Is your doctor going to be forced out of Medicare?

You've probably been watching the ongoing dustup in Washington concerning the continuation of the payroll tax cuts. Maybe you've been thinking "Thank goodness it doesn't affect me since I no longer receive a paycheck." Boy, are you wrong!

Included with this bill is a two-month extension of the Medicare "Doc Fix." The "Doc Fix" is a yearly ritual in Congress "...required by a 1990s budget law that failed to control spending but never got repealed. Instead, Congress passes a temporary fix each time, only to grow the size of cuts required next time around." This according to a piece in today's Huffington Post.

If the "Doc Fix" is not passed, Medicare payment to doctors will decrease by 27.4% as of January 1. (Medicare says that it will withhold payments to doctors for the first 10 business days of 2012 in hopes that the "Doc Fix" can be put into place. According to Medicare, any backup beyond 10 days is not possible without crashing its computer systems.)

If you have moved recently, you may have encountered difficulty finding a new doctor. Medicare payments are not lavish, and some doctors have simply refused to see new Medicare patients. If payments decrease by almost 30%, many more doctors are likely to opt out of Medicare.

Almost everyone expects the "Doc Fix" to eventually pass, so why is this happening? It mostly has to do with the inability of Congress to vote on things separately. Instead, they combine something that one side wants into a bill with something they don't want in hopes of using the "want" as leverage.

The current situation is also an example of poor negotiating practices. According to Ezra Klein in today's Washington Post: "Remember what everyone thought was happening here: Mitch McConnell was negotiating with Harry Reid on behalf of Senate and House Republicans. Those negotiations were successful. Almost every Senate Republican voted for the resulting bill. Boehner went to sell that bill to his members. But then the House Republicans rejected it, and we were back at square one."

Everyone who has ever served as a negotiator for their union understands one of the basic rules of negotiating: Don't send someone to the table unless they have the authority to make a deal.

Your holiday survival kit.

It's time to head out to grandma's house for big holiday gatherings. (Yes, I said "holiday" not "Christmas." I checked my calendar and there appear to be several holidays in the next couple of weeks.)

At any rate, for many of you the lowpoint of your holiday gathering will be the relative--or neighbor--who carries on about the sad state in which public employees--including teachers--have placed the country. It's always fun to respond to their generalized bloviating with those nasty "fact" thingies. Here's a list of previous blog posts which you can print and stuff into your suitcase for just such an opportunity:

Assertion: Public employees earn way more than those in the private sector. 
Facts: "Everybody knows" that public employees earn more than those in the private sector.

Public pay vs private: Truth is in the numbers.

Assertion: Public pensions are bankrupting the states.
Facts: Pensions NOT bankrupting the states!

Sometimes the comments tell the story.

The growing mythology surrounding public employee pensions.

The sky is falling: Not!

Assertion: Teachers earn too much.
Facts: Pay teachers more.

Teacher pay around the world: How we compare.

Teachers earn too much? Really?

Assertion: You're all just jealous of the rich.
Facts: Of the 1%, by the 1%, for the 1%.

Assertion: We spend too much on education as it is.
Facts: A number that's hard to believe.

Assertion: Our schools are failing; unions defend bad teachers; billionaires know best; charter schools are the answer; more effective teachers are the answer.
Facts: 5 myths about education.

Assertion: Tenure means a job for life.
Facts: Tenure DOESN'T mean a job for life.

Assertion: Teachers don't work a full year.
Facts: Teachers don't work a full year?

Assertion: Public sector jobs aren't real jobs.
Facts: Relax teachers, your job isn't real!

Assertion: Bad teachers are the cause of our educational problems.
Facts: The grand coalition against teachers.

The grand coalition against teachers, part 2. 

Let's stop blaming the teachers.

And then a teacher picked up her pen...

Finally, you might want to ask where your antagonist gets their news. Fox? Probably. Here's an interesting piece of research widely reported a little over a month ago:

"A new poll suggests people might be better off watching no news at all than tuning into Fox. Fairleigh Dickinson University surveyed New Jerseyans about the Arab Spring in Egypt and Syria, among other current events, and found that self-identified Fox News viewers were less likely to answer correctly than consumers of other news outlets. Fox viewers even did much worse than those who don’t watch any news....The results — controlled for partisanship, education, and other demographics — imply that there is actually something counterproductive about watching a Fox News program. Meanwhile, newspaper readers and fans of NPR, The Daily Show, and Sunday TV news, did the best overall." [Emphasis mine.]

Don't you just love research?

Teachers earn too much? Really?

