Thursday, June 03, 2004

Health Care Watch: Flash Point for Falling American Prosperity

A commentator to BOP-news to Ian's Healthcare piece (arguing that the US pays more and recieves less for its healthcare dollars overall) who is self-named "Eric D" had this to say:

In the US everyone does have access to basic health care; the emergency rooms can't turn anyone away.

The ideal you speak of is everyone having access to the best there is which sounds great but someone has to pay for it. Folks like to say 'let the government' pay for it but that's really 'let your working neighbors' pay for it.

So the question becomes, how much of my hard earned money are you going to take from me in order to pay for the health care of someone who could care less about getting a good job?

Does someone who has decided to get no education beyond high school, no job aspirations beyond McDonalds, and who spends most of their earnings on beer and cigarettes 'deserve' the same access to health care that I do? No. They've made choices in life and those choices have consequences, most of which are bad. It's not my duty to be their indentured servant for part of my work day to pay for their bad choices.

As someone raised and who has lived as a Republican I am very sympathetic to Eric D's argument - except that the correlation between making "the right choices in life" and ending up well off is being increasingly undermined. This is happening in Academia, it's happening to middle-class people, it's happening to hi-tech people. Wages have moved very little despite the fact that inflation is way above CPI estimates for everything on education, real estate, insurance, medical care, etc.

The American way of life is literally getting eaten out from underneath us, which is why we're having this discussion. Previously, the pressure wasn't sufficient enough to make socialized health-care look attractive.

As companies offshore more, squeeze benefits, people shift to two-income households to maintain the same lifestyle their parents had on one, manufacturing and now hi-tech goes into the crapper, people have to get more and more education more often and see less and less payoff in their careers, work longer hours, etc. etc.

Then even a dyed in the wool conservative like myself get's exhausted trying to think about what "right choice" to make in order to succeed and provide a good life for my family.

The conservative ethic of trying to protect business at the expense of the public and its championship of individual responsibility for financial life choices are running into an open contradiction. Something has to give. You can't simultaneously not-tax all corporations and give the management all the breaks as a new monied class free of reprucussions of graft or fraud, and simultaneously tell the guy on the street that he'll have to jump jobs five times in his life just to run hard enough to stay in place.

It just can't go on. Health care is just the flash point of this discussion, of the struggle of elder's to maintain financial independence and a inflation wildly out of control because the Fed won't recognize that their CPI estimates are wildly below actual monetary inflation.

Okay, according to the NYT money supply is running at a 12% annualized rate. According to the BEA GDP is growing at 4.3% annualized rate.

Who here believes that you can grow money supply at 12% and GDP at 4% and not have inflation be greater than the CPI says?

Brad Delong's description of the Kerry health-plan however gives little relief:

On the one hand, increasing market pressure on the health care system gets you gains: reduced unnecessary and inappropriate care. On the other hand, increasing market pressure gets you big losses: powerful financial incentives for providers not to treat (or not to pay for treating) the really sick, and for consumers to drop their coverage (and thus make somebody else pay for their bills). One step forward, two steps back. And trying to regulate the market to try to get the forward and not the backward steps lands you in the Pit of Despair and the Slough of Despond.

The Clinton health care reform effort is a decade dead. But now the Kerry campaign has dusted off and brought forward a very clever idea from Brandeis's Stuart Altman to not eliminate but at least diminish the magnitude of these two ways that market-based health-care reforms self-destruct. The idea? Have the government take its task of social insurance seriously, and reinsure private insurers and HMOs: construct a 'premium rebate' pool to pay annual health-care bills over $50,000. This greatly diminishes the cost to insurers and HMOs of covering the really sick. The cost of treating the really sick will then be on the taxpayer rather than on the insurance-purchasing consumer. Insurance rates will fall. And the incentive for the young without many assets to go naked and uninsured will diminish as well.

This essentially amounts to socialized health care. We already have the insurance companies dumping anyone remotely at financial or "pre-existing condition" health risk on Medicaid or Medicare. This proposal would allow them to dump their most expensive insured clients as well in order to become even more profitable. When you give a company a government subsidy this is not an incentive to clean up its act and stop cheating the little guy. This is an incentive to continue cheating the little guy and then start ripping off the tax-payer as well.

So the insurance companies will get to skim the cream off the top and dump people who unexpectedly rack up big bills on the taxpayer, who was paying through the nose for all the people at the bottom who got dumped on "emergency care" of local hospitals or government provided insurance anyway! That is not a solution!

The United States has a per capita GDP of $37,600 (courtesy of the CIA fact book) and that Canada has a per capita GDP of $29,003 per person (courtesy of Nationmaster). (Note that the Nationmaster figure of $35,992 US GDP per capita is comparable to the CIA factbook number). However this is misleading. In the United States the richest 10% have 30.5% of the income. In Canada the richest 10% have 23.8% of the income. Both figures from Nationmaster. If we were to look at asset valuations I'm sure the disparity would be even larger. While the income tax is at least mildly progressive, the laws regarding stocks, bonds, and real estate as forms of wealth are extremely skewed toward the top 10%.

The solution is to fix our economy and economic engine. Companies can't be scape-goated as "Benedict Arnold" CEO's but neither can they be allowed to run roughshod. We're not talking about people like Bill Gates who may bend the laws or break them, but at least is a business leader of acumen. No we're talking about people like Ken Lay, etc. who are just plain frauds who rack up lots of money for doing nothing or worse than nothing. Nothing usually qualifies as getting big bonuses by exporting US capital overseas in order to capture lower structural costs of production. Corporations have become a vehicle for a decadent and incompetent monied style privilege and storage proxy for wealth in order to advance a lifestyle rather than economic productivity.

The scramble over healthcare is just a symptom for the declining prosperity of your typical American who must make ever greater efforts and take ever larger risks just to run in place. At that point I think it's not a question of socialized medicine as opposed to personal responsibility for one's destiny, but we're talking about a commons being looted by a plutocratic agenda in such a way so that neither individual choice or public financing could save the system. The solution to a parasite is to kill the parasite, not to talk about whether the person should be strong enough on their own to carry it or to put them on a hospital IV. Get rid of the parasite and then the person will recover on their own. Even if we socialized the medical services in this country, the looting would still continue.

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