Phil Mattera

An Independent Corporate Front Group?

sheils Would a consulting company owned by Exxon be considered an impartial source of analysis on global warming, or would such a firm owned by Xe (formerly Blackwater) be regarded as a good judge of federal policy on the use of mercenaries? Probably not; in fact, they would, in all likelihood, be seen as front groups for the interests of their corporate parents.

Then how is it that one of the most influential consulting firms on healthcare policy is the Lewin Group, which is owned by a subsidiary of UnitedHealth Group, the largest of the for-profit medical insurance corporations and thus a very interested party when it comes to the current deliberations in Congress on major healthcare reform?

Lewin claims to be “objective” and “impartial,” but some of its analysis is repeatedly being used in very partisan ways by Republican members of Congress (such as John Boehner and Orin Hatch) and conservative commentators (the Heritage Foundation and Rich Lowry of National Review) to attack the idea of a public option in legislation that would seek to provide coverage to the uninsured. They typically do not mention Lewin’s relationship to UnitedHealth, which will benefit greatly if the public option is eliminated.

Those seeking to shield for-profit insurers from a competing federal plan are trumpeting Lewin research purporting to show that the existence of at least some versions of a public option would result in a mass exodus from employer-provided plans with higher premiums. Lewin claims that some 119 million of the 171 million people covered by employer plans could migrate to Uncle Sam’s offering. Given the assumption that taxpayers will be subsidizing participants in the public plan, such a shift is seen as creating a fiscal disaster for the federal government and the collapse of private plans. The rabidly pro-corporate group Conservatives for Patients’ Rights uses the Lewin research in a TV ad that depicts a public plan as a bulldozer that could “crush all your other choices, driving them out of existence.”

Lewin insists that it has “editorial independence,” but it is difficult to believe that its judgments are not influenced by the identity of its corporate parents. Its immediate parent, by the way, is Ingenix, a major player in healthcare information technology, especially billing systems. Ingenix, of course, also has a vested interest in protecting the for-profit medical bureaucracy. Ingenix and its parent UnitedHealth have paid out hundreds of millions of dollars to settle class-action lawsuits stemming from investigations spearheaded by New York Attorney General Andrew Cuomo charging that Ingenix promoted a database product that allowed insurers to underpay their members when reimbursing for out-of-network expenses.

Lewin was in existence for three decades when Ingenix and UnitedHealth acquired it in 2007. It’s interesting that before that deal Lewin was often in the news in connection with reports it produced for states such as California, Hawaii and Vermont showing the potential benefits of state single-payer systems. The firm released one such report (for Colorado) after being acquired by Ingenix, but these days Lewin seems to focus more on the hazards of expanded government involvement in healthcare. Lewin Senior Vice President John Sheils (photo) told the Associated Press that “the private insurance industry might just fizzle out altogether” if a public option were enacted.

Sheils insists he is impartial, but he has been aggressive in spreading the word about the potential drawbacks of the public option. He confronted President Obama directly on the issue last week as one of the questioners in an ABC News special whose host, Charles Gibson, seemed determined to bash government involvement in health insurance.

The Lewin Group acquisition added an insignificant amount to UnitedHealth’s annual revenues but it turned out to be a valuable investment for the $80 billion insurance giant. While playing the role of a neutral analyst, the consulting firm is in reality defending the interests of its corporate parents and the rest of the for-profit health insurance business. The most effective business front group is one that believes it is independent.

Regulating Murder

death-cigarettes Despite a long-running war on crime and billions of dollars spent each year on the criminal justice system, murders keep on happening. Instead of trying to end all homicides, perhaps the solution is to give up on abolition and simply regulate the practice: discourage the murder of children, put strong warning labels on guns, impose a tax on killers.

Ridiculous? Yes, but this is roughly what the federal government has just done with the tobacco industry, which legally ends far more lives each year than all the non-corporate murderers in the country combined.

The legislation just signed into law by President Obama — the Family Smoking Prevention and Tobacco Control Act — is billed as an aggressive move to bring the coffin nail industry under federal control for the first time. It starts off with what amounts to a 49-point indictment of tobacco products as a public health menace. Use of these products is called “inherently dangerous,” “addictive” and a “pediatric disease.” The tobacco industry, it is noted, still spends vast sums “to attract new users, retain current users, increase current consumption, and generate favorable long-term attitudes toward smoking and tobacco use.”

