'Intelligent discontent is the mainspring of civilization.' -- Eugene V. Debs

Monday, March 22, 2010

Gaius Responds to Going Down with the Titanic 

Too busy taking care of my son last weekend to notice that Gaius posted a thoughtful response to my Going Down with the Titanic one on Thursday.

Here it is, in its entirety (assuming, of course, that Gaius isn't going to raise a copyright objection):

Richard, you might well be right that the bill is a net loss for union workers.

Many (most?) of them already have health insurance and some will pay taxes on that coverage to help pay the costs this plan.

Also, the individual mandate has essentially the same purpose and the same effect as the "cadillac plan" tax.

It puts a big part of the burden of finance on a population of young and healthy working people who will not, as a group, require services costing anyting like what they will pay in.

The purpose and effect of both these features is to make the less badly off sectors of the working class pay a portion of the costs of the whole program, both administrative and actually medical, that should be paid for by the wealthier classes of society.

Not that they are getting off, completely.

The plan includes increased taxes on those making better than a working class income to finance this large extension of care to tens of millions of those less well off.

But the whole burden should have been tossed on the top end, and none of it on the working class.

Even so, the question can be asked whether Americans making less than that $250K are, as a group, net winners in this.

And the answer, of course, is that they are.

Too, it helps to remember that every major piece of America's social democracy is riddled with ugly compromises and partially defeated by them.

Social Security is far too close to being the coerced individual savings plan conservatives pretend it is when they work to defund, subvert, and destroy it, advertising their project as the liberal one of making it at least in part voluntary.

Medicare is crappy coverage compared to the plans people get from their employers during their working years as to what is actually covered, as to individual premiums, and as to eventual copays and coinsurance in case of need.

The corrupt boondoggle that is Medicare D, though it does provide needed coverage, is a laughing stock.

Medicaid, even in comparatively generous states like Pennsylvania, in case of serious medical need requires people to lose almost everything before kicking in.

The coverage in red states is so limited and wretched there is a constant flow of desperately sick people of all ages from Florida to Pennsylvania or Alabama to Illinois, people hoping to live long enough to establish residency and qualify under the blue state rules for treatment absolutely necessary to save their lives.

Every piece of social legislation imposing burdens on employers from workplace safety to unemployment insurance is full of exceptions for small businesses whose workers are in consequence not protected by these laws and regulations.

And that is a very large slice of American businesses and workers.

Just as this health insurance reform, if it passes, will still leave millions and tens of millions of people in our country without coverage.

All of America’s social democracy is half-assed.

But half an ass is better than none.


The student loan program is a good example of a good idea, corrupted by built in buyoffs for corporations.

Of course, the best idea is totally tax-financed education from bottom to top, for all.

Government guaranteed and subsidized loans from private banks are maybe third or fourth best.

Cheap government loans directly to students with no sweetener for banks is a better idea.

This is the sort of progressive move the Democrats hope to make in the future in connection with the health care reforms to be passed – or not – this weekend.

Interestingly, Gaius is saying pretty much the same thing my co-host said on our KDVS public affairs program last Friday. At the risk of boring everyone with repetition, I see the following problems with this perspective. Unlike Medicare and Social Security, this health care plan relies upon the private sector with minimal regulatory controls, especially in the area of cost containment. The fact that Congress and the President rejected the expansion of Medicare as a way of assisting the uninsured is quite telling as to the long term viability of this approach, if one defines viability as the provision of affordable insurance coverage.

Medicare, for all of its flaws, has provided coverage for over 40 years. Indeed, this plan incorporates the worst features of contemporary neoliberalism, state coercion along with direct subsidies for the insurance industry. The coercion reveals itself through both the mandate and the excise tax, with the tax constituting governmental intervention to discourage the provison of quality health insurance coverage by employers. The delayed application of the excise tax to policies obtained through collective bargaining agreements, if approved through the reconciliation process, will only forestall this outcome.

In regard to the subsidy, there is the obvious allocation of revenue to help people purchase policies. But, they will be insufficent, and, over time, will become even more inadequate given the lack of cost containment. It is entirely possible that the plan will never be more successful than during its first year of implementation, as that will constitute the period in which the subsidies will have the most value in terms of paying for policies. After that, there will be a slow, but inexorable decrease in overall coverage of the populace as the increased costs of policies outpace the subsidies. And, this is the best case scenario. Under the worst one, a coalition of Republicans and Blue Dogs cut the subsidies as part of a broader effort to cut Medicare and Social Security as part of entitlement reform.

The peril is especially acute because the President and the Congress rejected cost containment measures, such as, among others, single payer, the public option and the importation of much less expensive drugs from Canada. Thus, people expecting coverage under the plan face the prospect of being required to purchase policies with limited cost controls while there is unrelenting political pressure to cut the subsidies that they will rely upon to cushion the burden of purchasing them. There is also the problem that the plan is also being subsidized by cuts in Medicare spending over the next 10 years.

As noted by Gaius, a lot of people around the country already have trouble finding doctors because the reimbursement rates are considered too low. It is tempting to dismiss this because it has become a distorted talking point for Republicans, but Medicare is already in the sights of people who want to independently cut it as a means of reducing the deficit. How long before we are confronted with industry funded economic studies that show that dismantling Medicare and folding it into this plan will drastically reduce the government expenditures required to fund health care? One wonders if there is a long term expectation that Medicare will eventually be disbanded and replaced by this approach.

Finally, as I mentioned on Friday, there are the broader macroeconomic questions. There was an opportunity to expand health care coverage for people in a way that was marginally redistributive. In other words, increased coverage would be financed through more revenue obtained from the wealthy than from the middle and lower middle classes, and, furthermore, the middle and lower middle class would be protected from expropriation through ongoing, rapacious rate increases. Such a plan would have increased economic growth and job creation, making easier for people to purchase policies and the government to maintain the program.

Instead, we will now experience the opposite, a moribund economy for the indefinite future, with the middle and lower middle class subsidizing the profit of the industries associated with health care. Both the ability of people to purchase policies, such as they are, and the ability of the government to finance the program, will be compromised. Medicare has survived because of the economic growth, as sporadic as it was, since its inception. The notion that this plan, caught between the pincers of public expectation, lack of sufficient regulation and financial constraints, will fulfill its goal of insuring the vast majority of Americans, strikes me as implausible. But I don't think that has ever been the intention.

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