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Economics and Social Justice

A healthcare reform blog

by David Sirkin

1 August 2009; most recent entry 11 August 2009; last modified 11 April 2010

1 Aug 2009: my facebook comment re Uwe Reinhardt's 3 July 2009 New York Times Economix blog post:

Reinhardt makes some good points. Some of the comments from readers also good. Unfortunately, Obama and Congress making same mistake as Clintons: trying to include for-profit health insurance in the new system. Result: projected costs very high and insurance industry fights it anyway. Would be better to imitate Germany as Reinhardt has suggested in past (see also Reinhardt on NYT Economix blog 24 July 2009): 200 payers, tight government control, additional private insurance available, and cost per capita is half of what we are paying in US (despite the fact that Germany's population is older than ours!).

from the reader comments on the 3 July 2009 Economix blog:

(click here to go to this comment on the NYT website) Do you guys realise just how much the rest of the developed world is laughing at your inability to get your act together on this? The rest of us solved this one fifty years ago.

(click here to go to this comment on the NYT website) I see no logical way that the USA will ever have universal health care for its citizens. The lobbyists in the drug, medical associations and insurance companies see it seriously impacting their profits. They will spend hundreds of millions, perhaps billions, to fight universal health care. Politicians will be bought. US citizens will be bombarded with advertising to convince them that universal health care is evil. Who is going to compete with these pressure groups? Citizen groups will not be formed to offset those who profit from the existing health care system because those who would lead such a fight are complacent and have medical coverage.

2 August 2009: Recent developments (the last few days):

Robert Reich criticized Obama administration for agreeing to give the drug companies what they want: the government will not negotiate prices, and in addition they will give the big companies some more protection against competition from generics. “This is sure to drive prices sky-high,” he said.

Blue Dog (conservative) Democrats suggested non-profit “cooperatives” as alternative to “government option” for health insurance. (Good! This sounds like the beginning of a German-style system!)

Friday (31 July) evening TV:
Bill Moyer's Journal: Program on business practices of insurance companies and their scare tactics to kill health care reform, featuring interview with ex-Cigna PR exec Potter, who said that the insurance companies warn against letting government bureaucrats get between patient and doctor, without telling us that that what we have now is Wall Street (and the insurance companies trying to maximize profits to please investors) getting between patient and doctor. It also featured clips from Michael Moore's 2007 movie, “Sicko,” showing how happy patients were in other countries with their health care systems. Potter was able to explain how the insurance companies successfully blunted the impact of this movie by publicizing that Moore was a Hollywood movie-maker creating entertainment; not a factual documentary.
ABC's 20/20: A program “exposing” the administration's plan to create “socialized medicine.” Had numerous clips of people waiting in long lines for treatment in other countries. (Seemed like pure propaganda supported by the insurance companies, of exactly the sort Potter talked about!)
Unfortunately, 20/20 probably reached a much bigger audience than Bill Moyer's Journal.

Obama attempts to limit the debate by labeling desired reform as “health insurance reform” rather than “healthcare reform.” (This step seems to accomplish little, as most of the attention and debate has focused on insurance anyway.)

Today the Obama administration (Geithner, Summers) indicate that Obama may not be able to keep his pledge not to raise taxes; the government might have to raise taxes on the middle class in order to pay for a new healthcare program.

Obama in recent speech says extra costs now are justified in order to save money down the road. (The only problem is, so far he has not outlined how and when the cost-savings are to occur.)

Summary: Obama is losing credibility. He says he want to save money, when he has not presented a plan to save money. Also, he has told the insurance companies that they have no reason to fear a “government option,” when any fool can see that private corporations cannot compete on equal footing with government programs that do not have to make a profit. Now he is nailing the coffin on healthcare/health insurance reform by threatening to go back on his promise not to raise taxes on the middle class, without being able to prove to them that the proposed reforms will have a net benefit for them. He will be seen to be confirming the suspicions of vast numbers of people like the working-class white man interviewed on NPR a few days ago who said of the healthcare reform plans, “It's for minorities; it's not going to help white people.”

