The Real Protectionism: Favoring Private Insurers at the Cost of Children's Lives

According to this article in the New York Times, Republicans have decided to oppose America's most popular health insurance program - by stealth. Not brave enough to oppose SCHIP in Congress, the Bush administration is bringing in rules that would prevent states from expanding the program to cover more impoverished children.

And they're keeping it nice and quiet. This policy was announced, not in a press conference or news release, but in a letter sent to state health officials from bureaucratic non-entity Dennis G. Smith, the director of the federal Center for Medicaid and State Operations. On a Friday. At 7pm. In the middle of the August holiday period. States received no advance warning and were not consulted on the change in policy.

The letter says that states must demonstrate that they've enrolled 95% of eligible children below 200% of the Federal Poverty Level before they can extend the program - something that no state has ever achieved, and that the President's insufficient budget proposal effectively prevents. The letter goes on to say that:

• states must prove that individuals have been uninsured for a minimum one-year period before they qualify for the program
• states should charge co-payments or premiums that approximate the cost of private coverage
• states must prove that the number of privately insured children in the target group has not decreased by more than 2% over the previous 5 years

The letter concludes with a threat - states that have already been granted federal approval to expand SCHIP to children above 250% of the FPL must amend their state plans to reflect the new rules within a year or face 'corrective action'.

The collective effect of this is a directive which protects the existing corrupt practices of the private health care industry against an affordable, comprehensive health plan that is the only option for many of the working poor. SCHIP has reduced the number of uninsured children in America by one third since 1997. In the same period, private health insurers have increased profits and premiums while the numbers of uninsured and underinsured citizens have increased.

The Bush Administration says its new policy is aimed at preventing the expansion of SCHIP, but its combination of underfunding and impossible-to-meet rules undercuts the entire program. Fortunately, it looks like states are gearing up to fight back. What is certain is that the fight will be tough.

SCHIP is the most visible (and immediately tragic) component of the Bush administration's war on state health initiatives, but there are others. Trade policy- always an area given to undermining programs that help ordinary people- mirrors the Administration's approach to SCHIP. A new report by the Americans for Democratic Action Education Fund, Trading Lives, finds that global trade rules currently being negotiated threaten states' ability to pursue innovative health care reforms. Private insurers that dislike aspects of public programs may try to characterize them as 'disguised barriers to trade' and seek to insert limiting provisions in US trade agreements - again, a method that relies on a lack of Congressional scrutiny and democratic process.

This is the Bush Administration's true face. They say they want free trade, but what they really want is trade that benefits their friends. They say they want to expand access to health care but what they really want is to expand their funders' profits. Congress must deny them on all counts, and put the interests of the American people first.

Trade Rules Put Affordable Medicine At Risk

A lot of people learn the hard way: it pays to read the fine print. Any complex agreement has pages of it, and there are always things hidden in there that you wouldn't sign up to if they were obvious.

The United States is currently finalizing a host of trade agreements with a lot of fine print, and if Americans knew what our government was signing on their behalf they might not like it. Those agreements risk making our health care more expensive, less available, and less responsive to the needs of ordinary people.

International trade agreements are like contracts that countries sign, promising to change their behavior. And like any contract, they are enforceable- in this case, by the World Trade Organization's dispute resolution panels. If a country signs a contract that is bad for its citizens, its position in front of those judging it is no different from somebody who bought a rip-off car with a high payment: sorry, sucker.

But do Americans know what kinds of contracts George Bush's trade bureaucrats are negotiating on our behalf? Do you know what is in our trade deals with Colombia or Peru? Probably not. Trade policymaking is an undemocratic world of lobbyists, lawyers and bureaucrats whose orders are to do what the lobbyists suggest. This is a perfect environment for the special interests who benefit from the current health care system and would see their profits cut if all Americans were to have the health care they need. And they are working out how to bend trade policy to their goal of keeping the health care system profitable for them.

Take, for example, medicine and the right of American states to negotiate affordable drug prices for their citizens. This has become an issue in a number of states that are struggling to deal with ever increasing health care costs. America's drugs are the most expensive in the developed world, and it is possible for states and individual Americans to benefit by forcing drug companies with equivalent products to compete, bringing down prices to an affordable level. The drugs are the same, safety is not compromised, and Americans get the drugs that they need.

Big pharmaceutical companies' profits come from their ability to restrict supply and sell at high prices. And they defend their right to high prices with all the political weapons they can muster. If you run one of the world's most profitable companies, you can afford to fight policies that reduce those profits.

So when American states began to take action to reduce drug prices and give senior citizens a better deal, the pharmaceutical companies fought back. Their lobby group PhRMA filed suits in three states, claiming that the states' programs were illegal. They lost. Game over, right? The elected government of those states decided on a program and the courts decided the program was legal.

No. The pharmaceutical companies struck back through trade law. At the time the United States was negotiating a free trade agreement with Australia. PhRMA and the drug companies got provisions written into the US-Australia free trade agreement that undermine states' ability to negotiate cheaper drugs.

