How the Republicans Are Paving the Way For Single Payer Health Insurance

The proposed tax legislation sponsored by the Republicans in Congress and the Trump Administration would repeal the individual mandate in Obamacare.  This mandate, which requires all uninsured Americans to either buy health insurance or pay a penalty through their tax returns, is much detested by the political right.  But it is based on a sound principle of insurance.  Insurance works best when a large group of people work together to pool their risks.  Mandatory insurance on all registered vehicles is a good example of how an intelligent insurance systems works.  If the Republicans repeal the Obamacare individual mandate, then the private health insurance market for individual coverage will be severely distorted.  The healthy won't buy coverage until they get sick or are injured.  Since Obamacare forbids insurers from excluding prior medical conditions, people can game the system by not paying for insurance until they need a lot of health care.  Then they buy coverage and pay premiums that total only a smidgen of the actual cost of their care, while shifting most of their costs onto others.  Insurers would have to push up rates sharply and a lot more people would drop coverage--until they need a lot of healthcare, at which time they would game the system by buying health insurance.  The market for private individual health insurance would die.  Then, really large numbers of people would be uninsured.

Senator Susan Collins from Maine has tried to negotiate promises from Republican leaders in Congress and the Trump Administration for alternative funding for health insurance that would supposedly stabilize that market.  But with all the secret, back-room, opaque maneuvering and sneaky, swampy pork barreling that has gone on into putting together the proposed tax bill, one wonders how Senator Collins can be so sure these promises will be kept.  She has no meaningful recourse if they aren't.  Given how the proposed legislation is primarily a monumental looting of the U.S. Treasure by the rich and by large corporations falsely depicted as tax "reform" for the middle class, how can Senator Collins believe there is any good faith at all on the part of the Republican leadership?

The Republican destruction of the market for private individual insurance will pave the way for the expansion of Medicare to cover uninsured individuals.  Politically speaking, it is no longer acceptable to throw these people into the gutter.  Even President Trump recognized this when he promised that there would be insurance for everybody notwithstanding his efforts to repeal Obamacare.  But the underhanded tax law repeal of a health insurance measure--the individual mandate--vividly illustrates the difficulties of trying to use the private insurance market to provide universal health insurance coverage.  The Republicans leave no alternative except an extension of Medicare to uninsured individuals of all ages.

Virtually all industrialized nations today provide some form of universal, single payer health insurance.  Some allow supplemental private insurance for people willing and able to pay for premium level care.  Americans today view health insurance as something all should have, and a government program like Medicare is the only realistic way universal coverage can be provided.  Medicare isn't perfect.  But it works well, and ensures near universal coverage for people age 65 and older.  Its imperfections can be improved. It can and does work side-by-side with private insurance (such as Medicare D and supplemental policies).  Americans today won't tolerate their fellow citizens being tossed in the gutter because of health problems, in order to fund a monumental tax cut for the rich and powerful.  The Republicans will find this out in 2018 and 2020.

Can the Republicans Govern?

With the postponement of the House of Representatives' vote on repealing Obamacare twice in two days, one must ask whether the Republicans can govern.  They control Congress and the White House, but they weren't able to fulfill one of their signature promises from last year's elections.  Dissidents on the far right and in the moderate middle couldn't, for different reasons, sign up for the repeal measure.  President Trump, drawing on his dealmaking experience in business, gave them a take it or leave it compromise--and they left it.  In business, if you pass on a good deal and go for a great deal, you can blow the deal.  But in politics, as Trump may be learning, you can often score points with your constituents by going for a great deal and losing the deal instead of compromising.  Politicians get ahead by telling voters what they want to hear--indeed, that's how Donald Trump got himself elected President.  But doing things that leave voters with mixed feelings--like compromising--places politicians at risk in the next round of primaries.  It's better to look and sound good than doing anything that could leave you open to criticism.

Obamacare will now become a permanent part of the American landscape.  Its essential features--universal access to coverage, subsidies or Medicaid for those unable to pay, no exclusion of pre-existing conditions, and substantial coverage of health problems--will form the foundation of American health insurance for the future.  Surely, Obamacare will be modified over time.  But Barack Obama's greatest legacy will live on.

