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Highlights—August 31, 2013

  • Washington Post: Maximizing shareholder value: The goal that changed corporate America. By Jia Lynn Yang. Excerpts: ENDICOTT, N.Y. — This town in the hills of Upstate New York is best known as the birthplace of IBM, one of the country’s most iconic companies. But there remain only hints of that storied past.

    The main street, once swarming with International Business Machines employees in their signature white shirts and dark suits, is dotted with empty storefronts. During the 1980s, there were 10,000 IBM workers in Endicott. Now, after years of layoffs and jobs shipped overseas, about 700 employees are left.

    Investors in IBM’s shares, by contrast, have fared much better. IBM makes up the biggest portion of the benchmark Dow Jones industrial average and has helped drive that index to record highs. Someone who spent about $16,000 buying 1,000 shares of IBM in 1980 would now be sitting on more than $400,000 worth of stock, a 25-fold return.

    It used to be a given that the interests of corporations and communities such as Endicott were closely aligned. But no more. Across the United States, as companies continue posting record profits, workers face high unemployment and stagnant wages.

    Driving this change is a deep-seated belief that took hold in corporate America a few decades ago and has come to define today’s economy — that a company’s primary purpose is to maximize shareholder value.

    The belief that shareholders come first is not codified by statute. Rather, it was introduced by a handful of free-market academics in the 1970s and then picked up by business leaders and the media until it became an oft-repeated mantra in the corporate world.

    Together with new competition overseas, the pressure to respond to the short-term demands of Wall Street has paved the way for an economy in which companies are increasingly disconnected from the state of the nation, laying off workers in huge waves, keeping average wages low and threatening to move operations abroad in the face of regulations and taxes. ...

    The change can be seen in statements from IBM’s leaders over the years. When he was IBM’s president and chief executive, Thomas J. Watson Jr., son of the company’s founder, spoke explicitly about balancing a company’s interests with the country’s. Current chief executive Virginia Rometty has pledged to follow a plan called the “2015 Road Map” in which the primary goal is to dramatically raise the company’s earnings-per-share figure, a metric favored by Wall Street. ...

    Retired software developer Linda Guyer saw the change over her 29-year career. In the beginning, “it was a wonderful place to work — maybe the way Google is today, really innovative,” said Guyer, 59, who used to work for IBM in Endicott. But after training her overseas replacements and then being pushed into early retirement, Guyer said, “you end up feeling really cynical.” ...

    The mantra that executives and corporate board members have a duty to maximize shareholder value has become so ingrained that many people assume it must be codified somewhere.

    But legal experts say there is no statute in state or federal law requiring corporations and executives to maximize shareholder value. Blair, the professor at Vanderbilt, said that courts in fact allow wide latitude for managers and directors when it comes to business decisions.

    “Let me be clear that this pressure comes from the media, from shareholder advocates and financial institutions in whose direct interest it is for the company to get its share price to go up,” Blair said in testimony before a House hearing in 2008, “and from the self-imposed pressure created by compensation packages that provide enormous potential rewards for directors and managers if stock prices go up.” ...

    Watson published a seminal text in 1963 called “A Business and Its Beliefs: The Ideas that Helped Build IBM.” In it, he wrote that IBM’s philosophy could be contained in three beliefs: One, the most important, was respect for the individual employee; the second, a commitment to customer service; and third, achieving excellence.

    He wrote that balancing profits between the well-being of employees and the nation’s interest is a necessary duty for companies. Watson took pride in the fact that his father avoided layoffs, even through the Great Depression.

    “We acknowledge our obligation as a business institution to help improve the quality of the society we are part of,” read the text of IBM’s corporate values. ...

    In 1994, Gerstner outlined his own set of eight principles, a clear break from the old document. Near the top was that the company’s primary “measures of success” were shareholder value and customer satisfaction. The last one: “We are sensitive to the needs of all employees and to the communities in which we operate.” ...

    One of the most influential changes took place in 1999, when IBM overhauled its pension plan under Gerstner to help cut costs, shocking longtime employees.

    Guyer, the former IBM software developer, said she still remembers the surprise of getting a letter in the mail showing her cash balance for retirement after about two decades at the company: $30,000.

    “It was like, ‘Oh, my God, we’ve been totally ripped off,’ ” she said.

    IBM employees later filed a class-action lawsuit over the pension changes. In 2004, the company agreed to pay $320 million to current and former employees in a settlement. ...

    The company has continued tinkering with its retirement benefits. Late last year, it changed its 401(k) contribution policy so that IBM matches employee savings just once a year rather than throughout the year. The company said it was making the change to stay competitive, but the new plan also means that employees who lose their jobs before a set date in December do not see any of the matching funds. ...

    But as sales flatten, questions have emerged about how the company will hit its ambitious target, aside from slashing jobs.

    “This is a horrible business model,” said Lee Conrad, a coordinator for Alliance@IBM, a group that advocates for company employees. “It’s all about the EPS [earnings per share] and not about growing the business. The customers are being impacted by this when good employees are being cut. It’s just a mess.”

    Guyer said everyone in the office used to have a copy of Watson’s manifesto on IBM’s principles, the one that says “respect for the individual” came first. The company had its own printing press, so it was easy to get the book.

    By the time she left, she did not see the book around as much. She remembers rescuing one from a trash can once. And her copy? It is stored in her garage somewhere, a bittersweet souvenir from her corporate career.

    Selected reader comments follow:

    • For those of you old enough to remember the saying "nobody ever got fired for hiring IBM", the company called IBM today has absolutely nothing in common with that company.

      Today they're a company of below average products, with too many salesmen, and too few people who genuinely know how to solve problems.

      The height of arrogance is their services business, whose business plan is basically "make as much money as possible while giving the customer as little as we legally have to."

      All the while IBM is shedding as many American workers as possible as quickly as possible to move everything overseas. All of this is well documented, BTW.

    • Private union membership was 35% in 1950, and 30% in 1970. Today, some pols say the only thing standing in the way of plentiful jobs is the elimination of the final 7%. Let's remember that organized labor was never a problem for the economy, it was only a problem for corporate stock prices.
    • 8/27/2013 1:06 AM MDT I worked for IBM for 26 years when I left the company in the late 90's. The company was dysfunctional at that point. IBM had turn around and is doing well financially. But IBM is still dysfunctional and become a soulless machine. It;s ledger is broken down to individual employee and woe betide an employee whose expenses is not covered by commensurate revenues He or she is shown the door. Have a meeting and 10 IBM representatives will turn up, each one covering only one part of its product portfolio. Sometime, you have two representatives pitching competing products within the company. The company has turned its sales force into one that have strong survival instinct. After all, the lifespan of a sales person in IBM is 3 months. That is, each sales person is given quarterly quota that must be met to survive into the next quarter or out the door he or she goes. This buries the idea of meeting customer needs and wants - the buzz word of the 90's in IBM.

      I just wonder how long this soulless culture in IBM can sustain the company.

    • The fruit of the Reagan revolution has been a bitter harvest. An almost pagan belief in the "invisible hand" has indeed been invisible for our nation's poor and middle class. Thirty years ago so called conservatives in the White House and the Republican Senate produced policies that transferred tax liabilities from corporations and the wealthy to the public debt. The rest is history. The question for all of us, correctly raised by this column, is when will the public stop this sleepwalk and return to the values of corporate social responsibility and government "Of the People, by the People, for the People"?
    • As an ex-IBMer, I saw first-hand the company's stock-first emphasis. Random layoffs, reduced bonuses, and suppressed salaries. But the worse was IBM's big investments in every country but America. After a $6B investment in Bangalore created a negative backlash, IBM tried to keep the details secret about its huge investment in Shanghai. But the biggest secret within IBM is how many jobs have been transferred from America to other countries. Although I do not know it, it's reported to be staggering. A global company that enjoys the benefits of American law and defense that they really do not pay for. People looking for a real scandal could start with IBM and others like it.
    • Employees assumed many risks that they did not realize they were assuming when they committed to IBM over the long term-- in many cases, staying at a company means forgoing raises you would have received by leaving for another company. You skills become specialized in your position and the company, which are not necessarily applicable outside the company, making you a less marketable commodity over time. The trade off is the expectation that you will be able to stay until retirement and that the company will fulfill its pension obligations. What we see instead is that IBM fired many of its employees at an age where they were essentially unemployable elsewhere, and this was a betrayal of the workforce that had assumed risks for the company.
    • The spike you see in IBM's 1999 earnings was due to a FASB loophole that allowed Big Blue to book "$762 million in pension income, $266 million more than in 1998, and around 7% of its total pretax profit." It was this loophole that allowed Mr. Gerstner's greed to get this best of him (he reneged on 20-year pension promises just so EPS would look better, allowing him to earn nine figures).

      After hearing about the negative impact this change had on one of my coworkers, I bought a plane ticket to Cleveland for the 2000 stockholder meeting and read my 4-minute speech to Mr. Gerstner. To no avail.

      Until company boards force CEOs to take a long-term view of the firm--and factor in employee considerations--thieves like Mr. Gerstner will be extolled as "heroes".

    • Good article--but for the fact that the single most important point is buried in the middle of the article. Tying executive pay to share prices will ALWAYS result in prioritization of shareholder value over all other needs at the company. The reason is that these so-called modern pay structures separate executives (in an invisible yet devastating way) from rank-and-file employees.

      That sense of psychological separation is not healthy. Lacking connection to the mission of the rank-and-file, executives seek identity/sense of purpose through wealth, where they will never find it. Unfortunately, that giant hole where their sense of community used to be has hurts the very people who toil under them and perpetuates the cycle of separation.

    • Thanks to that snake-oil salesman Friedman, and his Chicago-style economist ilk, we have a recession that is technically over while many Americans shake their heads and ask "Are you freaking kidding me?" whenever somebody says that.

      Maximize shareholder value? Just another term for screwing over your employees by giving them as little as you possibly can.

      And this is why my generation, Millennials, seem like we have no loyalty to our employers. Because we DON'T. Why on Earth should we be loyal to executives who will hand us pink slips the moment their quarterly earnings report looks like they won't please the parasites on Wall Street (and thereby threaten their bonuses)?

      We watched as our fathers and mothers worked tirelessly for years - missing dinners, ball games, school plays, dance recitals, vacations, etc., etc. - only to have their pension funds robbed/converted in the name of "shareholder value".

      We watched as corporations decided that providing decent health insurance was not an 'efficient' way of maximizing shareholder value.

