Even if corrupt officials and politicians siphon off 20% of estimated Rs6.82 lakh crore of the likely expenditure of the Food Security Bill, they stand to gain Rs1.36 lakh crore in three years. What was the emergency that required an ordinance for this?
With each coming election, every political party revels in playing Santa Claus. With nothing to show by way of good governance, the only way to win elections is to dole out increasingly expensive gifts or promise grandiose welfare schemes. The United Progressive Alliance (UPA) won the 2009 election by promising a Rs52,000 crore loan waiver scheme (and which eventually cost Rs71,680 crore). With the economy in terrible shape and widespread disenchantment, the UPA has now announced, by way of an ordinance, the mother of all welfare schemes: Sonia Gandhi and her advisory commission’s brainchild of national food security. The Commission for Agricultural Costs and Prices of the Ministry of Agriculture has prepared a detailed “Discussion Paper 2” and page 33 gives an estimate of what this will cost the nation – hold your breath – Rs6.82 lakh crore over a three year period!
After failing to pass the Food Security Bill through Parliament, the Union Cabinet promulgated this Ordinance a few weeks before the monsoon session was to commence. This is a clear constitutional impropriety. The power to promulgate ordinances is vested with the President and Governors under Articles 123 and 213 of the Constitution and is based on similar powers that the Governor-General of India and the Governors of provinces had before independence. In a heated debate on 23 May 1949, several members of the Constituent Assembly expressed fears of a misuse of this power. Dr BR Abukir informed the members that this extraordinary power was necessary because the “framework for passing law in the ordinary process does not exist”. In the end, the members accepted that this extraordinary power was a necessary evil to be used in extraordinary situations and not perverted to serve political ends. As has happened several times in the past, our politicians have done exactly what the founding fathers did not expect them to do.
The National Food Security Ordinance, 2013 is a complex piece of legislation that has 44 sections and three schedules. Section 3 guarantees every person belonging to a “priority household” five kilogram of food grains per month at a subsidized price for the next three years. Households covered under the “Antyodaya Anna Yojana” are entitled to 35 kg of subsidized food grains for the same period. Schedule I prescribes the subsidized prices of rice, wheat and cereals at Rs3, Rs2 and Re1 per kilo, respectively. Section 4 provides for free meals to every pregnant woman and lactating mother to meet “prescribed nutritional standards” during pregnancy and six months after childbirth plus a maternity cash benefit of Rs6,000.
Section 8 provides that the non-supply of foodgrains will be compensated by a food security allowance by the State Governments! The Bill casts onerous responsibilities on local authorities and State Governments. For example, each State has to create a Grievance Redressal Mechanism, a State Food Commission and provide sufficient and scientific storage facilities at the State, District and Block levels. The Discussion paper 2 points out that several State Governments will suffer considerably with this Bill. This certainly merited detailed discussion in Parliament and before a Select Committee. It would have been even better to have first launched this scheme on an experimental basis in a few States and then drafted the bill on the basis of lessons learnt.
What was the emergency that required this ordinance? If the hunger of millions of Indians has suddenly caused a pang of pain to our politicians, the primary step was to plug the horrendous leakage in our Public Distribution System (PDS). As such large-scale plunder is possible only with political patronage, it is not surprising that very little has been done to check this loot in most States. Section 29 of the Ordinance provides for monitoring by the same Vigilance Committees at the State, District, Block and fair price shop levels that monitor the PDS .In simple English, nothing will be done and all the malpractices will continue. Even if corrupt officials and politicians siphon off 20% of estimated Rs6.82 lakh crore of the likely expenditure, they stand to gain Rs1.36 lakh crore in three years.
The gargantuan amounts that will be spent on Food Security and other schemes will necessarily reduce the amounts available for improving our infrastructure, education and, equally important, our defence sector. Our global power and influence depends on our economic strength. India is slowly and steadily becoming a sick economy that will find it increasingly difficult to meet the inevitable external and internal shocks. We began 2013 with the country’s economy in a critical state. Not a single bold decision has been taken to take the country on the path of economic recovery. The Food Security Bill may well be the tipping point in our nation’s future and make economic recovery extremely difficult if not impossible. Philanthropy without productivity, welfare without wealth and charity without capital will guarantee the bankruptcy of any nation.
