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DC For Sale: Health Care and Financial Services as Case Studies

It would be very hard not to notice, even if one is paying only cursory attention, how oversold the various “reform” programs underway are, and how they would be more accurately called, “Politicians Take Boatloads of Cash From Special Interests While Pretending They Help the Little Guy.” While cynics will argue that out that this is business as usual in Washington, differences in degree are differences in kind. We now have a destructive downcycle in progress, where companies (case example: financial services starting in the Rubin, um, Clinton era) win regulatory breaks that bolster their bottom lines, which enable them to throw more dollars at lobbying, which enable them to profiteer even more…..all at the expense of the public at large that isn’t directly benefitting from the scam.

Some readers (actually surprisingly few, but that may be a function of this being a holiday week and readers being in an agreeable mood) were critical of my opposition to the health care reform charade under way, the argument being that the insurance program was a Good Thing, it would provide insurance to people who were formerly uninsured, with subsidies to those at and not far above the poverty line (this is a big deal, for those who are familiar with benefit programs, some low income people do not seek better paying work because they would lose Medicare coverage).

The key assumption is that the insurance purchased will actually provide meaningful, affordable coverage. That is likely to prove to be a questionable assumption.

From an economic standpoint, anyone of reasonable means should not want insurance, save catastrophic coverage. You are better off paying for your routine coverage yourself, and paying for insurance (whether public or private) only to cover serious ailments that require hospitalization or other expensive treatment. So to extend that principle, for lower income people, the government could subsidize the catastrophic coverage and provide support for routine and preventive treatments.

In an interview with Bill Moyers at PBS (hat tip reader John D), Robert Knutter and Matt Taibbi explain how health care “reform” does far more for the insurers and drug companies, and far less for citizens than the plan’s boosters would lead us to believe:

ROBERT KUTTNER: Rahm Emanuel, the President’s Chief of Staff, was Bill Clinton’s Political Director. And Rahm Emanuel’s take away from Bill
Clinton’s failure to get health insurance passed was ‘don’t get on the wrong
side of the insurance companies.’ So their strategy was cut a deal with the
insurance companies, the drug industry going in….do whatever
it takes to get a bill. Never mind whether it’s a really good bill, let’s
get a bill passed so we can claim that we solved health insurance. Secondly,
let’s get the drug industry and the insurance industry either supporting us
or not actively opposing us….Now, that’s one way to get
legislation, it’s not a way to transform the health system. Once the White
House made this deal with the insurance companies, the public option was
never going to be anything more than a fig leaf…now it’s really nothing.

Yves here. The Administration signaled very clearly it that the public option was a mere trading chip. How? They called it….the “public option”! It’s an incredibly lame name, not the sort you’d ever use if you were serious about rallying public support. This is an Administration very attuned to marketing and positioning (the headfake HAMP mortgage mod program had its own logo and website as soon as it was launched, and consider the clever branding of the empty “stress tests”). Back to the transcript:

ROBERT KUTTNER: Think about it, the difference between social insurance and an individual mandate is this. Social insurance everybody pays for it through their taxes, so you don’t think of Social Security as a compulsory
individual mandate. You think of it as a benefit, as a protection that your
government provides. But an individual mandate is an order to you to go out
and buy some product from some private profit-making company, that in the
case of a lot of moderate income people, you can’t afford to buy. And the
shell game here is that the affordable policies are either very high
deductibles and co-pays, so you can afford the monthly premiums but then
when you get sick, you have to pay a small fortune out of pocket before the
coverage kicks in. Or if the coverage is decent, the premiums are
unaffordable. And so here’s the government doing the bidding of the private
industry coercing people to buy profit-making products that maybe they can’t
afford and they call it health reform.

Yves again. This is the key element that defenders of this program simply do not appreciate. The “plan” does nothing to fix the underlying problem of our health care system, which is bad incentives that lead to much higher costs than in other countries. This “reform” if anything reinforces the troublesome elements of the current system (by now making it official policy rather than design via official neglect) and worsen the cost equation by further enriching drug companies and extending the role of private insurers. Back to the transcript:

MATT TAIBBI: The Democrats are in exactly the same position that the Republicans were in once the Iraq War turned bad. All the Republicans have
to do now is sit back and watch the Democrats make a disaster out of this
health care effort. And they’re going to gain political capital whether
they’re in the right or not. And I think it’s a very- it’s a terrible thing
for the party.