Well, that's the conclusion reached by a new study published by right-wing thinktank the American Enterprise Institute. To quote AEI: "We estimate that public school teachers receive total compensation roughly 50 percent higher than they would likely receive in private sector jobs." In fact, they conclude that teachers are "overcompensated by 52%."

Many researchers have weighed in to point up serious faults in the methodology of this study. One of them is Jordan Solomon of George Washington University, who attended the presentation of the study. You can find his comments on the methodology in Maureen Downey's "Get Schooled" column in the Atlanta Journal-Constitution. Solomon concluded: " When confronted by an employee for an association representing retired teachers, the presenters admitted that their goal from the outset was to demonstrate that the benefits for teachers were too high. It would appear that Heritage and AEI set out to produce a paper that allowed conservative governors to denigrate teachers and chastise their unions for the “high” salaries and cushy benefits paid to teachers." [Emphasis mine.] Who would have expected it?

Let's pause for a moment and examine pay vs performance in the private sector. Anyone remember Carly Fiorina? Fiorina was the Hewlett Packard CEO who was ousted by her board of directors after a record of failure. She walked away with a $42 million severance package, then ran for governor of California claiming her private sector experience as a "job creator" would put California back on its feet. Sadly, she neglected to mention that while at HP she laid off 18,000 workers. How's that for "pay for performance?"

John Merrow, education correspondent for the "PBS Newshour" writes in the NY Daily News--not usually a teacher-friendly venue--to point out some interesting facts concerning private sector pay and performance.

"The average teacher today earns about $55,000. At least 75 CEOs earn that much in one day, every day, 365 days a year. According to the AFL-CIO’s “Executive PayWatch,” the CEO who ranked No. 75, David Cote of Honeywell, was paid $20,154,012, for a daily rate of $55,216.47".

"Unlike wages for teachers, CEO salaries have been soaring in recent years. Forty years ago, the average public school teacher earned $49,000, adjusted for inflation. That’s a raise of a whopping $150 a year for 40 years, or about one quarter of 1% annually." [Emphasis mine.]

"[The pay for performance model] doesn’t seem to be true on Wall Street and in corporate boardrooms, where the pay of the CEO is often at odds with his company’s performance. Take Cisco’s John Chambers. The website 24/7 Wall Street ranks Chambers as America’s most overpaid CEO, based on his total compensation of $18,871,875 even as the price of Cisco common stock fell 31.4 %."

"In fairness, some teachers are overpaid, because they have “retired on the job” and are just going through the motions until they can retire for real. Of course, there’s a big difference between being overpaid at $55,000 and being overpaid at $20,500,000, which is what Carl Crawford of the Boston Red Sox earned for hitting .255 with just 11 home runs last season. Like the CEO of Honeywell, Crawford earns about $55,000 a day, every day, 365 days a year. "

Merrow points out one other difference: "Teachers spend their own money on supplies for their classrooms. That came to $1.33 billion in school year 2009-10, or $356 per teacher, according to the National School Supply & Equipment Association. I will wager several packs of colored pencils that Dauman, Cote and the other high earners do not drop by Staples to pick up office supplies for their secretaries."

Retirement in America is in trouble.

Back in the "good old days" of a couple or three decades ago, the American retirement system was described as a three-legged stool. One leg was Social Security, while the second was the company pension and the third was individual savings. Together with the security of Medicare, these three legs would provide a reasonable level of comfort and security in our "golden years."

How times have changed! Today's USA Today carries an article titled "Many have little to no savings as retirement looms." Their assessment: "For many Americans, the golden years are quickly taking on a tin-like hue. After a vicious decade of no growth for the stock market, including two 401(k)-eating bear markets and persistently sky-high unemployment, more Americans are finding themselves in their 50s and 60s with practically no money saved for retirement."

What happened? Well, to begin with, about 80% of Americans find one leg of their retirement stool missing: their pension. Pensions disappeared in the private sector when one company after another discovered they could save money by switching to a 401(k) defined contribution plan. Employees thought it sounded great. They would contribute a part of their salary, their employer would match their contribution (up to a point), and they would get to have a say in the management of their retirement funds. What could go wrong?

Well, let's begin with the fact that the average employee is nowhere near the financial wizard they thought themselves to be. The folks who made a career of managing the "old fashioned" defined benefit pension plan really did do a better job of managing money than the average do-it-yourself investor.

USA Today points to an example: :"The people [financial advisor Joel] Redmond encounters most who are lacking sufficient retirement savings weren't necessarily delinquent or negligent. Many had money saved but were wiped out by the sour stock market in the past decade and poor investment strategies, Redmond says."

