Healthcare in the Senate: Another Example of the DESPERATE Need for Campaign Finance Reform

Time and again we have seen good ideas to benefit the people by regulating companies emerge from Congress in the form of legislation that does exactly the opposite of what it was intended to do, and amounts to nothing short of massive theft by the very industries that were supposed to be regulated.  That certainly appears to be where healthcare reform is headed.

While all the details have not been released yet, by all accounts the Senate has finally killed off the public option and replaced it with weakened non-profits run by for-profit insurance companies and an opportunity for uninsured people age 55-64 to buy into Medicare.  Many progressives have reacted with jubilation to the Medicare proposal because ultimately they would like to see this concept extended to all citizens.  They should be cautious with their enthusiasm.

It is really important to remember the core dynamic of health insurance, which is that statistically speaking, young and healthy people pay for more insurance than they consume in healthcare.  As they get older and sicker, they start consuming more healthcare than they pay for.  When insurance is structured this way, young people are essentially forced to save in advance for their future healthcare costs and the net effect is “low” premiums for everyone.  If young people are not included in the insurance pool and the only people with insurance are those who have very high healthcare costs, then the premiums will be very high because the insurance company essentially ceases to spread risk among the population and begins to be just an unnecessary payment processor, but one that has enormous administrative costs and a requirement to generate a profit.

So now look at what is shaping up in the Senate.

The insurance companies have won a mandate for all people to buy insurance from them.  This guarantees that young, healthy people will be in the insurance pool, which will allow companies to do some combination of A) increase the profits they distribute to their shareholders and B) manage the cost of their insurance premiums.  By giving people age 55-64 the ability to buy into Medicare, the insurance companies have also, probably, increased the ease with which they can force people in this age group out of their insurance pool.  So they have brought in millions of young, healthy, highly profitable customers, and they are getting ready to kick out millions of older, sicker, less profitable customers.  You wonder why they have been saying all day that they won?  This is why.  It is good to be them.  They are now essentially getting ready to sell expensive insurance exclusively to people who have no healthcare costs.

Medicare, on the other hand, is being set up to fail because just the opposite is happening to it.  It is being forced to take on millions of new older, sicker, customers with high healthcare costs but it will not get any younger, healthier customers to which they can spread the costs.  So Medicare is becoming more of a “payer” and less of an “insurer”.  This is going to cause Medicare’s average cost per customer to be much, much higher than the average cost of the private insurers.  Because Medicare coverage for this age group is going to be forced to be self-financing, the premiums are going to be very, very high. The effect will be that as people turn 55 they will be forced out of their lower cost private insurance, where young people subsidize them, and into Medicare which will end up having much higher premiums than they’ve been paying.

And when Americans look at the two systems side by side they will see private insurance with low premiums (they’ll forget that private insurance only has healthy customers) and Medicare with high premiums (they’ll forget that Medicare only has older, sicker customers) and they’ll conclude that “government can’t compete”.  Republicans will have a field day.

The single-payer proponents should be in favor of giving a buy-in to people age 55 -64 only if they know that next year it will be extended to people 45-54, the year after that to people 35-44, the year after that to people 25-34, and the year after that to everyone.  To be excited about what is currently on the table now is to be cheering the tsunami that is about to wash them away.

Pew Research: What Does the Public Know? Not That Much

http://pewresearch.org/pubs/1378/political-news-iq-quiz

Pew Research has released a study, which you can participate in if you’d like, on what the public knows and what it doesn’t know about current events. I’m frankly not sure what to think about the results.

First of all, what I am sure of is what everyone will be sure of, which is that the results are pretty dismal for a democracy.  For example:

• Only 23% of American adults know that “cap and trade” refers to energy and environmental legislation.
• 58% of Americans think that Iran and Israel share a border.
• Only 33% of Americans know that Ben Bernanke is the Chairman of the Federal Reserve Board.
• Only 33% know that the Dow is in the range of 10,000
• 82% do not know that Max Baucus is Chairman of the Senate Finance Committee that has been working on healthcare legislation.

