Turban vs. Terminator

Arnold Schwartzenegger has a new opponent, and this time he’s battling a desi [Thanks Chick Pea!]. The governator’s latest adversary is the head of the the California Medical Association, Dr. Anmol Mahal.

The Fremont, Calif., gastroenterologist admired Schwarzenegger’s goals–coverage for all of the state’s 36 million residents and improving health care for kids. “It’s in some ways very visionary,” Mahal said later. But Mahal’s admiration soured when Schwarzenegger revealed that his plan would force doctors to give up 2 percent of their gross incomes to help fund coverage. “We are very discouraged and disappointed,” Mahal complained. “We had no warning.” [Link]

It is strange enough for me to see two of the highest profile Republican governors in the country pick up Hillary Clinton’s banner of universal healthcare, but stranger still for me to see a turbanned face (wearing a turban almost the same shade of blue that Manmohan Singh wears) staring back at me from the pages of the MSNBC article on the subject.

The racial aspect of this is striking because this is a plan designed, in part, to cover the health expenses of illegal aliens. This is a complete about face from former Republican Governor Pete Wilson’s strategy of demonizing illegal aliens. Having a desi doctor as the face of the opposition adds another twist, framing this as a debate between wealthy legal immigrants and poor illegal ones. That makes the politics more interesting, but also more complex.

The crux of the doctors’ disagreement with the plan is the way in which it will be funded:

nearly 30 percent of the plan’s costs [will be covered] by levying a $3.5 billion “coverage dividend” on doctors’ (and hospitals’) gross revenues. “Why not tax teachers to provide money for better schools?” complains Dr. Samuel Fink, a Los Angeles internist. [Link]

Some medical practices would suffer more than others, doctors complain. Assessed on gross revenues rather than net income, the 2 percent fee hits doctors with high overheads harder, including oncologists, pediatricians and general practitioners–whose overhead costs may amount to 50 to 60 percent of their revenues. [Link]

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p>Here is how the costs break down across various economics groups:

… companies with 10 or more employees who do not provide health coverage be required to pay an “in-lieu fee” of 4 percent of their payroll. Hospitals would contribute a “coverage dividend” of 4 percent of gross revenues, while doctors would pay 2 percent of gross revenues. [Link]

The language of fees is important for two reasons. Firstly, the Governor doesn’t want to be seen as raising taxes:

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Schwarzenegger has steadfastly refused to call them taxes, but some of his own allies in the business and fiscal conservative communities say that’s exactly what they are…. some accuse the governor of being hypocritical, noting that Schwarzenegger criticized his Democratic opponent during the 2006 campaign for supporting a plan that would put billions of dollars in new costs on businesses to pay for health care [Link]

Secondly, there is a constitutional issue involved here:

The tax-vs.-fee debate is more than a question of semantics: It could decide the fate of the proposal. Tax increases require a two-thirds vote in the Legislature, while fees need only a majority. The larger threshold would give Republicans virtual veto power over critical pieces of the governor’s health plan. [Link]

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p>The CMA is girding their loins for a hard fight on these issues, hopeful that the administration will yield ground:

Negotiations have only just started. Dr. Mahal promises that the CMA will lobby hard to cut the provision that docs help pay for the plan. Schwarzenegger has signaled that almost everything is open for discussion–”I look forward to everyone having those debates,” he said on the day he unveiled his plan. [Link]

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One thing I’m sure of – Sacramento lobbyists will be as happy as pigs in $h1t for a while …

222 thoughts on “Turban vs. Terminator

  1. How can H-1s be hired as independent contractors?

    Kush said :

    Through a body shop or consultancy company. Some examples are TCS (Tata Consultancy Services) or mom and pop consultancy services for farm work to cleaning services to software.

    What you describe above is L1 visa situation not H-1. No H1 visa holder can be independant of a company. H1 visa must and must be associated with a company, atleast until the labor certification process.

    Labor certification process requires that H1-B hire gets paid equal to the prevailing wage. A lot of time they are not paid a little less than the prevailing wage but that is because a lot of the H1-b applicants are young and dont have as much experience.

    Labor certification requires that the company sponsoring H1B advertise that job and prove that they were not able to hire an American citizen for that position.

    Now TCS, WIPRO and Infosys do not have to do that. They get their employees on what is known as an L1 visa. L1 visa can NOT be transferred to an H1b visa.