"That's what happened, in part, to Robert and Connie Cabana of Tampa, who are both in their 60s. Robert built up a sizable 401(k) working as a financial executive at Verizon. Connie was a business assistant for a local irrigation supply company. Connie was laid off four years ago; Robert was let go three years ago."

"But the serious hit to their retirement, which wiped out half their 401(k) savings, resulted from the stock market and an overexposure to risky stocks, they say. Now, 75% of their 401(k) is gone, and they have "very little" left, Robert says."

Then there's the matter that their employers probably never mentioned: To provide the same level of retirement income, those in 401(k)-type plans must accumulate twice as much money as in a traditional defined benefit pension plan. (For a complete explanation of this see "What's so bad about 401(k)-type plans?") 

Nobody bothered to mention that:" A 65-year-old retiree would need to have $1.1 million saved to draw $50,000 a year in inflation-adjusted dollars, assuming 3% inflation and a 5% annual return from investments. That's if the investor is lucky enough to get a 5% return, which, given the flat-line returns of stocks the last decade, might give some pause."

That's a tough order considering that: " More than half of all workers, 56%, say they have less than $25,000 in savings, according to a survey by the Employee Benefit Research Institute." As for retirees: " More than half of retirees, 54%, report they have less than $25,000 saved. That's up dramatically from 2006, when 42% said they had less than that."

What's the meaning of all of this for those of us lucky to be members of the NY State Teachers' Retirement System? Simply this: There is little chance that the traditional pension will make a comeback in the private sector. Those without a pension will more frequently ask why they should pay taxes to provide public employees with a benefit they no longer have any hope of enjoying themselves.

We must stay vigilant--and politically active-- as the retirement "race to the bottom" continues.

Have grandchildren? Give their parents this book!

Those of us who are grandparents like to think that one of our most important functions is to draw upon our vast array of life experiences in giving advice to our grandchildren.

I used to think this was true, and then I read Thomas Friedman's new book, "That Used to be Us: How America Fell Behind in the World It Invented and How We Can Come Back." He made me realize that the world I grew up in--particularly the world of economics and work--had changed so rapidly and so completely that my experiences could no longer serve as a guide to my grandchildren.

You may recall that Friedman--A NY Times columnist and winner of 3 Pulitzer Prizes-- wrote a book called "The World is Flat." According to Amazon's review: "What Friedman means by "flat" is "connected": the lowering of trade and political barriers and the exponential technical advances of the digital revolution have made it possible to do business, or almost anything else, instantaneously with billions of other people across the planet."

"The World is Flat" was written in 2005. Since then, according to Friedman: "When I wrote The World is Flat, Facebook didn't exist, twitter was a sound, the cloud was in the sky, 4G was a parking place, applications were what you sent to colleges and Skype, for most people, was a typo. That's how much the world has changed in just a few years."

Freidman sees the George Clooney movie, Up in the Air, as a perfect metaphor for the first decade of the 21st century. Clooney plays someone who is always on an airplane because he's hired by companies to handle the firing of their employees who are no longer needed due to advances in technology. Eventually, Clooney is replaced by a young woman who comes up with the idea that it's less expensive to fire people over the internet rather than in person.

He tells about a large law firm which is now downsizing during the current economic difficulties. When Friedman asked the firm's head which lawyers were being fired, he received a surprising response. The firm had added many competent lawyers during the boom times. They did the work assigned to them in a competent and professional manner. They have been let go. The lawyers who stayed were the ones who added something "extra" to their jobs. They figured out how to do their work more efficiently, or how information technology would allow the firm to move into new areas of work.

When I finished the book, I purchased copies for my children. I told my son that there were 3 reasons I was giving him the book: 1) It would help him do his job better and give him an advantage over coworkers who had not read the book. 2) He works with large corporations, and understanding how their worlds were changing would help him keep his job.  3) The world is changing so quickly that if he gives his son career advice based on his experiences, it will be outdated wisdom.

My daughter-in-law was wondering whether their son, who is currently in eighth grade, was being pushed too hard in school. His counselor was recommending several advanced placement classes when planning his high school courses. I told her a story from Friedman.

Friedman's mother-in-law is the board chairman at Grinnell College, which is a small liberal arts college in Iowa. Last year, 10% of Grinnell's applications came from China. Of those 250 Chinese applicants, 50% had perfect 800 scores on the math SAT. Those kids are the people who will be competing with my grandson for jobs in a few years. Friedman's comment is that even Americans in "good" schools aren't getting an education that's good enough when compared with the education that is provided by many other countries.