There is a good deal more in this interview, which you can read here.
A related piece at Huffington Post, “The Cash Committee: How Wall Street Wins on the Hill” gives a describes in gory detail how big money trumps consumer interests, with the House Financial Services Committee as case study. It starts by discussing how efforts to regulate auto dealers were blocked, how the increase in the committee’s size favors vested interests: they play the grass roots game.

….groups like the auto dealers don’t bring with them to Capitol Hill the public-relations baggage of Wall Street or Goldman Sachs. “The local auto dealers are very popular in their districts,” Frank says. The more an interest group can make an issue district-specific and the more it can relate on an everyday level, Frank argues, the better it will do. “That’s why the realtors always beat the bankers. The bankers sit and they go [Frank makes a dour face, leans back in his chair and tightly folds his arms, miming an aloof posture]. The realtors are out there joining the Kiwanis and sponsoring little league.”

The same is true with John Deere, dairy farmers and other back-slapping boys from back home. But the big banks have figured this out, too — and now they use precisely such groups to poke holes in the reform effort. Over the last year, they’ve drafted an army of credible little guys to walk the halls of Congress and push the interests of brokers, swaps traders and Wall Street bankers. And they’ve shown that they don’t need big loopholes to slip trillions of dollars through.

“What’s happening now is the pro-regulation forces are being out-grassroots-ed by the antis,” Frank says. One member, he says, represented tons of title insurance companies. Another came from the headquarters of credit unions. A third’s district is home to LexisNexis; another to Equifax. Each of those entities received special treatment because their representative sits on the committee — and the more members on the committee, the more special treatment is needed. “I have not had a problem because of campaign contributions. The problem is democracy: it’s people responding to people in their districts: community bankers, realtors, auto dealers, as I said, end users, insurance agents,” says Frank.

Yves here. Those who followed the derivatives “reform” fiasco may recall how Wall Street got corporation to act as its spear carriers and plead its cause. Back to the piece:

Bank lobbyists looking for the seven votes needed to up-end legislation know where to start. [Melissa] Bean and 15 other New Dems have effective veto power on the committee and are sympathetic to their interests. According to its mission statement, the coalition, which was founded in the boom year 1997, is “committed to enacting policies that encourage economic growth, maintain U.S. competitiveness, meet the new challenges posed by globalization in the 21st century, and strengthen our standing in the world.” Wall Street lobbyists usually warn that banking regulations will harm U.S. competitiveness and slow economic growth.

Six of the committee’s New Dems are frontline freshmen. The panel is also home to seven Blue Dogs, another faction of business-friendly Democrats, three of whom are also New Dems. Two of the Blue Dogs are frontliners, including Rep. Walt Minnick, a freshman Democrat from Idaho who worked to beat back the pro-consumer finance authority in committee and pushed an amendment on the House floor that would have gutted it. Both efforts failed, but Minnick was nonetheless singled out for praise by the American Bankers Association in a post-vote memo…

Brad Miller has had his share of battles with the bottom two rows [newer members of the committee who sit in lower ranks]. Many of “the Blues and News,” as he calls them, are hamstrung by a “dependence on contributions from the industry. That traditionally has been one of the reasons to get on the committee. It was seen as a money committee.”

The article concludes by noting that the Democratic party has made a Faustian bargain with conservatives. There’s a reason that polls skew more liberal than what is the party is serving up:

But the difficulty of corralling the conservative Democrats, the valuable spots they take up on the committee that could otherwise go to a moderate or progressive and the expensive campaigns they require to stay in office call into question the strategy that got them elected. The party’s argument is that it is these marginal Democrats who give it the majority it needs to govern. But in seeking to craft its majority, the DCCC pays no attention to how those candidates will behave once in office.

One freshman, Alabama’s Parker Griffith, after getting roughly $1.5 million from the DCCC in 2008 and 2009, returned the favor by voting against every Democratic priority and then bolting for the Republican Party. The bottom two rows of the banking committee have been filled at a price of tens of millions of dollars. That money could have instead boosted the campaigns of progressives such as Bill Hedrick, Dan Seals or Bill Durston — all of whom lost tight races; none of whom would have voted with Wall Street.

Progressive Congressional candidate Darcy Burner who, despite heavy backing from the DCCC lost a squeaker in Washington State in 2008, says the campaign strategy has a more insidious influence.

