates. This, combined with the creeping monopolistic tendencies of hospitals, will likely result in higher premiums, an outcome that will significantly mitigate the value of having all of those additional people in the insurance pool.  

As the largest consumer of health care, Medicare is another obvious place to look for savings, but it is here where Brill's reporting is most disappointing - not because of any defect in his writing, but rather, because solutions that seem common sense, such as allowing people under 65 to buy into the program, perhaps at some modestly higher levels, or permitting the program to negotiate over drug prices, are non-starters. This is a key point because the government is going to be subsidizing the private insurance of a lot of people in their 50s and early 60s starting next year when the ACA is fully rolled out. Brill argues that it would be better (and cheaper) to take that money and re-direct it into lowering the Medicare eligibility age as opposed to raising it, which would put taxpayers on the hook for subsidizing people who are more expensive to insure on the private market. As for drug prices, while Medicare's hands are tied, Brill mentions that when a group of hospitals wrote to Sanofi, advising the drug maker they would no longer use one of their cancer treatments because of its cost, which was more than twice as much as another drug that was just as effective, Sanofi quickly backed down and lowered the price on its medication by half.  Brill estimates allowing Medicare to bargain over drug prices would save the program up to $250 billion over 10 years. 

Ironically, many of the market efficiencies that conservatives lionize are far more prevalent in Medicare than private insurance. As Brill notes, quality control and metrics on everything from call center wait times to the percentage of claims that are improperly denied (a ridiculously low 1%) are all aggressively monitored in Medicare, whose administrative costs are about two-thirds of 1%, while a private insurer like Aetna has overhead costs of 29%. Wringing the same efficiency out of the private insurance world would also be a big step toward lowering overall costs. More curious is Brill's support for tort reform, a bête noire of the right wing but a policy that has already been enacted to mixed results in a number of states throughout the country. Other suggestions, like levying a 75% tax surcharge on non-doctor hospital salaries above $750,000 and "outlawing" the chargemaster are pie in the sky, though in lieu of eliminating the chargemaster, "truth in billing" and closer scrutiny of non-profit hospitals who hand out multi-million dollar compensation packages to its executives might be feasible. 

Ultimately, Brill's deep dive into our health care system shows what happens when what is considered a fundamental right in the rest of the industrialized world is profit driven and treated like a commodity in our country. Everyone skims their profit off the top as costs pile up before landing in the patient's lap, either in the form of a heavily padded bill or an insurance premium that goes up and up with each passing year. Our leaders in Washington would do well to read Brill's piece, lower the temperature on their rhetoric and realize that improving efficiency and providing quality health care are not mutually exclusive; indeed, for our health care system to survive, they will need to work hand in hand. 

Thursday, March 14, 2013

(Almost) Everything You Need To Know Before The Mad Men Season Premiere

As we prepare for Mad Men’s April 7th return, here is a handy list of links to episode-by-episode recaps from Season 5, full season recaps for Seasons 4 and 5, character commentary and a few odds and ends to whet your appetite for the Season 6 premiere:

Season 5

Season Recap:

Episodes 1&2 – “A Little Kiss”

Episode 3 – “Tea Leaves”

Episode 4 – “Mystery Date”

Episode 5 – “Signal 30”

Episode 6 – “Far Away Places”

Episode 7 – “At The Codfish Ball”

Episode 8 – “Lady Lazarus”

Episode 9 – “Dark Shadows”

Episode 10 – “Christmas Waltz”

Episode 11 – “The Other Woman”

Episode 12 – “Commissions & Fees”

Episode 13 – “The Phantom”

Character Commentary

“Don Draper Is A Square”

“Megan Draper Must Die”

Peter Dyckman Campbell, 32

The Tao of Kenny Cosgrove

Season 4 Recap:

12 Essential Mad Men Episodes

Saturday, March 9, 2013

Obama Sues For Peace

In the past few days, President Obama has (literally) broken bread with a dozen Senate Republicans and the Chairman of the House Budget Committee, Paul Ryan. The media is thrilled to report that the President is reaching out to Republicans, bonding with them, and trying to find middle ground to come up with the elusive "grand bargain" that obsesses the Inside the Beltway crowd from the broadcast studio of Morning Joe to the editorial page of The Washington Post. Lost in all of this reporting is that with each fiscal skirmish, the pieces of that grand bargain are falling into place, and each time, the deal gets worse and worse for progressives.