      We watched as corporations decided that maximizing shareholder value meant stagnant wages for our parents while the executives saw their compensation levels increase year after year after year.

    • As one who spent 10 years at this company (2 stints over 15 years), I can say "spot on".

      The race to the bottom had been palpable over the past several years at big blue - an erosion of talent, a sole focus on lowering cost and squeezing out profits where none existed, the constant reorganization to make it look like management was proactive, and the outsourcing of everything, internal as well as client services. Things like intelligence and integrity had no place in this sort of environment; only short-term, ego-driven stupidity was rewarded. And yet, the stifling layers of bureaucracy remained (I had 11 bosses in my chain but I was the only billable resource among them, i.e., they were all overhead).

      The story about training your replacement in India is one of the most often-told stories around IBM. The strategy is obviously dead-end to anyone with a hint of vision. Once you've sent all your jobs to India and placed all your reliance on poorly-paid newbies, where do you go?

      Working for a private, employee-owned company is the way to go.

    • Having worked with (not for) IBM folk for over 30 years, I have noticed a definite edge to their employees that wasn't there before. Perhaps it's due to their continuous reorganizing, shuffling the seats on the Titanic, etc but there is definitely not a lot of the whole sale allegiance to the company that had been there in the past.
    • Having worked with (not for) IBM folk for over 30 years, I have noticed a definite edge to their employees that wasn't there before. Probably also had to do with the fact that IBM pay is lousy - it's like they don't respect you unless you have the cajones to quit (which I did, and then they lured me back 3 years later for 20% more than when I quit...)
    • While the article doesn't tell most people what they don't already sense, it puts into black and white how stark the transformation of attitudes and realities has actually been over the last generation in particular. Milton Friedman's shareholder wealth is the only thing that matters motto was the ancestor of last year's Mitt Romney, entitlement-driven, twisting of Obama's words 'you didn't build that' into a self-aggrandizing sneer of contempt for anything approaching IBM's former credo.

      What the President meant, and what IBM used to propound, was that you didn't and couldn't build anything...alone. You had help, you operated under a larger social contract, however informal, and you had obligations back to the society and its laws which enabled you to pursue wealth in the first place.

      Societies and entrepreneurs which remember that tend to be more inclusive, more egalitarian and measure success by what happens to their middle class. We used to be like that. Societies which forget that look like Panama, the Philippines, and South Africa, measuring their success by numbers of new gated communities, HOA easily they can send their kids to private boarding schools for their kids, and the ease with which elites can ensure that politics and politicians serve their interests, rather than those of millions of the have-nots around them.

    • Maximizing shareholder value is a recipe for concentrating wealth in fewer hands. It treats people as if they exist to benefit the economy and not the other way around. While I don't know of a magic formula for reversing the stagnation of wages and the decline of the middle class, I would remedy the ridiculous situation of capital gains being taxed at lower rates than ordinary income. I would also suggest changing the corporate tax code so that membership corporations and employee-owned corporations enjoy more tax advantage. If access to operating capital doesn't become more democratic, the nation will devolve into an oligarchy.
    • Nice article, but the author gets a D- in math. If you bought $16,000 worth of stock in 1980, you received 250 shares of stock, which is 1000 shares today adjusted for stock splits. This is worth about $184,740 at the closing price on 8/26. Still a nice 1054% gain for those 33 years of investing, but less than that cited in the article. Many companies have done better.

      As a shareholder and retired employee, my complaint centers on the billions of dollars of company stock buy-backs. While this does increase the earnings per share over time, it does nothing to increase shareholder value in the company. The executive team at IBM would be better to invest this money in new products and additional employees. Big buy-backs indicate an executive team that lacks imagination, past, present, and future.

      So the executive team also receives a collective D- in running the business, creating jobs, and strengthening the company's future. That said, I doubt any of the Commenters below could have done better. Most of the comments in this forum deserve a grade of "F" for their lack of accuracy, lack of perspective, and just plain stupidity. But I do give them credit for reading the Post. Maybe some hope for the future after all.

    • Oh, and just to reinforce the theme of this article, IBM recently changed its 401(k) plan so that it only pays out the matching portion once per year on December 28, and you must be employed by the firm at that time to collect it. So all the "Resource Actions" ("firings" in IBM-speak) will now happen on December 27. The logic is unassailable, but as diabolical as it comes.
    • I applaud the Post for writing about this and hope that the sale to Jeff Bezos, notorious opponent of taxing passive income (that generated by capital rather than individual effort) will not silence that voice. The distortions caused by corporate welfare in the form of taxpayer subsidies of capital gains, dividends, and corporate profits will be almost impossible to undo without bringing these issues to the attention of American voters. As it is, corporate ownership of media and the electoral process make me despair as to whether there can ever be a democratic counterbalance (one person/one vote) to the power of capital (one dollar/one vote).
    • What is shameful is that American politicians and the whole establishment, certainly including the media, support increasing the high tech visa, H1-B, which is used to transfer American technology and jobs to low wage countries like India and China. IBM is probably the largest user of H1-B which is not an Indian company.

      Not only are Indian 'body shops' allowed to grab a high percentage of the IT jobs in America, but their workers often act as liaison with programmers back in India, laying out job requirements for an American company, and transferring still more jobs back to India, where programmers may be paid 20% or even 10% of what they make here. The body shops seldom allow anyone to immigrate to the US. They are sent back to India with their valuable American knowledge and connections.

    • A company can become despised by the communities in which it operates, it can alienate and demoralize employees, and it can infuriate customers with rampant employee turnover, off-shored workers who don't know their products, and countless other negative side-effects from maximizing THIS QUARTER'S stock price.

      Ten or 12 years ago recruiters were doing all sorts of things to steal talent from IBM. Today all you have to do is get someone to go on LinkedIn and find out who IBM has let go, see if their skills line up, and hire them. I have a significant number of inventions in my current field. Before IBM started slashing employees and turning the place into a revolving door, my talent would have been locked up for another decade or two. When I look at IBMer resumes, that's something I look for -- their patent portfolio. Losing that talent carries a lot of risk, in an industry built on ideas.

      Corporations are made up of people, not capital. You can't toss a stack of $100's on a table and tell them to produce. Sooner or later people have to create, and people have to purchase, and people have to support. Companies like IBM have forgotten that people are how the new products get created.

    • A lot of Americans are getting fed up with the way that corporations are strip-mining America's wealth for the benefit of a few. Look at companies like Costco -- they treat employees far better than does Wal-Mart, and they are growing.

      I wouldn't buy IBM goods or services at this point, and I was an IBMer for a long time. The value proposition of a company like IBM is that you get what you need, when you need it, from people who thoroughly understand both you and your company's needs. That can't be delivered when people are being rolled in and out the door based on how marginally expensive they are.

      Before I was laid off in '09, I'd see the people being let go and the only thing that made sense is some bean counter decided they cost too much. Very highly skilled engineers who developed great products and delivered incredible value to customers. Then I was let go, and I started looking at who followed me. I'd hear about another engineer that I highly respected being laid off and wonder what the heck was going on in Armonk.

      Expertise costs money to develop and retain. I remember a time when the average service length at IBM was probably twice what it is today. The last I heard it was below five years and still falling. People who were eligible for "Quarter Century Club" membership started hiding that fact for fear they'd be added to a list for layoffs.

      IBM is vulnerable to two things, either of which could take the company down. The first is a competitor -- Oracle or HP, for example -- hiring ex-IBMers to deliver the same high-quality goods and services that made IBM great. But the second is more likely -- businesses and workers realizing that only looking to the next quarter is unsustainable. IBM on your resume is no longer valuable when they have the turnover they have. Why put up with it? And that attitude by potential new-hires means IBM is going to have a much harder time attracting talent.

  • Seeking Alpha: IBM - Continued Struggles In The Cloud. Excerpts: IBM famously navigated the transition from mainframes to personal computing, flourishing as it diversified into software, consulting and outsourcing. But Big Blue appears to be struggling with the current shift into cloud computing, as big companies cut IT costs by outsourcing their computing networks. ...

    Chief Executive Ginni Rometty blames the poor economy. But some of the smartest money on Wall Street is betting the company has a bigger problem as major cloud competitors such as Amazon.com and Salesforce.com have performed well thus far in 2013; whereas IBM shares are down 2%. ...

    Keeping profit on an upward trajectory is a struggle when revenue shrinks. Pressing on the accelerator of job cuts and software acquisitions has worked relatively well so far - but can that continue?

    Problems: ...

    • Efficiency Drive: Costs have been cut to the point where some investors feel that research and development has been left underfunded. Efficiency drives, naturally, show diminishing returns. Eliminating trash cans and enacting mandatory furloughs for employees in its hardware division are one-time fixes. Attempting further savings could be counterproductive in the long-term.
    • Altered Income Calculation: IBM uses a different definition of income to inflate its reported income by the way the company accounts for pensions, acquisitions and layoff costs. This has resulted in an investigation by the Securities and Exchange Commission into how the company books revenue for its cloud-based businesses. IBM officials have, thus far, been silent on the issues; which makes it difficult for an outside observer to determine whether there is a problem.
    • Selling Assets To Improve Ratios: Earnings-per-share has increased far faster than revenue at IBM. The reason is that IBM has been aggressively conducting share repurchases. This is a short term fix which rewards shareholders and improves ratios; however, it's just that - short term. Recently IBM sold its low margin hardware business to generate cash in order to buy back shares, pay dividends, and acquire more profitable software. While this isn't necessarily a problem, it's not a long-term solution.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: IBM Changes Medicare-Eligible Retiree Health Care Coverage as of 1/1/14" by "madinpok". Full excerpt: Since the insurance plans offered by Extend Health are all standard Medigap and Medicare Advantage plans, the normal rules for premium pricing and acceptance would apply. Here is a description of what is allowed:
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: IBM Changes Medicare-Eligible Retiree Health Care Coverage as of 1/1/14" by "netmouser". Full excerpt: Beware the first link. There is more to costs of Medigap policies.

    First, I previously posted rates from the rate sheet at Extend Health for Aetna, and it is similar for Humana - the premium goes up every year. So that sounds like age-based rating.