  2. No H1 visa holder can be independant of a company. H1 visa must and must be associated with a company, atleast until the labor certification process.

    RC Please read mine and ALM’s comments. I always used the word contractor, not independent contractor (ALM added independent), please, please read. The consultancy companies are H-1B granting companies, and you are contracted to different companies.

    This is not for only programmers, it is the same way, for farm labor or cafeteria workers or janitors or labor for post-Katrina construction work. The visa granting companies are 1-2 man/ woman outfits that do all the paper work, and take responsibility of you to be sent back if you are fired and/ or once the contract is over or jump the ship.

    RC, A contractor is someone who is hired on a fixed-term basis and is not considered the employee of the company where that person works.

  3. Some random thoughts from a callous, insensitive, money-grubbing physician who is texting this in between holes of golf….

    asha’s dad: word, but the game to play is polo… golf is SO yesterday…

    and for tuition, debt, etc… here is more info… the most expensive med school? likley tufts, or colorado at around 50 grand a year…

  4. Labor certification process requires that H1-B hire gets paid equal to the prevailing wage. A lot of time they are not paid a little less than the prevailing wage but that is because a lot of the H1-b applicants are young and dont have as much experience.

    Again, you are talking yuppish, folky, C++, Java, .net, embedded programmers. Even there, you can easily low ball them or as ALM said, and really milk them hard.

    Let us look farm worker in California, that is me, an expert, 20 year plus farm worker.

    An American costs X + 20/ hr. With my expertise would have costed X + 70/ hr.

    The prevailing wage is X/ hr (say, minimum wage or in a mixed market, with different experiences in the data pool)

    My boss hires me for farm work though a body shop and pays X. The guys get X – 50/ hr and no benefits. 50/ hr is kept by the person who did paperwork for my work permit.

    There 120/ hr differential between me and an American.

    Is this too difficult to understand.

  5. I like the discussion because I am learning something practical. I know you can easily charge $1,500 for filing a H-1 :)

    Lets come up with a scenario. I open a company here called ‘Indian programmers’. Then I contract with IBM or whoever to provide them these programmers for a 6 month project to fix their Internet Explorer or something. My company ‘Indian programmers’ gets the contract as an independent contractor.

    The Indians I hire on H-1 will have to be given a salary by me which will be equal to the prevailing wage rate (lets say $25 a man hour) There are always 4 levels of prevailing wage for a particular job and I will match that level. I am charging IBM $100/hour for every man hour provided by me. The project gets over in 6 months. Theres no other project for another 8 months. Do I still have to keep paying them a salary for keeping their H-1 current can I stop paying them for 8 months.

    (2) After 8 months I get a 10 month contract from Cisco for $35 a man hour. I can only spare to pay my H-1s $25 an hour. However as this is the second year, they only work for 10 months this year. Will their visa status be affected at the end of the second year because they only made $25 an hour for 10 months which does not amount to $50,000 ($25 into 2000 hours) a year. What if I only get one more contract job for 3 months the next year and only pay them $25 an hour for 3 months. Will their H-1 be renewed for another 3 years?

    (3) What if I pay them a percentage of the hourly rate I charge the other companies I independently contract for. Is the test for wage paid every hour, week or month or is the test for wage paid every year?

  6. ALM,

    You are raising excellent points.

    If I (part owner of Indian programmers) brought them (the Indian programmers) on $25/ hr on H-1B visa for 3 years (H-1B are typically done for 3 years at a time, for max 6 years. Not always). I am only obliged to pay them what I signed them for 3 years*** for or if I fire them, then I have pay for their airfare back home. Any contracts in those 3 years, I do not have raise the salary of Indian programmers even if I charged $100/ hr from IBM, and then $200/ hr from Cisco the next six months, and $ 250/ hr from Google for next 2 years.

    *** I can wish to raise the salary within those three years from the goodness of my heart or they can walk away, and get hired straight by IBM for $75/ hr at the end of six months. Then IBM does a new H-1B/ green card for them. It happens all the time. During renewal, I may raise their salary, I may not. Theres no other project for another 8 months. Do I still have to keep paying them a salary for keeping their H-1 current can I stop paying them for 8 months.

    Yes, by law if I keep them and their H-1B current. I can fire them, and let them loose*** (or put them on airplane). Then hire new set later.