The dirty little secret of budget politics is that not only have the Republicans run circles around the President, but the total savings that most "smart people" in Washington claim is needed to stabilize our debt in the long-term ($4 trillion) has already essentially been reached. What the President is being baited into is the final nail in the fiscal coffin that results in his giving away cuts in social welfare programs in exchange for closing tax loopholes that will quickly reopen not long after the ink is dry on his signature. 

If you're scoring at home (and you should be), there have been two huge cuts in government spending over the past 2 years. The first, enacted in 2011 as part of the debt ceiling deal, cut roughly $900 billion over 10 years, and the second (the so-called "sequester"), lopped another $1.2 trillion-$1.5 trillion off our long-term spending. [1] Meanwhile, there has been one tax increase (which wasn't really a tax increase - that will yield roughly $620 billion over 10 years while permanently locking in Bush era tax rates for just a hair more than 99% of all Americans. The final tally? Budget cuts: $2.1 trillion - $2.4 trillion vs. tax increases: $620 billion, or a roughly 3.5:1 to 4:1 ratio and a grand sum total of between $2.7 trillion to $3 trillion in long-term aid to our deficit picture, and that's without adding in savings on future interest, which gets that number closer to the magic $4 trillion mark. 

This simple arithmetic is important to remember. Republicans claim that the President "got" his tax increase at the beginning of the year. Of course, that tax increase was far less than it could have been. Instead of letting all the Bush tax cuts expire, which would have raised $4 trillion in new taxes over 10 years, we are raising less than 20% of that total ($620 million). Meanwhile, Republicans did not exactly fight for the extension of the payroll tax cut, which disproportionately hit the lower and middle class, but made sure an obscenely high exemption for estates was locked into place (and with yearly adjustments for inflation!). 

Against this modest pinch to the very richest in our society, the Republicans have extracted cuts to our domestic spending so severe that as a share of our overall federal budget, domestic spending is at it's lowest level since the 1950s. Infrastructure investment has all but dried up and bills that were once routinely passed in areas such as agriculture and aviation are now dragged out in a legislative Bataan Death march before passage. When the President proposed establishing universal pre-kindergarten, at a modest cost (and wonderful return on investment!) of $98 billion over 10 years [2], Republicans scoffed, even though we spent more than that amount in less than any one year of our occupation of Iraq. 

And now, Republicans can see the end game come into focus. Having relentlessly beat the drum about the need to cut spending (never mind this austerity was nowhere to be found when George W. Bush was President) and the long-term risk to our economy over debt and deficit (ditto), the Republicans have smartly caught Obama in a pincers movement - no longer is there talk of a jobs plan, infrastructure spending or homeowner mortgage relief, rather, it is a race to see who can more sharply "curb" the growth of those pesky "entitlements" (that we pay into with every paycheck). 

Republicans have already succeeded in getting Obama on record as supporting cuts, prodding him to cut deeper and deeper while "banking" these offers as the new shifting line for where any deal gets cut. Look on the White House website and you will see the President's call to shift the calculation of Social Security benefits to something called "Chained CPI" [3] which would reduce benefits by $340 billion over 10 years [4], never mind the fact that Social Security is solvent (i.e., can pay out 100% of its benefits until past 2030) or that by simply removing the FICA ceiling we would ensure the programs solvency, essentially forever. Instead of seeking equity and fairness in this program, the President of the party that created the single most successful anti-poverty program for the elderly now supports cutting it. Baffling. 

But the bigger problem is that Obama does not even draw decent negotiating lines in the sand. Even if he pitched the idea of removing the FICA cap entirely but negotiated it down to capping it say $500,000, or even $1,000,000 (it's currently $113,000 and change), or creating a "donut hole" so the current cap stayed in place but was re-triggered at a higher level (see above), either of those solutions would not harm wealthy wage earners anywhere near what switching to Chained CPI will do to poorer seniors who rely on Social Security. In other words, the President is playing entirely on the Republicans side of the field; conceding that cuts to Social Security is the only option available.  