“The D-triple-C as an institution is much more inclined toward Blue Dog candidates than progressives and that’s a self-fulfilling prophecy. They pick candidates who might be perfectly progressive and teach people to be less progressive. You really have to buck them to stay progressive,” she says, citing her own experience and several candidates who gradually became more conservative under DCCC guidance. “Once you say that stuff to voters, you’re expected to follow through.”

You can find the full article here.

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31 comments

  1. Francois T

    Both parties are addicted to money. It has become so bad that Dems have to “tame” the progressives in their rank. Freaking pathetic!

    Short of a true economic catastrophe, I just don’t see how we can break this lock-down on the politicians.

    Big business own them.
    The media is on their side.
    We get shafted big time.

    I guess it is a game of mind over matter: They don’t mind, and we don’t matter.

    Quite the democracy we got here.

      1. NotTimothyGeithner

        Yes, its a Republic and not a Republic in the sense Madison, the guy who wrote the Constitution, considered a “Republic” to be a Representative Democracy and a “Democracy” to be like the government of ancient Athens where citizens made policy directly.

        The word democracy is entirely appropriate since the advent of universal male (its not PC) sufferage to describe the American Government which could be argued existed effectively since the start of the Republic.

        Words meanings have changed, and the only definition of Republic which is everlasting means with a monarch, so the Roman Republic was a Republic when Sulla was Dictator-for-Life.

  2. Hugh

    Barney Frank’s comments on lobbyists add a certain level of humor and irony to the whole. Yes, Melissa Bean is a dreadful whore for the financial industry, but then so is Frank.

    Recruiting and running a bunch of DINO DLC Washington consensus neoliberal Rahmocrats wasn’t a bug. It’s a feature. It is important to realize too that in some ways the Democrats are even more corporatist than the Republicans. Obama’s healthcare plan has $400 billion in cuts to Medicare. No Republican could have gotten away slashing it like that. I doubt too that any Republican Administration could have gotten a personal mandate passed, forcing millions to buy insurance they can’t afford to use.

  3. Francois T

    When I watch the sorry freak show that Washington politics has become, I always have a thought for one of the country true patriots, Paul Wellstone:

    “[…] the late Minnesota senator Paul Wellstone [who] introduced his single-payer health care bill in 1993. Wellstone said single-payer legislation could not happen before campaign finance reform.

    “While Paul Wellstone submitted single-payer, Medicare for all legislation in the Senate, he regularly advised supporters that it did not stand a chance until we accomplish campaign finance reform,” commented long-time single-payer advocate Joel Clemmer who is working for passage of a Minnesota single-payer plan.

    Ever the lucid realist, Wellstone shed his illusions but never lost his ideals.

    Zoom in 16 years later:

    “That is the poignant background to Bernie Sanders’ gesture toward the gallery and admission that his amendment did not stand a chance because the opposing lobbies are too strong.

    “So the withdrawal of the Sanders amendment signifies both the short-term effectiveness of the Republicans’ obstructionist tactics and the long term power of those who supply funds for the election campaigns of those at the head of our government. The first problem is frustrating but the second is a threat not just to acceptable health care but to democracy itself.

    1. Doug Terpstra

      Wellstone’s death was a tragic, tide-turning loss, especially striking as Coleman took his seat. Death by plane crash makes one wonder.

  4. Patriot

    If you think about it, this is neo-feudalism. The companies like Equifax and LexisNexis are the neo-feudal lords. They have the peasants (debt shackled) in their domains, pressure the central government in favor of policies that benefit the neo-feudal establishment. People who work at Equifax or LexisNexis for stepping up to protect their income. They are protecting their feudal estate, so to speak.

    The problem is, who speaks for the self-employed, the small business owners and the service workers who will be paying out the nose for insurance and getting little in return? Who speaks for us?

  5. charcad

    he regularly advised supporters that it did not stand a chance until we accomplish campaign finance reform

    The operational definition of “campaign finance reform” is prohibiting the “other guys” from intervening in elections.

    I am still waiting for a cogent explanation of why any candidate any where should ever be allowed to accept one thin dime from anyone not qualified to vote for him (her).

    Yep. I can hear “progressives” everywhere fainting dead away and thudding on the floors at the thought. Surely Flyover Country Palin supporters should not be allowed to choose representatives without external tutelage?

    Well, here’s random entertainment from the current ephemeral Majority:

    http://query.nictusa.com/cgi-bin/can_ind/2009_H0MA04036/A-E/

    It’s Barney Frank’s list of individual donors! Just look at all the out of district high rollers.