    However, the Horizon Blue Cross Blue Shield of New Jersey's website page for Medigap says that it is community-based rates, so you might think you pay the same premium regardless of age. WRONG. Rates rise by age bands (groupings of 5 years or whatever). My HBCBS agent sent me their rate sheet with the below rate info:
    Age Band - Premium Plan F 2012
    65-69 - 161.11
    70-74 - 209.52
    75-79 - 245.26
    80+ - 260.25

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: IBM Changes Medicare-Eligible Retiree Health Care Coverage as of 1/1/14" by "netmouser". Full excerpt: Per link 2 above, it is important to note that if you do not choose a traditional Medicare Medigap plan in the very short window that you are allowed to do so, you may never be able to buy such a plan in the future.

    Some Plan C Medicare Advantage plans (that replace traditional Medicare) have a very low or zero premium that you may prefer. You do have a co-pay for everything. If you go with a Medicare Advantage plan because you are healthy and have few out-of-pocket-costs, and later get ill as you age, it may be difficult or impossible to get into a different traditional Medigap Plan like Plan F at a later time because there is no longer guaranteed access after the initial enrollment period (except in NY). Once you are out of the initial enrollment period, insurers will rate you and consider past or current health problems that will affect the premium and if they will even sell you a policy or not.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: IBM Changes Medicare-Eligible Retiree Health Care Coverage as of 1/1/14" by "harris_berman". Full excerpt: You've made an excellent point here. Switching from a Medicare Advantage plan to a Medigap plan subjects the applicant to the insurance company's underwriting process. There can be significant surcharges on the premiums if your health is not deemed good/excellent at the time of the application. Also, not all physicians will take payments from Medicare Advantage participants event though the physician takes Medicare assignments.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: IBM Changes Medicare-Eligible Retiree Health Care Coverage as of 1/1/14" by Timothy A Johnson. Full excerpt: It also depends on the state you live in. In Arizona, insurers are no longer allowed to sell attained age policies. (http://www.id.state.az.us/publications/2012_Med_Supp_Premium_Comp.pdf).

    Rates for issue age policies will still go up, but not as rapidly, but you pay more at the beginning, too.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: IBM Changes Medicare-Eligible Retiree Health Care Coverage as of 1/1/14" by "netmouser". Full excerpt: Age-related rating for Medigap will probably go away for all states by 2017, like underwriting if you switch plans after the enrollment period, when states (who regulate Medicare) have to step up to this per the federal government and ACA.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: IBM Changes Medicare-Eligible Retiree Health Care Coverage as of 1/1/14" by Bob Sutton. Full excerpt: Link: http://medicare.gov/find-a-plan/results/medigapresults/medigap-companies-offering-policy.aspx?ref=home (sent via Shareaholic)

    You should see Medigap plan Fs listed on Medicare.gov but one of them is from my fav USAA which I just called.

    Their Medigap plan is similar to Aetna Medicare Integration A in that there are no deductibles or copays for any service and no cap. Use the Medicare.gov Medigap matrix to see the exact F parameters however.

    They currently charge $243/mo/person for this Medigap coverage compared to the $57/mo I pay now for both of us on Medicare; that went up 3.4% this year but is not age based as others are just inflation adjusted each year. If you take that $5832 and subtract the current IBM support for me $3000 ($3500 for others) you get $2832 or $236/mo versus the current $57 or $179 more out of pocket increase.

    Also after you lose IBM health you have 63 days to get a replacement with no physical; if after you are subject to a physical and underwriting which maybe denied. If you drop Medigap for one year and then reinstate it you will be subject to a physical once again so it makes sense to keep coverage as you age.

    These figures will I believe come close to what we will see Oct 1 subject to some variation but as you see and assumed I'm sure already there will be a significant increase to out of pocket to all of us who try to replace the Aetna Medicare Integration A package...good luck to all.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: IBM Changes Medicare-Eligible Retiree Health Care Coverage as of 1/1/14" by Bob Sutton. Full excerpt: Link: I just forwarded the following note to Dr. Rhee via both via email and certified mail:
    Dear Dr. Rhee,

    In your announcement letter you stated "In fact based on our analysis nearly all our retirees will be able to enroll in medical and prescription drug plans that are of equal or better value than the plan options IBM currently offers." Later in the letter you state "All in all, with the IBM aggregate contribution to benefits that is consistent with prior years, this new approach will help make your dollars go further than they do currently".

    I and many other IBM retirees subsequently did not wait to verify these statements until the Oct. 1 with the opening of the Extend Health exchanges and I'd like to share my analysis with both you and your staff.

    I have been retired from IBM since 2002 and provide coverage to my spouse; during that time I first went on Medicare in 2006 and then finally my wife did too in Oct. of 2012. Our current coverage from IBM is the use of IBM Medicare integration Plan A for $57/mo. for both of us. We both pay $137 each for Medicare Part B and D drug plans so our current total out of pocket medical expense is $331/mo.; we also take advantage of the IBM dental plus plan administered from MetLife for $63/mo.

    When my wife entered Medicare we had a significant out of pocket reduction from nearly $800/mo. in early 2012 which started at a little over $200/mo. in 2002; a 400% increase in ten years prior to the reduction to $331/mo. with both of us entered Medicare in Oct. of 2012.

    Therefore the $57/mo. is the benchmark I tried to duplicate using those Medigap F plans listed on Medicare.gov for my area code in Ct. Using that and a certified healthcare adviser from another organization (not Extend Health) several plans were identified clustering around $240/mo./person. I then contacted one of them USAA which I have dealt with personally for decades as a former military officer and they quoted me $243/mo./person for each of us.

    Using that quote total for both of us of $486/mo. extended to $5832/yr minus the (assumed $3000 IBM subsidy (now called a HRA) I currently get) equals $236/mo. versus the current equivalent of $57/mo. out of pocket for an equivalent F Medigap plan from IBM.

    I called MetLife and they do not offer an individual dental plan and have no intention of doing so therefore I must change providers at some (to be determined) rate. BTW the representative had no knowledge of your announcement with subsequent lose of business for MetLife.

    At 10 am in early Oct when I consult with my Extend Health licensed adviser I intend to simply state please identify the $57/mo. F Medigap plan you recommend from your exchange to replace my IBM one and then say the same for my MetLife dental plan at $63/mo. and reference your above quotes.

    Because you are a very successful IBM executive who is also an intelligent and hard working doctor and has taken the Hippocratic oath to protect your patients best interests I'm sure he/she will have no problem meeting my request. BTW I know how smart and hard working doctors are since my daughter is a double board certified doctor who is married to another doctor.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: IBM Changes Medicare-Eligible Retiree Health Care Coverage as of 1/1/14" by "netmouser". Full excerpt: I also emailed him, and the reply was from their special email retiree@us.ibm.com. In case you want to forward your email to them as well. I also copied some executives associated with healthcare in Randy's department as well.

    Part of my question was about how not all plans on Medicare.gov are also on the exchange. That a retiree might find a cheaper plan or a plan with better coverage outside the exchange and therefore not get the best plan at the exchange. ( That does not seem true for me, the plan I want is on the exchange, and for my age is cheaper than my IBM group plan. I am access-only and pay the full premium. It may not be cheaper for someone who is 80.)

    The reply was to the effect that if retirees find better plans outside of the IBM benefits, they can choose them. In today's model, if retirees choose a plan outside of the IBM group plan, they would not receive the company subsidy (or FHA). The same "model" is true with the exchange.

    This does seem to make the brochure claim a bit misleading, "Tip from Dr. Rhee - I don't want you to spend more than you need for your coverage or be over insured".

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: IBM Changes Medicare-Eligible Retiree Health Care Coverage as of 1/1/14" by "netmouser". Full excerpt: My second question to Dr. Rhee was about those with access-only, who have no subsidy/FHA. Why do they have to buy at the exchange, if there is a better plan outside? The brochure says twice "if those with access-only do not enroll with Extend Heath for 2014, they cannot enroll in future years." Pretty scary. Yet, Medicare.gov says nothing about any company exchange set-up when they say you must enroll in a short time frame once it is known a plan is ending. I don't think Medicare cares if you buy through an exchange or directly with an insurer you see elsewhere. See #2 here at this link: http://www.medicare.gov/find-a-plan/staticpages/learn/rights-and-protections.aspx

    It also says at the bottom:

    "It's best to apply for a Medigap policy before your current health coverage has ended. You can apply for a Medigap policy while you are still in your health plan and choose to start your Medigap coverage the day after your health plan coverage ends. This will prevent breaks in your health coverage."

    A disadvantage of going outside the exchange may be you have to submit a lot of paperwork to prove your plan is ending. The exchange this first year may be a convenience worth having.

    But IBM's reasoning - wording - seems wrong and that seems misleading. EH makes money by each purchase, and IBM seems to force access-only retirees through fear to buy through EH which increases EH's profit and at an extra cost to the retiree, not to IBM, if the retiree sees a better plan not on the exchange.

    It would be really ugly if IBM has a contract agreement with EH that for 2014 all retirees would buy from them with some monetary assumptions for EH and IBM.

    I don't yet have a response on this yet.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: IBM Changes Medicare-Eligible Retiree Health Care Coverage as of 1/1/14" by "netmouser". Full excerpt: I got my reply from retiree@us.ibm.com (Dr. K) for question 2 below.

    The reply is in effect saying that IBM is concerned about retirees who are not familiar with Medicare and who may end up not enrolling. And that once the plan they now have is closed, they may end up without coverage. So they are, a bit clumsy in my opinion, saying "enroll or else".

    So they are saying to enroll during open enrollment in October with Extend Health, to make sure you do enroll. Given this, if you see a better plan not on the exchange, EH should be able to advise you on Medicare rules and how to purchase it if they are honest and fair. Their role should be to get you the best plan for you - and access-only retirees have no subsidy or FHA to lose.

    It sounds like a conversation you can have at your appointment should you want to inquire about a plan not on the exchange. And if the person on the phone sounds naive, ask to speak to a senior person - they are deeply experienced in Medicare and as agents selling insurance.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: IBM Changes Medicare-Eligible Retiree Health Care Coverage as of 1/1/14" "rkindt". Full excerpt: What about a retiree that is over 65 but who’s spouse is not yet 65? Do I now need to use Extend Health for my coverage plan and also call Fidelity for her separate coverage? Or do I continue to call Fidelity for coverage each year she is still under 65? Sorry if this was made clear, but I did not receive the EH package. --- In
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: IBM Changes Medicare-Eligible Retiree Health Care Coverage as of 1/1/14" "netmouser". Full excerpt: Anyone under 65 stays "as is", and enroll as you always have for them. They are not part of Extend Health. That said, for anyone else on Medicare, EH says AARP does have a discount for another purchase beyond your own. Something that might be helpful to you if you still keep all the doctors you want to keep with that plan.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: IBM Changes Medicare-Eligible Retiree Health Care Coverage as of 1/1/14" "tested". Full excerpt: Colleagues Am I missing something?