For the Republicans, the Party of No, a more important question is whether they even understand what it takes to govern.  It's necessary to compromise, and to take the heat from compromising.  The Republican Party, like the Democratic Party, is a coalition.  If coalition members don't work together, governance does not happen.  The next great challenge for the Republicans will probably be the budget bill and tax reform, which will have to go hand-in-hand if the Republicans hope to accomplish everything they've promise.  Their problem is they've made too many promises for the amount of tax revenues the federal government will collect.  They can't boost defenses spending by $54 billion, build the Wall at the border with Mexico, cut corporate taxes, cut taxes for the wealthy (which is an unstated but obvious goal of theirs, given that the proposed repeal of Obamacare was more a bill to cut taxes on the wealthy than improve the health insurance system), and rebuild America's infrastructure, all at the same time.  Something has to give.  Either taxes are raised, federal deficit spending increases, and/or the Republicans give up on some of their goals.  The Republicans will have to compromise to accomplish anything.  But their failure to work out a compromise to repeal Obamacare does not portend well for their future.

Although virtually powerless right now, the Democrats must have gotten a lift today.  Their fortunes have started to turn around.  As devastating as their defeat in 2016 was, it's not the end of the world, or of their party.

Will Donald Trump Be a Traitor to His Class?

The most important legislative priorities of the Trump administration--tax and health insurance reform--will be enacted within a matter of months.  Both of these measures will greatly impact the working class whites who propelled Trump to the White House--either for better or for worse.

Preliminary assessments of the proposed tax reform indicate that taxes for the middle class will drop about a couple hundred dollars.  One percenters can look forward to many thousands in tax savings.  This isn't exactly what folks in small town America were hoping for.  To make up for the loss of income tax revenues from these cuts, the President may endorse a border adjustment tax (basically, a tariff on imports that would likely increase the prices of the inexpensive food and goods that low and moderate income Americans rely on).  To many, this might feel like another kick in the teeth.

Health insurance reform is turning out to be a very tough nut to crack.  President Trump has said he wants to preserve the protections that many low and moderate income Americans count on--guaranteed acceptance, coverage against pre-existing medical conditions, and subsidies for those unable to pay full freight.  But these conditions are very expensive.  How will the President cover the costs?  There seems to be little consideration of progressive taxation of the wealthy or increasing the federal debt.  Yet there's no free lunch.  One possible "solution," so to speak, would be to offer low cost policies with skimpy coverage--prior medical conditions would be covered but total coverage might go only up to $25,000 or $50,000 a year.  This would be expedient, but would effectively deprive people of coverage when they needed it the most.

On top of this, the President's desire to turn Medicaid into a program of block grants for the states has significant potential to reduce coverage for the low income.  Many of these people voted for him.  Where will they go for care without health insurance? Medicaid covers around 74 million Americans--almost 1 in 4.  Cuts to this program could mean many millions of people mad at the President.

President Trump's problems are exacerbated by his proposal to increase military spending by $54 billion.  Where will this money come from?  The Republicans in Congress won't agree to more deficit spending.  So the President can either raise taxes, or piss off many millions of voters by cutting other federal programs.

Donald Trump is President at a time when stark choices are necessary.  He was elected as an insurgent.  But he's stacked his cabinet with establishment Republican types, people who have no demonstrated concern or sympathy for his core constituents.  The Republicans who control Congress gave him scant and faint-hearted support during his campaign.  But today they stack the legislative agenda with bills that would make the rich richer and offer the working class hardly more than a crumb or two--and stale ones at that.  

If the President really wants to help his constituents, he'll have to be a traitor to his class.  He'll have to offer substantial improvements in life to the working class, and sorry to say, but wealthier people will have to pay for them.  America got itself into its current mess by believing that somehow everyone can get more of everything all the time at no cost to anyone else.  The last two large nations to subscribe to this notion--the Soviet Union and Communist China--had to abandon their illusions and now struggle with the consequences of the their wishful thinking.

Franklin Delano Roosevelt, the greatest President of the Twentieth Century, was labelled a traitor to his class.  And he was.  He endorsed legislation like Social Security and a strengthening of protections for workers and labor unions that uplifted many millions of ordinary Americans out of poverty and into the middle class.  The cost was born to a large degree by a sharp increase in federal income taxes paid by the well-to-do.  The rich grumbled and plotted against him.  But he ushered in the prosperity of the 1950's and 1960's, now viewed as a golden age in America.  America's perceived decline from those days also correspond with ever increasing inequality of wealth and income.  If Donald Trump really wants to make America great again, he'll have to make it great for the working class.  That isn't the direction he's been going in since his inauguration.  The next few months, when his most consequential legislative initiatives will be enacted, will likely make him both a traitor--either to his core constituents or to his class--and a hero--to the wealthy, many of whom didn't support him but are glad to free-ride on his policies and program, or to the working class that vaulted him into office.  The choice is his.