    And everyone’s favorite by the hour girl, Melissa Bean.
    http://query.nictusa.com/cgi-bin/cancomsrs/?_10+H2IL08088
    Of the $780k she’s already raised for 2010 I doubt even 20% was contributed by natural persons who can legally vote for her.

    http://query.nictusa.com/cgi-bin/can_ind/2009_H2IL08088

    I’ll bet some N-C readers can find friends and even themselves on Melissa’s list of – ahem – supporters. Identical exercises are possible for “Republicans”. But they’re out of power right now in the House.

  6. Jim Maclean

    Yves,

    You are mistaken about the value of non-catastrophic health coverage. Insurance companies negotiate good prices with doctors and hospitals (that’s really all they do). The uninsured pay more for the same services than the insured.

  7. Kelli K

    Sorry, I respectfully disagree with a number of the points made here.

    Let’s start with your criticism of the name “public option.” What should it have been called? It was talked about as the government-run health insurance option on a menu of mostly “private options.” Makes sense to me. Some suggested it was an extension of medicare or medicaid (but that was very unpopular with large segments of the public). It was talked of as a “coop” option (what did THAT mean? no one knew). Would “government health care” have sounded better?

    Secondly, you seem to approve of Kuttner’s insane statement: “Social insurance everybody pays for it through their taxes, so you don’t think of Social Security as a compulsory individual mandate.”

    When I look at the chunk that FICA takes out of my paycheck I absolutely DO think of it as a “compulsory individual mandate.” And it’s one that may not pay much out by the time I retire.

    The single-payer system these guys wanted would have put us on a fast-track to bankruptcy rather than the slow train route this current plan has us on. It’s unclear to me how that is much improvement.

    1. Hugh

      “The single-payer system these guys wanted”

      Not sure who these guys are but the public option was most definitely not a single payer system.

      Also single payer as it is done in countries like France and Australia delivers better health outcomes for their citizens and at about half the cost per capita than here. The current system and/or Obama’s joke healthcare plan are the fast track to bankruptcy because costs remain uncontrolled. You really should get your facts straight.

    2. Doug Terpstra

      We were already on the fast track to bankruptcy, paying twice what any civilized country pays, for poorer outcomes. With this sickcare bill, the Senate just took out the bridge over the ravine.

      Speaking of Social Security, just wait till Wall $treet gets its bloody, predatory claws on that, explicitly I mean; ostensibly, it already has. With Geithner as lobbyist insider, Obama may just channel FICA taxes to them directly.

    3. lambert strether

      Respectfully, KK, I must ask you to do your homework. The United States spends at least twice as much on health care than any other nation, and for worse health care outcomes. The French, for example, spend $3601 per capita, compared to our $7290, and live, on average, two years longer– and that’s after all the smoking, the wine, and the butter.

      The best way to avoid bankruptcy (and tens of thousands of deaths that are needless to everyone but those who seek to preserve the private insurance business model) is to adopt a system that can be shown, by evidence, to work, saving both lives and money: Single payer. (Single payer also has the virtue of being the centrist position: socialism, a la the UK’s National Health Service, is the left position.)

    4. LeeAnne

      Extension of medicare or medicaid, known as the ‘public option’ is very far from unpopular; 70% of Americans want a ‘public option.’

      But negotiating for health care reform legislation are the representatives of corporations who are opposed to ‘the people.’ Make no mistake about it: the private health insurance corporations [they don’t provide health care; they are health care brokers] are opposed to the people of this country. The representatives in Washington fighting for the corporations have money on their side; individuals have very little money by comparison to fight them. Example: Bloomberg just spent more than $100,000,000 to get reelected in a narrowly won election. In other words, only his money made the difference; New Yorkers did not want him.

      Never in the history of the US have the people, any group of people in the US, been mandated to purchase anything on the private market. That alone is horrendous, but in addition, the government will administer it and enforce penalties if you don’t pay to an industry with the record of rapaciousness these companies have practiced. In addition, there is the certainty that the private industry will come up with loopholes people won’t be able to fight because of the prohibitive cost of lawyering for individuals.

      Even the requirement to purchase car insurance does not require you to own a car.

      But we all have a body we must care for as long as we live; cradle to grave, many for families of three or four and more.