Let me conclude with a wonderful piece of video. It's Friedman talking about his book at the Aspen Ideas Festival. The video runs for about an hour, but I promise you it is one of the best hours you'll spend. Even if you don't read the book, you'll learn something.

Personally, I think the best gift you can give your grandchildren this Christmas is to give a copy of "That Used to be Us" to their parents. Here's the video:

The sky is falling: Not!

Here we go again! Public employee pension systems are supposedly crushing the life out of state finances. Just listen to part of a recent column by Leo Hindery, Jr --former CEO of AT&T Broadband and Liberty Communications--in the Huffington Post. He is referring to the Rhode Island State Pension Fund.

"Rhode Island's state pension fund now consumes 10% of every state tax dollar, and this figure is currently projected to double within just the next few years....And the root problem? Until just this year, Rhode Island calculated its pension number by assuming an average annual rate of return on its investments of 8.25% -- in fact, for the last decade its actual average return on investment was only about 2.40%. And in each of the last 10 years the state's fund paid more money to retirees than the fund collected from state employees and taxpayers combined....Rhode Island is a microcosm of what's wrong with the country's $3 trillion worth of public pensions plans in the aggregate, and it's truly the 'canary in the (national pension crisis) coal mine'. The state -- just like 49 other states -- made promises it didn't sufficiently fund along the way and now can't keep. That bill has come due, so to speak, and...the state is being forced to choose among the state reneging on both past and future promises to workers, undermining its future by cutting back on investing in everything from schools to green energy to health care, or, even though in the midst of an ongoing recession, raising revenues through large tax increases."

It's interesting to compare this with the recent news release by the New York State Teachers' Retirement System:"A robust total fund return of 23.2% net of fees for the fiscal year ended June 30, 2011 was the largest rate of return posted in 25 years by NYSTRS. The figure was nearly double the previous year's return of 12.1%."

"The two consecutive years of double-digit returns helped the System regain much of the loss sustained during the devastating 2008-09 economic crisis. "

"As of June 30, 2011, total net assets were valued at $89.9 billion, an increase of more than $13 billion from a year earlier. NYSTRS has achieved returns well above the 8.0% assumed rate of return in four of the past six years. The System's 25-year annualized rate of return stood at 9.0% — or 100 basis points above the actuarially assumed rate. " 

Remember that part about the Rhode Island system paying out more in benefits than it took in from members and employers? Here's the way the NYSTRS looks at it: "The NYSTRS plan has also proven to be extremely efficient and cost effective. For the 20-year period ended June 30, 2011, NYSTRS collected $15.3 billion in member and employer contributions while paying out $63.5 billion in benefits. Despite distributing nearly $50 billion more than it took in, System assets rose from $31 billion to $89.9 billion."

Are employer contribution rates skyrocketing out of control? Not for NYSTRS: "Due in large part to the System's long-term investment success, the employer contribution rate has remained in single digits over this same 20-year period. In the 1990s the average rate was 5.66% and in the 2000s it was 4.37%. The 11.11% rate applicable to 2011-12 payroll will be the first double-digit rate in 22 years."

It should be noted that the employer contribution rate is based on a rolling 5-year average of investment performance. That means that the losses which occurred in 2008-2009 will work their way out of the calculation in a couple of years. If the stock market doesn't plummet again, it is reasonable to assume that the ECR will actually decrease in the future.

Why is NYSTRS doing so well? The simple answer is that it is fully funded. Other state systems are also supposed to be fully funded, but in New York's case the required contributions by public employers were actually made each year. States such as New Jersey and California took several years off from making contributions as a way of keeping taxes lower.

As i have pointed out before, that's like contracting with someone to paint your house then, when the house is painted telling the painter, "I spent some of the money I was going to use to pay your bill on a big new flatscreen TV, so you'll have to accept less than the contract price." And then, you accuse the painter of being greedy when the painter insists that you pay him the agreed upon price!

Other state public employee pension systems may be in trouble, but it's not because of the "greed" of the public employees. If you hear anyone trying to lump NYSTRS in with those other systems, now you have the facts to set them straight!

And then, a teacher picked up her pen...

I like Fareed Zakaria. He usually has intelligent, informed ideas concerning his specialty, foreign affairs. Last week, he wrote a piece called "When Will We Learn?" for Time magazine and my head nearly exploded.

