By Annie Berman – Talk Radio News Service

The current health care system is not bankrupting America; Rather, outrageously high medical bills, mounds of credit card debt and expensive mortgages are what cause Americans to file for bankruptcy, experts said Tuesday at a hearing before the House Subcommittee on Commercial and Administrative Law.

Elizabeth Edwards, the wife of one-time Democratic Presidential hopeful John Edwards, shared statistics with the committee regarding vast medical costs forcing Americans into declaring bankruptcy. Edwards explained that such costs force households into cutting back on what they spend on health care.

“According to a recent Kaiser Family Foundation survey, concerns about affording needed medical care led insured individuals to cut back on care due to cost. Responses included postponing care (34%), skipping a recommended medical visit or treatment (30%), not filling prescriptions (27%), and skipping doses or cutting pills (21%),” said Edwards.

University of Michigan Law Professor and bankruptcy expert John A. E. Pottow offered his definition of medical bankruptcy to the committee.

“It could mean someone whose medical debts exceed…a certain percentage of their income. Or it could mean someone who lost income or a job, or even had to mortgage his or her home, due to medical bills,” said Pottow.

Dr. Steffie Woolhandler, a physician and Harvard University medical professor, argued that only a single-payer system can make health care coverage available and affordable to all Americans, and would “save hundreds of billions we now waste on insurance overhead and bureaucracy”. Woolhandler also claimed that private insurance is fundamentally defective and the tremendous amount of over-treatment by doctors causes medical bills to go way up.

However, the committee’s ranking Republican member, Rep. Trent Franks (R-Ariz.), took issue with Woolhandler’s sentiments.

“Here’s my big concern, and that is that somehow the answer to medical bankruptcy is nationalized healthcare…If a [nationalized healthcare system] saves hundreds of billions of dollars, it would be a first in history for government to do something of this complexity and actually save money,” said Franks.

“If indeed private insurance is fundamentally defective…with all the crises that people face with healthcare, if you put it in government hands, even to a partial extent, you will diminish the dignity of the patient and the pressure will be on giving less healthcare…I am convinced that healthcare will become more expensive…Instead of having financial bankruptcy, we will have health bankruptcy,” said Franks.

Today the Supreme Court announced it will hear the case of United Student Aid Fund v. Espinosa.  The case involves a question about procedures an individual most go through in order to reduce student loan debt as part of a bankruptcy proceeding.

Espinosa filed for Chapter 13 and the bankruptcy judge was able to reduce his loans from $17,823.15 to $13,250.  The Fund received notice of this plan and did not make any objections to it.

Three years after Espinosa’s filed for bankruptcy, the Fund claimed that Espinosa still needed to pay back the original loan of $17,823.15.  The Fund claims that they were allowed to revisit Espinosa’s case and ask for full payment because Espinosa never initiated a court hearing to settle the loan, but instead just asked the bankruptcy judge to reduce the amount.

Judge Kozinski, who wrote the opinion for the 9th Circuit, said that the Fund should have taken the opportunity to object to Espinosa’s bankruptcy plan when the Fund received notice three years ago.

The court will likely hear the case in November.

The U.S. financial crisis facing auto-makers has begun to take its toll on the dealers as well. Following the declaration of bankruptcy by both Chrysler and General Motors, two of the U.S.’s largest auto-manufacturers, the companies put forward a plan to restructure their dealership networks. Chrysler will terminate the contracts for 789 dealerships while General Motors plans on terminating over 1,100.

“This has been the most difficult business decision I’ve ever personally had to take, but the decisions had to be made. They were gut-wrenching, but absolutely necessary for Chrysler’s survival,” said James Press, Chrysler President, during a hearing with the Senate Committee on Commerce, Science, and Transportation today.

Dealers have cited a number of concerns over the restructuring. Many dealers were not told why their contracts will be cancelled as opposed to others and questions remain over the reasoning behind shutting down the franchises when the dealers cover all expenses.

Perhaps most distressing for the dealerships is the timeframe in which they have to close-shop. While General Motor’s is giving their franchises till October 2010 to gradually sell their inventory, Chrysler has ordered its dealerships to perform the same task within twenty-six days.

“You just can’t close a dealership in 3 weeks,” said Russell Whatley, a Chrysler dealer who appeared as a witness before the committee. “We have an 8 month supply of vehicles and only three weeks to clear them out.”

