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Highlights—November 10, 2007

  • Poughkeepsie Journal: Executive: Embrace change. Donofrio: IBM will move more work overseas. By Craig Wolf. Excerpts: Change and innovation are necessities in an increasingly globalized world whether you like it or not. That was the message of Nicholas Donofrio, one of IBM Corp.'s top executives, speaking Wednesday morning to the Greater Southern Dutchess Chamber of Commerce. This requires openness, collaboration and people who are willing to connect and change, Donofrio said. ...

    He cited the global research and manufacturing collaboration based at the East Fishkill chip complex, including Sony and Toshiba, who teamed in developing the Cell Broadband Engine chip that debuted in Sony's PlayStation 3 game console.

    He did not refer to news reports out Tuesday, including from Reuters, that Sony is pulling out of research with IBM and Toshiba to develop the manufacturing technology for producing microchips with circuitry at 32 nanometers or less. The report said Sony will stay involved at the level of design work on chips. ...

    Donofrio's remarks were well-received by the business group, about 200 strong, at the Sierra Suites motel here. ...

    Rob Doyle, of United Country Absolute Auction & Realty, Pleasant Valley, was inspired by Donofrio. "It's like a talk that I would pay a couple hundred dollars to hear," he said.

    • A reader comments: So I guess my question would be, as the USA population increases, and we continue to move jobs "off Shore", what is everyone going to do for a decent job in the USA? Join the Army to protect the billionaires investments?
  • Excite Money & Investing: Keller Rohrback L.L.P. Announces ERISA Investigation of the IBM Savings Plan. Excerpt: Keller Rohrback L.L.P. (http://www.erisafraud.com) today announced that it is investigating the IBM Savings Plan (the "Plan") (IBM) regarding the investment options offered to participants. In particular we are concerned about the fees, expenses and performance of investment options.

    If you are a participant in the IBM Savings Plan and are concerned about the fees, expenses or performance of the investments in your Plan, you may contact paralegal Jennifer Tuato'o or attorneys Karin Swope or Derek Loeser toll free at 800/776-6044, or via e-mail at investor@kellerrohrback.com.

  • Global Labor Strategies: Are US and EU Corporations Complicit in Evading China’s New Labor Law? Excerpts: Evidence is mounting that they are. In a recent post we reported that some firms in China are firing workers in the run-up to the implementation of China’s new labor contract law which grants more rights to workers. Now it appears the problems are widespread and that foreign corporations--including Walmart--may be complicit.

    Corporations are looking after their own interests: as 2008 nears, law firms and HR consultants are hard at work giving advice and holding seminars on how to best deal with the new law and HR staffs are drafting new contracts and policies. For workers it’s a different story. At a meeting here in the US last week a visiting Chinese scholar called the current situation “a-symmetrical”. Citing the example of one firm that has laid off workers to avoid provisions of the new law he asked, “Who is looking out for the interests of the employees?” Who indeed! Against the power of the employers, workers have been left to their own devices.

    A story that is currently receiving a great deal of attention in China involves the Chinese telecommunications company Huawei which has joint ventures, partnerships, or other legal ties with IBM, Siemens, Motorola, Microsoft, Sun Microsystems, and HP among many others. Recently thousands of Huawei employees have quit their jobs. Well sort of…

  • Yahoo! IBM Union message board: "IBM France Unions to strike over IBM AT&T transfers November 13" by Lee Conrad. Full excerpt: Mobilization against transfers: A national day of action will be taken by unions in France to draw the attention of staff and government on the transfer of some 5000 jobs from IBM to ATT (American Telegraph and Telecoms), in some thirty countries . In France, some 85 employees at IBM sites Lyon, Montpellier, and La Gaude, (worst affected with 25 transfers), will move from one company to another "Without being asked. This is intolerable, "said CGT delegate from La Gaude, Serge Kerloch who is affected by this transfer.

    The IBM France workers describe themselves as "pawns of in a game in a dehumanized world". According to one union member "We do not even know about the timing of these transfers, or all of the staff concerned."

    After the announcement of forced transfers, the trade unions have stated that they will oppose by all means these transfers. Unions involved CFDT, CFE CGC, CGT, FO, SNA, UNSA.

  • The Journal News (Westchester, Rockland and Putnam Counties in New York): IBM video game teaches business and computer skills. By Julie Moran Alterio. Excerpts: There are no wizards, monsters or swords in IBM's new video game, but Big Blue hopes students of information technology will find Innov8 much more rewarding than a weekend devoted to World of Warcraft. Innov8 is an interactive, three-dimensional educational game designed to teach graduate students a combination of business and IT skills. ...

    A student playing Innov8 enters the game as a character named Logan, who gets an assignment to solve a business problem from her company's chief executive officer. The first scenario involves improving operations at a call center, where workers are taking too long to solve problems and have poor documentation.

  • South Florida Sun-Sentinal: Merrill Lynch tells pension boards it's being investigated by SEC. By Harriet Johnson Brackey. Excerpts: Merrill Lynch, which monitors about 100 public employee pension funds for Florida cities from Lake Worth to Hallandale Beach, has sent letters saying that the Securities and Exchange Commission believes the company may have violated federal regulations. ...

    The letter is shaking up the placid world of local pension boards. If they were being overcharged or if the pension fund were somehow skimmed by consultants, that would leave less money for retirees. Eventually, taxpayers could be forced to bail out a pension plan that came up short. ...

    Critics say public pension consultants can hide the true costs and their profits from the volunteer board members and from regulators. For example, a consultant might pick a money manager and then insist that the manager do all the fund's stock trading through the consulting firm's own brokerage unit.

