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    Wednesday, March 24, 2010

     

    Health Care Reform: A Victory for the Little Guy?

    by Dollars and Sense

    David Leonhardt, the New York Times economics reporter, has a cover story in today's paper, In Health Bill, Obama Attacks Wealth Inequality, that depicts the new health care reform law as the first great social legislation in a generation. It is big, and it is social legislation, and it is true that it will be funded partly by raising taxes on higher-income folks. But it is hard to view it as the challenge to inequality that Leonhardt thinks it is--or that Obama & Co. (least of all Larry Summers, whom Leonhardt mentions in a positive light in the article) intended it as such.

    As a counterpoint to Leonhardt's argument, here's something from the great, relatively new blog from the good folks at the University of Missouri at Kansas City's econ dept, New Economic Perspectives. This guest post is from Robert Prasch of Middlebury College.

    Think The Democrats Just Scored One for the Little Guy? Think Again.

    By Robert E. Prasch | Tuesday, March 23, 2010
    Professor of Economics
    Middlebury College

    As a resident of Massachusetts, where the backlash is already well underway, I thought I should add a comment. Let's begin by considering the origins of "Obamacare". It comes from Massachusetts. It was passed early in Gov. Patrick's reign because during the campaign it was already in debate as it was Gov. Mitt Romney's proposal. Now, one might wonder where the conservative, free market, head of Bain Consulting governor might go finding a healthcare plan? Well, he got it from the Heritage Foundation. And why did they have such a plan? Well, they developed its broad outlines during the 1993-4 years as the Republican ANSWER to Hillary's effort. So, that is our new federal plan -- it is a warmed over version of the Heritage Plan. This, I submit, might explain a few things. (1) It was Obama's idea all along to "triangulate" the Republicans on this issue, and (2) why many of them are really very bummed out that their leadership did not take up the chance to show "bi-partisanship" on this issue (see David Frum on this).

    Now, I tend to be skeptical of Heritage Foundation health-care plans. For several reasons:

    (1) By design, costs are not contained, neither is health care reformed. This means that "affordability" does not come from controlling costs, but by shifting them. Shift to whom? A hallmark of the Heritage/Romney plan is that no change of the distribution of income is to occur with the financing of this plan. NONE. Rather, funding is to be from three sources --- those with supposedly "Cadillac" plans, those who have "opted out' because of the laughably high cost of coverage relative to their own risks, and to the state general fund. (2), In light of state budget shortfalls, it is no surprise that the latter source is declining quickly, and tens of thousands of Mass residents have ALREADY lost their subsidies (this trend will certainly occur on Capitol Hill over the next several years as 'deficit mania" kicks in). So, get this, as your income declines and your house is repossessed, the cost of your health care rises with higher premiums AND lower subsidies. But, make no mistake, even as the subsidies decline, the mandate will stay -- why should the big companies give up this huge windfall of unchecked access to the wages of the low paid?

    (3) I also wish to warn against the 'NPR version' of the story that this bill "gives" health care for those without. Nothing is given, it is a MANDATE. Now, while the original 'vision' of the bill had subsidies, these are fading rapidly. So, now we have a dramatically underfunded mandate. Solving the lack of insurance by mandating the poor to buy it is, to be blunt, Dickensian. Obama himself stated it very well during the campaign "It is like solving homelessness with a mandate that those living on the streets buy a house". Those who are poor understand this point, and resent it. True, there are some young people who are in good health and, understanding statistics and rapacious health care insurance firms, "choose" not to get health insurance (as I did for several years in my 20s as the teaching assistantship I got from DU during my years studying for my MA could not cover my living expenses AND health insurance), yet the bulk of non-buyers are people who have found that with little in the way of family funds, other priorities (rent, car repairs, food, school fees, etc.) are a greater priority.

    So, now the Democrats have taken it upon themselves to decide the priorities of millions of our poorest citizens. Thus, thanks to the Democrats, non-negotiable required fees from the insurance industry will be several multiples of the current income taxes of the lowest paid. This is sticker shock at its worse. Even Republicans know that the money will go to rapacious, soulless, insurance companies under the careful guidance of the IRS (here in MA, we have several extra highly-complex pages on an already long tax form where we have to prove that we have insurance). Stated simply, the Democrats have decided to go into the business of being the "enforcers" of the big insurance firms. This is NOT a good place to be in an election year. This is ESPECIALLY not a good place to be when you are already presenting yourself to voters, as Obama seems committed to do, as the die-hard supporter of the big banks that foreclosed on people's homes and blew up their economy.

    With such a context, along comes someone who calls himself a "regular guy" with a pickup truck (he failed to mention that he has five homes, one in Aruba, but the truck was in all the ads), and he takes Kennedy's seat in Mass. In MASSACHUSETTS! Only one year after Obama wins this state by 20 points! Wow. This, folks, is what a backlash looks like, and it is enormous. Turning the wages of the working classes over to the insurance companies, without recourse or mercy, is not going to win this state, and it will not win in many others. If the Democrats lose any less than 35 house seats this election I will be amazed. And, note my wording, the Republicans did not, and will not, win them. No, the Democrats have decided to lose these seats. Amazing.

