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

Thursday, August 20, 2009

The Death of Health Care Reform in Real Time (Part 3) 

For those of you out there who are rightly suspicious that the public option will be nothing more than a rhetorical device to facilitate the passage of a bill dictated by industry participants, consider this:

The people who brought us the public option began their campaign promising one thing but now promote something entirely different. To make matters worse, they have not told the public they have backpedalled. The campaign for the public option resembles the classic bait-and-switch scam: tell your customers you’ve got one thing for sale when in fact you’re selling something very different.

When the public option campaign began, its leaders promoted a huge Medicare-like program that would enroll about 130 million people. Such a program would dwarf even Medicare, which, with its 45 million enrollees, is the nation’s largest health insurer, public or private. But today public option advocates sing the praises of tiny “public options” contained in congressional legislation sponsored by leading Democrats that bear no resemblance to the original model.

According to the Congressional Budget Office, the public options described in the Democrats’ legislation might enroll 10 million people and will have virtually no effect on health care costs, which means the public options cannot, by themselves, have any effect on the number of uninsured. But the leaders of the public option movement haven’t told the public they have abandoned their original vision. It’s high time they did.

After this blunt introduction, Kip Sullivan, a member of the steering committee of the Minnesota chapter of Physicians for a National Health Program, then proceeds to lay it all out for us: the original concept of a public option that would cover as much as half of the non-elderly population, the cost savings that could result, and then, as one could have predicted, the evisceration of it through the legislative process. It is well worth reading in its entirety as a touchstone for evaluating the ultimate outcome.

Sullivan's article also points toward a question that emerged in relation to the bailout, namely, the passivity of the other sectors of the American economy that will suffer as a consequence of a policy dictated by the rapacious interests directly affected. In the case of the bailout, the real estate, manufacturing and service sectors remained mute as trillions of dollars that could have reinvigorated consumption instead went to buttress the balance sheets of transnational financial firms. Whatever one thinks about the environmental merit of the program, Cash for Clunkers reveals the explosive benefit of even minor amounts of effectively targeted stimulus that captures the public imagination.

Imagine if the federal government had adopted some aggressive, targeted proposals designed to provide financial relief to the struggling middle and lower classes, such as, for example, the ones I suggested in February:

. . . . the federal government would deficit spend primarily for the purpose of providing a safety net for those facing severe hardship as a result of unemployment and the loss of the homes. Along these lines, unemployment insurance funds, now within the jurisdiction of individual states, and, in many instances, bordering on insolvency, would be completely federalized for a specified period of time, say two or three years. The federal government would then pour billions into these funds so as to guarantee a much more generous minimum benefit, say 60% of one's salary prior to discharge, with a maximum yearly benefit amount of around $50,000. Of course, these benefits would be untaxed at both the state and federal level.

Such a program would be matched by a loan modification program whereby the banks would be required to refinance the mortgages of people facing foreclosure at existing market rates for those properties. They are already begrudgingly moving in this direction, as they are going to have to eat the losses, anyway. After all, why foreclose on the mortgages when they can instead create a new stream of income by substituting new ones, especially as they are desperate for new transaction fees and revenues going forward.

Clearly, there were many ways to skin the cat, as they used to say back in the North Georgia hill country, so there were, no doubt, other policies that could have achieved equally good, or even better results. But the urgent question here is why did the sectors of the US economy outside of finance acquiesce in the adoption of a policy that was cleary ruinous to them?

And, now in relation to health care, why are they doing it again? In their current forms, the health care reform proposals circulating through Congress will, if adopted, do nothing to arrest the enormous, ongoing transfer of wealth from non-health related sectors of the economy to pharmaceutical companies, health insurance companies and health care providers. Indeed, they will worsen the situation by making it mandatory that Americans purchase health insurance coverage. A combination of a lack of cost containment, with a government imposed requirement that people purchase coverage despite inadequate subsidization, will be yet another constraint, along with the long term consequences of the bailout, upon the rest of the US economy. Expect the offshoring of US jobs to accelerate if Obama succeeds in his effort to reform health care or health insurance or whatever they call it these days.

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