  • New York Times: Wobbled by Wealth? By Paul Krugman. Excerpts: Nor is the demand for change solely about Iraq: there has been a strong revival of economic populism. Democracy Corps asked those who believe America is on the wrong track to choose phrases that best described their views of what’s gone wrong. The most commonly chosen were “Big businesses get whatever they want in Washington” and “Leaders have forgotten the middle class.”

    So much, by the way, for pundits who claim that Americans don’t care about economic inequality. ...

    But the Democracy Corps memo warns that “Democrats have not yet found their voice as agents of change.” Indeed. What the memo doesn’t say, but is all too obvious, is that one big reason the Democrats are having trouble finding their voice is the influence of big money.

    The most conspicuous example of this influence right now is the way Senate Democrats are dithering over whether to close the hedge fund tax loophole — which allows executives at private equity firms and hedge funds to pay a tax rate of only 15 percent on most of their income.

    Only a handful of very wealthy people benefit from this loophole, while closing the loophole would yield billions of dollars each year in revenue. Retrieving this revenue is a key ingredient in legislation approved by the House Ways and Means Committee to reform the alternative minimum tax, something that must be done to avoid a de facto tax increase for millions of middle-class Americans.

    A handful of superwealthy hedge fund managers versus millions of middle-class Americans — it sounds like a no-brainer.

    But as The Financial Times reports, “Key votes have been delayed and time bought after the investment industry hired some of Washington’s most prominent lobbyists to influence lawmakers and spread largesse through campaign donations.” It goes on to describe how Harry Reid, the Senate majority leader, was “toasted by industry lobbyists” (and serenaded by Barry Manilow) at a money-raising party for his special fund to help Democrats get elected next year.

  • USA Today: The pitch: Retire early. The catch: Unscrupulous brokers. By Kathy Chu. Excerpts: After 30 years of toiling in oil fields, Ray Lirette was told in 1997 that he could retire at 52 and buy a camper so he and his wife could travel across the USA.

    Lirette says he trusted the advice because it came from an investment broker used by other Chevron workers. That's why he turned over his retirement savings — $335,000 — to the broker to manage, bought a camper and truck, then borrowed against a nearly paid-off mortgage to pay off credit card bills and auto loans.

    "He showed me this projection that I'd have $1.3 million in 10 years," Lirette, 63, said as the sun glinted off the 28-foot camper parked on his lawn. "I thought, 'I guess we can retire.' "

    Retirement didn't last long. Lirette says his nest egg shrank to $43,000 over eight years as his portfolio — concentrated in fairly risky stocks — plunged. The broker, he says, still guaranteed returns of 15% and said the market would rebound. About five years ago, Lirette and his wife were forced back to work, into jobs paying a fraction of what they used to earn.

  • New York Times: Ex-Chief of S.E.C. Says Pension Funds in Danger. By Mary Williams Walsh. Excerpts: As New York State comptroller, his father “saved the retirements” of countless workers, Arthur Levitt Jr. said in a speech yesterday — but he added that now those pensions, along with those of millions of other Americans, are again at risk. ...

    The Carlyle Group is one of the investment firms to be questioned by investigators in an inquiry into the New York State pension fund. Mr. Levitt alluded to that inquiry, which has focused on whether associates of New York State’s most recent former comptroller, Alan G. Hevesi, improperly benefited from his sole direction of the $156 billion fund, the nation’s second largest. (Editor's note: Former IBM CEO and Chairman Louis Gerstner is the current Chairman of the Carlyle Group).

  • New York Times: Citigroup Chief Is Set to Exit Amid Losses. By Eric Dash. The embattled head of Citigroup, the global banking giant, has told directors that he would resign from the bank after an emergency meeting this weekend in the wake of a $5.9 billion write-down and sharp drop in profit, people briefed on the situation said last night. ...

    Mr. Prince will leave with vested stock holdings valued at $94 million on top of the roughly $53.1 million in pay he took home in the last four years, according to James F. Reda & Associates, a compensation consulting firm, and Equilar, a data provider. Included is a pension worth $1.74 million and another one million stock options, which have no current market value because of the stock’s sharp decline. They have a potential estimated value of about $4 million based on current estimated values — and possibly more if the stock rises. Severance would have to be negotiated; Mr. Prince has no employment contract.

  • Yahoo! IBM Retiree Information message board: "IBM EPO - Empire (CA)" by "exitasap". Full excerpt: I thought the medical costs in general went up perhaps 8%, meaning if IBM passed all inflation to me, premium would go up 16%. Nope, you guessed right...

    IBM EPO - Empire Santa Clara County, CA
    +28% +37% +40%
    2008 150/1 690/2 933/3+ (3 or more)
    2007 117/1 503/2 667/3+

    What is it? For each year closer to 65, they add on an extra 25% for aging up? Our premium went up an astounding 40%! What gives? We do.

    If the total premium was $7K (ibm) + $8K (mine) for 2007, then an 8% increase would change total premium to $16.2K. Taking out ibm's 7K, leaves $9.2K for us, or $767/mo (vs $933 being billed for 2008).

    Could it be the pool of those with the local IBM EPO plan is so small, that one persons extraordinary 2007 expense will drive up this group's rate?

    Yet, unsubsidized dental and vision premiums have been essentially flat the last several years. Duh, are they trying to get us to cancel before 65?

    It won't be long before we catch up with those who already spend their whole pension on the basic health premium. Before you tell us Kaiser is a viable option, I keep hearing from patients their care is best for the healthy young -- not those that could demand specialized care with age (unless you have a close relative to someone who works for the place). I hear its hard to get the referrals to specialists quickly when you need; with multiple delays, you are done. B.S.