    Sorry about bringing the bad news. But this bill is a disaster, and it is worse than nothing, as it will destroy the incomes of those it purports to help along with the Democratic Party. It is especially bad since a public option was always an option, I do not believe the D.C. spin on this for even a minute. Just as Obama never wanted to renegotiate NAFTA or leave Iraq, it was clear from the outset that the White House never wanted a public option, which explains why Rahm said so early last summer. Why? Because the big insurance companies did not want it, so Rahm did not want it. End of issue.

    Read the original post.

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    3/24/2010 02:29:00 PM

    Comments:
    The commentators keep reminding us that Theodore Roosevelt was the first president who tried to bring universal health care to the American people. That's not quite true. He never really expressed the idea while he was in office. In 1912 Roosevelt had been out of office for four years when he attempted to reclaim the presidency from William Howard Taft, the man he had picked to succeed him. Once in office, Taft began to dismantle most of the progressive reforms that Teddy had put into place. When he sought the nomination once again, his campaign slogan was "a square deal for every man and every woman in the United States." Part of the "Square Deal" was health care for all. He arrived at the convention that summer with all the delegates he needed (and then some) to seize the mantle of standard bearer. It was not to be. His party would betray the people by giving the nomination to Taft in spite of his victory. They had had enough of Theodore Roosevelt and his progressive reforms. 1912 was the year that the progressive wing of the Republican party died. He was the last great Republican president - the very last.

    A generation later TR's distant cousin Franklin attempted to pick up the torch of universal health care. In his 1944 State of the Union address, he told the American people that his major goal for the post war world was national health insurance. Unfortunately for you and I, FDR did not live to see the war's end. A film of that speech can be viewed in Michael Moore's film, Capitalism: A Love Story. It's is now out on DVD and is essential viewing.

    The new health care bill is not perfect - far from it - but as the old Chinese saying goes, "The journey of a thousand miles begins with the first step." There will be improvements made on it down the years - there absolutely needs to be - but this is a fairly good first step. We're on our way! The Conservatives will whine, but that's what they do best. They'll whine just as they whined when Lyndon Johnson signed into law the Voting Rights Act of 1965, or the Civil Rights Act of 1964. Just as they whined when Harry Truman desegregated the army in 1947, or when Franklin D. Roosevelt brought Social Security into being in 1935. They'll whine just like they did when Woodrow Wilson tried to form the League of Nations in 1919 - or when Abraham Lincoln ended the institution of slavery in 1863! They whine a lot. Did you ever notice that?

    http://www.tomdegan.blogspot.com

    Tom Degan
     
    There's something about over-the-top denunciations of the affordable care act from professors who get good health care from their job that really makes me want to vomit. It's easy for Prasch to dismiss any legislation that isn't the perfect lefty dream; it's easy to hold out for perfection when you're not the one suffering for lack of medical care.

    The Affordable Care Act expands who can qualify for medicaid. That's literally millions of lower-income Americans who will be getting FREE care. And yes, it's not the best insurance in the world -- but it mainly helps people who currently get no care. Why doesn't Prasch even mention that? And how is that not a transfer of wealth?

    A lot of Prasch's other arguments are laughably bad -- or would be, if the subject wasn't so important. Is there ANY evidence at all that the subsidies in the affordable care act "are fading rapidly," for example? Is it at all plausible that there was nothing at all in the MA special election effecting the outcome other than health care reform?
     
    The greatest expansion of American government and the social welfare state since the Great Society passed the House Sunday night. Opponents recognize that this bill violates the most important principles of American government, and as such, is immoral.

    In a free society, does one individual’s needs constitute another individual’s obligation to provide? The answer is no; rather, it is the duty of free individuals to decide what and whose needs appear most important to them. In a free society, the individual is of supreme importance and should not to be used as a means to society’s ends. The individual has the right to order his actions and possessions in the manner most consistent with pursuing his own happiness and values. This view is consistent with America’s founding principles. The Declaration of Independence states:

    We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.-That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed.

    The above rights are known as “Natural Rights,” and they protect the individual’s right to freedom, autonomy, and self-government — in other words, to take all the actions required to support the furtherance, fulfillment, and enjoyment of one’s own life. They provide no material assurances or particular opportunities to the individual, but rather set conditions that allow the individual to decide what use he shall make of the circumstances in which he finds himself — to act in his own best interest so long as his actions don’t infringe on the equally protected rights of others.

    Another important question is: What constitutes a need, and who should decide? Should it be the patient in concert with his or her physician? This seems like the obvious choice. However, if society is paying the cost of whatever service is required to satisfy “the need,” then the provision of that service must be regulated to prevent overutilization and runaway costs. In other words, it must be rationed. In a free market, prices perform this rationing function. In the absence of a free market, some third party must ration based on a formula other than price.

    Eric Pearson, Democratic Party candidate for US Congress in the 5th district, Tennessee.

    Site: http://www.democraticreformparty.com
     
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