    I live in New York. When I compare Empire Blue Cross Medigap Plan F with 100% on everything with a single high deductible of $2,110 and a monthly premium cost of $79 with other Empire full coverage Plan F with a premium cost of $324 a month and no deductible, the annual savings is approximately $2,940 a year ($245 a month). This is annual savings of $830 above the deductible plan. For those who receive some kind of supplement and therefore reimbursement of deductibles with balance in the account does this mean they have no medical cost for the year except the Medicare Premium? A health care cost of $912 plus $2,110 deductibles = $3024 without drug, dental or eye coverage. In NY, the Humana - Walmart Drug with a high deductible of $325 is $18.50.

    If a spouse is involved than the annual family cost would be an additional $1,170 ($97.50 a month).

    Even without a supplement, it would be better to be self-insured for the high deductible and run the risk that you will spend less than the high deductibles of both plans and use whatever is in the account to cover a spouse's cost

    Is this correct? Am I missing something or failed to consider everything?

    Is there any reason given the above facts, that someone would take another Medigap plan other than the Plan F?

    Thanks. Regards, A Medicare Retiree.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: article on private health exchanges and defined contribution medical" by "harris_berman". Full excerpt: The ONLY way to have access to the IBM HRA is to use Extend Health for the enrollment and administration. "Using your HRA...
    • You pay premiums and out-of-pocket expenses directly. Then submit claims for eligible expenses.
    • You have a choice for reimbursement from your HRA: - Option 1: Auto-Reimbursement (for premiums only): Extend Health processes your claims electronically. - Option 2: Manual Reimbursement (for premiums and out-of-pocket expenses): You submit paper claims to Extend Health.
    • You receive reimbursement (within 1 week is using auto- reimbursement, within 2 weeks if using manual reimbursement)."

    "Eligible Expenses:

    • Premiums for individual Medicare supplemental insurance, such as Medicare Advantage, Medigap, and prescription drug plans that you enroll in through Extend Health.
    • Unreimbursed premiums for Medicare Part B.
    • Premiums for dental and vision plans.
    • Out-of-pocket expenses, including deductibles, coinsurance and co-pays for medical, prescription drug, dental and vision plans."
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: article on private health exchanges and defined contribution medical" by "netmouser". Full excerpt: This is a good article. Extend Heath is just an administrative body that helps someone choose a plan (I wonder if they make money by what they point us to per the article), and administers the IBM subsidy for those who have that. Nothing more. We lose IBM as an advocate for problems with the insurer.

    Extended Heath person said to me that if there is any question on a claim, we have to talk to the insurer, so we are on our own now. They clearly point out that they are not an insurer. I asked what advantage is there for someone without an IBM subsidy to use Extend Health, and he was really at a loss to answer that.

    You don't need them if you don't need help deciding what plan to pick, just go to Medicare.gov. I'm hanging in, not sure why, in case there is some advantage I just don't see now.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: article on private health exchanges and defined contribution medical" by "madinpok". Full excerpt: > The ONLY way to have access to the IBM HRA is to use Extend Health for the enrollment and administration. That's true, but many people (and I believe netmouser is one of them) will get absolutely zero dollars from IBM in the HRA towards their health care expenses because they didn't qualify for the FHA (Future Health Account). So Extend Health may not offer any advantage to them at all.
  • Yahoo! IBM Pension and Retirement Issues message board: "Medigap Not An Option Now?" by "kwilner". Full excerpt: This situation applies to me and my parents. My father is now 88 and is in a home for Alzheimer's and my mother is 79 and also had some medical issues. They have been on Original Medicare for years and they have always had IBM as the Secondary which caps their out of pocket costs each year. Last year it saved my mother over $6000 in nursing home costs because the IBM supplement picked up after the 20th day until day 50.

    Now with this change - if they stay with Original Medicare - they will have no secondary coverage - because they are well past the time when they would be eligible to buy a Medigap plan. Are they going to be forced to go onto Medicare Advantage?

    I think I am in the same boat because I am disabled and get SSD and was placed on Medicare as my primary 2 years ago. I used IBM coverage as secondary - now it is also too late for me to get a Gap plan since I had 6 months to do so.

    Also - when my disability is reviewed in the next year or so - and if they determine I am no longer disabled - I was told I would revert back to the IBM Retiree Medical for non-Medicare retirees - since I am not 65 - I wonder how that will work now - since I have the FHA. This sounds like I have a 3 person nightmare coming up to resolve.

  • Yahoo! IBM Pension and Retirement Issues message board: "Medigap Not An Option Now?" by "netmouser". Full excerpt: As IBM is switching to Extend Health, call them say you are nearing Medicare and wanted to talk to them about some insurance questions. They are insurance agents and I got someone excellent who chatted with me quite a while. I found out that I can leave EH this year to get a lower cost plan not on their exchange and can return next year (I have no FHA / subsidy to lose). It may be anyone can use them, even your parents. They are Medicare experts especially.

    The Extend Health IBM number is: 855-359-7380. Their main number, where the expert I had answered, is: 1-866-322-2824. 8 a.m. - 9 p.m. EST.

    Let us know how it goes. If you don't feel you are getting the right help, let me know (private email) as I have a name.

  • Yahoo! IBM Pension and Retirement Issues message board: "Medigap Not An Option Now?" by "netmouser". Full excerpt: I re-read this, and as your parents are retired from IBM then they, like you, are eligible to buy a new Medigap plan. When a plan stops, like the IBM Medicare supplemental plans are stopping now, there is a 63 day window, I think it is, to buy any new plan you want.

    Call Extend Health and talk to someone at their IBM number: 1-866-322-2824

    Let Extend Health help you figure which plan is best for your parents and for you. If you revert back to IBM's pre-retiree plan, then that is a different question at that time.

  • Yahoo! IBM Pension and Retirement Issues message board: "More info from Extend Health" by "netmouser". Full excerpt: I spoke to a very knowledgeable EH person, got a senior person this call, due to high call volume today he was pulled in. He's been licensed to sell insurance since 1980 and provides assistance to the customer service team normally.
    • EH is an insurance agency, really. Companies were called agencies, then brokerages. Now they are being called exchanges. They get paid like any agency by a commission from insurers. He did not know if IBM paid any fee by contract to manage the IBM subsidy or anything else.
    • Some insurers are not on the exchange, it is the insurer's decision. Example, Blue Cross in Florida was not, and this year is. Horizon Blue Cross NJ has Medicare Advantage on EH but not their Medigap plans.
    • The underwriting problem when switching Medigap plans after open enrollment will go away soon. The states regulate Medigap plans, and by 2017 states have to address the underwriting problem (as was done by Obamacare for non-Medicare plans in 2014 where you can't be denied coverage or have increased premiums for existing health problems).
    • Plan F (full 100% coverage) will likely go away. The fed does not like full coverage and wants plans where people pay something to help contain costs. Plan G may then become the standard (like F but does not pay for Plan B deductible).
    • If you don't have an IBM subsidy to lose, you can choose to not use EH this year - perhaps you want to buy directly from Horizon Blue in NJ that is not on the exchange because the premium is lowest. And you can return to EH next year if you want to.
    • Advantages for buying through EH include they can be a liaison and advocate for you if you have an issue with an insurer. They will join you in a phone call to help resolve things. They can advise of plan changes they are hearing about, and can provide guidance and education on Medicare.
    • This EH person really steered me to other plans that might be better for me than my choice. Not visible on the exchange are the AARP-United Healthcare plans. This is because they honor the exclusive advertising agreement between AARP and UHC. But they do sells their plans at the exchange and the EH person can provide that info to you at your appointment. He did for me today on the 2013 plans.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: More info from Extend Health" by Tim Johnson. Full excerpt: Netmouser, thanks for the excellent info from EH.

    I'm glad they indicated they would advocate for clients if there is an issue. We had one last year when my wife transitioned from her acute care hospital to skilled nursing. Her acute care hospital was also in a group that had a contract with the skilled nursing facility. Unknown to us, in his role in the acute care hospital, he was on the United Healthcare EPO network list, but NOT in his role at the skilled nursing facility.

    His charges went from being covered one day to not covered the next. He also left his group immediately after that, so he only saw my wife one day in the skilled nursing facility. UHC refused to pay for his claim at the skilled nursing facility (which was in the network, by the way). We appealed but were denied.

    I then wrote to IBM HR, describing the situation and that there was no reasonable way we could have known the doctor was no longer in network. Withing a few weeks, UHC paid his claim.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: More info from Extend Health" by Bob Sutton. Full excerpt: My next analysis was directed to group Dental plan coverage replacement which is currently IBM Dental Plus administered by MetLife and cost $63/mo. for both myself and spouse. I drilled down into the MetLife dental org. and finally got a dental rep. I asked her for a quote on an individual dental plan similar to the coverage above and she informed me that MetLife currently is only a group insurer and therefore cannot give me a quote as an individual. I then informed her of the impending transition from group IBM dental to individual coverage through an exchange and she was clueless. I suggested she inform her supervisor that MetLife is about to lose the business of X IBMers 1/1/14 including mine.

    I will now do an analysis on individual plans available from other carriers as well as dental discount plans which is like buying a coupon for discounts with their network of dentists; many seem to be available for under $200 but are unknown as to real value but something to look as yet another alternative to a pure insurance policy purchase.

    It is once again clearly evident that the real impact of this IBM change is the lose of IBM group rates and the lose of options in companies that supply only those group policies; EH exchanges are not an IBM group rate substitute because we lose the leverage of a large employer to get the lowest rates; EH gets commissions from its network agents. It is as if we all never worked for IBM at all now.

    Of course the rejoinder from IBM has already been communicated that their expenses will triple in the next few years and is unsustainable (by them) therefore IBM have transferred that future cost to the individual who will obviously be forced to reduce coverage to compensate for the lose of group rates. I have the highest sympathy for those of diminished mental capacity that are being thrown into this morass by this thoroughly evil company.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: More info from Extend Health" by Bob Sutton. Full excerpt: The least IBM owes its retirees was to act as their ombudsman to get them the lowest possible group rates even if they passed the entire cost to them with no subsidy which will always beat any individual plan they can negotiate. The choice (benefit) that Dr. Rhee is really talking about is selecting a lessor benefit plan with potentially higher costs not a better one at the same cost.