  • Yahoo! IBM Pension and Retirement Issues message board: "advantage plan" by "ranheimchas". Full excerpt: I spent a lot of time yesterday speaking with an Aetna rep about the PFFS plan offered by IBM. Things were looking good until we got to the prescription drug part. They use a 3-Tier system. If you look at the sheet from Fidelity, it shows three prices for drugs, representing the three tiers.

    However, the real rub surfaced when I gave the rep and example of where I would stand getting Lipitor. I was told it was a Tier 3 drug with Step-Up requirements. What this means is that I can no longer even get Lipitor until I try several other similar (cheaper) drugs to see if any of them work. Only after I go through this drug list, and have it verified by a doctor that they are not working well enough, will I be allowed to go back to Lipitor.

    When the price came up, I was told a 90 day supply would cost me $160, as a Tier 3 drug. I now pay $70 for the same drug with my present IBM Medical/Drug plan. My wife takes Fosomax. The same rules apply to that. This was a show stopper for me. Give them a call and ask about this drug plan. They were very nice and open, about how it works.

  • Motley Fool: United's Faustian Bargain. By Rich Duprey. Excerpts: Literature's Dr. Faustus is a scholar who has learned all there is to know and makes a pact with Mephistopheles, the devil, trading his soul for power and material gains. He's likened to Icarus, who flies so close to the sun his manmade wings melt, and he falls fatally to Earth.

    That seems like an apt metaphor for the deal United Airlines' parent UAL (Nasdaq: UAUA) made with the government's Pension Benefit Guaranty Corp. (PBGC) in defaulting on its employee pensions.

    Apparently, I was too exuberant in suggesting the government give back to United the pension obligation it foisted on the PBGC. As part of its agreement with the airline, the PBGC imposed an extraordinary waiver of its powers and agreed not to seek to restore it to United -- ever.

    It's a curious move by the pension agency. While only once before has it returned a pension plan to a company that defaulted on its pension obligations, I'm sure today's situation might be the only time a company has been sitting on a host of valuable assets it now wants to spin off and reap billions of dollars in profits from. ...

    Employees were the ones who lost their souls after having worked for decades for the airline to see their benefits slashed. Pilots, for example, who are required by law to retire at age 60, found out that not only would their benefits be cut nearly in half because the maximum the PBGC pays is about $47,000 for someone who retires at 65 -- they were penalized again because the PBGC discounts benefits further for those who retire before 65! Talk about being caught between the flames and the fire!

    Contrast that with the sweet deal chairman, president, and CEO Glenn Tilton carved out for himself.

  • Motley Fool: United's Flights of Financial Fancy. By Rich Duprey. Excerpts: Airline loyalty programs are the hidden treasure du jour. UAL is trying to spin off its Mileage Plus program, while a large shareholder is pushing American Airlines parent AMRto unlock value by spinning off its own mileage plan. These richly valued hidden assets could mean billions for the airlines. But where were they a few years back, when employees and creditors bore the brunt of the airlines' bankruptcies? ...

    Yet employees lost out on retirement benefits when the airline defaulted on its pension obligations, and creditors and shareholders were also denied a full return on their investment from the bankruptcy. Taxpayers are on the hook for more than $6 billion in pension benefits to United's employees. Meanwhile, United now holds a competitive advantage over other airlines, since it no longer has to worry about paying its retirees. And executives who were festooned with large stock option grants when United emerged from bankruptcy might just enjoy a huge boost in their shares' value from any spin off or merger. ...

    Perhaps the biggest coup -- for executives, anyway -- would be a merger with another airline. Tilton received more than half a million United shares in stock options and restricted shares when the airline emerged from bankruptcy. This windfall was valued at more than $20 million, vesting over five years; Tilton has already exercised seven figures' worth of his holdings.

    Upon a change of control in the airline, however, United's latest proxy statement says that Tilton's stock options would immediately vest, entitling Tilton to $24 million in compensation. If he was forced out of the executive suite within two years of the merger's completion, he'd also receive an additional $12 million. That wouldn't be a bad payoff for a boss who oversaw the decimation of his workers' and retirees' pensions and benefits. At least one person would get a comfortable retirement.

    The airline industry is undoubtedly tough -- one reason Warren Buffett has never liked investing in it. And management should be trying to increase shareholder value. Yet the abundance of loftily valued options available to this once-bankrupt company makes me suspect that its previous excuses for scuttling its employees' pension obligations may have been more fantasy than reality.

  • New York Times: Tax Proposal From Rangel Could Benefit His Donors. By Stephanie Strom. Excerpts: The chairman of the House Ways and Means Committee has proposed legislation that would effectively halt some current tax audits of people who get a tax break for living and operating a business in the United States Virgin Islands.

    Many beneficiaries of the tax break are campaign contributors to the lawmaker, Representative Charles B. Rangel, Democrat of New York, according to data collected by CQ MoneyLine, which tracks political contributions. ...

    The Virgin Islands tax break — an effective federal tax rate of only 3.5 percent on income earned in the islands — is tied to a program to encourage economic development there. It has existed since the 1960s, but it gained momentum over the last decade as the Virgin Islands government opened the program to services companies in an effort to attract educated, affluent workers.

    Financial services companies and their executives began flocking to the islands, taking steps like contributing to local charities as ways of establishing residency, which was required to capitalize on the program’s tax benefits. The I.R.S. became suspicious that many were spending more time running their businesses on the mainland than in the islands, and in 2003 it undertook enforcement efforts that, lawyers in the islands say, have ensnared some 100 taxpayers, not all wealthy.