In fine, our political leaders are not like the benevolent, bearded man who brings gifts for children each Christmas. They are vampires masquerading as Santa Claus. They feed on the nation’s resources to win election after election. It does not occur to them that, in the not too distant future, there will be no blood left to suck. What will the vampires then do? Lord Macaulay pointed out that, in the fifth century, the Roman Empire was fearlessly plundered and laid waste by the barbarian Huns and Vandals, who came from without. India faces the tragedy of being plundered and laid waste in the 21st century by elected representatives from within.
(Arvind P Datar is a Senior Advocate of the Madras High Court and also practices in the Supreme Court. He has authored several important books on law and taxation.)
Joan Boice needed help. Lots of it. Her physician had tallied the damage: Alzheimer's disease, high blood pressure, osteoporosis. For Joan, an 81-year-old former schoolteacher, simply getting from her couch to the bathroom required the aid of a walker or wheelchair
Joan Boice surfered from Alzheimer’s, diseases. The disease had gradually left Joan unable to dress, eat or bathe without assistance. It had destroyed much of the complex cerebral circuitry necessary for forming words. It was stealing her voice.
Joan’s family was forced to do the kind of hard reckoning that so many American families must do these days. It was clear that Joan could no longer live at home. Her husband, Myron, simply didn’t have the stamina to provide the constant care and supervision she needed. And moving in with any of their three children wasn’t an option.
These were the circumstances that eventually led the Boice family to Emeritus at Emerald Hills, a sprawling, three-story assisted living facility off Highway 49 in Auburn, Calif. The handsome 110-bed complex was painted in shades of deep green and cream, reflecting its location on the western fringe of the craggy, coniferous Sierra Nevada mountain range. It was owned by the Emeritus Corp., a Seattle-based chain that was on its way to becoming the nation’s largest assisted living company, with some 500 facilities stretching across 45 states.
Emeritus at Emerald Hills promised state-of-the art care for Joan’s advancing dementia. Specially trained members of the staff would create an individual plan for Joan based on her life history. They would monitor her health, engage her in an array of physically and mentally stimulating activities, and pass out her 11 prescription medications, which included morphine (for pain) and the anti-psychotic drug Seroquel (given in hopes of curbing some of the symptoms of her Alzheimer’s). She would live in the “memory care” unit, a space designed specifically to keep people with Alzheimer’s and other forms of dementia safe.
At Emerald Hills, the setting was more like an apartment complex than a traditional nursing home. It didn’t feel cold or clinical or sterile. Myron could move in as well, renting his own apartment on the other side of the building; after more than 50 years of marriage, the couple could remain together.
Sure, the place was expensive — the couple would be paying $7,125 per month — but it seemed ideal.
During a tour, a salesperson gave Myron and his two sons, Eric and Mark, a brochure. “Just because she’s confused at times,” the brochure reassured them, “doesn’t mean she has to lose her independence.”
Here are a few things the brochure didn’t mention:
Just months earlier, Emeritus supervisors had audited the facility’s process for handling medications. It had been found wanting in almost every important regard. And, in truth, those “specially trained” staffers hadn’t actually been trained to care for people with Alzheimer’s and other forms of dementia, a violation of California law.
The facility relied on a single nurse to track the health of its scores of residents, and the few licensed medical professionals who worked there tended not to last long. During the three years prior to Joan’s arrival, Emerald Hills had cycled through three nurses and was now employing its fourth. At least one of those nurses was alarmed by what she saw, telling top Emeritus executives — in writing — that Emerald Hills suffered from “a huge shortage of staff” and was mired in “total dysfunction.”
During some stretches, the facility went months without a full-time nurse on the payroll.