By Michael Combier-Talk Radio News Service

President Barack Obama announced today that even though 400,000 jobs have been lost before this restructure of General Motors has begun, more will come in the future, more plants will close and more dealerships will shut their doors. (1:12)

 

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By Michael Combier-Talk Radio News Service

Two months after laying his plan with his Auto Task Force to keep struggling U.S. auto giants from collapsing, President Barack Obama announced today that General Motors has filed for Chapter 11 bankruptcy.

“Working with my Auto Task Force, GM and its stakeholders have produced a viable, achievable plan that will give this iconic American company a chance to rise again. It’s a plan tailored to the realties of today’s auto market – a plan that positions GM to move toward profitability, even if it takes longer for our economy to fully recover; and it’s a plan that builds on GM’s recent progress in making better cars,” Obama said.

Also today, Fritz Henderson, GM President and CEO, said that: “The economic crisis has caused enormous disruption in the auto industry, but with it has come the opportunity for us to reinvent our business. We are going to do it once and do it right. The court-supervised process we are pursuing provides us with powerful tools to accelerate and complete our reinvention, as well as strong safeguards for our customers and our business. We are focused on the job at hand, for the benefit of our customers, employees, dealers, suppliers, retirees, taxpayers, investors and other stakeholders.”

Obama said that GM will build a larger share of its cars in the U.S. and will be more committed to building more fuel-efficient cars.

In addition to the $19 billion already given to the company with federal loans, Obama said that the federal government is investing about $30 billion in GM which will “entitle American taxpayers to ownership of about 60 percent” in the auto company. Obama said his administration was doing this to protect jobs and “that is the only way to help GM succeed.”

The Obama Administration has no interest in running GM or making decisions for the auto company in the future, Obama said.

“GM will be run by a private board of directors and management team (that) will call the shots and make the decisions about how to turn this company around,” said Obama. “The federal government will refrain from exercising its rights as a shareholder in all but the most fundamental corporate decisions.”

But “building a leaner GM will come at a cost. It will take a painful toll on many Americans who have relied on General Motors throughout the generations… More jobs will be lost. More plants will be close. More dealerships will shut their doors, and so will many parts suppliers,” said President Obama.

By Michael Combier-Talk Radio News Service

President Barack Obama announced that even though the federal government will invest $30 billion to restructure the new General Motors, his administration has no interest in running GM which will be run by a private board of directors and a team of management. With this investment, the American taxpayers will own 60 percent of the new GM. (2:24)

 

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Announcing the bankruptcy of General Motors, President Barack Obama detailed the cuts made by the United Auto Workers on health care benefits, of GM shareholders and of unsecured bondholders in order to prevent a liquidation of the auto maker. (1:20)

 

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By Michael Combier-Talk Radio News Service

At a press conference this morning, President Barack Obama announced that 31 days after having filled Chapter 11 bankruptcy, a new Chrysler will emerge in the coming days. President Obama added that bankruptcy has been the best solution for the auto maker and that the American people have been comforted by “this extraordinary commitment to stand behind a quick bankruptcy process.” (1:15)

 

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By Suzia van Swol, University of New Mexico-Talk Radio News Service
One-time giant Chrysler filed for bankruptcy protection today, but President Obama says he has every confidence it will emerge from this process stronger and more competitive.

After speaking with the President today, U.S. Rep. Marcy Kaptur (D-OH) said that the auto industry is important to the U.S. defense industrial base and the economic power of Northern Ohio. “Most important are the 30,000 jobs saved at Chrysler,” said Kaptur.

Kaptur said that the auto industry was brought down by Wall Street and it deserves to flourish. “The government will stand behind the working capital for Chrysler in the form of working capital and loans,” said Kaptur.

Striking comparison with other bailouts, Kaptur said that if you look at who got the big money, “the AIG gets 70 billion, one company?” She went on to say that TARP should have been opened up for vehicle sales
and for the financing of dealership showroom floors. Instead, there was a total credit strangle hold, which still is impacting this industry, and unemployment started to tick up all across the country.

The federal bankruptcy court will ultimately determine Chrysler’s immediate future, but Jeeps might still get a chance to four-wheel over mountains.

Coffee Brown, University of New Mexico, Talk Radio News

Rep. Carolyn Maloney (D-N.Y.) asks whether bailout was necessary, or preferable to bankruptcy.

Maurice R. Greenberg, fprmer Chairman and CEO of American International Group doesn’t think so.

02:35

 

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