All of this is certainly true, but it seems odd to follow this denunciation with legislative language that imposes restrictions on the noxious industry but does not seek to put it out of business. In fact, the law can be seen as conferring some degree of legitimacy on tobacco producers. For example, the industry is given a statutory role in the Tobacco Products Scientific Advisory Committee, which has to be consulted before any new industry regulations are promulgated. Fortunately, the three seats on the committee given to tobacco manufacturers and growers are non-voting positions, but it is still unseemly — to put it mildly — to have representatives of such a notorious industry so involved in government oversight.

According to Corporate Accountability International, which has played a central role in promoting tobacco control policies: “Not only is the inclusion of the industry on this committee akin to letting the fox guard the henhouse, it runs counter to a treaty provision that obligates ratifying countries to safeguard their health policies against tobacco industry interference.” Kathy Mulvey of CAI adds: “U.S. policymakers must now gird themselves for inevitable attempts by Big Tobacco to delay and thwart [the law].”

The ability of a notorious industry to go on influencing policy is reinforced by the fact that the law generally treats tobacco companies in a way that is not greatly different from other regulated corporations. The Food and Drug Administration is instructed to collect “user fees” from tobacco companies — as if they were pharmaceutical manufacturers seeking to get new drugs approved. Unless tobacco companies plan to “use” the FDA in some way, the fees should at least be called something different; perhaps reparations.

Another problem is that the law mentions that any restrictions on tobacco industry advertising and promotion must be consistent with the First Amendment. You can be sure that the industry will be screaming loudly that the law violates its free speech rights (granted by misguided court rulings). This is another drawback to regulation rather than criminalization.

While some players in the tobacco industry have ardently opposed federal regulation throughout the 15-year campaign to bring it about, some shrewd parties eventually realized that government intervention was inevitable and jumped on the bandwagon. Tobacco giant Philip Morris (now part of Altria) took this tack back in 2000, reaping years of improved p.r. and now a law that allows it and its competitors to continue selling their deadly wares with restrictions that are far from fatal to their profits. As much as corporations like to complain about regulation, sometimes it is their salvation.

Corporate Power is, Alas, Alive and Well

donohue Congratulations, fellow “anti-business activists.” It seems we have forced the U.S. Chamber of Commerce to commit $100 million for a campaign designed to remind Americans that they are supposed to love capitalism.

“Many union leaders, some environmentalists, and a growing force of anti-business activists are pushing governments at all levels to close trading markets, lock down capital markets, expand entitlements, and raise taxes and debt to unsustainable levels,” proclaimed the Chamber’s CEO Thomas J. Donohue (photo) recently. “We are going to activate free enterprise supporters, educate the public, and hold politicians accountable as we defend and advance economic freedom.”

After this gratuitous and somewhat puzzling swipe at activists, Donohue made it clear that the campaign’s real target is the federal government, which he suggested is preparing “an avalanche of new rules, restrictions, mandates, and taxes.” However, the events of the past year — the financial bailout, unprecedented intervention in the auto industry, a huge stimulus program, etc. — make it impossible for even Donohue to preach the laissez-faire gospel in its pure form.

“Dire economic circumstances have certainly justified some out-of-the-ordinary remedial actions by government,” Donohue acknowledged. “But enough is enough. If we don’t stop the rapidly growing influence of government over private sector activity, we will squander America’s unmatched capacity to innovate and create a standard of living and free society that are the envy of the world.”

But where is this “avalanche” of new heavy-handed federal interference? The Obama Administration has done its best to limit intervention in the private sector, despite the gravity of the economic crisis. It resisted the pressure to nationalize the likes of Citigroup and Bank of America. Obama was more aggressive in restructuring General Motors, but he insists the feds will not be involved in managing the automaker and will return it to private ownership as soon as possible.

The Administration supported efforts in Congress to curb abusive practices by credit-card companies, but the reform avoided the more radical step of capping interest rates. Along with the Democratic leadership in Congress, the Administration has rejected the single-payer solution to healthcare reform, and it is unclear whether the half-baked alternative of a public option alongside private insurers will make it into the final bill. Obama has moved to restrict but not abolish the environmentally destructive practice of mountaintop removal by major coal mining corporations. And the key demand of organized labor — the Employee Free Choice Act — appears to be stalled in the Senate.