    *** Invariably, they will themselves find something new on their own.

  7. What if I pay them a percentage of the hourly rate I charge the other companies I independently contract for. Is the test for wage paid every hour, week or month or is the test for wage paid every year?

    There are no real test. There is no communication between USCIS, DOL, Social Security, IRS unless Homeland Security is on your case – then there is.

    If USCIS find out, then they will be huge penalties.

  8. fresh H-1Bs make little more than graduate stipends, with middle men keep a significant share

    grips glass tightly, thinking of events that transpired more than a decade ago

    M. Nam

  9. Is the test for wage paid every hour, week or month or is the test for wage paid every year?

    As far as I know, typically most consulting companies sponsoring H1B will pay yearly wages. They are required to pay salary even during the bench period. Usually the difference between the hourly rate they charge and the annual wage they shell out is sufficient to cover the bench periods and to still be profitable. If for a significant number of employees that is no longer the case, they start firing people.

    Annual wages received over the last few years typically become an issue for an employee during his/her green card processing. Last three years of W2 and tax returns need to be submitted along with the 140 application. That is where IRS and USCIS interesect, most irregularities are found out and the Ability-to-pay RFE (Request for Information) is issued which often leads to green card rejection.

    DOL job titles are so vague and so unrelated to real-life job titles and responsibilites in the computer/IT industry and the prevaling wage ranges are so big, there is enough room for corporations to depress wages of immigrant scientists and engineers. Additionally, the lost opportunity cost for being stuck at a job, and often at the same position and title, is huge in a fast-changing industry. Also as the H1B engineers are very reluctant to start the long and unpredictable green card process all over again, they are very useful for the projects and tasks no one else will touch. Last two problems are relevant not only for desi bodyshop/consulting companies, but also for large tech companies with thousands of H1B full-time employees such as Microsoft, Cisco, Oracle and IBM where the starting wages are usually at par with American employees but career growth over the following 3-6 years is a different story.

  10. Ahoy you doctors. Thought I’d share this bit of insight into Long-Run Health Care Cost Drivers:

    No matter which subtribe of economists you think is correct in the intellectual health-care wars, the world is moving in directions that make the favored policies of both factions less likely to work in the future.

    It’s quite good and adds another wrinkle to the ongoing debate about what the proper and feasible plan looks like:

    …as America ages and as American society changes an increasing share of the increase in health care costs is going to be driven not by increases in adverse selection by insurers or by moral hazard driven by doctors ordering inappropriate and barely effective care, but by expensive chronic diseases and risk factors driven by long-term lifestyle choices. Nationalizing the health insurance sector won’t diminish the costs in 2050 of treating the lung cancer that the twenty year-old staring smoking today will develop. Increasing copays won’t reduce the costs of treating the diabetes that the five year-old today with a two-coke and three-twinkie-a-day habit will develop in 2045. Neither prescription will be very effective as a remedy to cost drivers like these. Our irresistible force is our belief that health care should not be rationed by price. Our immovable object is the unwillingness of American taxpayers to be turned into an IV drip bag for the health sector that the health sector itself controls. What happens when these meet is a crisis, which cannot be averted no matter whether we adopt the right-wing prescription, adopt the left-wing prescription, or muddle through.

    Ugh. Ugh. Ugh.

  11. What does someone from Cali know about horses? In Texas we ride them to school every day.

    too bad one of the horses made their way to DC.

  12. if this thread is at its end, that’s a fitting ending.

    “Somewhere in Texas a village is missing its idiot”

  13. no von misses: you read my mind.. that was what i was going to say… :) happy friday….as somewhere a horse rides off into the sunset.. happy trails…

  14. Last two problems are relevant not only for desi bodyshop/consulting companies, but also for large tech companies with thousands of H1B full-time employees such as Microsoft, Cisco, Oracle and IBM where the starting wages are usually at par with American employees but career growth over the following 3-6 years is a different story.

    This is true. One of my friends worked for a big tech company, was paid really low. He did not want to get out because he would have to start all over again, while another friend in a consulting company was charging 80% of the billing rate and making more than this guy. Some of the desi/nondesi consulting companies(those with more than 200 employees) are actually better than many big tech companies in paying really well including insurance.