This works for drug companies. They can work in the shadows, quietly inserting provisions into these complex, technical, and frankly, boring agreements.

It also works for service providers, insurance companies and everybody else who benefits from the health care system. A new report by the Americans for Democratic Action Education Fund, Trading Lives, shows how importation of medicines, state health reforms and many presidential candidates' plans might violate provisions that are being inserted into global trade agreements such as the General Agreement on Trade in Services (GATS).

In other words, the United States is already signing agreements that will make it harder to buy affordable medicine. It will soon be signing vague statements that will make it harder to make sure every American can get health care.

The Bush administration doesn't seem to mind, strangely enough. Pharmaceutical companies, insurance companies, and some private health care companies think this sounds all right. Should ordinary Americans mind? Well, ask yourself. Would you like to make sure that American health care becomes more driven by greed, harder to get, and more expensive for ordinary people? If so, you'll like the trade policy agenda in health.

The real protectionism

The US House of Representatives has passed the 2007 Farm Bill by 231 to 191 votes.

There is often a conflict between trade policies that are in the best interests of domestic groups and those that promote development in other countries. The farm bill is a rare example of a law that is detrimental to both. It rewards big agribusiness at the expense of family farmers at home and abroad. The new bill contains some good news thanks to the Democrats (improvements in the food stamps program, funding for conservation efforts and fairer taxation of US subsidiaries of foreign firms) but doesn't fundamentally reform damaging subsidies.

As Kim Elliott at the Center for Global Development points out 70 per cent of subsidies go to 10 per cent of farm operations:

Of the $10 billion in payments for specific commodities in 2004, 60 percent went to just two crops--corn ($4.5 billion) and cotton ($1.6 billion). But rather than reform this discriminatory and inequitable system, legislators preferred to buy off selected critics by adding a few dollars to nutrition and conservation programs, while piling on more trade-distorting subsidies for wheat and other grains, soybeans, and sugar.

This is the real face of protectionism in the US, not family farmers or domestic manufacturers trying to compete in a system that benefits multinationals, not trade unionists and environmental activists campaigning for basic regulatory standards to be included in free trade agreements, and not protesters who question the nature of globalization. Why was there such an enormous fuss about inserting ILO standards into the text of trade agreements, yet very little protest over this incredibly unfair bill?

And why are 'free traders' in Congress willing to let this continue? Passing this bill without cutting farm subsidies shows developing countries in the WTO that the US is hardly serious about the 'development' aspects of the Doha round. The Washington Post reports that the White House has threatened a veto, on the grounds that subsidies remain high. Countries such as Brazil are critical of US and EU agricultural subsidies, the main stumbling block at a recent meeting of the G4 (Brazil, the EU, India and the US). It's enough to make even the most steadfast supporters of the Doha Development Agenda throw up their hands in disgust.

What should we do to improve this situation? First of all, let's remove food stamps from the bill. There must be a better legislative vehicle for this important program. Presidential candidates, how about putting this in your health reform plans?

Second, let's stop subsidizing big agribusiness. Oxfam America provides some good policy suggestions on this. The money could be better spent elsewhere - providing assistance to farmers that really need it, and sponsoring rural conservation and infrastructure development.

And while we're reforming fast track, let's reform the way that Congress votes on farm subsidies as well. A trade policymaking process in which Congress and trade negotiators aren't even reading from the same book, let alone on the same page, is not one that works.

Read more of Holly's posts at her blog TradingLives.

So it's come to this: China kills US homing pigeons

UK National Newspaper the Guardian reports on the latest spat between the US and China in an escalating (but petty) trade war over the safety of consumer goods.

Inspectors at Beijing airport have seized and destroyed a shipment of 41 homing pigeons, after it was found that their health certification was incorrect and the number of birds failed to coincide with what was written on the accompanying documentation.

This 'retaliation' comes on the back of a series of health scares involving Chinese products. Toxic ingredients in Chinese pharmaceutical products killed two people in Panama. Americans and Europeans found industrial solvent in tubes of toothpaste. American inspectors found cancer-causing chemicals in fish, and melamine in pet food. Apart from picking on the pigeons, China has also suspended some US pork and poultry exports.

Of course, this is a symptom of much wider concerns about US trade with China- many of those in Congress are calling for the country to change its trade and monetary policies.

As I have said in my previous post on this topic, China bashing is not the answer. China poses a huge policy problem for the US because of its geography- its enormous population makes labor cheap and its large land mass makes law enforcement difficult. The results of these respectively are i) outsourcing and a huge trade deficit and ii) cheap, but sometimes sub-standard consumer products.

We must look to our own laws first. The US doesn't enforce ILO standards, the administration has allowed the currency to depreciate in order to keep the economy afloat, and we have underfunded the agency that's supposed to inspect the goods we buy. We have made it easier for companies to outsource jobs. We protect the rights of multinational companies and foreign investors over domestic producers, their workers and the public.

Both China and the US must be allowed to grow and prosper in the global economy. Let's get the policies right so that we do so in a sustainable way.