Now comes Obama’s ballyhooed overhaul of financial regulation. The plan has some good features, such as the creation of a consumer protection agency for financial products, but overall it focuses more on rearranging the structure of the regulatory system — mainly by giving more power to the Federal Reserve — rather than truly reining in financial institutions and markets. Even the New York Times pointed out the limited nature of the reforms: “Everywhere you look in the plan, you see the same thing: additional regulations on the margin, but nothing that amounts to a true overhaul.”

Obama seemed to acknowledge that the plan was less than audacious, saying:

In these efforts, we seek a careful balance. I’ve always been a strong believer in the power of the free market. It has been and will remain the engine of America’s progress — the source of prosperity that’s unrivaled in history. I believe that jobs are best created not by government, but by businesses and entrepreneurs who are willing to take a risk on a good idea. I believe that our role is not to disparage wealth, but to expand its reach; not to stifle the market, but to strengthen its ability to unleash the creativity and innovation that still make this nation the envy of the world.

Huh? Did Donohue use part of the $100 million to bribe an Obama speechwriter to insert Chamber talking points into the President’s remarks? Or is Obama reminding us that neither he nor anyone else in official Washington intends to do anything that seriously challenges corporate power?

Shell’s Self-Serving “Humanitarian” Gesture

whale One of the advantages for a corporation in resolving a sensitive lawsuit out of court is that it can proclaim innocence and insist it is settling for other reasons. Royal Dutch Shell has done just that in a case brought in connection with the 1995 execution of author Ken Saro-Wiwa and eight other activists who campaigned against the oil company’s operations in the Ogoniland region of Nigeria.

Shell actually was even more brazenly self-serving than the typical company that says it is settling in order to put the case behind it. The Anglo-Dutch transnational insisted that its willingness to pay the plaintiffs US$15.5 million – $5 million of which will go into a trust fund for the Ogoni people – was a “humanitarian gesture.” It was unusual for Shell to allow the amount of the settlement to be disclosed, but it was apparently worth it to draw attention away from the lawsuit’s charges that the company collaborated with the repressive military regime that ruled Nigeria in the 1990s and that put Saro-Wiwa and the others to death after a sham trial. The suit – brought in U.S. federal court under the Alien Tort Claims Act, the Torture Victim Protection Act and racketeering statutes – also accused Shell of being complicit in crimes against humanity, torture, inhumane treatment, arbitrary arrest, wrongful death, assault and battery, and infliction of emotional distress.

It is understandable why the plaintiffs and their lawyers – led by the Center for Constitutional Rights and EarthRights International – would feel a need to settle a case that had dragged on for 13 years and provide some financial assistance to the Ogoni community. Yet it is frustrating to see Shell trying to turn an outrage into an opportunity to burnish its image, even though other Ogoni claims are still pending.

The frustration is compounded by the fact that Shell continues to engage in dubious behavior in other parts of its global operations. For example, the company has a problematic relationship with another undemocratic government as part of its deep involvement in a massive oil and gas project in the Russian Far East. That offshore project, known as Sakhalin II, has been the subject of a great deal of controversy because it threatens the survival of one of the world’s most endangered species of whales – Western Pacific Grays (photo).

Groups such as Pacific Environment, collaborating with Russian activists who formed Sakhalin Environment Watch, have pressured Shell and its partners to adopt stronger environmental protections or abandon the project. Shell’s largest partner is Gazprom, a publicly traded gas monopoly that is controlled by the Russian government, which has used the company to advance Russian foreign policy goals vis-à-vis Eastern Europe by cutting off gas supplies at various times. Shell has acknowledged that it is interested in developing a new Sakhalin III project in collaboration with Gazprom.

Last year, there were reports that Shell had sought to influence the outcome of a purportedly independent environmental audit of Sakhalin II. Previously, Shell gained notoriety for overstating its proven petroleum reserves by 20 percent. The company ended up paying about $150 million to U.S. and British authorities to settle the charges. It did not try to depict that payment as a humanitarian gesture, but it is possible that one day Shell may have to put a positive spin on millions paid to settle claims stemming from the harms caused in Sakhalin.

Note: If you want to keep track of the far-flung operations of U.S.-based transnationals, check out a new tool called Croctail, which provides an easy way to search the names of domestic and foreign subsidiaries that publicly traded companies report in their 10-K filings to the Securities and Exchange Commission. Croctail is an extension of the Crocodyl wiki of critical corporate profiles sponsored by CorpWatch and other groups (full disclosure: I am a contributor and advisor to Crocodyl).