The paucity of workers led to neglect, according to a nurse who oversaw the facility before resigning in disgust. Calls for help went unanswered. Residents suffering from incontinence were left soaking in their own urine. One woman, addled by dementia, was allowed to urinate in the same spot in the hallway of the memory care wing over and over and over.
The brochure also made no mention of the company’s problems at its other facilities. State inspectors for years had cited Emeritus facilities across California, faulting them for failing to employ enough staff members or adequately train them, as well as for other basic shortcomings.
Emeritus officials have described any shortcomings as isolated, and insist that any problems that arise are promptly addressed. They cite the company’s growing popularity as evidence of consumer satisfaction. They say that 90 percent of people who take up residence in assisted living facilities across the country report being pleased with the experience.
Certainly, the Boice family, unaware of the true troubles at Emerald Hills, was set to be reassured.
“We were all impressed,” recalled Eric Boice, Joan’s son. “The first impression we had was very positive.”
And so on Sept. 12, 2008, Joan Boice moved into Room 101 at Emerald Hills. She would be sharing the room with another elderly woman. After a succession of tough years, it was a day of great optimism.
Measuring the dimensions of his mother’s new apartment, Eric Boice sought to recreate the feel of her bedroom back home. He arranged the furniture just as it had been. He hung her favorite pictures in the same spots on the wall. On her dresser, he set out her mirror and jewelry box and hairbrush.
Joan, 5-foot-2 and shrinking, had short snow-and-steel hair and wintry gray-blue eyes. Eric looked into those eyes that day at Emerald Hills. He thinks he might have seen a flicker of fear. Or maybe it was just confusion, his mom still uncertain where, exactly, she was.
A Reform Movement Winds Up on Wall Street
The Emeritus Corp., the assisted living corporation now entrusted with Joan’s life, sat atop an exploding industry.
Two decades earlier, Keren Brown Wilson had opened the nation’s first licensed assisted living facility in Canby, Ore., a small town outside of Portland. Wilson was inspired by tragedy: A massive stroke had paralyzed her mother at the age of 55, forcing her into a nursing home, where she was miserable, spending the bulk of her days confined to a hospital bed.
Wilson aimed to create an alternative to nursing homes. She envisioned comfortable, apartment building-style facilities that would allow sick and fragile seniors to maintain as much personal autonomy as possible.
“I wanted a place where people could lock the door,” Wilson explained. “I wanted a place where they could bring their belongings. I wanted a place where they could go to bed when they wanted to. I wanted a place where they could eat what they wanted.”
These “assisted living” facilities would offer housing, meals and care to people who could no longer live on their own but didn’t need intensive, around-the-clock medical attention. The people living in these places would be called “residents” — not patients.
It took Wilson nine years to persuade Oregon legislators to rewrite the state’s laws, a crucial step toward establishing this new type of facility. After that, states across the country began adopting the “Oregon model.”
But what began as a reform movement quickly morphed into a lucrative industry. One of the early entrants was Emeritus, which got into the assisted living business in 1993, opening a single facility in Renton, Wash. The company’s leader, Daniel Baty, had his eyes on something much grander: He was, he declared, aiming to create a nationwide chain of assisted living facilities.
Two years later, Baty took the corporation public, selling shares of Emeritus on the American Stock Exchange, and piling up the cash necessary to vastly enlarge the company’s footprint. Many of Emeritus’s competitors followed the same path.
The company’s rapid growth was, at least in part, a reflection of two significant developments. Americans were living longer, with the number of those in the 65-plus age bracket ballooning further every year. And this growing population of older Americans was willing to spend serious money, often willing to drain their bank accounts completely to preserve some semblance of independence and dignity — in short, something of their former lives.
As the assisted living business flourished, the federal government, which oversees nursing homes, left the regulation of the new industry to the states, which were often unprepared for this torrent of expansion and development. Many states didn’t develop comprehensive regulations for assisted living, choosing instead to simply tweak existing laws governing boarding homes.