  • CNN/Money: GE Increases Pension Payments To 130,000 Retirees. Full excerpt: General Electric Co. (GE) said Thursday it plans to increase pension benefit payments to more than 130,000 of its retirees from Dec. 1. The plan, which provides most to those who have been retired longest, will make payments for the rest of their lives to eligible retirees who left the company before June 1, 2003. The company said the increases will range from 10% to 20% for many of those retired before 1993. GE did estimate the overall cost of the enhanced pension plan. Retired GE executives are not included in the plan.
  • Yahoo! IBM Pension and Retirement Issues message board:"Re: Increases in cost of Retiree Medical" by Janet Krueger. Full excerpt: You missed a key word. CAPS. That means IBM has promised to never spend MORE than 7K bucks a year per retiree under the age of 65 or MORE than 3K per 65-or-older retiree.

    IBM never committed to spend that much. If you attempt to parse out how much they spend per retiree from the annual report, it is clear they spend much less.

    But, because of the way Congress wrote the bill that created Medicare part D, IBM gets a huge kickback from the federal government each year because they still provide SOME prescription coverage per retiree. And no, they don't have to return any of the kickback to the retirees.

  • Australian IT: Big Blue eyes on Asia potential. By Glenn Boreham. Excerpt: PEOPLE are a scarce resource for IBM Australia boss Glenn Boreham, who has been hard at work hiring more than 1000 into the local outfit over the past year. Excerpt: A big believer in offshoring basic IT work, which is not surprising since IBM runs many development centres around the globe, Boreham says it is incumbent on businesses and governments seeking to optimise economies to push low-value IT work elsewhere and skill up the workers whose jobs are exported.
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • San Francisco Chronicle: California among worst in providing health insurance through jobs. By Victoria Colliver, Chronicle Staff Writer. Excerpts: Nationwide, about 63 percent of Americans have health policies offered by their employers. But in California, only 55.7 percent of workers were covered through their jobs last year, making it the state with the fifth-lowest level of employer-sponsored coverage, according to the study by the Economic Policy Institute in Washington.

    The number of employers offering health insurance has fallen nationally in recent years due to rising premiums and the diminishing bargaining power of the average worker. Companies have responded to the pressure by requiring employees to pick up a larger portion of the tab, through higher co-payments and monthly contributions, and reducing benefits and coverage for spouses and children. ...

    While low-wage workers had the lowest level of coverage, middle-wage employees in California saw the steepest decline in those offered insurance during the past five years. And more than 600,000 fewer children in California were covered by their parents' insurance last year than in 2000.

    "California is a large bellwether, and it's an important microcosm of the rest of the country," said Jared Bernstein, senior economist with the Economic Policy Institute. "Everything that's going on in the nation is going on in California in a big way - immigration, economic inequities, large employers, small employers. You have highly profitable companies and a lot who are just scrambling to get by."

    "With productivity up and profits through the roof, employers are shedding coverage," he said. "The private sector, even under positive economic conditions, is failing to provide this vital part of our lives."

  • New York Times: Beyond Those Health Care Numbers. By Gregory Mankiw. Excerpts: With the health care system at the center of the political debate, a lot of scary claims are being thrown around. The dangerous ones are not those that are false; watchdogs in the news media are quick to debunk them. Rather, the dangerous ones are those that are true but don’t mean what people think they mean. Here are three of the true but misleading statements about health care that politicians and pundits love to use to frighten the public:
  • The Hill, courtesy of Physicians for a National Health Program: Why would Big Business defend ERISA? Big Business launches healthcare lobby group. By Jeffrey Young. Excerpts: As state legislatures, Congress and the presidential candidates turn up the volume on national healthcare reform, more than 50 of America’s largest corporations and most powerful lobbying organizations are joining forces in a campaign to protect their stake in the status quo. ...

    Under the Employee Retirement Income Security Act of 1974 (ERISA), companies that bear the full costs of their health benefits, as opposed to purchasing an insurance package for their workers, are exempt from state regulations of health insurance. Most large companies offer ERISA-regulated health plans because, among other reasons, this approach permits the companies to offer uniform benefit packages to employees in all 50 states. Otherwise, the firms would have to comply with varying insurance requirements, such as mandates that certain services be covered, from state to state. ...

    Comment: By Don McCanne, MD. Excerpts: What is going on here? Big Business is being strangled with escalating health care costs. General Motors, a member of this coalition, is in the process of dumping its health benefits program into a union controlled VEBA (voluntary employees’ beneficiary association). ...

    An old rule is that when something doesn’t seem right, start by looking at the money involved.

    Obviously, adoption of a national health insurance program would shift the financing of health care to the tax system. But what about an individual mandate to purchase private plans? Private health insurance that provides adequate financial protection is now so expensive that average-income individuals can no longer afford it. An individual mandate would require a massive infusion of taxpayer funds in the form of vouchers or tax credits. No matter the model, any program that is truly universal and is effective in preventing financial barriers to care will require a massive infusion of tax funds.

    Who will pay those taxes? Moderate- and low-income individuals can no longer pay their share. Small businesses are also finding it very difficult to fund health benefits. Innovative tax policies such as taxes on tobacco or on casino gambling can’t even make a dent in the amount needed. Obviously Big Business is looking at this, and what is their perception? ...

    But there’s a much greater issue. Who are the employers insuring? Their own healthy workforce and their young healthy families. They are paying for a large sector of our population that happens to have the least expensive health care needs. Imagine shifting Big Business to a universal program, whether public insurance or mandated private plans, that includes the higher-cost sectors of our population. They do have the legacy costs of their retirees, but that still doesn’t approach the costs of introducing all high-risk individuals into the universal risk pool. ...

    Single payer advocates may claim that we’ll save Big Business money, but if you were a corporate health benefits manager, would you believe it? “I think that we’ll just stick with our self-funded program, thank you.”