Ruling by Fiat

marchionne The outpouring of angst about the bankruptcy and downsizing of General Motors is overshadowing what is perhaps an even more dramatic transformation at Chrysler. The smallest of what we used to call the Big Three has been delivered on a silver platter to a foreign company with outsized ambitions. It is now clear that the federal government is in the business of picking winners and losers, in certain industries at least. The question is why the Obama Administration has been so eager to make Fiat one of those favored few, given that it apparently aspires to challenge GM, the presumptive flagship U.S. automaker in which the feds are investing some $50 billion.

Only a few years ago, Fiat (profiled here) was accorded the same basket-case status that came to be applied to Chrysler and GM. In fact, in 2000 the Italian automaker was forced to turn to GM for help as its market share began tumbling both at home and in the rest of Europe. GM purchased a 20 percent stake in Fiat as part of a strategic cooperation deal between the two companies. In 2004, as Fiat’s condition grew worse, it invoked a provision of the cooperation agreement that would have compelled GM to buy the company. GM had no interest in taking on Fiat’s huge debt load, so it paid $2 billion to get the Italians to go away.

Fiat’s chief executive Sergio Marchionne (photo) decided that the company’s only path to survival was to combine with other car companies. He saw an opening earlier this year when the federal government agreed to provide emergency loans to Chrysler but pressured the company to restructure and find a partner. Fiat agreed to be that partner without investing any cash.

When Chrysler went back to the government for more aid, the Obama Administration took an even harder line, explicitly requiring the company to join with Fiat. The feds later pushed Chrysler into a bankruptcy filing designed to bring about the emergence of a reorganized company run by Fiat.

Marchionne took full advantage of his privileged position to intensify the pressure on Chrysler’s unions to make major contract concessions. He took a tough stance both with the United Auto Workers and the Canadian Auto Workers, threatening to scuttle the deal unless they capitulated. Canada’s National Post headlined its story FIAT PUTS GUN TO CHRYSLER UNION HEADS. Both unions gave in to the pressure and signed new contracts with major givebacks.

Fiat is no stranger to hard-line labor relations. Its relationship with unions has been tumultuous throughout the company’s history. The 2002 announcement of a 20 percent cut in the Fiat’s Italian workforce opened a new period of unrest in its domestic operations. In recent months, as Marchionne has pursued his grand plans for the creation of a new auto giant, Italian metalworkers have grown worried that they may lose out. Last month they held a national protest near the company’s headquarters in Turin. Frequent work stoppages and blockades have been taking place at various Fiat plants.

Chrysler’s workers may soon find themselves resorting to similar tactics. Even though 55 percent of the company will initially be controlled by the UAW’s Voluntary Employee Beneficiary Association, it is likely that Fiat’s executives will be the ones really calling the shots. The VEBA will have its hands full meeting its obligations to workers. In fact, UAW President Ron Gettelfinger has said the union would probably sell its Chrysler holdings as soon as it is financially feasible.

The party that has the most to gain from Chrysler’s restructuring is Fiat. Even though Marchionne was thwarted in his attempt to go from the Chrysler coup to the purchase of GM’s European operations, he still has grand dreams and is seeking other industry partners. In the meantime, the Chrysler deal will enable Fiat to expand sales of its small cars in the North American market, creating more competition for the new GM. How nice of the Obama Administration to use U.S. taxpayer dollars to make this happen.

Pushing Uncle Sam to Be an Activist Investor

unclesam4 Now that it’s becoming clear that the federal government will end up owning nearly three-quarters of the shares in General Motors, the question is: What kind of owner will Uncle Sam be?

In certain respects, the Obama Administration has been acting like a private-equity firm that imposes conditions on a company it is taking over. It already booted out GM’s chief executive, restructured its debt, pressured its union to make contract concessions and bullied its main minority shareholder — which in this case is the autoworkers’ healthcare trust — and is wiping out other investors.

Yet, despite maneuvering to gain an expected stake of some 70 percent in the automaker, the feds don’t want to manage the company. According to the Wall Street Journal, the Treasury regards itself as “a player that has no intentions of directly guiding the company once it emerges from bankruptcy.” Unnamed sources in the federal government told Reuters: “We want to be shareholders for as short a period of time and almost in as inactive a way as we can responsibly be.”