In this suddenly booming, but haphazardly regulated industry, no company expanded more aggressively than Emeritus. By 2006, it was operating more than 200 facilities in 35 states. The corporation’s strategy included buying up smaller chains, many of them distressed and financially troubled, with plans to turn them around.
Wall Street liked the model. Market analysts touted the virtues of the company and its stock price floated skyward. One of the corporation’s appeals was that its revenues flowed largely from private bank accounts; unlike hospitals or nursing homes, Emeritus wasn’t reliant on payments from the government insurance programs Medicare or Medicaid, whose reimbursement rates can be capped. As the company noted in its 2006 annual report, nearly 90 percent of its revenues came from “private pay residents.”
In filings with the Securities and Exchange Commission and in conference calls with investors, Emeritus highlighted many things: occupancy rates; increasing revenue; a constant stream of complex real estate deals and acquisitions; the favorable demographic trends of an aging America.
“The target market for our services is generally persons 75 years and older who represent the fastest growing segments of the U.S. population,” Emeritus stated in a 2007 report filed with the SEC.
Today, the assisted living industry rivals the scale of the nursing home business, housing nearly three-quarters of a million people in more than 31,000 assisted living facilities, according to the U.S. Department of Health and Human Services.
Keren Brown Wilson, the early and earnest pioneer of assisted living, is happy that ailing seniors across the country now have the chance to spend their final years in assisted living facilities, rather than nursing homes. But in her view, the rise of assisted living corporations — with their pursuit of investment capital and their need to please shareholders — swept in “a whole new wave of people” more focused on “deals and mergers and acquisitions” than caring for the elderly.
She speaks from experience. After her modest start, Wilson went on to lead a company called Assisted Living Concepts, and took it onto the stock market. Wilson left the company in 2001, and it has encountered a raft of regulatory and financial problems over the last decade.
“I still have a lot of fervor,” said Wilson, who now runs a nonprofit foundation and teaches at Portland State University. “I believe passionately in what assisted living can do. And I’ve seen what it can do. But for some of the people, it’s just another job, or another business. It’s not a passion.”
“A Phenomenal Deal”
Joan Boice, born Joan Elizabeth Wayne, grew up in Monmouth, Ill. It was a tiny farm belt community, not far from the Iowa border. Her father, a fixture in the local agriculture trade, owned a trio of riverfront grain elevators on the Mississippi and a fleet of barges. As a teenager, she spent her summers trudging through the fields, de-tasseling corn.
In 1952, accompanied by a friend, Joan packed up a car and followed the highway as far west as it would go. Then in her early 20s, she was propelled by little more than the notion that a different life awaited her in California. In a black-and-white snapshot taken shortly after she arrived, Joan is smiling, a luxuriant sweep of dark hair framing her pale face, gray waves curling in the background. It was the first time she’d seen the Pacific.
Joan had been a teacher for two years in Illinois, and she quickly found a job at an elementary school in Hayward, a suburb of San Francisco. In certain regards, her outlook presaged the progressive social movements that were to remake the country during the next two decades. She viewed education as a “great equalizing force” that could help to remake a society far too stratified by class, race and gender.
“She was just free-spirited and confident,” Eric, her son, said.
Joan met Myron Boice through a singles group at a Presbyterian church in Berkeley. On their wedding day, Joan flouted convention by showing up in a blue dress. The Boice children came along fairly quickly: Nancee, then Mark, then Eric.
Myron Boice was a dreamer. A chronic entrepreneur. He sold tools from a van. He made plans to open restaurants. He had one idea after another. Some worked; others didn’t.
Joan’s passion for education never dissipated. Even in her late 60s, she continued to work as a substitute teacher in public schools. After retirement, she began volunteering with a childhood literacy program.
But age eventually tightened its grip, and hints of a mental decline began surfacing around 2005. Eric grew worried when she couldn’t figure out how to turn on her computer twice in the span of a few months. Then she forgot to include a key ingredient while baking a batch of Christmas cookies. The cookies were inedible.