  • New York Times: Health Care Excuses. By Paul Krugman. Excerpts: The United States spends far more on health care per person than any other nation. Yet we have lower life expectancy than most other rich countries. Furthermore, every other advanced country provides all its citizens with health insurance; only in America is a large fraction of the population uninsured or underinsured.

    You might think that these facts would make the case for major reform of America’s health care system — reform that would involve, among other things, learning from other countries’ experience — irrefutable. Instead, however, apologists for the status quo offer a barrage of excuses for our system’s miserable performance.

    So I thought it would be useful to offer a catalog of the most commonly heard apologies for American health care, and the reasons they won’t wash.

  • New York Times: Veterans Without Health Care. Excerpts: Although many Americans believe that the nation’s veterans have ready access to health care, that is far from the case. A new study by researchers at the Harvard Medical School has found that millions of veterans and their dependents have no access to care in veterans’ hospitals and clinics and no health insurance to pay for care elsewhere. Their plight represents yet another failure of our disjointed health care system to provide coverage for all Americans.

    The new study, published in the American Journal of Public Health, estimated that in 2004 nearly 1.8 million veterans were uninsured and unable to get care in veterans’ facilities. An additional 3.8 million members of their households faced the same predicament. All told, this group made up roughly 12 percent of the huge population of uninsured Americans.

  • The Journal of County Administration, courtesy of Physicians for a National Health Program: Why a Single-payer Health Care System Would Be Good for Counties. By Paul Clay Sorum, MD; Professor of Medicine and Pediatrics, Albany Medical College, Albany, New York; and Chair, New York Capital District Chapter of Physicians for a National Health Program. Excerpts: “The problem for counties is the soaring health care responsibilities and costs that already consume much of their budgets. County governments have a responsibility for the health of all their residents, especially for those at the margins. Many expend substantial taxpayer dollars on Medicaid, county hospitals, nursing homes, health departments, and other health costs. They provide health insurance for their current employees and retirees. All these costs are rising faster than people’s incomes and property values. County governments desperately need, therefore, a means of fulfilling their responsibilities without causing serious financial problems for county taxpayers.

    The first step of a solution is to recognize the need to provide adequate health coverage to all residents of all counties. Almost all health reformers, interest groups, and politicians agree that everyone should have health insurance. If people do not have health insurance, they do not get preventive care, they delay seeking treatment for illnesses, they use the emergency rooms more frequently than those with insurance,and counties end up paying in different ways for the unpaid and higher bills. The cost of the health forgone because of uninsurance has been estimated at $65 to $130 billion. ...

    Private insurers add enormous costs to our already skyrocketing medical expenditures. These include both insurers’ administrative costs—the salaries of their highly-paid executives and armies of employees, their marketing expenses, and (in the case of for-profit insurers) their profits—and the billing related costs imposed on providers. In California, billing and insurance-related functions for insurers and providers represent 20-22 percent of privately insured spending in California acute care settings. In the US, we spent in 2001 $351 per capita on administrative costs, while the Canadians spent only $54 and the French only $48. ...

    Private health insurers must, according to the logic of the free market,contribute to uninsurance and underinsurance. As long as health insurance is a market commodity, private insurers must promise prospective enrollees as much as possible, but also reduce costs as much as possible, i.e., must spend as little as possible of their premiums on actual health care. Even if individual medical directors and other employees are virtuous and well meaning, they must avoid sick patients and deny care if their companies are to survive in the market.

  • The Huffington Post, courtesy of Physicians for a National Health Program: Why Not Single Payer? Part 2. What's Wrong With The Clinton / Obama / Edwards Health Care Plans. By Miles Mogulescu. Excerpts: In Part 1 of this multi-part Huffpost series on the health care debate, I criticized the leading Democratic candidates — Hillary Clinton, Barack Obama, and John Edwards — for surrendering, without firing a shot, to the insurance and drug companies by opposing universal single payer health care.

    In this second installment, I elaborate on the difference between universal single payer health care and the Clinton/Obama/Edwards universal insurance mandate plans and argue that universal mandates are bad social policy.

    But overall, a universal insurance mandate is bad public policy compared to universal single payer health care. Some of the reasons:

    1. It’s a colossal waste of money. While the administrative cost of Medicare is about 2-3 percent, approximately 30 percent of private insurance premiums go to overhead, profits and executive salaries. ...
    2. Universal mandates punish the middle class who make too much to receive government subsidies, but too little to afford the cost of health insurance that the government will coerce them into buying. ...
    3. The universal mandate plans assume that most people will continue to be covered by their employers and therefore they won’t have to reach into their pockets to pay the full cost of meeting the government mandate. But employer-based health insurance is a dying dinosaur. Each year fewer employers offer insurance. Between 2000 and 2006, the percentage of employers offering some type of health insurance declined from 64.2 percent to 59.7 percent and it continues to decline. ...
    4. Large numbers of people opting for lower-cost, high deductible plans will lead to many middle class people avoiding preventive care and necessary treatment until they are already very sick, leading to worse health outcomes and in the long-run resulting in higher costs from waiting to treat preventable diseases until they become serious. If, after paying thousands of dollars a year in premiums, a middle class family has to pay $2,000-$4,000 in deductibles before their insurance kicks in, many won’t go to the Doctor until it’s an emergency. ...
    5. The strongest argument by progressives who support a universal mandate is that the plan would include a Medicare-like public alternative that would compete with private insurance and, because it would so clearly be superior to private insurance, would eventually evolve into a single payer system. If this plan is modeled on Medicare, it would be a fairly generous plan in which you can choose your own doctor, in which most treatments your doctor recommends are covered, and in which deductibles and co-pays are low. This means that, even after greatly reducing the administrative costs associated with private insurance, it will still be expensive compared to high deductible plans. This leads to “adverse selection.” The young and healthy would opt for the cheaper plans. The people who will buy the Medicare-like plan will be those who think their health care costs are likely to exceed their premiums — in other words, the older and sicker. Far from slowly evolving into a single payer system, as its progressive supporters like Paul Krugman argue, the Medicare-like plan is likely to become more and more expensive as time passes, making it less and less affordable and forcing more and more people back to bare bones private insurance.
  • Motley Fool: Health Insurance for Young Retirees. By Selena Maranjian. Excerpts: Another option is a new one, offered by health-benefits firm Humana. The company recently introduced its "HumanaOne" portfolio of health-insurance plans, targeting groups such as the young, the self-employed, and early retirees. According to the company, the plans offer deductibles ranging from $1,000 to $7,500 for single coverage and from $2,000 to $15,000 for family coverage, with premiums as low as $30 per month for singles.