Meanwhile, the Republicans continue to press for drastic changes to Medicare. Paul Ryan will introduce yet another iteration of his "voucher" proposal to turn what is a guaranteed right for all Americans at age 65 into a private health insurance program that will require the elderly to purchase private health insurance; while the President has said he does not currently support raising the eligibility age to 67, he has flirted with the idea in the past (and is also known to back down from his positions, just check his promise to raise taxes on anyone earning more than $250,000). And while battle lines are being drawn over Medicare, in Florida, Governor Rick Scott got the Obama Administration to agree to allow him to privatize the delivery of Medicaid as a condition of accepting funds under the Affordable Care Act - a dangerous harbinger that may lead other Republican governors to seek similar exemptions, especially since studies show that "government run" Medicare/Medicaid have far lower overhead/administrative costs than private insurance.  

What Obama wants in return is the elimination of various deductions and loopholes in the tax code that largely benefit the wealthy and multinational corporations. There is widespread support for ending many of these benefits, particularly ones that allow billionaire hedge fund managers to pay 15% tax on something called carried interest (google it) and enormous oil and agricultural corporations to reap billions in tax credits. Of course, those loopholes don't appear out of thin air. Indeed, the same call to "clean up" the tax code resulted in a massive reform in 1986, but slowly but surely, lobbyists have slipped in sweetheart deals for their overlords, there is no reason to think that even if these loopholes are closed today, they won't reappear in the future. The difference is, there will be far less political will to bolster reduced social insurance benefits.

Not only is Obama getting boxed in to cutting a deal that is bad politics, it is bad policy. As noted, Social Security is not "broken" to begin with, but even if one were to accept it needed to be tweaked over the medium to long-term, lifting the FICA ceiling is a far more equitable way of doing it than Chained CPI (with the added benefit of making the program solvent forever). As to Medicare, allowing the program to negotiate lower prescription drug prices and continuing to emphasize outcome-based performance measures for doctors is a better alternative than either vouchering the program (which runs far more efficiently than private insurance plans) or requiring near elderly people to continue paying for costly private insurance.  As the journalist Steven Brill has pointed out, there is a far better argument to be made for lowering the Medicare eligibility age than raising it [5].

But all of this appears lost on a President who is now throwing himself at any Republican who shows even the vaguest willingness to negotiate with him. Sadly, we've seen this movie before. After being elected in 2008, Obama tried to get Republican support for his stimulus bill by making 40% of it focused on tax cuts. He got no Republican votes in the House and three in the Senate. When the Affordable Care Act (an idea that originated in a right wing think tank) was being debated, Obama held out hope for months on end that first Chuck Grassley, then Olympia Snowe, might sign on to some sort of bipartisan bill, only to have them each back out at the last moment. 

Do not be surprised if the same thing happens again. Republicans will lead Obama around by the nose and if no deal is cut, it is of no consequence to them - they have already locked in more than $2 trillion in spending cuts with modest tax increases, have the President on record supporting cuts in Social Security and Medicare, gerrymandered House seats to such an extent that only an electoral tidal wave will sweep them out of power and Senate seats all over the country are being defended by Democrats in 2014 with their grasp on control of the Senate up in the air. Not bad for a party without a leader, that holds just one house of Congress and hasn't had more than 45 Senators in the other since 2009. 


[1] Estimates of the sequester's long-term effect vary between $1.2 trillion to $1.5 trillion. 





Thursday, March 7, 2013

Girls Season One

I just watched the 1st season of Girls and decided the show was neither the groundbreaking work of television its fans proclaimed it to be, nor the torpid, entitled version of Sex and the City refracted and warped through the eyes of an upper middle class liberal arts snob that its detractors said it was. Rather, it was a decent, but not particularly exceptional piece of story telling about a group of mostly unlikeable characters doing what many young people do after college - drift aimlessly and without any particular direction. And for that, I am not really sure what all the buzz is about. In the same way movies like Reality Bites and Singles and TV shows like Friends captured the post-collegiate ennui of Generation X, Girls does for Millenials. 

Of course, the show's title is deliberate, the main characters may be women, but their behavior, which is often self-centered, narcissistic and uncaring, reads "mean girls." Hannah, Marnie, Jessa and Shoshana are just hard to root for. Hannah has lived off her parents' largesse for 2 years while working on a book she is not close to completing, while roommate Marnie has somehow amassed a Manhattanite's wardrobe on an assistant at an art gallery employee's salary. Jessa is a free spirited Brit who breezes back into town and moves in with distant relative Shoshana, a 22 year old virgin who text-speaks her way through conversation and could deconstruct a coffee order for 5 minutes before making it. 