Expect Nothing From the Government in 2014

Chances are the federal government won't do much of anything in 2014.  Neither party has control of the government, and neither has a coherent program in any event.  Republicans are at war with each other, with the mainstream and Tea Partiers wrestling for dominance.  Right now, the Republicans couldn't put together a coherent set of policies if they wanted to.

The President is playing defense, trying to get the federal health insurance exchange out of the ICU, contain the NSA surveillance scandal, deal with the Iranian nuclear program without another major American military commitment in the Middle East, pivot toward Asia, and bring the troops back from Afghanistan, all while avoiding a government shutdown from yet another lousy rerun of the debt ceiling crisis in early February.   The Democrats on the Hill are angling to keep their majority in the Senate and perhaps gain some seats in the House, but the administrative debacle with the sign-up process for the federal health insurance exchange has left Democrats facing re-election scrambling for cover.  That means distancing themselves from the President.  And that makes the formulation of a coherent set of Democratic policies pretty unlikely.

The mid-term elections this fall will drive doings in Washington.  That will mostly mean doing nothing.  In today's politics, everyone wants to be a critic, and no one wants to be a doer.  Critics get a lot of press coverage.  Doers are targeted by critics.  When you do something in Washington, you may benefit some people.  But you'll also damage the interests of others.  And they will dispense political contributions with a view to getting even.  It's safer to be a critic, verbally heave donkey dung at one's adversaries, and avoid actually doing anything.  You may not help anyone, but you also won't make a lot of enemies.  Voters gravitate toward those who tell them what they want to hear.  With today's grossly gerrymandered districts, critics have an easier time getting elected and staying that way. 

So expect little from the government this year.  Far right-wingers and hard-core libertarians may think this is a good thing.  But everyone who realizes that essentially the entire country--from the top 1% to those below the poverty line, from the big banks to the small businesses scrambling for an SBA loan, from parents who want safe toys for their kids to those who prefer not to eat tainted food to home buyers looking for a mortgage loan to anyone who is potentially exposed to communicable disease (and that excludes very few of us)--needs a functioning government must hope against hope for something more.

Barack Obama's Curious Redistribution Ideas

President Obama recently spoke critically of the gap between the rich and the poor.  He has endorsed an increase in the federal minimum wage, from $7.25 up to $10.10.  He has argued for stronger enforcement of the labor laws.  He seeks universal pre-school.

Predictably, Republicans stood in opposition.  More government spending isn't the answer, they contend.  Economic growth is the tide that will lift all boats, they say.

Republicans, whether they are right or wrong, have nothing to worry about.  Barack Obama, whatever he may say, isn't really serious about changing the distribution of income or wealth.  He favors reducing the cost of living adjustment for the Social Security, military and federal retirement benefits that tens of millions of Americans depend on.  Cutting back on retirement benefits worsens the distribution of income and wealth.

There were some federal tax increases that took effect this year.  But the income tax increase on high level earners was accompanied by an increase in Social Security taxes (which are regressive).  So what was the net effect?  Most likely, very little or no redistribution.

The Affordable Care Act would have a redistributive effect because of its health insurance subsidies for low income participants.  If only people could enroll  . . . .

Barack Obama has serious credibility issues.  He drew a line in the dust over the use of poison gas, and Assad stepped over it.  Obama squirmed, complained, and then let the Russians broker a deal.  He didn't have the management skills to implement his signature legislative achievement, the Affordable Care Act.  He negotiated some sort of deal on nukes with Iran, although that deal seems to have implementation issues as well.  As negotiators talk, Iran continues to enrich.  If you're looking for action from the White House on redistribution of income or wealth, don't hold your breath.  Keep saving and investing, because you're on your own.

Why the Republicans Blinked

The Republicans, especially those in the House of Representatives, are rapidly giving ground in their fiscal battle with the Democrats.  A resolution is pretty likely within a week or less.  It will probably provide a short term delay of the debt ceiling and re-open the government, while the parties negotiate over long term fiscal issues.

Why did the Republicans blink?  Because they tried to manufacture a crisis out of a non-problem and a long term problem.  The non-problem is Obamacare.  The truth is that Obamacare offers valuable benefits to millions of people.  The huge traffic jams on health exchange websites demonstrate that lots of people understand Obamacare's value and want to participate in the program.  The Republican attempt to de-fund Obamacare would take away something millions of people want, and that's usually a very poor political strategy.  The Republicans seem to have belatedly figured this out, but not before forming a circle and firing volleys inward.