One is tempted to ask: why? The Obama Administration has already taken some bold steps with regard to the rescue of GM. It is disingenuous to now act as if it is improper for the government to exercise any influence.

No one is suggesting that Treasury Secretary Tim Geithner or the Secretary of Transportation take over day-to-day control of the company, but there is still the question of broad policymaking exercised through the board of directors and annual shareholder meetings. This will not be a situation in which government has a small interest whose voting power is far outnumbered by private investors. GM is heading for a situation in which it is nearly a wholly owned subsidiary of the United States of America.

There are encouraging reports that the federal government will name a substantial number of GM’s board members. But who will these appointees be — and will they be expected to pursue certain policies? It is easy to imagine Geithner installing business types with the mindset of conventional directors who are free to act as they please.

And then there’s the question of whether the federal government will vote its shares at annual meetings. If the government does not make its will known through the board or vote its shares, then who will control GM? Will the UAW healthcare trust end up calling the shots — or perhaps the governments of Canada and Ontario, which will reportedly end up with a small holding in exchange for the financial assistance they are giving the company.

As the federal government uses its large investment in GM to help steer the company back to some semblance of financial health, why can’t it also use its influence to turn the automaker into a paradigm of the most enlightened corporate governance and accountability practices?

Keep in mind that GM’s track record is not only one of bad business judgments. It also has a long history of acting irresponsibly toward its critics (Ralph Nader et al.), its workers (the speedups that led to the Lordstown revolt in 1972), communities (destruction of streetcar lines in the 1930s and 1940s), the environment (pushing SUVs long after it was clear they were disastrous for the climate), etc. etc.

For years, activist investor groups have tried to promote better practices through proxy resolutions. GM has not yet issued the proxy statement for this year’s annual meeting, which is scheduled for August (two months later than usual), so we don’t know what issues will be voted on by the shareholders. Last year, the resolutions were on issues such as the reduction of greenhouse gas emissions, support for healthcare reform, full disclosure of political contributions and shareholder advisory voting on executive compensation — all of which were opposed by management.

Abstaining from voting on such matters would in effect mean preserving the status quo and giving implicit support to the backward policies adopted by the company for decades. As long as the federal government (and by extension the taxpayers) owns the overwhelming majority of the shares, it should use its influence to clean up not only GM’s financial accounts but its social ledger as well.

Calling in the Vultures

vultures Only one day after Treasury Secretary Timothy Geithner told the Senate Banking Committee that the nation’s financial system is “starting to heal,” bank regulators took a step indicating that parts of the system are still festering. The FDIC announced that it had seized BankUnited, a struggling institution in Florida with assets of about $13 billion. It was the biggest bank failure this year. The collapse will cost the insurance fund about $4.9 billion.

BankUnited’s demise was expected for some time. The company’s big bet on option adjustable-rate mortgages backfired when the housing market in the Sunshine State began to shrivel. Although BankUnited avoided the subprime market, many supposedly prime customers with those option ARMs, which allow one to lower interest payments in the first years of a mortgage by adding to the principal, found themselves seriously under water and started to default.

But what’s most significant about the takeover of BankUnited is who the FDIC got to buy the bank: a private-equity group led by John Kanas, the former head of North Fork Bank, who has joined forces with prominent vulture investor Wilbur L. Ross Jr. Also involved are funds managed by the Carlyle Group and Centerbridge Partners. In other words, the FDIC delivered BankUnited’s depositors and employees into the hands of aggressive private-equity firms.

The FDIC announcement casually noted: “Due to the interest of private equity firms in the purchase of depository institutions in receivership, the FDIC has been evaluating the appropriate terms for such investments. In the near future, the FDIC will provide generally applicable policy guidance on eligibility and other terms and conditions for such investments to guide potential investors.” In other words, the FDIC realizes it is doing something risky, but it will figure out its policy after approving the deal.

Geithner previously raised the prospect of subsidizing private-equity firms and hedge funds to buy up the toxic assets held by banks. Now regulators are putting a bank itself in the hands of those wheeler-dealers.

Particularly troubling is the role of Ross, who has a long history of bottom-feeding in industries such as textiles, steel and coal. In the latter sector, his International Coal Group was the parent company of the Sago mine, where a 2006 explosion resulted in the deaths of a dozen miners. The mine had been repeatedly cited for safety violations.