The men of Girls are no better. They are uniformly boys, be they of the 20something variety, like Marnie's insufferably sensitive boyfriend Charlie or Charlie's snarky sidekick Ray, a coffee barista by day and struggling musician by night. Older men are middle-aged cliches like Hannah's handsy boss Rich, who casually molests his female employees, Jeff, the father of Jessa's babysitting wards, a neutered house husband who makes a clumsy pass at her at a hipster party and Hannah's father Tad, forever seeking to protect his precious "Hannah Banana." Indeed, the only guy offered some depth is Hannah's primary love interest Adam, a dark and odd person, who, to the writers' credit, turns out to be a far more complex character than the shock value sex acts and peccadilloes he engages in that define the show's first few episodes. 

But the show's defining feature is its air of uncertainty. Each character is unsure of their decisions, like people testing the ice on a frozen pond fearing if they plant their feet too firmly they will fall in. Marnie is miserable with Charlie right up until the moment he breaks up with her, at which point she wants him back, until midway (literally) through their make up sex, when, oops, she decides she doesn't want to be with him, until she sees him with another woman, and so on. Hannah claims to be a writer, but does little writing, instead toggling between chasing Adam like a schoolyard crush to misreading him and his intentions when Marnie moves out of their apartment and he offers to move in; all done, naturally, while Hannah artfully dodges full-time employment. 

To be honest, it all amounts to so much navel gazing that I cannot believe anyone who has crossed that particular life rubicon found it interesting, much less worthy of awards. The stakes could not be any lower for Hannah and her friends and not because some of the subject matter is minor, but rather, because of the equivalency, attached to decisions both great and small. Shoshana is set up in a NoLita apartment while attending college and seems to have no greater concern in her life than being deflowered. Jessa, on the other hand, is blasé about getting an abortion, but more than happy to seduce a former boyfriend simply for the sake of being able to prove she can. Curiously, by the end of the season, she has married herself off to a venture capitalist living in a swanky high rise complete with a $10,000 rug not long after admonishing her former employer that she did not need any life advice. What could possibly go wrong? Hannah does not have a steady source of income, but does have HPV, which she comes to terms with in a tweet, so there's that. Of course, Marnie, the only one of the four with a stable job, is portrayed as an uptight control freak incapable of relaxing and is mocked for planning out the next steps in her life. For this crowd, thinking adult thoughts is a bad thing and it is not until Marnie is stuck crashing at Shoshana's apartment and gets bombed at Jessa's surprise wedding that she finally "loosens up" (i.e., lives in the moment, without concern for what tomorrow may bring and <gasp> kisses a chubby nerd).  

The show offers no great insight into life other than the fact that 20somethings smash their emotions like toddlers and are scared shitless of adulthood, which is understandable, considering their role models are, by and large, no better than they are. I do give Dunham credit for her unflinching ability to expose her insecurity and self-loathing. The rawness of scenes that show her as venal and self-absorbed could easily be mocked, but they are written (and performed) in a way where you feel pity, not just for Hannah's cluelessness (giving herself a pep talk before a date back in her hometown while reminding herself that simply because she lives in New York makes her more interesting than people in her hometown) but for her loneliness (telling Marnie she can't say anything that will be more harmful than the fact that she [Hannah] hates herself).  You would offer the poor woman a hug if she wasn't so insanely consumed with her own pettiness and unwillingness to get her act together. 

But self-loathing is one thing when it's played for comedic effect by the Larry Davids of the world; it rings hollow when expressed by someone whose life appears unaffected by anything other than what Twitter calls "first world problems." And here I think the criticism of Girls is most on point. Being in your mid-20s and living off your parents' dime while you figure out what you want to be when you grow up is a quintessential problem of privilege that not only speaks to a very thin slice of the world, but underscores the smallness of what the show traffics in. There are no great struggles to overcome, no hurdles to leap, just an incessant avoidance of learning the ropes of adulthood or, as the tag for Season 2 put it, "kinda, sorta getting it together." For people on the other side of that time of life, or Dunham's contemporaries who are not fortunate to have their parents pay their cell phone bills, who know what the "adult" world looks like, with its disappointments and responsibilities, narrowing of options as you age and uneasy embrace of the decisions made, the tone of Girls wears quickly. Oh to be 24 and have nothing to worry about other than proper text etiquette or nursing a petty grudge. And those problems that seem more consequential to an older viewer - of abortion or marriage or drug use - are handled with the same concern as the small ones, which is to say, none. 