    Monthly premiums below $100 are certainly cause for celebration, but deductibles of $7,500 are rather ... steep. That translates to $625 per month. Still, that's not too far off from what many folks are paying on their own for their health-insurance plans. If it's the best deal you can find, it might be worth considering, at least to carry you to age 65 and the open arms of Medicare.

  • AARP: Welcome to Ridiculous (video)
New on the Alliance@IBM Site:
  • What Every IBM Employee should know about your Health Care Premium. Excerpts: IBM pays a fixed amount for health care plan premiums for each employee. The amount is a closely guarded secret, but is rumored to be in the neighborhood of $7,500 per single employee per year. It is higher for those with families. This amount will remain unchanged in 2008. In other words, the health care cost to IBM for each employee will show no increase, no change, from 2007 to 2008. IBM cost is not going up. Employee costs will be going up substantially. ...

    In the case of the PPO plan, the benefits and copays associated with the plan are negotiated to match the premium, which is 100% paid by IBM. This PPO premium amount is not set by the negotiated benefits. Rather, it is set by IBM as the same amount as last year. The benefits and copays associated with the PPO plan are then negotiated to match the premium. Because of this, those on the PPO plan will notice their co-pays (especially for prescription drugs), deductibles, and out-of-pocket maximums go up substantially.

  • New Membership Category: IBM employees and retirees have told us during our membership drive that they would like to support the Alliance financially but that $10 a month was too much. The Alliance@IBM understands your situation and is pleased to announce a new category Associate Member for only $5 a month.

    Associate Members will receive the newsletter Think Twice as well as e-mail alerts. Associate Members contribution of $5 a month help sustain and grow the Alliance@IBM financially. Associate Members are not eligible for the benefits and rights of full membership. Join now!

  • More Virtual Strike success, by Lee Conrad. Full excerpt: One month after a virtual protest staged in Second Life with almost 2'000 avatars demonstrating on IBM islands, a new contract with IBM Italy has been signed.

    The new agreement, which still needs to be approved by the IBM Italy workforce, reinstates the performance bonus that was cut unilaterally by IBM Italy management.

    The agreement signed by IBM Italy and the trade union Rappresentanze Sindacali Unitarie (R.S.U.) not only includes the performance bonuses from 2007 up until 2010 but also payments by IBM into a national health insurance fund and also states that negotiations will continue with respect to IBM industrial and business strategies in Italy and the improvement of internal communication policies.

    The situation abruptly improved and negotiation resumed after the former country manager left IBM in the mid of October, who had signed responsible for the pay cuts in the first place. His departure cleared the air and facilitated constructive negotiations between social partners as this could be expected from a professional management of a high-tech company.

    The virtual demonstration organized on 27 September for a whole day has certainly had an impact on the positive development. Almost 2'000 virtual protestors from 30 countries populating IBM premises in Second Life solicited an unprecedented media echo from all over the world, including TV and radio stations, daily news papers, computer and business magazines. The virtual protest had been supported by global unions such as the International and European Metalworkers Federations (IMF and EMF) and UNI Global Union.

    The threat of strike action in the "real world" by the Italian unions after the virtual protest has certainly also helped to break the deadlock. Yet, the impact of this historical action in Second Life must not be underestimated.