The elderly couple was still living in the San Francisco suburbs, when, in late 2006, a doctor diagnosed Joan with Alzheimer’s. As her mind deteriorated, Myron struggled to meet her needs. The situation was worsened by the fact that none of the children lived nearby. Mark was in Ohio. Nancee was about an hour away in Santa Cruz. And Eric and his wife, Kathleen, were roughly two hours away in the foothills of the Sierra.
“We offered my parents to come and live with us,” Eric recalled. But Myron said no. He and Joan wouldn’t move in with any of the kids. The family patriarch refused to become a burden.
A physician encouraged Joan and Myron to consider assisted living. It made sense. And so Myron sold their home in 2007 and the couple moved into a facility called The Palms, near Sacramento. The move put them approximately 40 minutes away from Eric and Kathleen.
“They were very attentive to every single thing she needed,” Kathleen Boice said of the staff at The Palms. “They actually re-taught her to eat with a fork and a knife.”
By 2008, however, Myron wanted a change. He wanted to be closer to his son and daughter-in-law and grandkids. He wanted different meals, a new environment. Myron began hunting for a new place to live, a search that led to Emeritus at Emerald Hills in Auburn.
Emeritus opened the Emerald Hills complex in 1998. It was, in many ways, a classic Emeritus facility, situated in a middle-class locale that was neither impoverished nor especially affluent. It was a sizable property, capable of housing more than 100 people.
In part because of its appetite for expansion, Emeritus was in the early stages of what proved to be a period of enormous stress. In 2007, the company had made its biggest acquisition to date, buying Summerville Senior Living Inc., a California-based chain with 81 facilities scattered across 13 states.
The purchase — which expanded Emeritus’s size by roughly one-third — helped the company make another major leap, bouncing from the low-profile American Stock Exchange into the big leagues of commerce, the New York Stock Exchange. News of the Summerville deal propelled the company’s stock to a new high. Emeritus was poised to become the nation’s No. 1 assisted living chain.
But the timing for this bold move turned out to be wretched. The real estate market was freezing up, and it would soon collapse, plunging the nation into an epochal recession. For Emeritus, the economic slowdown and then the housing crash posed direct challenges. Its services didn’t come cheap, so many people needed to sell their homes before they could afford to move into the company’s facilities. With the real estate market calcified, Emeritus’s customer pool shrank.
“Our stock price plummeted,” recalled Granger Cobb, Emeritus’s chief executive officer, who joined the company as part of the Summerville deal. The company’s occupancy rates had been trending skywards. Now they went flat.
At Emerald Hills, the economic slowdown that summer was making life tough for Melissa Gratiot, the lead sales agent.
“It was way harder to move residents in,” she remembered.
But there was some good news. She was close to a significant sale, this one to a couple. Gratiot worked the pitch. She talked with the family. She emailed. She gave them a tour of the facility’s memory care unit, called The Emerald City. She told the family she’d received approval from higher ups to offer the family “a phenomenal deal.”
Gratiot closed the sale. On Aug. 29, 2008, Myron and Eric signed the contract, and the family opened its wallet: A $2,500 initial move-in fee; $2,772 for Joan's first two weeks in Room 101; another $1,660 for Myron.
There had been one oversight, though. No one at Emeritus with any medical training had ever even met Joan, much less determined whether Emerald Hills could safely care for her.
Correction (7/29): An earlier version of this story stated that Emeritus at Emerald Hills had failed a company audit of its memory care unit before Joan Boice moved in. It has been corrected to say an audit found flaws in the facility’s medication handling process before Boice moved in. The memory care unit was audited while Boice was living there and failed nearly every important test.
This story was produced in collaboration with PBS Frontline. Full episode airs Tuesday night, 30th July. Watch the trailer here: Life and Death in Assisted Living
NEXT PART: They Are Not Treating Mom Well
While keeping key rates unchanged, the RBI said India is currently caught in a classic ‘impossible trinity’ trilemma whereby it has to forfeit some monetary policy discretion to address external sector concerns
The Reserve Bank of India (RBI), in its first quarter credit policy review has kept repo, reverse repo, cash reserve ratio (CRR) and bank rate unchanged. The central bank said India is currently caught in a classic ‘impossible trinity’ trilemma whereby it has to forfeit some monetary policy discretion to address external sector concerns.