The BankUnited deal could open the door to a wave of bank takeovers by private equity firms, which are not known for their enlightened management practices. If you think banks are run irresponsibly now, just wait until the vultures are in charge.

Geithner’s Cod Liver Oil

cod-liver-oil What a difference eight months make. Last fall, Treasury Secretary Henry Paulson pushed through a bailout program that was seen as the salvation of the financial sector. The banks eagerly lined up to get their share of $700 billion in federal largesse with few strings attached.

These days, aid from the Treasury Department is about as welcome as the heaping spoonfuls of cod liver oil mothers used to force down the throats of their children. Large institutions such as JP Morgan Chase, Goldman Sachs and Morgan Stanley cannot wait to repay Uncle Sam. Several smaller ones have already done so. Allstate just became the second large insurer to announce that it is not interested in the insurance bailout fund reportedly being put together by the Treasury. “Given Allstate’s strong capital and liquidity positions…we will not participate in this program,” sniffed the company’s chief executive Thomas Wilson.

Bailouts are supposed to be situations in which companies come to Washington with a tin cup and plead with lawmakers to save them from obliteration. Lawmakers have to be persuaded to devote public money to rescue those suffering failure in the private market.

Somehow that has gotten completely turned on its head. We now face a situation in which the federal government is in effect pleading with large corporations to take its money, and those companies find it distasteful to do so. Getting bailed out is viewed as burden rather than deliverance. Financial policy has gone from being wrong-headed to being downright bizarre.

Treasury Secretary Timothy Geithner does not seem to be aware of the absurdity of his position. It is unclear why he continues to push his bailout medicine on financial institutions that claim they don’t need it—claims that on the surface have more validity following the completion of the stress tests that were dubious to begin with and lost all validity after it came to light that many banks successfully negotiated for more favorable findings.

To make things worse, Treasury is, according to the New York Times, allowing those banks buying back the feds’ holdings to do so on extremely favorable terms. “Treasury accepted a lowball offer,” one analyst told the Times.

The time has come for Geithner and his boss President Obama to admit that the bailout program has become a farce. There is little evidence that it ever accomplished the stated aim of freeing up lending. Whether or not the banks really needed the assistance in the first place is something that analysts will be debating for many years to come. The auto industry portion may have provided some breathing room for General Motors and Chrysler, but now it’s become clear that the real plan is to increase imports from low-wage countries such as China.

Let’s wrap up this botched flirtation with state capitalism and focus on rebuilding an effective system of financial regulation. Some investigations and prosecutions of those who caused the mess in the first place would also be welcome.

Trust-Busting Shows New Signs of Life

varney2 “Everywhere you look, powerful forces are driving American industries to consolidate into oligopolies—and the obstacles are less formidable.” That’s the way a February 25, 2002 front page story in the Wall Street Journal began, and for the following seven years those obstacles grew yet more feeble.

With a few notable exceptions, such as the Federal Trade Commission’s long-running effort to block Whole Foods from acquiring its rival Wild Oats Markets, major mergers have sailed through. Last fall the Bush Justice Department issued a policy paper on antitrust that was so soft on anti-competitive practices that three FTC commissioners took the unusual step of issuing a public statement denouncing it.

Now the Obama Administration is repudiating the policy. Christine Varney (photo), head of the Justice Department’s Antitrust Division, gave identical speeches to the Center for American Progress and the U.S. Chamber of Commerce heralding the change of course. She made a telling comparison to the late 1930s, arguing that today, as then, the tightening of competition policy is part of the way government should respond to an economic crisis.

She reinforced this principle by separately stating that the Antitrust Division would work with federal agencies to prevent contractors from unlawfully profiting from stimulus projects funded by the $787 billion Recovery Act signed by the President in February.

Varney’s declarations were all the more significant in that they were soon followed by the announcement of a record antitrust fine – the equivalent of about $1.5 billion – imposed by the European Commission on Intel for unfairly dominating the computer chip market. During the Bush Administration U.S. officials had declined to go after Intel.