  • From the Job Cuts Status & Comments page
    • Comment 11/05/07: To all of you who constantly ask if anyone else has heard about more layoffs..... It will continue forever without a union contract. There is no end in site. You have 2 choices, Unionize or move on. There is no point in asking if there are more layoffs coming. -WhoWantsToWorkLikeThis?-
    • Comment 11/06/07: Austin - Last PBC "2". Severance is 2 weeks for each year, 6 months medical/group life and possible $2500 re-training reimbursement. Very close to that magic age of 55. -ResourceActioned-
    • Comment 11/06/07: ResourceActioned - Did they offer a bridge to retirement if you are close to the magic 30 years? If so, how close? 1 yr? less? -close-to-retirement-also-
    • Comment 11/06/07: Wow! Someone else wrote about being RAd on his birthday. I was RAd on my anniversary with IBM. Sort of weird. -RAdInAustin-
    • Comment 11/06/07: I got RAed but the manager is still pushing me to support my clients till the end. How can I resist? Thanks! -RAedButStillBeingPushed-
    • Comment 11/07/07: To ResourceActioned: "Austin - Last PBC "2". Severance is 2 weeks for each year" I have a question: Is that a max of 26 weeks pay which I have heard, or let's say if you worked 25 years, you are getting 50 weeks pay severance? -Anonymous-
    • Comment 11/07/07: Fear not fellow RA brothers and sisters. The world outside of IBM is much like the commercial on TV for a popular allergy drug. You finally see the light and ask yourself why didn't I leave this company before now. Keep your heads up - move on - get more money - and worry not about IBM - what comes around goes around.... -gonebabybone-
    • Comment 11/07/07: Dear Anon, I got my package today and read it over. The maximum severance is 26 weeks or six months no matter what your length of service, or SO THEY TELL ME. I have only 11 years, so mine is 22 weeks. Health benefits and group life are also 6 months. That's what mine is, anyway. -RAdInAustin-
    • Comment 11/07/07: To Gone Baby Gone...truly I am glad for you, but most folks don't do as well as you are describing. Depending on age, expertise, luck and who you know, your life can be as good or better than before. However, most people, especially those in the IT field, do not find this to be true. They end up contracting, with no benefits and driving 50 miles in heavy traffic each way, no vacation, no nothing. If you are older, late 40's and above, your chances are even slimmer. We are there now. RA'd with only 4 yrs to full retirement. What goes around comes around? I used to believe that, but I am not so sure I believe it anymore. IBM and its ilk have instilled a frightening pessimism in many. I am glad for you, though, and others who find a better life outside Crap Blue... -Respect for the Individual - Yeah Right-
    • Comment 11/07/07: Hey, StillBeingPushed, Geez. One of my colleagues was RAd (me, too, but different situation). She has been trying for years to get a different job within IBM. They always cited "Business Needs" for not letting her move. NOW, she is laid off and they are on her like white on rice to find a different position, calling her every day to ask what she applied for so they can make calls about how great she is. They got angry with her b/c they didn't think she was taking the job hunt seriously enough. They told her that if she wasn't going to search full time she should come back on the phones. Also pointed out to her that if she doesn't pursue another job within IBM they can withdraw the severance offer. QUESTIONS: Does management get some sort of kickback or bonus for getting RAd employees new jobs? Do they get something for targeting people? I am on STD and the minute I come back the 30-day clock starts ticking. -RAdInAustin-
    • Comment 11/07/07: RAedButStillBeingPushed- : Nothing surprises me anymore in big blew..but this is a common dirty tactic IBM management plays. Tell your manager to handle the client if you have no assigned backup support for your clients! What do they pay him/her for? If you are being RA'ed then he/she is saying they can handle the client without you. So challenge the bastard with it! If he/she threatens you with upholding RA severance or anything else then I suggest you tell your local media (radio,newspaper, etc.) about it. They would love to hear it I'm sure. -sby_willie-
    • Comment 11/08/07: To RAedButStillBeingPushed: How heartless your manager is in only being interested in the IBM client you handle and is not giving you the time in trying to find another job in IBM. Your manager should be helping you find another job in IBM during this period. Ask what your manager is doing to help you find another job. That is also their job or at least was.

      So what has totally replaced "respect for the individual"? It's "client is #1, IBM and all it's ways is #2, and you the employee and your not even #3".

      To resist: if you have vacation days left take them NOW! When you are on vacation forget the client. That way your manager has to find a way to handle the client when you are out. If your manager says you can't take vacation days now, take sick days instead. You have good reason to with dealing mentally with this manager. Also be vocal to your colleagues and tell them you situation.

      Keep passing word of this around IBM. Tell your media about your situation. I hope you get another IBM opportunity in this time period. It's real hard now we hear but not impossible. If not, I pray for you that you get another job in a better company that respects you real soon! -Anonymous-

  • General Visitor's Comment page:
    • Comment 11/01/07: Former IBM Slave: Still IBM gets a bargain from your work even if you might have been sleeping :) I don't get upset or envious that more IBMers and ex-IBMers got more $$$ than I did in this settlement or got any money at all. I'm not a greedy bastard like the IBM Board of Directors. executives, and Mr. Palmiselloff. As long as it is coming out of IBM's pocket and into it's employees and ex-employees coffers that is goodness! -IBM_and_O/T-
    • Comment 11/05/07: To: Mistressofthei5 While I'm fairly certain, by what you have said, your parents loved you and took care of you very well; they neglected to teach you anything about unions. You plead ignorance about IT unions existence and what it takes to get a union together in the workplace. Either your parents did you a great disservice, or you were just a spoiled arrogant brat. Maybe you weren't any of these, but your attitude is just as insulting as you claim Alliance@IBM's is to you . You say "Let's face it". The only one that should have faced it was you during your youth. But like many young people of that era (the booming prosperous 1980's) middle class and upper middle class working people thought they had the world by the a**.

      You were dragged into the same illusion along with thousands of other IBM'ers . I'm sorry that happened to you. Looking out for number 1 leaves little time to discover how to survive with a group with the same interests as you. You should have done some soul searching and some home work. I think that you might have been a good organizer, if you had stopped to look around during the good times and said to yourself "This can't last forever". That's why many of us Alliance members started this union. We saw the future coming, and we didn't like what we saw. Take that anyway you wish.. -FYImiss-

    • Comment 11/06/07: For Burlington Vermont employees, we are collecting information on equal pay violations in the State of vermont. Please post your Complaints. Also record complaints with the state of vermont regarding equal pay if you feel you have been discriminated in pay , in the state of Vermont:
      • Understand your rights
      • Register a complaint with the state or a legal representative In the State of Vermont

      Note - Employers cannot require employees to agree not to disclose their wages in 2002 Vermont adopted an equal pay wage non-disclosure agreement law, the Equal Pay Act. IBM cannot make employees agree not to disclose their wages, as a condition of employment.