The long term problem is the federal deficit.  It is a serious problem.  But it's not an immediate problem.  The Republican effort to create a crisis at this moment over something that will play out years and decades from now is too obvious a political ploy.  The minority party wants to call the shots by gratuitously inflicting damage on the economy with a government shutdown and coercing an unnecessary default on the most important financial instruments in the world, U.S. Treasury securities.  Political parties thrive by winning over a majority of voters, not by wrecking economies and financial systems.  The fiscal deficit is not an immediate crisis.  It needs to be addressed, and will be, over the next years and decades as it becomes more pressing.  But the Republican tactic--give us everything we demand or we will destroy your government and wreck your finances--is bound to, and in fact did, alienate a majority of the electorate. 

After Barack Obama's re-election last year, the Republicans launched a process of reflection and reconsideration.  It's unclear that they made much progress, and the fiscal brawl of the past few weeks has surely left the party more damaged than before.  The Tea Partiers have prevented the Republicans from doing the thing that's necessary to political domination--shifting toward the middle.  Since political power abhors a vacuum, the Democrats have easily moved into the breach. 

The Key To Obamacare's Survival?

Even though the House of Representatives has just voted to use the budget bill to defund Obamacare, its chances of survival are pretty good.  Not just because the Senate will delink the defunding from the budget bill, but also because Obamacare suddenly seems to have some powerful supporters.

Not that these supporters are speaking openly.  But here's the scoop.  Major American corporations are moving their workers or retirees to the private exchanges.  Wahlgreens, Sears, and Darden Restaurants (think Olive Garden, Red Lobster, Longhorn Steakhouse, Capital Grille and more) have announced that employees will move to the private exchanges.  IBM and Time Warner are moving retirees to the private exchanges.  Apparently, these companies will pay employees or retirees subsidies to reduce their premium costs.  But these companies, and others making similar moves, are offloading a very important risk--the unpredictability of health care costs.  They provide fixed subsidies, thus stabilizing their costs.

Businesses love predictability and certainty.  Profits are more likely if you can control major cost items like health care coverage for employees and/or retirees.  In essence, Obamacare is on the verge of becoming an important subsidy to big business.

Experience teaches that government subsidies are virtually impossible to eliminate.  Long after the Great Depression and Dust Bowl, agricultural subsidies that make no public policy sense persist.  Even after being nationalized just before they could bring down the entire U.S. economy, Fannie Mae and Freddie Mac roll along, now more centrally positioned in the financing of residential real estate than ever before.  Virtual giveaways of access to minerals on federal land continue unabated even though the settlement of the West was effectively complete by 1890.

With Obamacare in the process of becoming a potentially really, really important subsidy to really, really big corporations, do we really think that it's going to be eliminated?  The Tea Partiers in the House make a lot of noise, but can they take on the political firepower that big business lobbyists can bring to bear?  Recent polls indicate that a majority of Americans support Obamacare, and politicians in a democracy eventually have to pay attention to the polls (see Obama-Syria-poison-gas-response for more on this point).  But, just as importantly (or more so), powerful business interests can arrange the survival of big subsidies no matter how loud some people in the House of Representatives scream.  This may reflect poorly on the nature of the political process, but it's the truth.  And Obamacare may well now have the backing of some highly influential lobbyists who will speak softly (to stay out of the cross-hairs of the Tea Party) but will wield big sticks to keep their clients well-subsidized.

Will the Affordable Care Act Lower Health Insurance Costs?

In 2014, two of the most important provisions  of the Affordable Care Act take effect.  These require health insurers to accept all applicants without regard to prior medical conditions, and to provide unlimited coverage.  Although some recent news stories indicate that health insurers are raising premiums in 2014 to compensate for these provisions, it's possible to foresee a time when these same provisions will constrain the growth of health insurance costs. 

These requirements--no exclusion for prior medical conditions and unlimited coverage--provide powerful incentives for insurers to manage health care rationally.  Currently, many health insurers endeavor to limit their exposure to the costliest patients (i.e., those with existing medical conditions and those needing very expensive care).  In other words, insurers attempt to avoid covering those most in need of coverage.  It's no surprise that the most common reason for individuals to file bankruptcy is unmanageable medical bills.  It is perhaps surprising that most of these individuals have some health insurance coverage--but not enough. 