    Even this relatively small IBM benefit has been eliminated under the only strategy IBM has left of relentless and ruthless cost cutting as its core business remains dead in the water relative to revenue growth and is in effect shrinking relative to the industry which continues to grow.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: More info from Extend Health" by "tested". Full excerpt: Has anyone done a cost comparison of purchasing the Plan F Medigap with high deductible ($2,200) verse the Plan F Medigap with full coverage. The cost of such a plan for a 70 year person in NY is $80 a month and therefore the difference in NY numbers seems to be about a $1,000 a year. In two years like auto insurance the money saved on the premium would cover the deductible. This assume that the retired IBM does not have any major medical conditions.

    The real issue for those who receive the $3,000 or $3,500 subsidy is can they use it to cover other medical expenses including the high deductible, dental insurance and its deductible costs and eye glass insurance. If IBM limits a retiree who has a subsidy to premiums only then as a retired employee one should buy the highest premium health insurance that covers everything but balancing it with the cost of dental and eye insurance. Remember whatever is in the account goes back to IBM.

    Has anyone looked at or considered this?

  • Yahoo! IBM Pension and Retirement Issues message board: "Extend Health Exchange" by "hankharty". Full excerpt: Does this new arrangement mean IBM Medicare-eligible retiree medical will now come under individual state insurance regulations?
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Extend Health Exchange" by "netmouser". Full excerpt: Medicare and Medicare plans are regulated by states. Things will change, I'm told, by 2017 when states have to step up to the federal government and address issues like no guaranteed access after the initial enrollment period when you turn 65 (there are exceptions like now for us, when a plan you are in stops). Meaning, you are subject to underwriting and may have higher premiums or rejection based on pre-existing health conditions.
  • Yahoo! IBM Pension and Retirement Issues message board: "Extend Health plan coverage difference" by "netmouser". Full excerpt: Just a few thoughts. It seems that Medigap Plan F is most like the IBM group plan Aetna Traditional Choice Plan A. There are some differences to be aware of. Extend Health can talk to you about all the plan choices.

    While Plan F does have 100% coverage for what Medicare covers, there is no Rx, eye, ear, dental coverage. You can use any practitioner and facility in the USA that accepts Medicare and do not need a referral. But there is crappy emergency coverage outside the USA, so you might purchase travel insurance with evacuation coverage (cheap and easy to get through a travel agent) for any cruise or trip you take. Also, the premium is age based (from what I see) so older people pay more for the same thing.

    If you take no drugs, buying the Walmart-Humana Rx plan ($18.20 in 2013) seems the cheapest plan. Tools let you enter your drugs to find the best plan. Some have a deductible and some do not.

    For dental, I chose to have my dentist evaluate my mouth, and since it is unlikely I'll have any major work he recommended I self insure and not pay a dental plan premium.

    For eyes, the cost of an exam is a little less than the premium for a plan, so I do not buy a plan. Costco is the best eye exam/glasses/customer service place, at a low cost, per Consumer Reports and you do not have to join Costco.

    I bought my glasses with great success over the internet for under $100 at http://www.warbyparker.com/ They mail you sample glasses to tryout for free postage on return, and size your glasses with an internet tool that takes a photo of you and measures the space between your eyes. You can go to one of their few stores. It worked out great.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Medicare Payment Reimbursement" by "tjlavery". Excerpt: In the general package I received from EH, there is a statement that the $900 Medicare reimbursement for eligible retirees (1993? or earlier) will still be the same and paid as before ( thru ACCLARIS I assume) See page 9 of the IBM announcement letter in the package.
  • Yahoo! IBM Pension and Retirement Issues message board: "Extend Health confusion" by "crostafarian". Full excerpt: I am not sure how "Extend Health" affects me. I have not received any correspondence regarding Extend Health. I retired from IBM in 2002. I am now on Medicare Part A. My wife is still employed and we use health coverage through her employer. Will I be REQUIRED to sign up for Extend Health or can I stay where I am? Is there any financial benefit to sign up with "EH" for our situation? Thank you in advance for your help. Gene.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Extend Health confusion" by "netmouser". Full excerpt: You do not use an IBM plan now. That seems to mean you have no IBM subsidy or FHA account money to lose. I'm told that anyone can buy Medicare plans from Extend Health and get the same plans and services as those associated with IBM. The only difference it seems is that those associated with IBM get their subsidy or FHA account if you have that. Does not sound like you do.

    You can ask further questions by:

    • calling Extend Health's IBM number 1-855-359-7380 (TTY: 711) Mon-Fri 8:00am - 9:00pm Eastern
    • by emailing IBM at: retiree@us.ibm.com It took a couple of days to hear back, and now we have the holiday weekend.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Extend Health Exchange" by Bob Sutton. Full excerpt: https://www.humanaonedental.com/connecticut-dental-insurance/dental-insurance-overview.aspx. This is typical of dental plan for the state of Ct that my dentist accepts; both of us currently pay total $63/mo. for IBM Dental Plus.

    As you can see this coverage is for $1000/yr versus the IBM Dental Plus of $2000. Monthly fee is $55.98 plus $35 one time enrollment fee. So you pay about the same for half the coverage in a year or invert and pay twice for the same coverage.

  • The Register Channel (United Kingdom): IBM likes the channel, puts a ring on it. 'We ARE removing channel conflict...in STG anyway'. By Paul Kunert. Excerpts: IBM is getting more touchy with resellers by tackling channel conflict in its hardware biz following a massive slide in server sales during recent quarters.

    The move is being made exclusively in the System & Technology Group (STG) where IBM sales reps will now only be paid incentives for deals closed alongside resellers, not directly by the vendor.

    Previously, the sales rep got paid compensation if the revenue target was hit, irrespective of how that business was transacted. Our sources reckon the changes will be net neutral for Big Blue staffers. ...

    And the company needs partners on side because it has been a rocky road for STG, what with server sales declining by double digit percentages in Q1 and Q2, staff axed from the unit and continued talk about the future ownership of Systems x and BladeCenter server units.

  • Yahoo! IBM Employee Issues message board: "ERP or RRP?" by "sby_willie". Full excerpt: Anyone wish to say what the odds will be if IBM keeps losing key talented employees (or are they truly just resources?) resulting in lower earnings per share, losing customer accounts, disappointing revenues, and share price declining to start an Employee or Resource Retention Plan to retain and/or attract employees?

    The RAs have to end sometime since critical mass sets in eventually.

  • Yahoo! IBM Employee Issues message board: "Re: ERP or RRP?" by "robertpliner". Full excerpt: Has anyone ever conducted a study on how many ra'd IBMers are in key decision making positions with other IT organizations? This would seem to me to be a huge poisonous snake working its way through the industry helping to destroy sales, not that IBM isn't also contributing to this with poor products & services.

    Maybe in the future this would be a classic business school case study on how a once mighty corporation became a house of cards and destroyed itself piecemeal.

  • Yahoo! IBM Employee Issues message board: "Re: ERP or RRP?" by "sandy12533". Full excerpt: Well, I can tell you this much. During my tenure at IBM, I worked on an account (a major soup company) that brought in a new director. She was hell bent on removing any and all vestiges of IBM from the entire company. IN 3 years, she removed the app development team, middleware, Servers, etc. IF it had any type of IBM logo on it, it was GONE! She absolutely detested the IBMers that were on-site and wouldn't even look at you in the hallway. Rumor was that somewhere along the line, a family member was RA-ed from IBM and this was now pay-back time.

    IBM lost millions of dollars when that acct went away. (I was also RA-ed from IBM as a result of lose of this acct).

    I also had a personal friend who was laid off from IBM during the LEAN initiative back in 2007. He landed a mgr job at another company handling infrastructure. IN 5 years, as the hardware came up for replacement, He made sure that EVERY IBM part was removed and replaced with a different brand. He was especially fond of IBMers coming on-site trying to sell him something. He got satisfaction letting them go through the entire presentation, giving them the impressions there was interest, making them come up with proposals, etc. and then just blowing them off.

    Those are only 2 that I know of. I can only imagine how many others are out there with a bad taste in their mouth for the company.

    So, while I do not think there has been any study done, it is happening to the tune of millions of dollars.

  • EE Times: IBM's Last Stand in CPUs? By Rick Merritt. Excerpts: The Open Power Consortium could become IBM's last stand in microprocessors with huge implications for the future of Big Blue.

    Years ago, IBM took a shot at the mainstream PC market when it forged its PowerPC alliance with Motorola. Intel won, and the partners retrenched into the embedded market with the Power.org consortium. These days, their embedded partners -- LSI, Freescale, and others -- are all shifting to ARM cores. ...

    Exacerbating IBM's woes, the company appears to have been designed out of at least two of the three next-generation game consoles where it once provided its Cell multicore processor, ASIC technology, and other goodies. Microsoft's Xbox One and Sony's Playstation 4 both use AMD's cores. The muscular, custom console processors once were significant drivers of process technology and profits for Big Blue.

    Now IBM is left to defend its main stronghold, the high-end server. This, too, is under siege.

    These days the massive scale-out datacenters of web giants such as Amazon, Facebook, Google, and Microsoft are increasingly driving server technology and volumes. The x86 rules here along with an emerging streamlined style of design that's in opposition to the muscular scale-up style IBM practices for its classic customers in banking, government, and scientific markets.

    Even in the Top 500 Supercomputers, IBM's old turf, it is losing ground to scale out designs using Nvidia GPUs paired with racks of x86 systems. Now Intel is coming on strong here with its own multicore Xeon Phi, which some say is offering higher performance, lower cost, and easier development than Nvidia GPUs. ...

    IBM makes its money on software and services, but those products are tied to its Power and proprietary mainframe hardware. If the chips and boxes become unsustainable, IBM could implode into a much smaller IT company that services a diminishing set of very high-end accounts.

  • Huffington Post: Taxpayer Dollars Paid A Third Of Richest Corporate CEOs: Report. By Zach Carter and Katherine Burkhart. Excerpts: More than one-third of the nation's highest-paid CEOs from the past two decades led companies that were subsidized by American taxpayers, according to a report released Wednesday by the Institute for Policy Studies, a liberal think tank.

    "Financial bailouts offer just one example of how a significant number of America's CEO pay leaders owe much of their good fortune to America's taxpayers," reads the report. "Government contracts offer another." ...