What Obama should have done: Talk straight and tough: Tell the country that we are going to have a new system, which will be rather similar to the German system, which will cover everyone with good insurance, and which will cost half as much as the system we now have. To the insurance companies he should say, “Sorry, but under the new system you will shrink to a small fraction of your present size.” To the drug companies, “Sorry, but you will not be able to make the kind of profits you have been enjoying anymore.”

Apparently Obama believes that he cannot ignore the special interests (private health insurance, pharma) and get a bill passed. If he is right, then maybe we have to reform government before we can reform healthcare.

5 Aug 2009:  Noisy agitators organized by Republican operatives disrupt and end townhall meetings of Democratic congressmen in their districts during summer recess.  There seem to be no answering counter-demonstrations by supporters of the current healthcare reform bills.  Conclusion:  Though, reportedly, the majority of the public wants health care reform, very few are very enthused by what has been offered so far.

My proposal now:  There seems to be a lot of support for a few minor, but important reforms, such as forcing insurance companies to accept anyone, regardless of preexisting conditions.  Get a few things like that passed soon and then put the rest on hold.  Arrange for congressmen and senators and citizen groups to visit various countries and see first hand how things are there: meet with government officials, patients, doctors, nurses (as Michael Moore did in “Sicko,”).  Talk to people in cafes and bars.  Then publicize more how things are in some of the countries we might emulate.  Obama may have been wrong to believe that healthcare legislation had to be done in a hurry.  The belief that time is in the insurance companies' interest is probably wrong.  It is the opposite.  A hurried, inadequate, misguided bill is much more vulnerable to attack.  With time, things are only getting worse with the status quo.  In the shorter run, taking time to get people focused on the problems with the status quo, and on the advantages of some of the systems in other countries, can facilitate the crafting of better legislation that would be much harder for the special interests and the reactionary conservatives to attack.

10 Aug 2009:  Lots of conservatives talking about how terrible the Canadian system is.  Everyone seems to have a story of a friend or a relative in Canada who has had some terrible experience not being able to get a necessary medical treatment.  Often the story ends with the person coming over to the USA to get treated in the world's best system.  Funny thing--no one seems to ask the question:  If the Canadian system is so terrible, why don't they get rid of it and replace it with our great system?  Last I heard Canada is a democracy.  Finally, NPR's Morning Edition program went to Vancouver, Canada and interviewed Canadians to debunk the myths.

11 Aug 2009:  Obama managed to have a pretty smooth town meeting in New Hampshire.  I feel he hurts his case with unnecessary disingenuousness:  "Government will not run healthcare," (It depends on how you define "run"), and, "You can keep your health insurance," (Sure, until your health insurance company goes out of business, as most of them will--and should, when large numbers of people leave them in favor of the public option, or the coop option).

26 Sept 2009: The new plans from Obama and the Senate: Some of the reforms are almost guaranteed to increase costs: requiring insurance companies to accept all customers and forcing them to pay more claims. And if the government's role in helping to provide universal coverage primarily is to subsidize premiums for those who cannot pay, then costs will rise through the roof. The main cost-saving measure I heard in the President's speech to Congress was to reform the legal systems for malpractice lawsuits to reduce the associated legal and insurance expenses for healthcare providers. The “public option” or coop option for health insurance could be the big cost-saver ultimately, if it expands to replace for-profit private health insurance. The coop option could end up being a public option in disguise if the government becomes the ultimate reinsurer, by establishing something akin to the FDIC (Federal Deposit Insurance Corporation) to back up the coops when they fail.

26 Sept 2009 bis: In his August 21 NYT Economix blog, Uwe Reinhardt finds it "remarkable that the United States, one of the richest countries in the Organization for Economic Cooperation and Development, has never been able to offer its citizens that kind of stable financial security" that countries such as Germany, Canada, Japan, and Taiwan are able to offer their citizens through their health insurance systems.

In a previous post, he explains that some of these countries do this because they have a "social ethic, [which] is based on the principle of social solidarity. It means that health care should be financed by individuals on the basis of their ability to pay, but should be available to all who need it on roughly equal terms." He goes on to say that the American "immature, asocial mentality is rare in the rest of the world."