Here are some real kickers:

• Only 40% of Americans know that Glenn Beck is a TV and radio talk show host
• 44% of American adults do not know that the “public option” has to do with health care

There are also some non-surprises.  Older people know a lot more about current events than younger people, and more educated people know a lot more about current events than less educated people.

What I’m not sure about is whether this changes my world view of politics.

After untold hours of arguing with conservative friends about the entire array of issues and philosophies wrapped up in politics, and having only ever convinced one or two to change their opinion on anything, I’ve come to believe that expending a lot of energy on convincing people of anything is futile.  Calories are far better spent finding the people who already agree and convincing more of them to get their asses off the couch to vote and make phone calls than the other side.  Turn out is everything.

Do these numbers challenge that?  Could it be that if we can explain cap and trade to the 77% of Americans that don’t know what it is before the other side can, we actually have an opportunity to win them over?  Could it be that the 77% of people who think cap and trade has to do with health care, or unemployment, or banking and finance reform can not be convinced otherwise?  Or could it be that the 77% of people who don’t know this are just way more interested in who is winning Dancing with the Stars and they are never going to be an important political force whether they understand or don’t understand because they are never going to vote anyway.  I’m not sure.

Aside from the obvious, as stated above, what do you think this study means for the pragmatic practice of politics?

Public option will NOT automatically cause most companies to drop insurance.

There are exceedingly few companies in the United States today that are required by law to provide insurance for their employees.  So why do they do it when it is such a huge expense?

Companies provide insurance benefits to compete in the labor market.

No matter what the unemployment rate, sooner or later companies have to hire new employees.  When they do, it doesn’t matter whether there are three employees available or three hundred… no company wants the 3rd best.  They compete for the best.  They don’t always win the competition, but they try to.

When was the last time you met an electrical engineer with ten years of experience who would even consider working for some fly-by-night company that doesn’t offer medical benefits?  Or a Director of Advertising.  Or a Senior Database Security Analyst.  Or a Vice President of Finance and Accounting?  Or a District Manager of Food Service Operations?  Or a damn good Administrative Assistant?

To compete for the best talent, companies have to offer the most competitive compensation packages, and in today’s world that means health insurance as a benefit is mandatory.

Now, if a company is paying 15% of its payroll to provide insurance and it finds that it can stop doing that and pay just an 8% penalty… of course it is going to want to do that.  But it is only going to be able to do that if workers find that option to be competitive.  If the best quality employees, the ones with the most choices and options of where to work, feel that the public insurance and private insurance are equally as good, but their out of pocket cost is $300 a month for the company that provides private insurance (because of the employer contribution) but $900 a month for the company that makes them use the public option, they will work for the company that offers them the private insurance.  Until, or unless, the company not offering insurance pays them the $600 a month in cash to make them whole.  Likewise, if the out of pocket costs are the same, but the public insurance turns out not to be as good as the private insurance, the best employees are going to either demand to be compensated financially… or flat out refuse to work there.

If it turns out that the public option insurance is as good as the private insurance, and that after paying the 8% penalty and whatever amount they have to pay employees in cash to continue to be competitive it is still economically beneficial for them to do that… well, that will be the proof of the pudding that government can do it better!  We should all applaud.  The employees will be happy, the company will be happy, the taxpayers will be happy… everyone will be happy except the insurance company CEO that can no longer command a $10 million a year annual salary.