"The recent liquidity tightening measures by the Reserve Bank are aimed at checking undue volatility in the foreign exchange market and will be rolled back in a calibrated manner as stability is restored to the foreign exchange market, enabling monetary policy to revert to supporting growth with continuing vigil on inflation. It should be emphasised that the time available now should be used with alacrity to institute structural measures to bring the CAD down to sustainable levels," the central bank said in a statement.
With no change in key policy rates, the repo rate (the rate at which the RBI lends money to banks) remains at 7.25%. Similarly reverse repo rate (the rate at which the RBI borrows from banks), CRR, and bank rate remains at 6.25%, 4.00% and 10.25%, respectively.
Reverse Repo Rate..........6.25%
The central bank said its monetary policy stance over the last two years has predominantly been shaped by the growth-inflation dynamic even as external sector concerns have had a growing influence on policy calibration over the last one year. “The current situation – moderating wholesale price inflation, prospects of softening of food inflation consequent on a robust monsoon and decelerating growth – would have provided a reasonable case for continuing on the easing stance. However, India is currently caught in a classic ‘impossible trinity’ trilemma whereby we are having to forfeit some monetary policy discretion to address external sector concerns,” the RBI said.
The trilemma refers to the difficulty of simultaneously having free capital movement, a stable exchange rate and an independent monetary policy.
DK Aggarwal, chairman and managing director of SMC Investments and Advisors, said, "By announcing the measures twice this month to curb deceleration in rupee, it has become quite evident that RBI is not going to cut rate and that only happened in today policy review meeting. The past cuts also did not get transmitted meaningfully in the banking system because of rise in delinquency rates and overall deficit in the banking system. And now with the shift in policy stance we expect RBI to cut rates with a lag of three to six months."
"Looking at the other side of the coin, let us suppose even if RBI cut rates, then also banks would not reduce rates as now there would be shortage of funds of more than 1% of net demand and time liabilities. The recovery is yet to gather momentum and as a result of which more pain in terms of rise in non-performing assets (NPAs), fall in government revenues from the levels at which they are budgeted, may happen," Mr Aggarwal added.
RBI also lowered the gross domestic product (GDP) forecast to 5.5% from 5.7% and headline inflation to 5.1% from 6% for the fiscal year ending March 2014 and said that monetary policy stance would again shift towards supporting growth when normalcy returns in foreign exchange market.
Industry body, Confederation of Indian Industry (CII) feels that the moderation of growth outlook by the RBI is a matter of great concern and this enforces its view that actions on multiple fronts are required to help the economy revive.
"We have shared with the Government our concerns about the high Current Account Deficit and these concerns call for financing measures, but more importantly, we need to ensure that we are able to establish a very competitive manufacturing sector. Our exports need to increase exponentially and with a strong manufacturing sector we should be able to obviate the need for many imports, which could be very well manufactured within the country" said Kris Gopalakrishnan, president, CII.
Through 2012-13, the Reserve Bank persevered with efforts to address growth risks with a 100 basis points (bps) reduction in the repo rate, supported by policies to ease credit and liquidity conditions through a 75 bps reduction in the CRR, 100 bps reduction in the statutory liquidity ratio (SLR) and open market operation (OMO) purchases of about Rs1.5 trillion.
During May this year, the central bank continued with its easing stance with a reduction in the policy repo rate by a further 25 bps to support growth in the face of gradual moderation of headline inflation. With upside risks to inflation still significant in the near term, however, the Reserve Bank indicated that it saw little space for further policy easing and warned that risks because of the CAD could warrant a swift reversal of the policy stance. In its mid-quarter review of June, the Reserve Bank paused its policy easing. This policy stance was informed by the need to wait for a durable receding of inflation and to be prepared for the impact of growing uncertainty in global financial conditions.