      Employees are protected and must be paid equal pay for equal work. Employers must pay equal wages to all. What To Do If You Suspect you are not being paid the same as other employees for the same Job? File a complaint with the Vermont state attorney (see address and phone number below) also request the state equal pay brochure

      What does it mean? It is illegal to pay wages to employees, regardless of their sex, who are performing equal work under similar working paid to employees Were you offered a lower starting wage for a job that requires the same or equal skill, effort, and responsibility the job may be substantially equal, but not identical, in skill, effort, did you get a lower starting salary, or did you discover that you are under similar working conditions. and are paid less.

      Were you disciplined or discharged because you disclosed your wage to another employee Decide Whether to File A Charge with the Vermont Attorney General , who has the authority to investigate;

      Employees have the right to equal pay, and to seek civil damages penalties and damages from employers who violate equal work. The equal pay law. Damages are usually double the amount in question. As of July 1, 2005 If you are not paid equal pay for equal work file a complaint with the Vermont state Attorney,(toll free Vermont only) or (802) 828-3657. The office is located in the Pavilion Building, 109 State Street, Montpelier, VT 05609 -Vermont rights on equal pay-

  • Pension Comments page
    • Comment 11/02/07: I have heard horror stories from people who have taken the SS leveling option. If I understand correctly what they told me, the leveling is based upon what the projected SS payout will be. When you actually start to collect SS the actual number is deducted from your pension. In the cases I heard, the projections were always significantly less than the actual. The net result was the pension goes up slightly before SS, and goes to almost nothing after SS starts. I heard of people who then owe IBM to cover their medical insurance because the pension once SS starts is so low. -Anonymous-
    • Comment 11/07/07: Anyone who thinks that IBM's new 401k+ plan is going to allow you to replace what your frozen pension will cost you: THINK TWICE. Unless the stock market and higher risk and yielding funds do extremely well over the next few years and that is a BIG IF, you in all likelihood will not be able to save enough of money to replace benefits lost with a frozen pension with this new 401k plan. But you can be assured of this: IBM is saving money by doing this change (they admit it) and what they are saving is your deferred compensation that was a pension promise they made and now broke to you. -big_freeze&broken promise-
  • Raise and Salary Comments
  • PBC Comments
    • Comment 11/04/07: Prior Yr PBC = 2; This Yr PBC = 3; This Yr Bonus = 0; Prior Yr Bonus = 1200; Message = to: RankingIsTheName - It's been discussed in this forum and confirmed by managers. PBC rankings are already graded on relative contribution in the management teams eye's. You could be doing a bang up job and have your co-workers viewing you as a lead resource. Yet managers rate you as a minimal contributor and bang - you get a 3. My last couple years was only for the money and I was RA'd last summer. Now I realize there is more in life than just IBM money. -RA'd Bear-
    • Comment 11/06/07: Well it is almost that time of year again when we go through the inane practice of trying to convince our managers of how good we were over the past year. When it does not really matter because the ratings were already done and confirmed back in the first week of february. Since that time managers have just been gathering data that will be used to justify the rating they arrived at in February. By the way I once sat in front of a manager who told me that I had the best customer satisfaction on her team and I actually performed more work than anyone on her team but she still rated me a 3. I still have no idea why. -pbc ratings are decided in February-
    • Comment 11/07/07: Prior Yr PBC = 2; This Yr PBC = 2; This Yr Bonus = 2200; Prior Yr Bonus = 2200' Message = It is no secret that in Global Services PBCs are used as a vehicle to suppress American wages and “manage out” American workers. Although HR espouses equal opportunity and diversity, IBM discriminates against American workers. Your customers can all be very happy with your performance but you can still get a poor evaluation due to ‘relative contribution’ when compared to your peers (What is really being compared is your salary relative to a GR salary.) I don’t think this specious reasoning would exist in a customer driven company nor would it exist in a company that valued its employee. Sadly, IGS is almost totally cost driven and it treats its employees as commodities. -Anonymous-
  • International Comments
Vault Message Board Posts:

Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC. A few sample posts follow:

  • "Well..." by "mogrits". Full excerpt: I was in the Retail Practice for several years ending in 2004 when I retired. Still have friends there. In a word - sucks, but if you want the exposure to the IBM "story" and the money is that good for you, why not? Can't say that you'll really learn anything but add to your network. Focus there is still selling IBM Solutions (read Hardware/Software sales). There is certainly opportunity there to move up if you can smooze up to one of the current batch of incompetents at VP/Partner level. Clients are better than IBM deserves considering how often we've raped them with one grand idea after another. As far as West Coast location and having to travel.... that's just part of the requirement anymore for everyone. Senior Consultants are all over the board with experience levels but I'm sure that you will find your niche....heh,heh,heh.
  • "Tuition Reimbursement" by "BleakPeach". Full excerpt: I am looking for an example of a Business Case for Tuition reimbursement. I am an Administrative Assistant at a BAnk and was told I needed one to be considered for Tuition Reimbursement. Funny, if i knew how to wrote a business case i wouldn't need to finish my degree. I think they do this to deter employees at my level. They don't seem to have a problem approving MBA's for managers. Any help out there?
If you hire good people and treat them well, they will try to do a good job. They will stimulate one another by their vigor and example. They will set a fast pace for themselves. Then if they are well led and occasionally inspired, if they understand what the company is trying to do and know they will share in its sucess, they will contribute in a major way. The customer will get the superior service he is looking for. The result is profit to customers, employees, and to stcckholders. —Thomas J. Watson, Jr., from A Business and Its Beliefs: The Ideas That Helped Build IBM.

This site is designed to allow IBM Employees to communicate and share methods of protecting their rights through the establishment of an IBM Employees Labor Union. Section 8(a)(1) of the National Labor Relations Act states it is a violation for Employers to spy on union gatherings, or pretend to spy. For the purpose of the National Labor Relations Act, notice is given that this site and all of its content, messages, communications, or other content is considered to be a union gathering.