By forbidding insurers to squeeze out those in the greatest need of coverage, the Affordable Care Act now steers insurers' attention toward managing care rationally and providing the best quality, most effective care.  Preventive care, such as regular physicals, screenings, immunizations, wellness programs, and so on will take priority. People will hopefully fall ill and injure themselves less often and perhaps less severely.  In the long run, this fundamental change in approach may lower the growth of premiums, as improvements in health from better preventive care hopefully reduce the need for medical treatment.  Premiums will rise next year for many--but only because they're getting better coverage.  And that improved coverage may pay off in the long run.

The Supreme Court's Big Surprise

The Supreme Court held a surprise affirmation party for Obamacare today. Most pundits and experts had predicted the health insurance law would be overturned, and aren't enjoying the party very much. But the biggest surprise was the key vote in upholding the law, which came from Chief Justice John Roberts. Most observers of the court had perceived Roberts to be reliably conservative in the political sense. The Citizens United case (Citizens United v. FEC, 558 U.S. 50 (2010)) was regarded as a classic example of how Roberts and the four other conservative justices on the Supreme Court banded together to rule favorably for conservative interests, and unleash a torrent of business funding into the campaign process, most of which is going to Republican candidates.

In today's healthcare ruling, however, Roberts appeared to take a judicially conservative approach, finding a narrow ground to uphold the mandate for uninsured individuals to buy coverage and deferring to the policy judgments of the legislative branch, while explicitly avoiding any endorsement of them. Such displays of judicial restraint have seemingly fallen out of fashion at the Court. No doubt Roberts knows that public estimation of the Court has been falling as it has increasingly been seen as a political body. The perceived politicization of the Supreme Court has turned the judicial confirmation process for both Supreme Court justices and lower court judges into a hyper-paranoid brawl of an inquisition over every possible nuance of every statement, whether written or oral and without regard to remoteness in time, made by the nominee under any circumstances whatsoever. It's no wonder the judicial confirmation process is clogged, backlogged and bogged down. Nominees are no longer viewed as potential judges, but as potential tools to secure political gains.

Restoring the Supreme Court and the lower courts to their intended role as judicial forums would force politicians in Congress and the White House to take their jobs more seriously. They could no longer count on the courts to clean up messes they make. Possibly one reason why conservatives in Congress were so uncompromising about Obamacare is that they gambled the Court would smack it down if they couldn't. If they had understood the Court would show deference to the outcome of the political process, they might have engaged more seriously with the Democrats to fashion a compromise. Perhaps this is one message the Chief Justice meant to send. Certainly, if Obamacare had been struck down, some alternative more acceptable to conservatives would have been enacted to replace it, but then very possibly litigated by liberals and dumped back into the Supreme Court's lap. The Court might then have been placed in the position of fashioning America's health insurance policies. Roberts, as a judicial conservative, would surely not have wanted this.

The Supreme Court is the duck billed platypus of the democratic process, an oddly structured decisional body composed of unelected people with lifetime appointments who can make crucially important decisions based on whatever they individually believe to be right. While all of them purport to base their decisions on the Constitution, the flexibility of that document is copiously evidenced by the abundance of concurrences and dissents that blossom with each difficult decision. To maintain its legitimacy and effectiveness, the Court has to find and fulfill what each generation of citizens perceives as its proper judicial role. It must treat the Constitution as an organic organic (not a typo) document, with its meaning capable of changing and evolving as the needs and welfare of the nation require. For example, the meaning of the Commerce Clause, as interpreted in early New Deal cases, would not be conducive to today's federal economic regulatory structure, designed as it is to foster nationwide confidence in the regulated matters. Had that interpretation not changed with the times, we would probably be a poorer nation today.

Yet, the Court cannot reach so far that it appears to be stretching beyond the meaning of the words of the Constitution. Americans have a very high regard for the rule of law. This is not surprising, considering that the United States was not founded based on tribal or ethnic loyalties, or religious beliefs, or the imposition of sheer military power. It was founded by the voluntary congregation of former British colonies that depended greatly on the effective functioning of the Constitution to maintain their union and thus ensure their survival. Without the rule of law, the nation could fail (and almost did fail, twice). The Supreme Court has the task of constraining the other branches of the government, the states, and, indeed, itself to stay within their respective constitutional roles. Just as the Court has to stop Congress, the Executive Branch and the states from overreaching, it has to stop itself from overreaching.

Finding the right balance between judicial activism and judicial restraint is one of the most crucial challenges for every generation of justices, and especially every chief justice. The loudest sound you hear in the political blogosphere tonight is conservative teeth gnashing. But behind that, there is a faint of hum of legal scholars saying "hmmmmmmmmmm, maybe John Roberts will attain stature among the chief justices."