Voter Discontent May Be Related to Everything Being a Scam
There were two articles last week that appear unrelated but that highlight in their own way the under-appreciated and under-reported unified theory of why everyone is so pissed off and why vague talk of addressing "affordability" isn't going to cut it: Everything is a scam.
The first is in the The American Prospect, examining the pernicious role of various middlemen in our economy, focusing in particular on pharmacy benefit managers (PBMs), the giant but little-known companies that control the vast majority of the country's billions of prescriptions, managing the transactions for insurance plans, negotiating prices with drug manufacturers, reimbursing pharmacists, and controlling the list of drugs that get covered:
Whitney Curry Wimbish
The article tells the story of Cole Schmidtknecht, a 23-year-old with asthma who showed up at a Walgreens needing an inhaler, only to find that his insurance no longer covered the one he usually bought, meaning that instead of having to pay the $35 to $67 he usually paid for it, he would have to pay $519, a 700 percent increase. He chose not to buy it, left Walgreens and died eleven days later.
The company that decided Cole's inhaler was no longer covered was Optum Rx, a PBM that is a subsidiary of insurance behemoth UnitedHealthcare. The problem of PBMs is big and getting bigger. Last year, President Biden's Federal Trade Commission released a report examining how PBMs increase their profits by jacking up drug prices and squeezing independent pharmacies. But PBMs and other middlemen have largely avoided closer scrutiny. As noted in The American Prospect article:
When we think about our family budgets, we don’t factor in the intermediaries who take a profit by sitting in between the things we need and want and the companies that produce them. Middlemen can enable critically important transactions to proceed across time zones and geographical borders. But in the process, said Columbia Law School professor Kathryn Judge, middlemen “acquire a whole host of advantages that they very often systematically exploit to their own advantage and to the disadvantages of the parties they’re trying to connect.” They are the spine running down the entire global economy.
The other article is in The Guardian, this one examining how retail giants Dollar General and Family Dollar routinely charge their customers more than the prices shown on their store shelves:
Barry Yeoman and Jocelyn C Zuckerman
In other words, the shelf shows that the Red Baron frozen pizza is supposed to cost $5, but at the checkout register it rings up at $7.65. Repeated across millions of transactions, the dollar stores log millions in illicit revenue largely unbeknownst to their customers, most of whom are lower-income with little ability to shop elsewhere. Regulation of pricing issues like these is handled at the state level, and according to The Guardian article:
Dollar General stores have failed more than 4,300 government price-accuracy inspections in 23 states since January 2022, a Guardian review found. Family Dollar stores have failed more than 2,100 price inspections in 20 states over the same time span, the review found.
Among these thousands of failed inspections, some of the biggest flops include a 76% error rate in October 2022 at a Dollar General in Hamilton, Ohio; a 68% error rate in February 2023 at a Family Dollar in Bound Brook, New Jersey; and a 58% error rate three months ago at a Family Dollar in Lorain, Ohio.
It's not that states aren't policing the dollar stores. Some are, levying hundreds of thousands of dollars in fines in the process. But the dollar stores have obviously determined that it's easier to just pay the fines and keep overcharging people.
As Dean Baker of the Center for Economic and Policy Research notes, this type of price manipulation isn't just bad in and of itself, it's also bad because it may skew inflation data (the monthly Consumer Price Index is calculated using prices listed on the shelf, meaning increased prices at the register don't show up in the data, potentially leading to an understatement of inflation), and it is likely also driving widespread consumer anger (while some people check their receipts and call the dollar stores on their shenanigans, most don't, but are probably aware that things seem more expensive than they should be).
It's that last part that gets at why I think the vibes are so terrible. You can tell people that AKSHUALLY increases in wages have outpaced increases in prices or AKSHUALLY the price of eggs is falling or AKSHUALLY this whole affordability thing is just one big scam, but you know what? People can be dumb about a lot of things, but they generally have a pretty good sense for when they're getting screwed. And, my friends, I don't know how anyone can make it through a day in America without having a pretty good sense that they're getting it, and they're getting it good and hard.
You have a question about pricing? You say the shelf says the mac and cheese is supposed to cost $3.75, but it's ringing up as $8.75? That is 100% our bad, and we will definitely credit you that $5, and also that $4.50 box of pizza rolls is actually $9.50, so we're all square.
Do you have your loyalty card? No? That 12-pack of Fresca is now $32. You do have your loyalty card? Great. Would you like to apply 10% in savings to this transaction (limit $2.50 in total savings), $2.50 in savings to this transaction, or save your savings for later (must be redeemed within the next 4 days or permanently forfeited, with a total savings limit of 4% (limit $4 in total savings) or $4)).
You have a question about your inhaler? We do have it, but unfortunately, it looks like your insurance doesn't cover that particular life-saving medication any longer, so it now costs $800 even though it only costs the pharmaceutical company $6 to make it. Whoopsie doodle! You can either pay the $800 or go home and die.
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