  15. I grew up in Austin, the liberal part of the state, so I’m not a big fan of W either.

    It’s a Texas tradition starting wars (LBJ, Bush the Elder, Bush the Dumbass) I suppose, dating back to the whole Remember the Alamo!

    Incidentally we do have a high number of uninsured patients. In my opinion the illegal immigrants have been the most rewarding patients to take care of in large part due to the fact that they are cooperative, grateful and appreciative for the care that is given to them. Most of them want to get well go back to work so that they can feed their families and send money back to Mexico, as opposed to the obese Americans who want their handicap sticker, the mechanical wheelchair, or their worker’s comp disability filled out.

    Again there should be someway were everyone contributes a small fixed percentage, similar to the 911 fee everyone pays as part of their phone bill or the 9/11 security surcharge when one buys an airline ticket.

    If one really wanted to make illegal immigrants contribute to this, pass a law requiring a fee for money transfers that would go into a health care fund. Make the insurance companies, casinos, lawyers, AND doctors contribute as well. I’ll give 1% of my income to fund this. It just means less money that goes to CARE, Salvation Army, UNICEF, or any of the other charities that I contribute to.

  16. Honestly, pea, I’m disappointed. I don’t dispute your experiences, I’m sure this is what happens, and my masi (an OB/GYN in LA/Anaheim) has had the exact same frustrations. That said, I think it is skewed to assume that because you ran into many undocumented folks “playing the system” that the vast majority of folks play the system. I think this is also an LA-specific thing to a certain extent. Like I said before, I seriously doubt that the “additional burden” on the welfare system outweighs the substantial subsidization to our cost of living. And further, if a kid is born in the U.S. that’s really all that matters, no matter how their mamas worked it. If you’re upset they’re getting MediCal, should we also be angry at low-income women in Watts, Richmond, and EastLos who are having kids who qualify for benefits?

    Also, just for a moment of non-California based clarity, a substantial number of “illegal immigrants” are affluent students from Europe and India/China who let their visas overrun. Are they posing a strong burden on the system when they come in for emergency care, or do we really only care about poor immigrants who can’t afford primary care and might be too scared about being deported to get good preventative care?

    Also, I’m sorry, am I the only person offended by the constant use of “illegals”? What is this, the Round Up Saloon? Should we all join the Minute Men next?

  17. Dipanjan and Kush answered the ‘Indian Programers’ scenario. All I can add is that the H1-B that ‘Indian Programers’ firm has, is linked to ‘Indian Programers’ firm. Then it is the firm’s responsibility to pay the hired people. They have to prove that they are giving prevailing wage. ‘Indian Programers’ have to pay them during the “bench” period (period when there is no project). If ‘Indian Programers’ cant make a profit they will lay off these people, as Dipanjan mentions. But I am not sure how long after getting laid off the programer becomes out of status. So question in your scenario 2) depends on whether the programer was ever ‘out of status’ or not. If not than another 3 year extention is possible. If not than I dont know.

    A lot of this stuff is not something that I personally went thru as I worked in a large corporation out of grad school and they had a law firm that did everything. We just got the paperwork. It was bit easier too, back then.

  18. But I am not sure how long after getting laid off the programer becomes out of status. So question in your scenario 2) depends on whether the programer was ever ‘out of status’ or not. If not than another 3 year extention is possible. If not than I dont know. A lot of this stuff is not something that I personally went thru as I worked in a large corporation out of grad school and they had a law firm that did everything. We just got the paperwork. It was bit easier too, back then.

    A person becomes out of status in 60 days after getting laid off.

    All the contractors go through law firms only. Some big contractors(200+) have their own lawyersin their payroll. Nobody can represent themselves to get a visa.

  19. If you’re upset they’re getting MediCal, should we also be angry at low-income women in Watts, Richmond, and EastLos who are having kids who qualify for benefits?

    We shouldn’t, but many people are. Many of the same ones who are angry about migrant workers getting benefits or using resources. It’s amazing that any social services have survived with the amount of resentment that exists toward the recipients.

  20. What hasn’t been discussed is that the majority of the tax collected will go toward healthcare expenses, i.e. revenue for MDs, hospitals, etc. Furthermore, with the availability of preventive services more revenue will be driven toward primary care and away from speciality care. So in essence this is a progressive tax on doctors, which would explain with the CMA president (a GI) would be up in arms.

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