This "asocial mentality," our lack of a sense of "social solidarity," is the biggest obstacle we have to overcome. We are still a racially divided, racist country. Those who are relatively well off (who are predominantly white) do not feel it their obligation to pay for health care (or anything else) for those who are less well off (conceived of as being predominantly black and Hispanic, even though many are white).

This is perhaps the ultimate challenge for our first part-African president: to get us Americans to confront our racism, and to overcome it enough to develop the sense of social solidarity, the feeling that we are one society, needed to achieve health-care reform and other social reforms.

24 Nov 2009: Congress seems close to passing a healthcare reform bill. What seems to be emerging is something that will do a lot to increase depth and breadth of insurance coverage for Americans, but will do little if anything to reduce the cost of healthcare. In fact, the total cost is going to go up, perhaps spectacularly, as insurance companies will be forced to raise premiums for the increased coverage. The president and Congress have not been wanting to hurt or anger too much the doctors, the drug companies, or even the insurance companies, in order to get them all on board.

One positive development regarding paying for healthcare is the new tax on the very rich, which is part of the bill recently passed by the House. This moves us toward the “social ethic” Uwe Reinhardt talks about (see my 26 Sept 2009 bis entry just above). However, with the total cost continuing to rise, it means that tax revenues that are needed for infrastructure, transportation, and education are going to be consumed instead by healthcare.

Optimistically, I see a two-stage process taking shape. First we expand coverage, at enormous cost. This is what we are on the brink of doing now. Then, later, we will be forced to reduce costs, and I hope that there will be a reduction in the profits of drug companies, insurance companies, doctors, and lawyers, rather than that we will backtrack with regard to providing good insurance to all (or almost all) Americans.

31 January 2010: Why I am in favor of passing healthcare reform legislation:

Over the next few years the dollar is going to fall against stronger currencies.

The good news is that our wages will look cheaper to the rest of the world, and we may gradually start to be more of a manufacturing country again, which will lead to a correction of our trade imbalance.

The bad news is that we in fact will be poorer in terms of the buying power of the average American. The US will no longer be counted alongside Japan, Korea, and several of the western European countries as one of the rich countries of the world. Instead we will be considered one of the middle-tier countries, with a very unequal distribution of wealth. We may resemble China or Brazil, with maybe 1/100 percent obscenely wealthy, about 5 percent affluent--affluent enough to afford a 1-week vacation in a wealthy country once in a while, 75 percent working class and middle class--able to enjoy a decent life, but earning about half as much as their counterparts in the rich countries, and 20 percent poor, struggling to obtain the basic necessities of life.

The current effort for health care legislation may be a last chance for the US. If any healthcare bill is passed that provides universal access to healthcare, it will mean that we as a society are making a contract among ourselves, a promise that we will not let the upper strata of society become completely uncoupled from the rest; that we are all responsible for each other to the point of guaranteeing the protection of the law to all inhabitants, effective schools for all children, and, yes, healthcare for all who need it.

If we let this chance go, it may be much more difficult in the future, after the economic strata have drifted too far apart, after the masses of poor have become too many and too poor.

But if we make this first step now, this commitment, then we may take the necessary steps in the future to stay together as a society, and to strive for prosperity together.

After legislation is passed that resembles the current bills in Congress, the next watershed would occur when we realize that the system is costing too much. But having made the first commitment, we would find it easier to take the next steps of making cost-saving reforms, including putting an end to for-profit health insurance, and of taking more from the rich, forcing them to give more to the rest, who can less easily bear the burden of modern healthcare costs.

When we make such commitments to take care of everyone, we will discover that people are expensive. We might not take population growth so lightly. We may get serious about reducing immigration and reversing our pro-natalist policies in order to slow population growth and ultimately bring it to a halt.

In this way, first mixing in a little socialism with our capitalism, as the Europeans have done, and then taking steps to end our rapid population growth, we will be able in the future to start building a lasting prosperity for the whole country.

Passing healthcare reform now may be the first important step we need to take in order to prevent many Americans from sinking into the morass of poverty and misery after the dollar finishes falling and the new world economic order begins to take shape.

Economics and Social Justice

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