    Many of the companies appeared multiple times on the annual top 25 list, with Bank of America appearing 18 times, Citigroup appearing 15 times, while Morgan Stanley and American Express each secured 12 slots. JPMorgan Chase CEO Jamie Dimon has landed on the list twice since the bank received $10 billion under TARP, and American Express CEO Kenneth Chenault has appeared three times since his company accepted $3.4 billion in bailout money. Goldman Sachs received $10 billion under TARP, and made the list seven times in the past two decades, once after receiving its bailout. Washington Mutual and Lehman Brothers, both of which failed in 2008, also appeared on the list, with Leman making eight appearances before filing for bankruptcy. ...

    Banks piled on financial risk in the years leading up to the banking crash, fueling record profits from their investments. Those high profits translated into strong "performance-based" bonuses and stock compensation. But when the risk backfired in 2008, companies either collapsed or were rescued by taxpayers. ...

    "Sky-high CEO pay purportedly reflects the superior value that elite chief executives add to their enterprises and the broader U.S. economy," IPS wrote. "But our analysis reveals widespread poor performance within America's elite CEO circles. Chief executives performing poorly -- and blatantly so -- have consistently populated the ranks of our nation's top-paid CEOs over the last two decades." ...

    About 12 percent of the 500 CEOs listed comprised executives who ran firms that did extensive business with the federal government. IBM landed on the top CEO pay list 11 times, securing about $11 billion in total government contracts during those years, while General Electric appeared on the annual list eight times, with $16.5 billion in contracts. GE also has a large banking wing, which issued more than $70 billion in debt guaranteed by the federal government at the height of the financial crisis, making it one of the biggest beneficiaries of the bank rescue.

  • Glassdoor IBM reviews. Selected reviews follow:
    • Not the company it used to be” Senior Software Engineer (Current Employee), Austin, TX. I have been working at IBM full-time for more than 10 years. Pros: Large company with some sense of security if you are among the top contributors. Benefits aren't bad. Lots of room to move around if you are young and mobile. Ability to work at home. Cons: Resource Actions instead of revenue growth. Benefits degraded from what they used to be. One of the values that attracted me to this company was "Respect for the Individual"; that is LONG GONE and has been replaced by new values centered solely around business results. Pensions are gone for new employees and been replaced by an adequate 401K. Advice to Senior Management: They wouldn't listen anyway, but remember PEOPLE are your most valuable assets. No, I would not recommend this company to a friend.
    • Acquisitions instead of skill development for current employees” Project Manager (Current Employee), Research Triangle Park, NC. I have been working at IBM full-time for more than 10 years. Pros: Global company with a tradition of technical excellence (read the "Cons" for context). Cons: IBM is bent on meeting a 2015 stock increase commitment at all costs. There is no avenue for skill development for current employees that wish to move into roles in emerging areas. Why train someone in analytics or public cloud when you can buy a company and its people? If you join the company, have a full handle of your career path and when you deviate from your goal, move on. There is no loyalty and the golden years of caring about employees is gone for good. Advice to Senior Management: Don't cut your employees; invest in them. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • Pays as little as possible, helps employees as little as possible” Manufacturing Technician (Current Employee), Essex Junction, VT. I have been working at IBM full-time for more than 5 years. Pros: Reasonably good people work at IBM. Cons: Everybody's hands are tied. Nobody can help you. You will be paid as little as possible while your benefits are chipped away. There is a strong sinking ship feeling. Early this year there was a significant layoff. Just a few weeks ago, furlough. This is scary.

      Advice to Senior Management: I don't even know what management can do. Everything is so strongly obfuscated from the employee that you don't know where to turn for help. Your manager has a manager, who has managers in turn of his own. If you have a salary dispute, how far up the chain does the approval have to go before someone can effect change? I have no idea. I'm not even sure who does. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company

    • Once a great company” IT Specialist (Former Employee), Boulder, CO. I worked at IBM full-time for more than 10 years. Pros: Not many. OK if you can find a place to hide. Cons: Too much mandatory overtime, even when there is no work. This leads in unethical behavior. Not willing to pay for even the most basic employee expenses. No raises, no bonuses, fear of constant layoffs. Advice to Senior Management: Too late, get rid of management. No, I would not recommend this company to a friend.
    • A solid company, but impersonal” Senior Software Developer (Former Employee), Boulder, CO. I worked at IBM full-time for more than 10 years. Pros: Very well respected in the industry. Solid financial results allows freedom to do new things. Almost universal work from home policy which allows employees to spend time with family. Cons: Work from home policy means that most teams are geographically dispersed and in some cases you may never even meet your boss or coworkers in person. Policy decisions are often made by the institution - i.e. no one stands behind them so they cannot be challenged or discussed. The power is all in management—the workers are just resources. Yearly layoff policy trims thousands off the payroll silently on a regular basis. Q) "Where's Joe?" A) "Didn't you hear? He left the company in the last Resource Action." Advice to Senior Management: Listen to the technical experts more. Make decisions openly and allow them to be discussed. Make the Resource Actions more public and give the employees more control of their situation. The way it is now, the employees are always concerned they won't last through the year. Yes, I would recommend this company to a friend. I'm optimistic about the outlook for this company.
    • Learned a lot, but career options were limited.” Advisory Hardware Engineer (Former Employee), Research Triangle Park, NC. I worked at IBM full-time for more than 10 years. Pros: There are a lot of smart people at IBM. Management is good, not great. It is a great place to be part of a successful team. Cons: Lots of big company issues including outsourcing and shutting down businesses that are profitable, but not profitable enough! You do not feel like anyone outside of your immediate colleagues cares about you. Advice to Senior Management: Re-learn how to shift your talented workforce from your struggling businesses to your new, strategic businesses. Don't waste the talent that you have. And don't assume that old dogs can't learn new tricks. And stop outsourcing with reckless abandon. Your long term future is looking dim at this rate. Yes, I would recommend this company to a friend.
    • IBM: A brand but not more than it” Systems Engineer (Current Employee), Pune (India). I have been working at IBM full-time for more than a year. Pros: Brand name in the market that can be used to switch to a better company. Cons: Full of sickening projects which involves huge degree of ill politics, least recognition of talent but other irrelevant things like buttering, flaunting to work. Most of the good resources end up leaving IBM because of this and also because of least salary satisfaction. Advice to Senior Management: Please do pay some serious efforts to take up the name of IBM rather playing ill politics and staying back just the same for years.
    • "Used tU” Manager (Current Employee) Durham, NC. I have been working at IBM full-time for more than 10 years. Pros: Still room to grow and move around the company. Work/life balance is okay despite the long hours as there is lots of flexibility. Cons: Gradually degrading benefits; job security is low and the same is true for morale; use of cheap overseas employees just for the bottom line hurts/will hurt the company in the long run; workload is increasing as US staff is shrinking, but workload stays the same. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • Megacorporation Blues” Systems Administrator (Former Employee), San Francisco, CA. I worked at IBM full-time for more than 10 years. Pros: Good salary. Front-line technology in many areas. Perks, social clubs, excellent benefits. Cons: Intense pressure to make bricks without straw. Low morale among first-line staff, as there is always far too much to do but no help on the horizon. Loyalty is to the stockholders, not to the employees. Advice to Senior Management: If you keep terminating employees, some day there won't be anyone left to do the work. Yes, I would recommend this company to a friend
    • Not your father's IBM” Software Engineer (Current Employee), Austin, TX. I have been working at IBM full-time for more than 10 years. Pros: - Flexible hours and work from home; - Good team. Access to lots of experts; - Lots of tools (although some a little clunky); - Get to work on new technology. Always learning something new; - Enjoyed most of my time working here, but things are changing.

      Cons: - Dwindling US work force; - Hesitancy of management to challenge poor direction; - US employee is led to feel like liability rather than an asset; - Poor rating system. Stellar performances can still receive average ratings based on nebulous criteria. Analogy--A 98% can be an "A" or a "C" depending on who is sitting next to you; - Morale is in the tank; - The dogged focus on the 2015 Roadmap of $20 EPS is proving the downfall of this company.

      Advice to Senior Management: The perception of priority from the onlooker is: 1. Stock price, 2. Customers, 3. (and last) Employee.

      Unfortunately, 1 is being achieved by getting rid of 3. While there is lip-service to 2, you need 3 to satisfy 2. Read financial articles on IBM EPS goal and customer failures. Financial gurus are seeing right through it, and churn in workforce is affecting customer satisfaction. Please set aside financial engineering and get back to product engineering.

      IBM does not get it that the US employee brings something special to the table. The feeling is that the US employee is a liability, not an asset. Yes, it may cost a little more than other places, but you get a lot of bang for the buck. The company may come to realize this only after it is too late.

      Amazon, Google, etc., are poaching some of the top talent away because they value trained US professionals. IBM here has not hired any full-time trained professionals in years in our area.

      Give the US employee a reason to believe that he/she is a part of the solution, not the problem.

      No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.

    • IBM now stands for 'Incredibly Bad Morale' or 'I'm By Myself'. What was a great place to work is now sad and dysfunctional.” Senior Managing Consultant (Current Employee). I have been working at IBM full-time for more than 10 years. Pros: Still some very bright and talented people left. Have flexibility in setting work hours as long as salaried workers do 20% overtime.

      Cons: Teammates are now considered competition due to regular layoffs. Managers will tell you that upper management doesn't care about us. Little risk taking or attempts at improving things because most think it is fruitless.

      Advice to Senior Management: Hire managers that have actually done the work of the people they are "managing" and give them the autonomy to do what's right, not what saves shareholders $.02 per quarter. Reviewing pipeline spreadsheets is not managing. Return to investing in employees instead of buying and selling them. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.

    • Basically just a group of smart people” Software Developer Intern (Former Employee), Raleigh, NC. I worked at IBM as an intern for less than a year. Pros: Relaxed atmosphere full of people dedicated to their work. IBM only seems to employ people who are very enthusiastic about their jobs and management never needs to really step in and get everyone on the same track; they all instinctively do that themselves. Cons: The large size is intimidating and often doing your work requires hunting down someone, possibly across the globe, with that one vital piece of information you need to continue your work. Advice to Senior Management: Not every product needs the word "Smarter" in front of it. Yes, I would recommend this company to a friend.
    • Poor leadership vision and bad internal climate; good opportunities to grow technical skills” Systems Analyst (Current Employee), Hortolândia (Brazil). I have been working at IBM full-time for more than 8 years. Pros: Outside North America, there is some job stability A lot of opportunity to get technical experience and training; it's all there for you. Probably the best workplace to improve professional skills and move somewhere else. It's like a big school that pays you as long as you put up with it.