Make no mistake, Dunham's achievement is impressive, she has captured a particular moment in a particular type of person's early adulthood, it just was not, for me at least, a particularly interesting story to watch. To her credit, Dunham is insightful enough to not be too taken in by her own skill - she is, as her character puts it, a voice of a generation - to elevate her any higher would be inaccurate, but also unnecessary, her work speaks for itself. 

Sunday, March 3, 2013

The Fall Of The Evil Empire

If you live in the New York-New Jersey area and follow sports, no team casts a larger shadow than the New York Yankees. Since the Red Sox famously sold Babe Ruth to the Yankees in 1919, the Bombers have dominated Major League Baseball in a way no other team in any other American sport has, winning 27 World Series, 40 American League pennants and, since the advent of division play in 1969, 18 division titles. In those more than 90 years, the team has only experienced two truly fallow periods, the first, in the mid-1960s, lasted about a decade and was the result of an aging roster unreplenished with younger talent and a failure to see the ways in which the influx of African-American and Latino players was impacting the game. The second began in the early 1980s and lasted through the mid-1990s, a period of ownership drift, poor free agent signings and a lack of minor league development. 

As to that first period, the Yankees ultimately re-tooled, taking advantage of the new rules around free agency to sign players such as Reggie Jackson and Catfish Hunter while developing and nurturing young talent like Ron Guidry and Thurman Munson. The Yankees most recent run began in much the same way, by cultivating its farm system and, as those players matured, surrounding them with in-their-prime free agents. The Yankees' decided revenue advantage stemmed largely from the creation of its own cable network - the YES Network, a money making enterprise that allowed the team to outbid anyone for a player they truly wanted [1]. This model has served the Yankees well.  Beginning in 1996, the team won 5 World Series titles, appeared in 2 others and only missed the playoffs once (2008). 

But like bankruptcy, which someone once defined as going poor slowly and then really fast, the "Evil Empire" is about to hit the skids and experience its third prolonged stretch of failure. The reasons for this are not dissimilar to those that caused their two prior periods of mediocrity. Let's examine why the Yankees are primed for a fall:

The Spending Gap Has Shrunk: Perhaps no greater change in the baseball economy has taken away the Yankees advantage quite as much as the one-two punch of the luxury tax and regional cable deals. On the one hand, the luxury tax penalizes teams whose payrolls are above a certain threshold by requiring them to pay money back to the other teams in the league. This money improves competitors' bottom lines and creates greater financial parity. In recent years, with the death of George Steinbrenner, the team has shown less of an inclination to pay the luxury tax, curtailing its willingness to spend big money on free agents while still being locked into longer-term deals with its aging stars (more on that later). 

But the bigger change is one the Yankees spearheaded - the creation of sports networks. Now, mid-market teams like the Cincinnati Reds, who 15 years ago would have lost a once-in-a-generation talent like Joey Votto to free agency, have the capacity to lock stars into long-term contracts before they becomes free agents, so the Yankees don't even get a chance to bid for their services. Other teams have done the same thing, including the Rockies (Troy Tulowitzki), Brewers (Ryan Braun) and Nationals (Ryan Zimmerman). With fewer marquee free agents available, the Yankees can no longer rely on a pipeline that at one time brought them players like CC Sabathia, Mark Texeira, Mike Mussina, Johnny Damon, Jason Giambi, Hideki Matsui and Alex Rodriguez [2].

An Aging (and Expensive) Roster: The Yankees roster is old - really old, especially in today's game, denuded of most forms of performance enhancer and where high level talent blossoms at every younger ages. The Yankees have produced few home grown stars since the mid-1990s, when Derek Jeter, Andy Pettitte, Mariano Rivera, Jose Posada and others came up through the minor leagues. The average age on the Yanks' 25-man roster is almost 32 [3] and includes pitchers like Pettitte (41), Kuroda (38) and Rivera (43!), who are expected to contribute significant innings while everyday players like Jeter (39), Texeira (33) and Kevin Youkilis (34 and keeping 3B warm until A-Rod, himself 37, returns from hip surgery) are all part of the everyday line-up. While this might not have been pause for concern 15 years ago, when, for example, the Yanks let their closer leave and seamlessly plugged Rivera into that role, the team has not developed farm system depth behind its aging talent and those young players they have cultivated, like Joba Chamberlain, Phil Hughes and Brett Gardner, have not performed at a level to keep the team competitive [4].