Now, it didn't start out that way. I agreed with almost all of his thoughts. You really should click on the link above and read the entire article, it's not long. If you're short on time, here are some of his points:

"...it is worth noting that [Steve] Jobs got a great secondary education. The school he attended, Homestead High in Cupertino, Calif., was a first-rate public school that gave him a grounding in both the liberal arts and technology. It did the same for Steve Wozniak, the more technically oriented co-founder of Apple Computer, whom Jobs met at that same school. In 1972, the year Jobs graduated, California's public schools were the envy of the world. They were generally rated the finest in the country, well funded and well run, with excellent teachers. These schools were engines of social mobility that took people like Jobs and Wozniak and gave them an educational grounding that helped them rise."

"Today, California's public schools are a disaster, beset by dysfunction and disrepair. They rank at the bottom of the country, just as the U.S. now sits at the bottom of the industrialized world by most measures of educational achievement. The World Economic Forum ranks the U.S.'s educational system 26th in the world, well behind those of countries like Germany, Finland, the Netherlands, Denmark, Canada and Singapore. In science and math, we score even worse."


OK, no surprises here. I'm nodding in agreement. He continues: "....As American education has collapsed, the median wages of the American worker have stagnated, and social mobility—the beating heart of the American dream—has slowed to a standstill. Education is and always has been the fastest way up the socio economic ladder. And the payoff from a good education remains evident even in this weak recovery. The unemployment rate for college graduates is just 4%, but for high school dropouts it is 14%. If you drop out of high school—and the U.S. has a 25% dropout rate—you will have a depressed standard of living for the rest of your life." More nodding from me.


"The need for better education for most Americans has never been more urgent. While we have been sleeping, the rest of the world has been upgrading its skills. Countries in Europe and Asia have worked hard to increase their college-graduation rates, while the U.S.'s — once the world's highest — has flatlined. Other countries have focused on math and science, while in America degrees have proliferated in "fields" like sports exercise and leisure studies." More nodding, and groaning. The groaning is because I watched the Republican debate Wed. night and one of the two things Rick Perry could remember he would do away with as soon as he became president is the Dept. of Education. That'll sure help us catch up with the rest of the world!

Zakaria goes on to say we need to work harder, like they do in South Korea's schools and get better teachers, as in Finland. "Finland has great teachers, who are paid well and treated with the same professional respect that is accorded to doctors and lawyers. They are found and developed through an extremely competitive and rigorous process. All teachers are required to have master's degrees, and only 1 in 10 applicants is accepted to the country's teacher-training programs. The contrast with the U.S. is stark. Half of America's teachers graduated in the bottom third of their college class."

I like that part about being paid and treated well. My head is now bouncing like one of those bobble-head dolls on a dashboard. And then, my head explodes!

"There are many more ideas, many of them worthwhile and worth trying, but you can get lost in the details of the education debate. These two seem simple—work more and get better teachers. Yet implementing them is anything but simple. They bump up against an education system that is deeply resistant to change and teachers' unions that jealously guard their prerogatives. All the specific measures that would allow students to work more and good teachers to be identified and rewarded— more days, longer hours, merit pay—are mostly opposed by the teachers' unions and other guardians of the status quo." [Emphasis mine.]

You almost got it, Fareed, but you bought into the anti-teacher, anti-union BS being spouted by the education "reformers." I've never met a group of people who so desperately want to change the educational system as do teachers. Have a look. Teachers don't control the system! And I will not apologize for my union's position that adding hours, days or weeks to my work load should mean an increase in compensation. 

So I reached for my keyboard. And then I stopped. I knew there would be an inservice teacher somewhere in America who would respond. This week's issue of Time proved me correct. Here's the letter that Laurie Floyd of Howell, NJ sent in response to Zakaria's piece. (Note: If you are unfamiliar with the Khan videos she mentions, please read the Zakaria piece.)

"Perhaps I shouldn't have read Zakaria's article after spending the last hour of my 10-hour teaching day looking for a copier that worked and then hand-stapling over 100 tests. I was probably a bit cranky to start. Then again, maybe I am a little tired of people who have never taught a roomful of 34 high school students telling me I am doing it wrong. I too love the Khan Academy model, but how would I get all my students to watch the Khan videos at home, on their own time, when many do not have a working computer and some do little, if any, homework?" (And, by the way, I do not teach at an inner-city or rural school; I teach in a wealthy suburb.) Instead of blaming us teachers, ask us what would actually improve education. Here's my answer: 1) Deal with childhood poverty, 2) hold students partly responsible for their education so they meet us at least halfway, and 3) give teachers more time to prepare and receive professional development. A working copier would help too."

I couldn't have said it better.