Counting on Kamala to act on price-gouging and debt
Chuck Idelson for Common Dreams
In
addition to the proposals for re-instating and expanding the child tax credit
with a baby bonus for new parents, federal support for affordable housing
construction and a subsidy down payment for first time home buyers, much of the
new focus and attacks have centered on what the Washington Post labeled the “first ever” ban on
price gouging for groceries and food.
What
makes that idea especially noteworthy is its correlation to the medical debt
plan, cap on prescription drug costs and rent increases. A central cause of
those inflated costs goes well beyond the usual claims of supply chain
bottlenecks, government spending on social programs, and the disruption of the
pandemic. In every case, there is a direct link to monopolization and big
corporations exploiting those factors to jack up charges to extract higher,
often record, profits, well beyond their own costs to produce or provide them.
Unpacking
the crisis and main source of medical debt as well as for health care costs
overall, including for prescription drugs, provides the tell.
For over two decades California Nurses Association/National Nurses United researchers have studied how hospitals inflate charges over their costs. Overall, the conclusion has been that hospital profit taking, augmented by corporate mergers, is a clear driver of medical debt.
A 2020 NNU study found that some hospitals had hiked
their charges by as much as 18 times over their costs, exploding profits by 411
percent over the prior two decades. NNU’s forthcoming update on hospital
charges will show that some hospitals by 2022/2023 were now setting charges at
almost 24 times over their costs, doubling their charges over the past 20
years. Further, the biggest for-profit hospital chains set the highest prices
and make the most profits from them. Among the 100 top hospitals with the
highest charges, hospital giant HCA had six hospitals alone with a combined
profit of almost $400 million for that fiscal year.
Big
Pharma is the gold medal winner in profiteering which is why drug costs have
become such a national scandal. The U.S. Senate Health, Education, Labor, and
Pensions (HELP) Committee, chaired by Sen. Bernie Sanders,
issued a Majority Staff Report in February documenting how
three of the biggest pharmaceutical giants, Johnson & Johnson (J&J),
Merck, and Bristol Myers Squibb (BMS), have prioritized profits over patient
need, collectively piling up $112 billion in profits in 2022 through “unethical
pricing strategies, relentless price hikes, manipulative patent tactics, and
extensive lobbying efforts.”
That
lobbying blocked years of efforts to allow Medicare to use its bulk purchasing
power to negotiate lower drug prices, as most other industrial countries have
achieved. It’s why President Biden’s Inflation Reduction Act to permit Medicare
to bargain lower prices for 10 of the highest cost drugs that treat heart
disease, cancer, diabetes, and blood clots was such a dramatic success. The White House this week announced it
will save millions of Medicare recipients $1.5 billion in the first year of the
program.
Grocery
and housing prices
There’s
a similar story of predatory corporate practices on grocery and housing prices.
No they’re not just set by market supply and demand. “Is Harris right on the
economics?” asked political economist Robert Kuttner on Friday in
response to the announcement of Harris' plan.
"A detailed study by Groundwork Collaborative found that
corporate concentration and increased profits accounted for more than half of
the inflation felt by consumers in 2022 and 2023," Kuttner wrote.
"First, it vividly connects with the issue of inflation where ordinary
people feel it… Second, the plan reframes the issue … to how corporate
concentration opportunistically drives price hikes…Third, the approach recasts
the struggle as ordinary people vs. predatory corporations.”
“Today,
everywhere consumers turn, whether they are shopping for groceries at the local
Kroger or for plane tickets online, they are being gouged,” wrote David Dayan and Lindsay Owens in the lead to a
major American Prospect series in June. “Landlords are quietly
utilizing new software to band together and raise rents.”
In
the “40 years from 1979 to 2019, nonfinancial corporate profits
cumulatively drove about 11.4 percent of price growth. From April to
September of last year,” Dayan and Owens continued, “that number was 53 percent.” Factors include corporate
concentration, high-tech pricing practices, utilizing “technological
innovations such as cloud computing, artificial intelligence, and surveillance
targeting” of consumers to collect extensive personal information.
Jarod
Facundo described a panoply of corporate grocery pricing
practices including dominance of shelf space by the biggest chains, surge
pricing, repackaging goods without changing prices, and tech driven
personalizing pricing “for each shopping cart” that have been “the path to
higher margins,” increased costs, and, of course, bigger profits.
Food
company profit increases since
inflation peaked, notes former labor secretary Robert Reich, include
Cal-Maine, the largest U.S. producer and distributor of fresh shell eggs, whose
profits soared 471 percent. Monopolization has also driven food inflation,
Reich says: Just four companies control 85
percent of beef processing, 80 percent of corn seed distribution, 77 percent of
fertilizer production, and 69 percent of grocery sales.
In
an investigative report in October, 2022, ProPublica’s Heather
Vogell described how Texas-based RealPage’s software
facilitated price inflation on rental units. “Property managers across the
United States have gushed about how
the company’s algorithm boosts profits,” she wrote. “The nation’s largest
property management company, Greystar, used the software to price tens of
thousands of apartments.”
In
the American Prospect, Luke Goldstein also zeroed in on the effect of RealPage’s practices to
“maximize profits” in rental markets. “Clients accept the RealPage
recommendations over 80 percent of the time, and the company includes
provisions in its contracts to ensure rent hikes. It heavily pushes adoption to
new clients of an ‘auto-accept’ feature that forces price increases
automatically.”
Corporate
price gouging has not gone unnoticed by the Biden administration, as Dayen and
Owens note, citing the work of its agencies to aggressively target algorithmic
price-fixing, corporate mergers and other practices, such as junk fees and
corporate care interest rates that spark inflation.
Harris
has been a voice on those initiatives as well, which have contributed to her
economic proposals today. The proposals will face considerable assault from
corporate lobbyists and the politicians they influence, of course, which will
require a lot of political organizing to support.
Among
those praising her initiative was Sen. Sanders as staff writer Jake
Johnson reported Friday for Common Dreams.
Sanders called the Harris plan “an important step forward in making our country
a fairer and more just society. I look forward to working with Vice President
Harris when she becomes president to implement her economic agenda, and more,
within her first 100 days in office."
Chuck Idelson is the Communications Senior Strategist for National Nurses United, the nation's largest union and professional organization of registered nurses with 175,000 members.