The team's payroll is also bloated with long-term contracts paying players on the downside of their career a lot of money. In addition to the $114 million owed to A-Rod for the next 5 years, Mark Texeira is owed $90 million and C.C. Sabathia is owed $91 million over the next 4 years and Derek Jeter is making $17 million in the last year of his current contract. With management reluctant to spend big, the team may be reluctant to re-sign the few quality younger players they do have, like Robinson Cano and Hughes, or, in a fit of irony, get outspent by one of their rivals for them. 

Lastly, because free agency is not as fruitful as it once was, the team can't afford to miss on trades like the one it made last year, moving top catching prospect Jesus Montero to the Mariners for starting pitcher Michael Pineda, who has yet to throw an inning for the team due to injury. The limited number of tradable minor league players also hampers the team's ability to pull off larger trades, like the one the Nationals made for Gio Gonzalez before the beginning of last season. The Nats, who had built one of the best farm systems in the league, were able to offer the Athletics four quality prospects in exchange for Gonzalez, a young lefty who had already shown flashes of brilliance but the A's were not going to be able to sign long-term. The Nats not only got an outstanding young pitcher, but by immediately signing him to an extension, are keeping Gio off the free agent market until 2016. The Yankees simply do not have the players to pull of a deal like that one.

The upshot is that the Yankees are pinched on both ends. Their major league roster is littered with expensive contracts for past-their-prime players, but the farm system is devoid of the type of talent that the team could use to replace them. The lack of tradable prospects also impairs the team's ability to get younger, proven, major league talent and because teams can now lock up their best players before they become free agents, the Yankees can't outbid its rivals for them.  

Other Teams Have Caught Up: Te Yankees have been a virtual shoo-in for the playoffs since 1995, but its competitive gap, which reached its apex in 1998, when the team went a jaw dropping 125-50 (regular season and post season) in its romp to the World Series, has narrowed considerably. Small market teams like the Marlins and Rays have made runs to the World Series with young players not yet at their peak, while other teams like the Rangers, Cardinals, Giants and Tigers have mixed young and old to stay competitive. Still other teams like the Phillies, Angels and Red Sox have cribbed the Yankees model and spiked payroll to reach (and win) the World Series. Still others, like the Nationals and the Blue Jays, who pulled off a massive off season deal to bring in major league stalwarts like Jose Reyes and Mark Buerhle, are loaded with rosters featuring players nearing their peak and locked into contracts that will keep much of their rosters together for the next few years [5]. 

When you put all these factors together, the logical conclusion is that not only will the Yankees near two decades of dominance end, but the team may not be particularly competitive for the next few years. The team's starting pitching is old, its bullpen mediocre and its everyday roster dotted with players earning big money on the downside of their careers. No team will take on, say, A-Rod's near $30 million a year contract and Jeter, at 39, and coming off a broken ankle, cannot be expected to perform as he once did. But more distressing for Yankees fans should be the fact that neither short- nor long-term solutions are in the offing. Free agency is no longer a reliable method of replenishing its roster and its spending advantage is not what it once was. The Yanks farm system is ranked somewhere between 10th and 15th out of 30 teams, but not every prospect pans out and few are close enough to major league ready to make an impact in 2013, or 2014 for that matter. Meanwhile, rosters in Anaheim, Detroit, Tampa Bay, Texas, and Toronto all look better on paper and younger teams like Baltimore and Oakland are also ripe for sustained playoff contention.

Yankees fans should be prepared for the fact that the team will struggle to make the playoffs, not just this year, but for the foreseeable future, as the Bombers make the pivot away from being an old, slow team to a young, faster one capable of another run of dominance. Unsurprisingly, few tears will be shed outside of the greater New York metropolitan area. 


[1] Rupert Murdoch's FOX empire just bought a 49% stake in YES that values the channel at $3.8 billion.

[2] I know, A-Rod was not technically a free agent signing; however, when he was dealt to the Yankees, only one other team had the financial wherewithal to absorb his $25 million a year contract. Regardless, had A-Rod stayed in Texas for the addition year or two before his opt out, the Yankees would have still been only one of two teams able to afford his services. 


[4] Ironically, two of the established stars the Yankees could have relied on to bridge talent gap, Rafael Soriano and Russell Martin, both opted not to re-sign with the Yankees. 

[4] For example, the Nationals essentially have their major league roster for 2014 *and* 2015 already locked up: