Contempo Magazine Blog

The announcement of Arizona Governor Janet Napolitano to head the Department of Homeland Security is a disappointment to the many Hispanics who voted for Senator Barack Obama in the 2008 Presidential election. Given Mr. Obama’s stated goals for diversity and inclusion it would be reasonable to expect that one of the major cabinet posts would go to a well qualified Hispanic instead of the usual token Post Master General.

Governor Napolitano’s nomination is being hailed by the liberal press as showing sensitivity to the border states concerns. As governor she was one of the most vocal proponents of punishing businesses for hiring illegal aliens. On the one hand she presented herself as a friend to those sympathetic to Hispanic’s immigration concerns but on the other would be happy to see many small businesses owned by Hispanics stripped of their business licenses if they did not act as border enforcement agents in investigating all their employees. Salon.com reported yesterday, that the major reason for the Napolitano appointment is political payback for her early support of Barack Obama.

Meanwhile, America’s only Mexican-American governor, Bill Richardson,  who took a political chance supporting Barack Obama over Hillary Clinton who has been the governor of a border state and most would say has much more experience on the national scene so far seems to have been passed over for the major cabinet positions.  Bill Richardson in addition to serving as New Mexico’s Governor, has served in the United States Congress where he was Chairman of the Hispanic Congress, nominated for the Nobel Peace Prize for negotiating political prisoners release, chaired the Democratic Party in 2004, served as UN Ambassador and Energy Secretary.

If Hillary Clinton is selected as Secretary of State and Bill Richardson is passed over for a major Cabinet position then Mr. Obama will have broken a promise of inclusion to America’s Hispanic voters. Hispanic voters had expected Richardson to be  named as Secretary of State or Head of Homeland Security not because he is Hispanic or because he supported Barack Obama but because he is the most qualified for the job.

Tony Magaña grew up in McAllen Texas, attended Texas A&M University, served in the Army Reserve, and holds a doctorate from Harvard University. The co-founder of Contempo Magazine has participated in Valley business for over 20 years.He is a member of the National Association of Hispanic Journalists.

Go To Contempo Magazine Home Page

Multiple sources including MSNBC which has become Barack Obama’s personal news service have announced that former Senator Tom Daschle will be named to the Cabinet to head the Department of Health and Human Services.  While Senator Daschle has been a key figure in the Obama campaign he also has spent the last two years traveling around the country as a Senior Fellow for the liberal think tank, The American Center for Progress, holding forums and has written a book, Critical: What We Can Do About the Health Care Crisis, which offers a detailed plan for changing the American health care system.

The Reorganization and Restructuring of the American Health Care System

A Federal Health Board (FHB) will be created for health care to work similar to the Federal Reserve for banking. Daschle has looked at models in Europe and Canada for inspiration on this idea. The members of this board would be appointed like the members of the Federal Reserve. The job of the FHB will be far reaching. Standards for medical practice, hospitals, drugs, health insurance, acceptance of new technology, approval of hospital resources, and research funding will come under the authority of the FHB.

Medical insurance will be based upon the Federal Health Benefits Program. Private insurance will have to meet federal standards set by the FHB to work allowed. In addition Medicare, Medicaid, Indian Health Care and Veteran’s Health Care systems will continue.Individuals or families that do not qualify or cannot get private insurance will get a basic program from the Federal government probably by extending Medicare/Medicaid.

In forums across the country Senator Daschle has presented 10 key points to his program

•  America’s health care system should be a combination of a private system and the public system now in place through programs like Medicare, the Indian Health Service and the Veterans Administration.
• Universal access should be a universal goal.
• Any new system should be based on a model “that we know works,” the Federal Employee Health Benefits Program.
• Policy-makers should recognize the need for “complete care,” which would include insurance coverage for mental health services and dental insurance.
• Incentives should shift to wellness and prevention away from expensive disease treatment after a patient is sick.
• Transparency is needed. Deaths and injuries should be subject to federal review and public reporting such as takes place under the Federal Aviation Administration after a plane crash. Daschle said physicians and others should get safe harbor from lawsuits if they follow best practices.
• Records should be computerized to avoid the sea of redundant paperwork now in place.
• Eliminate unnecessary care. Of the $2.4 trillion spent on health care each year, some estimate $700 billion is unnecessary.
• Shift from a fee for service, which promotes lots of procedures (see Nos. 5 and 8), to payment based on the quality of health of patients.
• A governing authority, a Federal Health Board, should oversee the system as the Federal Reserve oversees the banking system.

What Changes Are Going to Happen?

Given the fact that President Elect Obama has essentially a filibuster proof Senate and add in the fact that the reducing the cost of health care will be necessary to increase the employment, I am expecting quick action on the health care plan.  Its no accident that many Democrats were saying today that aid to the auto industry can only succeed if a new health care plan is passed.

Our blog has predicted that there will likely be significant organizational and structural changes in health care. The removal of fee for service payments to physicians will likely mean that the government is going to combine (bundle)  fees for health care providers and facilities together. Most physicians will become employees or contractors to hospitals or clinic. Not for profit health care providers such as the Mayo Clinic and the Cleveland Clinic will likely continue to propagate throug out the country replacing private stand alone hospitals and private practitioners.

Separate insurance for auto accidents, work injuries, and liability coverage may be all combined into regular insurance once insurance is mandated for all.

The creation of a National Health Board will likely reduce the roles of local and state health authorities like State Medical Boards.  Senator Daschle has stated that no hospitals or health facilities will be allowed without Federal approval. Hospitals will need to request permission to build new beds, add new equipment, or do new procedures from the FHB.

Malpractice and Peer Review will come under Federal regulation. Senator Daschle says that if a physician practices under the Federal guidelines he will protected.

Critics of the Daschle plan including Robert Goldberg, Vice president of the Center for Medicine in the Public Interest, have said that the new plan will result in long waits for necessary procedures and rationing of health care. In the New York Post he was quoted as saying that “countries with national health boards routinely deny patients access to the latest treatments for breast cancer, brain tumors, Alzheimer’s and multiple sclerosis on the grounds that they cost society too much”.

There is no doubt that America’s health care system as we have previously said needs to undergo major change. The appointment of Senator Daschle as Secretary of HHS is a clear indication of the urgency with which it is likely that Congressional Democrats and President Elect Obama will likely proceed with reform. Conservative thinkers may oppose this plan but currently do not have a well conceived alternative to counter the Daschle plan.   The American public is angry over high medical bills and lack of insurance coverage. It is doubtful given the current climate of corporate mistrust that private health care only proponents could convince the American public to have faith that America’s private health insurance companies will provide lower cost care without action. They will be given a chance to compete with the government plan to prove whether private health care can survive.

Tony Magaña grew up in McAllen Texas, attended Texas A&M University, holds a doctorate from Harvard University. The co-founder of Contempo Magazine has participated in Valley business for over 20 years.He is a member of the National Association of Hispanic Journalists.

Go To Contempo Magazine Home Page

Read the daily newspaper or watch any mainstream news show on television and it seems clear that America’s concept of the corporation is under attack. In April this year much was made about reports that a majority of corporations are not paying taxes and everyone is familiar about the scandals of stratospheric executive salaries and bonuses of those who work for companies now asking for government bailout.

Following the scandals of Enron,Tyco, and Adelphia among others, the Congress passed a law called the Sarbanes-Oxley Act in 2002 which was supposed to prevent corporate mismanagement.  The main problem at that time was that the record keeping of corporations  was not objective or transparent even when done by separate companies. Conflicts of interests were occurring between accounting firms who edited the corporations, corporation executives, corporate board members, and sometimes even stockholders in an unbalanced way.  This measure was designed to combat outright fraud accomplished by falsification or obscuration of records from principle players in corporations that would negatively affect the stockholder. However, the Sarbanes-Oxley Act did not address problems in corporate governance.

Americans wonder how graduates of great business schools like Wharton and Harvard have remained at the helm of multinational corporations and remained silent while the corporations in their charge were like a train in old movie about to run off the cliff.  Booz & Company just completed an annual study that looked at why CEOs at major corporations are performing so badly. They looked at 10 years worth of data from the largest 2,500 companies.

They identified a disturbing growing trend that is contrary to commonly held beliefs. Many in the business world and general public have heard that CEOs are immediately expected to improve a corporation’s stock price and get short time gains with about 2 years. Failure to get quarterly gains within that 48 month period so the urban legend states will result in a CEOs quick exit. In fact, quite the opposite is the case.  CEOs from failing companies have only a 2% chance of losing their jobs if they are losing ground and even for those with 25% losses the risk of being fired was only increased to5%. Asia and Europe did much better jobs at preparing corporations for successions in leadership than the United States. America’s system punishes innovation and change and instead inspires new executives to follow the path of failure.

The Booz & Company researchers found that companies plan poorly for succession. They often hire a new CEO who has no previous experience from the company to act as an “apprentice” to the old CEO for awhile before he is allowed to take the reins.  Better preparation of lower executives for succession and promotion within the company usually resulted in greater corporate success. They also said the common American practice of making the CEO and Chairman of the Board of the Directors , the same person, also was more often associated with business failure than success.

At the same time, many are questioning the common practice of giving high level executives exclusive and exorbitant stock options.  Research by several authorities has shown that when they control more than 20% of the stock of a company the chance they will act against the interests of the stockholders in general for the long term is significantly increased.  Corporate executives have been gradually getting more power over stockholders  as well. Federal and state courts have upheld the rights of executives to keep information to minority stockholders. Since most stocks in mutual funds held by retirement accounts the distance of stockholders to management in modern corporations is more than the original concept many believe was the intent in making corporations. Despite attempts by the SEC and others to organize shareholders for the most part small shareholders in most American companies have no real say in corporate governance.

Conservative political thinkers need to address the current corporate governance problem which has contributed so heavily to our current economic downturn.  The Constitution clearly gives the Federal government to responsibility to affect Commerce.  Those who run publicly traded corporations have a legal responsibility to run those corporations competently, fairly, and in the interest of the stockholders.  Private property rights of stock holders need to be as avidly guarded as those of ranchers and farmers.  Corporations need to develop much more transparency in their functions and Congress must act to improve the right of stockholders to not only become more knowledgeable in what is happening with their property but also in being able to address the boards of directors and management.  Empowering stockholders will help the American public who feels so alienated from the current economic system once again be the active participants in corporate governance that is intended in the publicly traded corporation. Failure to do so will foster further mistrust and likely lead to even more corporate mischief and collapse. Corporate boards and executives must be accountable to the stockholders.

Tony Magaña grew up in McAllen Texas, attended Texas A&M University, holds a doctorate from Harvard University. The co-founder of Contempo Magazine has participated in Valley business for over 20 years.He is a member of the National Association of Hispanic Journalists.

Go To Contempo Magazine Home Page