      Cons: Job-life balance promises are sort of a lie. Promotes brown-nosed yes-sayer who put up with anything, never the most competent. Bureaucracy everywhere. Pays below average.

      Advice to Senior Management: Employees are not allowed to criticize management decisions, no matter how stupid they are. This means the company is just as smart as their upper management, not as smart as their whole workforce. IBM spends energy on bureaucracy and the useless (remember Second Life?). No, I would not recommend this company to a friend.

    • Senior Manager” Anonymous Employee (Former Employee). I worked at IBM full-time for more than 8 years. Pros: A Mostly stable environment. Nice work facilities if you cannot work from home. Cons: Routine changes in direction/priorities. 10% annual shedding of resources (it's true). No longer a US company. IBM has sold its soul. Advice to Senior Management: Bring the company and jobs back to the US. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • Wonderful Company” Program Manager (Current Employee), Atlanta, GA. I have been working at IBM as a contractor for less than a year. Pros: Best people in the world! Cons: Hard to steer a ship so large! Advice to Senior Management: Spin off a few divisions? Yes, I would recommend this company to a friend. I'm optimistic about the outlook for this company.
    • A good start, but not a place to stay forever” Anonymous Employee (Former Employee). I worked at IBM full-time for more than a year. Pros: It's a nice company to start your career; it has a wide range of positions and departments. And you get to overlook the whole IT market from an interesting perspective. There's always some research going around. The collaboration tools work most of the time, and the people are nice.

      Cons: You wonder how can some critical business things be done manually or in an Excel sheet in an technology company. Depending on the department you are, even if you do well on performance evaluations, you're still stuck on your career with nowhere to go and no raise in salary. First line managers are mostly unprepared for the position they're in. Salaries are way below market and benefits like home office, is arbitrary on some departments.

      Advice to Senior Management: Pay more attention to the good employees you have, value them, and offer them benefits because if you don't, you'll loose them. Yes, I would recommend this company to a friend. I'm not optimistic about the outlook for this company.

    • Bad place to work” Advisory Software Engineer (Former Employee), Durham, NC. I worked at IBM full-time for more than 10 years. Pros: Liberal policies, no retributions (reportedly), LGBT rights, adoption help, special needs insurance (though they haven't increased the funding in 15 years), software companies are making a lot of profit (just not sharing it with employees), $35/day per diem (cheap).

      Cons: Benefits are horrible. Max out of pockets to $24,000+ for families and even in network $12,400+ for individuals. (Pray you don't get sick or have a chronic disease). $1,100/individual deductibles on top of $,$$$ premiums for families. Dental is worse.

      Every benefit change in the past 10 years has been for the worse for employees. Minimum hours per week 44; few eat lunch in cafeterias. Morale is at the bottom. IBM wants older people to leave, whom cost IBM more. Everyone wants to be a manager thinking they'll be safe.

      I would not recommend IBM to anyone until they eliminate the $24K risk.

      Advice to Senior Management: Be bold! Fight for the employees. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.

    • IBM Services Center - Lansing (formerly Michigan Delivery Center)” Applications Developer (Current Employee), East Lansing, MI. I have been working at IBM full-time for more than a year. Pros: They'll hire just about anyone who has the word "Java" on their resume. Fairly laid back atmosphere. Great for a first job out of college. Chance to get real industry experience with Fortune 500 companies. Great benefits on day 1. Cons: Lowest salaries in the field. Overtime exempt. Clients can be downright abusive (in terms of work/life balance) and give impossible deadlines. I know people who have been flown to a client site and worked 10+ hour days every day for a month, and only got to fly back for a day and a half to see their families. Advice to Senior Management: Stand up for your employees. Don't let clients bully them into burning themselves out. Yes, I would recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • IBM does not adhere to the policies toward their employees that they advertise as a caring place to be employed”. Financial Analyst (Former Employee), Rochester, MN. I worked at IBM full-time for more than 5 years. Pros: Meet many people from diverse backgrounds. Cons: No pay increases over 7 years employment; lack of respect toward people over 40; lack of opportunity to advance unless you are a manager's favorite. Advice to Senior Management: Remember what the company was founded on: taking care of the people and doing what brought success the first hundred years; IT WAS not outsourcing everything just to make a profit. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
    • IBM yuck” Anonymous Employee (Former Employee). I worked at IBM for more than 3 years. Pros: There is not much good about working for IBM. However, who you work with are good people and there are a lot of very good techs. Cons: IBM is the cheapest company you will ever work for. E.g. if you want a keyboard and mouse at your desk you have to buy your own. The managements' highest goal is to keep their bonuses, and they achieve this by being unethical in how they treat their employees and customers. Advice to Senior Management: Start being ethical in your business practice. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
  • Glassdoor IBM Canada reviews
    • Time to bail?” Anonymous Employee (Current Employee). I have been working at IBM Canada full-time for more than 10 years. Pros: Large company with opportunity to develop your career given the right circumstances. Cons: Typical Canadian management; too busy looking up the management chain to actually run the business. For a technical company management is not technical and seems to be afraid of leveraging new technology. They work on the premise that "everything is fine the way it is" rather then trying to improve the business. They are intimidated by intelligent staff. Advice to Senior Management: Stop promoting the "yes" men and women, and start promoting or at least listening to your experts. No, I would not recommend this company to a friend. I'm not optimistic about the outlook for this company.
  • Alliance for Retired Americans Friday Alert. This week's headlines:
    • Executive Director Ed Coyle Announces His Intention to Retire
    • Retirees Celebrate Labor Day
    • Treasury Secretary Jack Lew: Congress Must Raise Debt Ceiling by Mid-October
    • U.S. Justice Department Sues Texas over Voter ID Law
    • Appeals Court Rules in Favor of UMWA Retirees
    • Nevada Alliance Holds its Convention
  • New York Times: Set Back by Recession, and Shut Out of Rebound. By Michael Winerip. Excerpts: In September 2012, it appeared that the world was John Fugazzie’s frozen oyster. He was in charge of dairy and frozen foods for the A.&P. supermarket chain, making $125,000 a year. ...

    Lately Mr. Fugazzie has been feeling a little weary and beat down. One morning last October, just before his 57th birthday, he was laid off and, carrying a box of belongings from his office, driven home in a car service hired by the company. In the 10 months since, he has applied for more than 400 positions and had 10 interviews, but still has no job.

    He and his family are living in his 88-year-old mother’s home, and last month he awoke at 4:30 a.m., sweating profusely, in the midst of a heart attack.

    As happens to many Americans, when he lost his job, he lost his health insurance. He now owes $171,569.44 for the six nights he spent at the hospital. ...

    The re-employment rate for 55- to 64-year-olds is 47 percent and 24 percent for those over 65, compared with 62 percent for 20- to 54-year-olds. And finding another job takes far longer: 46 weeks for boomers, compared with 20 weeks for 16- to 24-year-olds.

    Nor are those who believe age discrimination was a factor likely to have much luck in court. In 2009, just as the economy was hitting rock-bottom, the Supreme Court issued a ruling that toughened the standard for proving bias. ...

    Since the Supreme Court ruling, most lawyers won’t even take age discrimination cases. In an effort to change that, a bill has been filed in the Senate each of the past several years, aimed at making it easier to bring a discrimination lawsuit.

  • Smirking Chimp: Americans Are Working Too Damn Hard. By Laura Flanders. Excerpts: I know, it’s cheeky to talk about time off. Unemployment is high and jobs are scarce. Americans are supposed to feel grateful to have paid work at all. A vacation too? We’re so busy tightening our belts and “leaning in” that even when we do get vacation days at work, we often skip them. Admit it - did you feel guilty taking every last day this summer, or (more likely) guilty that you didn't?

    A study by a workforce consulting firm in 2011 reported that 70 percent of employees said they were leaving vacation days on the table. The vast majority of workers, meanwhile, would love some time off, but ours is the last rich country in the world where offering paid time off to workers is optional.

    Americans work almost five weeks more a year than our contemporaries in Europe. Family leave is still unpaid under federal law, and the big bosses’ lobbies are working like mad to scuttle paid sick days legislation coming out of states and cities.

New on the Alliance@IBM Site

Job Cut Reports

  • Comment 08/26/13: Regarding the health care changes...what about retirees that are not eligible for Medicare? -anonymous-
  • Comment 08/28/13: The medical plan changes are only for Medicare plans which are transitioning to a private exchange. Early retirees have no change (at this time). -anonymous-
  • Comment 08/28/13: The more I read about IBM executives past and present, and the travesty of the cash value pension snafu, the more stunned I am at how stupid I was to not see any of it sooner. The blue koolaid apparently worked quite well on me. I knew there are always greedy people in business, but in the aforementioned intoxication, I thought that the hallowed Business Conduct Guidelines that I wasted far too much time reading year after year implied integrity at the executive level toward those actually doing the work. In fact, they never cared about anything but lining their own pockets. What utterly heartless, pathetic, and disgusting poster children for exactly what's wrong with the United States. May a new hell be created for them to rot in. -dismayed-
  • Comment 08/28/13: AIS must be in trouble in the third quarter. Got my "Call to Action" notice which included the statement "If you have not been averaging at least 44 billable hours each week for the past four weeks, please get to 44+ this week. At a minimum, we need you to record 30 additional billable hours above what you have already forecast between now and the end of the quarter (Sept 27)". -Blue Flu Coming On-
  • Comment 08/30/13: @Blue Flu Coming On. You are required to work 10% overtime? You bill for time while on lunch? This harks back to when sales figures were computed on booked deals, which was not the same as when the deal actually closed and revenue realized. For example, IBM crows about it's recent $1B DHS cloud deal, without saying that the contract is over ten years so actual per year revenue is $100M -PlayingNumbers-
  • Send the RA pack to ibmunionalliance@gmail.com so we can validate and count the number of workers fired. Names are confidential.

How Does the Furlough Affect You & Your family

  • Comment 08/30/13: Remember furloughed IBMers do not return to work and work extra hours to catch up. If your work was important to IBM you would not have been furloughed. If this furlough is considered successful then you can expect more of it. -Anonymous-
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
Minimize
  • Kaiser Health News: Bare Bones Health Plans Expected To Survive Health Law. By Jay Hancock and Julie Appleby. Excerpts: Consumer Reports calls it “junk health insurance.” A California regulator described them as “skeleton policies.” To an expert from the American Cancer Society, they “are a perfect example of why health care reform is so crucial.”