New on the Agenda: Fire Protection Reform

Taking their cue from the healthcare debate, Conservatives are setting out to bring the US socialist fire protection system into the capitalist fold.  A new measure being proposed by Republicans in the House of Representatives will require firemen to make sure that home owners, businesses, and other property owners present proof of insurance and sign an acknowledgement that they are ultimately responsible for all charges, before any attempt is made to put out a fire.  Industrial concerns, large retail complexes, owners of multiple family dwellings and high-rise office buildings will also need to have their insurance company provide prior authorization and a confirmation number before services are provided and public expense is incurred.  An amendment that has been proposed, but not yet voted on, would require fire departments to access the Department of Homeland Security’s E-Verify database before extinguishing a fire to ensure that home-owners, tenants, landlords, and any overnight visitors are properly documented and in the US legally.

Conservative blogger TeaBaggingFan69 states that “it is about darn time fire protection consumers had a choice as to who their primary fire protection service is.  For too long, the overbearing, lib’ral government has dictated which fire departments respond to our emergencies.  Heck, we don’t even get to choose which fire trucks are sent or which firemen come!”  Reverend Richard Weed, who has previously testified about the subject in front of the Commerce Committee summed up the feelings of many Conservatives when he said “Now, look, any time a house is on fire there’s a good chance that it will be lived in again.  Many Evangelical Christians resent the idea that a faggot  might be traipsing through their house squirting God knows what everywhere!  These people go against the grain of nature every day… who can even imagine what they might do in a private residence after they have forcibly carried family members outside”

While popular among many on the right, the measure faces an uncertain future in the Senate even if it passes the House.  One individual who claims to have inside knowledge but who requested anonymity because he was not authorized to speak on the subject, said that Senator Majority Leader Harry Reid may recently have been quoted as stating “That’s the dumbest damn idea I’ve ever heard.  Democrats will only support that if Republicans say they really, really, should.”  A spokesperson did not immediately return our call.

Oy, my liberal friends… oy.

Being more liberal than most, I think I can get away with complaining about my fellow liberals for just a minute or two.

Change.org has been running a competition to generate 10 ideas to present to the Obama administration this Friday at the National Press Club.  Over 7,000 ideas were submitted by anybody who wanted to submit them.

Through November and December over 250,000 votes were cast on the site and the top three ideas in each of 30 categories made it to “the final round”.  Since January 5, voting has been open among just these finalists.

Here’s my complaint.

• The top idea (and the fourth top idea) so far, by a pretty wide margin, is legalizing pot.
• The third most popular idea, I assume because there’s an organized lobby with e-mail lists and whatnot far beyond what you would ever think, is a proposal to make it easier for small, crafty toy makers like you see in art fairs to avoid new toy safety regulations that are coming out.  WTF?
• The fifth most popular idea is to “make the grid green within 10 years.”  Nothing about how to do this.   That’s it.  Just “make the grid green within 10 years.”
• The sixth most popular idea, apparently bubbling up from the fans of ideas one and four, is to “Appoint Secretary of Peace in Department of Peace and Non-Violence”.  You can’t make this stuff up.
• Health care reform, a noble idea indeed, is sitting in two slots: number 2 and number 9.

I mean, I agree that pot should be legalized, the drug war ended, those convicted of crimes that never should have been crimes should be pardoned and they or their estates should be given reparations.  I don’t think it is the single most important thing that should be on our national agenda.

The idea of making the grid green is obviously a good one, on everybody’s mind, but that’s all it says about it!  That’s not an idea.  There’s not a single suggestion of anything we might do to get there.  Had I known people would vote in such numbers for something like that I would have entered one to “Give each American a check for $20,000” and I bet I would have beaten even the pot guy!

Anyway, it’s been a fun exercise and a lot of great ideas have indeed surfaced.  It’s a bit of a shame that half the ones presented at the National Press Club will be duplicates, limited to a tiny special interest group, pies in the sky, and/or will confirm the media’s impression of liberals as latte sipping, granola eating, pot smoking former hippies.

And not to leave off a pitch, you should click over there and vote for adjusting our trade policies so they don’t create unfair economic advantages for countries that don’t care at all about the environment, worker safety, living wages, etc.  You can vote for up to 10 ideas so, while you’re at it… find 9 other good ones to support.