It would be a wonderful thing for the United States to rejoin Europe and take the enforcement of competition laws seriously. Varney is talking a good line now, but the Obama Administration has to make up for an overly tolerant stance toward certain oligopolies—above all in banking policy, where Treasury Secretary Timothy Geithner has accepted the notion that the likes of Citigroup and Bank of America are too big to fail and, rather than cutting them down to a reasonable size, wants to go on propping them up with taxpayer funds. And in the health care arena, the Administration seems to take it for granted that the giant health insurance carriers, who use their power to deny as much care as possible, will go on playing a central role.

At a time when an increasing number of Americans recognize the shortcomings of giant corporations, the federal government cannot afford to be seen to support any oligopolies. And if it really wanted to promote competition, the Justice Department should go after the biggest antitrust scofflaw of them all: Wal-Mart.

Rick Scott’s Crusade to Preserve Fast-Food Healthcare

rickscott Is Rick Scott following the T. Boone Pickens playbook? Pickens is the notorious corporate raider who moved into the public policy arena with his advocacy of wind energy. Scott (photo) is the former chief executive of disgraced for-profit hospital company Columbia/HCA (now just HCA) who has inserted himself in the middle of the debate over healthcare reform.

Both men play down their controversial histories and claim they are driven by principle rather than personal gain. In the case of Pickens, the principle is laudable: he has been pushing the country to adopt renewable energy in a major way. Scott is playing a much less constructive role. He is on a mission to sabotage efforts by the Obama Administration and Congress to make affordable coverage available to all.

Scott is the public face of a new organization called Conservatives for Patients’ Rights, which has been spending heavily on TV ads to argue that the reform proposals being considered by Democrats would take away the ability of patients to make their own healthcare decisions, leaving them at the mercy of the “nanny state.” The group’s website is filled with testimonials from “victims of government-run healthcare” in Canada and Britain.

It’s tempting to laugh all this off. The problem with the reform ideas being considered by the Democratic leadership is that there is not enough government control. The most efficient alternative, single-payer or Medicare for all, has been taken off the table, and some leading Dems are even leaning toward the abandonment of a public option as one of the new coverage options that would be available to the uninsured.

Moreover, does a campaign that puts the now unpopular term “conservatives” in its name, focuses much of its media buys on Fox News and uses a tainted figurehead such as Scott really expect to win widespread appeal? Perhaps this is just another facet of the Right’s current tendency to rally only hardcore reactionaries.

Yet there is more to Scott’s crusade than ideology. He represents a portion of the commercial healthcare industry that is threatened not only by government involvement but even by measures that bring medical costs under control.

Since 2001 Scott has been involved in a privately held company called Solantic, which is a leading operator of “urgent care facilities” throughout Florida. These are standalone clinics located in shopping centers, strip malls and the Orlando airport. Some are in Wal-Mart Supercenters.

The existence of the company – whose president Karen Bowling used to be a Columbia/HCA marketing executive and before that a TV news anchor in Jacksonville – is predicated on the fact that traditional medical care is out of reach for a substantial portion of the population – both the uninsured and the underinsured. Its walk-in clinics treat care as an isolated and seemingly affordable purchase rather than an ongoing relationship between patient and doctor. Critics also charge that the clinics often serve mainly as a way to attract customers to the drugstores and retail outlets in which many of them are located, creating an incentive for them to prescribe medications that will be filled under the same roof.

While the clinics may be a convenient alternative for simple procedures, the industry will succeed only if its services are used also by people with a wider range of conditions, including ones that should involve ongoing monitoring. For those patients, the clinics are as distant from good medical care as fast-food joints are from healthy eating and payday lenders are from responsible banking.

The prospects for Solantic were appealing enough that private equity firm Welsh, Carson, Anderson & Stowe, which focuses on the healthcare and infotech sectors, agreed to invest $100 million in the company in 2007. Last year, Welsh partner Thomas Scully joined Solantic’s board. Scully previously served as head of the Centers for Medicare & Medicaid Services during the Bush Administration. He was at the center of a scandal for threatening to fire the chief actuary of the Medicare program if he told Congress that the industry-friendly drug benefit promoted by Bush would be much more expensive than the White House had acknowledged. After leaving the Administration in 2003, Scully first went to work as a lobbyist for the healthcare industry.

Scully, Scott and Solantic all have a strong vested interest in preserving the current system that deprives so many people of decent coverage and forces them to depend on walk-in clinics. It remains to be seen whether the Democrats are truly willing to create an alternative that frees everyone from fast-food healthcare.