    They are bare-bones health plans, and critics say they could leave consumers who become seriously ill on the hook for tens of thousands of dollars in medical costs. The Affordable Care Act was supposed to do away with them.

    “The good news is that these plans will be a thing of the past in 2014,” Steve Larsen, then a high-ranking Department of Health and Human Services official, told reporters two years ago.

    The law did outlaw so-called "mini-med" plans, which cap annual benefits at, say, $2,000 even though the average hospital stay costs $14,000. But now a new type of bare-bones policy may take their place.

    Consumer advocates, employers and insurers say that unless regulators move to block them at the last minute, plans with limited benefits may continue to be offered by some large businesses, especially those with low-paid workers such as restaurant chains and retailers. ...

    Asked whether Cigna will offer new versions next year, a company spokesman said, "We are currently evaluating the types of plan designs that will meet the needs of employers and employees." Aetna spokesman Matt Wiggin said the insurer is "still assessing" customer needs.

    Skimpy insurance under the Affordable Care Act won’t be quite the same as it is now. Under the new rules, capping the dollar value of annual benefits isn't allowed, but excluding entire categories from coverage - such as hospital stays - is permitted, say benefit consultants. That's another way of keeping costs down.

  • New York Times: How to Charge $546 for Six Liters of Saltwater. By Nina Bernstein. Excerpts: It is one of the most common components of emergency medicine: an intravenous bag of sterile saltwater.

    Luckily for anyone who has ever needed an IV bag to replenish lost fluids or to receive medication, it is also one of the least expensive. The average manufacturer’s price, according to government data, has fluctuated in recent years from 44 cents to $1.

    Yet there is nothing either cheap or simple about its ultimate cost, as I learned when I tried to trace the commercial path of IV bags from the factory to the veins of more than 100 patients struck by a May 2012 outbreak of food poisoning in upstate New York.

    Some of the patients’ bills would later include markups of 100 to 200 times the manufacturer’s price, not counting separate charges for “IV administration.” And on other bills, a bundled charge for “IV therapy” was almost 1,000 times the official cost of the solution

    It is no secret that medical care in the United States is overpriced. But as the tale of the humble IV bag shows all too clearly, it is secrecy that helps keep prices high: hidden in the underbrush of transactions among multiple buyers and sellers, and in the hieroglyphics of hospital bills.

    At every step from manufacturer to patient, there are confidential deals among the major players, including drug companies, purchasing organizations and distributors, and insurers. These deals so obscure prices and profits that even participants cannot say what the simplest component of care actually costs, let alone what it should cost.

    And that leaves taxpayers and patients alike with an inflated bottom line and little or no way to challenge it.

  • The Commonwealth Fund: Wielding the Carrot and the Stick: How to Move the U.S. Health Care System Away from Fee-for-Service Payment. By Stuart Guterman. Excerpts: The U.S. health system is plagued by fragmented care, variable quality, and high and rapidly growing costs. Underlying these problems is the prevalence of fee-for-service payment, in which health care providers are paid per visit, test, or procedure. Not only does fee-for-service payment fail to provide incentives for efficiency, quality, or outcomes, it encourages the provision of unnecessary care and often discourages coordination of care and management of patients across providers and settings.

    A broad range of policy experts have called for the adoption of alternative approaches to paying for health care. But how do we move our $2.9 trillion health system from fee-for-service payment to other approaches?

    Three elements are key to successfully moving toward alternative payment approaches:

    • The carrot—Implement policies that reward high performance and encourage changes in the organization and delivery of health care.
    • The stick—Reduce and eventually eliminate the option of remaining in the fee-for-service payment system.
    • The muscle—Coordinate policies across public programs and private payers so they are applied consistently and their impact is maximized.
  • Washington Post: Health-care costs are a civil rights issue. By Matt Miller. Excerpts: In 1963, when Martin Luther King, Jr. gave his “I Have A Dream” speech, America spent 5.5 percent of gross domestic product on health care. Today we spend 18 percent, while most other wealthy nations spend 10 to 12 percent through systems that deliver equal or better health outcomes. In a $16 trillion economy, our excess health-care spending — that is, money we devote to health care that plainly isn’t needed for quality care — thus comes to a staggering $1 trillion a year.

    Call this a trillion-dollar “diversion” or “opportunity cost.” Call it a “rip-off.” Or even “theft.” Whatever the label, the point is the same: No leader commemorating the March on Washington and urging the nation to pursue our unfinished progressive agenda will draw a link between our out-of-control medical-industrial complex and the price of justice. They should. ...

    Average wages have been stagnant for years, in part because in our employer-based health-care system, soaring health-care costs have devoured all the cash businesses might otherwise have had available to give workers a raise.

    “America has given the Negro people a bad check,” King said in 1963, “a check which has come back marked ‘insufficient funds.’ But we refuse to believe that the bank of justice is bankrupt. We refuse to believe that there are insufficient funds in the great vaults of opportunity of this nation.”

    What would King have made of this needless overpayment of a trillion dollars a year? A trillion dollars not available for higher wages and better teachers. A trillion dollars we can’t use for gleaming new infrastructure and world-class preschools. A trillion dollars that could dramatically lower the cost of college for every young American working to build a better future.

    If the mob told us to hand over a trillion a year in protection money, we’d call the police. If a conquering foreign power tried to extract a trillion a year in tribute, we’d revolt.

    But when respected doctors in white coats and local worthies on hospital boards essentially hold America up for the same aggregate sum, we say nothing. We do nothing.

News and Opinion Concerning the "War on the Middle Class"
Minimize "It is a restatement of laissez-faire-let things take their natural course without government interference. If people manage to become prosperous, good. If they starve, or have no place to live, or no money to pay medical bills, they have only themselves to blame; it is not the responsibility of society. We mustn't make people dependent on government- it is bad for them, the argument goes. Better hunger than dependency, better sickness than dependency."

"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.

  • New York Times op-ed: We’re All Still Hostages to the Big Banks. By Anat R. Admati. Excerpts: Nearly five years after the bankruptcy of Lehman Brothers touched off a global financial crisis, we are no safer. Huge, complex and opaque banks continue to take enormous risks that endanger the economy. From Washington to Berlin, banking lobbyists have blocked essential reforms at every turn. Their efforts at obfuscation and influence-buying are no surprise. What’s shameful is how easily our leaders have caved in, and how quickly the lessons of the crisis have been forgotten.

    We will never have a safe and healthy global financial system until banks are forced to rely much more on money from their owners and shareholders to finance their loans and investments. Forget all the jargon, and just focus on this simple rule. ...

    From Wall Street to the City of London comes the same wailing: requiring banks to rely less on borrowing will hurt their ability to lend to companies and individuals. These bankers falsely imply that capital (unborrowed money) is idle cash set aside in a vault. In fact, they want to keep placing new bets at the poker table — while putting taxpayers at risk. ...

    Implicit guarantees of government support perversely encouraged banks to borrow, take risk and become “too big to fail.” Recent scandals — JPMorgan’s $6 billion London trading loss, an HSBC money laundering scandal that resulted in a $1.9 billion settlement, and inappropriate sales of credit-card protection insurance that resulted, on Thursday, in a $2 billion settlement by British banks — suggest that the largest banks are also too big to manage, control and regulate. ...

    Ben S. Bernanke, chairman of the Federal Reserve, has acknowledged that the “too big to fail” problem has not been solved, but the Fed counterproductively allows most large banks to make payouts to their shareholders, repeating some of the Fed’s most obvious mistakes in the run-up to the crisis. Its stress tests fail to consider the collateral damage of banks’ distress. They are a charade.

  • Smirking Chimp: It’s Time For The Masses To Be Represented In Congress. By Thom Hartmann. Excerpts: This won’t come as a surprise to many of you, but unless you are an bankster or a billionaire, you’re not being represented in the United States Senate. According to a new study published in Political Research Quarterly, Senators in the last five Congresses have consistently voted to benefit their wealthy constituents. And, those votes virtually ignored the political will of everyone except those at the top. ...

    Of course, there are a few Senators that constantly work to give low-income and middle class voters a voice in Congress, but the vast majority of our lawmakers ignore those of us who can’t contribute huge sums to their campaigns. We’ve known it for some time, but now we have hard evidence to show how important it is to get money out of politics. If we ever want to be represented by our elected leaders, let’s overturn Citizens United and return the power to the public masses – where it belongs.

  • New York Times editorial: Mr. Boehner Wants a Debt Fight. Excerpts: Just when Speaker John Boehner should be warning his members not to use the debt ceiling as a threat, he is doing exactly the opposite. Instead of reminding lawmakers that they are obligated to pay for the debts they voted to incur, he is once again waving the dull saber of default.

    “It may be unfair, but what I’m trying to do here is to leverage the political process to produce more change than what it would produce if left to its own devices,” he said. “We’re going to have a whale of a fight.”

    It’s more than “unfair” to wage this fight again; it’s a reckless abdication of Mr. Boehner’s responsibility to guide House Republicans away from the brink. Too many Tea Party members of the House have spread the dangerous falsehood that a default would be of little consequence, that it would merely shake up Washington a bit and cut the deficit, which is already declining. One of them, Ted Yoho of Florida, recently said that a default would actually raise the government’s credit rating.

    No responsible economist or business leader agrees with that. In 2011, the credit rating of the United States declined when Republicans merely threatened not to raise the limit. If they actually refused to raise the debt ceiling, the markets would crash, interest rates would skyrocket, benefit checks and military spending would be at risk, and the fragile economic recovery would probably grind to a halt.

    Mr. Boehner, who has previously said he would not allow a default to take place, should be reminding House members of the potential catastrophe instead of encouraging their worst impulses and raising their hopes that this “whale of a fight” could win them new victories.

  • The National Memo: Boehner Demands Medicare, Social Security And Medicaid Cuts To Raise Debt Limit. Excerpts: Speaker John Boehner (R-OH) vowed on Monday that any increase in the debt limit would require cuts to the “mandatory side” of government spending. ...

    “Mandatory” government spending includes Obamacare, Medicare, Medicaid, Social Security and government pensions, all programs that benefit senior citizens who — according to a recent poll from Democracy Corps — have begun to turn against the GOP. ...

    The Speaker clearly wanted the Republican donors in the audience to think he’s preparing a debt limit fight reminiscent of the 2011 crisis that cost the United States its AAA credit rating, triggered losses of more than 2,000 points on Wall Street and will cost taxpayers an estimated $19 billion over 10 years.

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.

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