      The public system, Medicare, now insures health care for the elderly and disabled only; those groups that are the most expensive to care for since they are most guaranteed to be in need of health care, and therefore the most costly for taxpayers, so that the private monopolistic insurers have the younger more healthy group in the population to exploit for profit by not guaranteeing the insured will be paid by the insurer thereby running a lottery where the insured can never be certain what will be paid for, dropping those considered at risk of requiring health care, operating exempt from anti-trust laws, charging increasing, uncontrolled, whatever-the-traffic-will-bear rates; not for providing health care or insurance in the sense we think of insurance as freedom from worry over expenses in an unpredictable event, but for acting as health care brokers.

      The private health brokerage industry operates as a middle man that distracts doctors from their primary purpose of caring for patients, (health insurance companies do not provide health care, they act as middle men/brokers) and cause perverse incentives for doctors to specialize in areas where the patient pays directly so that many doctors can avoid the interference and expense of insurance company meddling. That also seriously limits the number of doctors willing to provide necessary primary health care.

      A Medicare plan for all who want it, with a requirement that everyone choose a private or public plan; that is, a ‘public option’ with the poor subsidized, would level the playing field, decrease the costs for the entire nation, and gradually eliminate the rapacious, thieving, extortionist, private health care industry as we know it, [which is why they fight the public interest so hard] and as the world understands it. Its about time the US had a civilized approach to health care. The people want a ‘public option.’

  8. KoshemBos

    First to the Kuttner point about Rahm Emmanuel: The pretend left cannot stand seeing their fake darling Obama get all the blame for all his lies and missteps. Therefore, they put a lot of the blame on Rahm. He became an easy voodoo doll for the pretend left. With all do respect, Rahm is only the hired hand; Obama is the president.

    Wellstone was right 25 years ago. Now, campaign reform will not do the trick. The huge gap between the billions the lobbies represent and the smaller fortunes of the single senator, just like water flowing to the lower elevations, will cause money in different forms to flow to the senate.

    The jets, the exotic resort in remote places, the multi macmansions will continue to make lobbyists infuential with the powerful.

  9. Eric L. Prentis

    President Barack Obush is the ex-president’s alter ego: Obush’s personnel decisions on defense (Gates) and on the economy (Geithner, Summers, Bernanke), and his actions in Afghanistan (30K troop surge), on the economy (more and more government debt to buy toxic assets for the taxpayers, thus saving the liars, crooks and cheats at the insolvent zombie banks), and now the giveaway to the insurance and drug companies in the new healthcare legislation (similar to Bush who passed in 2003 the $400 billion dollar Medicare Prescription Drug Modernization Act for seniors) perfectly follows Bush’s game plan. Progressives have been duped and can only hope that Obush is a one-term president.

    1. Doug Terpstra

      So well said. This is Bush Medicare “reform” on steroids, and Obama is a brilliant ringer.

      Obama definitively signaled his capitulation early on with ‘suspenders’ as a too-clever metaphor for a ‘public option’. It was a tipping point to abandon hope in Obama, when I came to see him as a cynical propagandist, the great deceiver. Clinton too, was a sellout, but less painful because the stakes were not then so extreme, his slick-Willie-bubba persona never inspired such profound confidence, and he wasn’t really the nation’s first black president.

  10. lambert strether

    Yeves writes:

    Yves again. This is the key element that defenders of this program simply do not appreciate [emphasis mine]. The “plan” does nothing to fix the underlying problem of our health care system, which is bad incentives that lead to much higher costs than in other countries. This “reform” if anything reinforces the troublesome elements of the current system (by now making it official policy rather than design via official neglect) and worsen the cost equation by further enriching drug companies and extending the role of private insurers…

    I wish I believed this, but I don’t, any more. When you’ve got a Nobelist assuming a can opener and peddling abstractions that don’t take real household budgets into account, the likelihood that we aren’t dealing with b*llsh*t becomes vanishingly small. Rather, even “the good guys” in Versailles have decided that passing some bill, any bill is more important than setting up a policy that would prevent, oh, the deaths of a few ten thousands or so.

    It’s Marie Antoinette, updated: “Let them eat sh*t.”

  11. catastrophard

    Our best hope now is for a narrow GOP majority devoted to internecine warfare and paralysis for the rest of Obama’s sole term. With luck things will be bad enough by 2012 to require some genunie reform for stability’s sake. But odds are that the police state will be more than adequate to repress instability without reform. That’s the big fallacy in Kunstler’s piece up there. This country will bleed everything else to pay for more and more cops.

  12. Jim Krugman

    a link to an opinion piece on the morning’s Bloomberg that shows clearly how effective financial lobbying can be. Take a look. It is htttp://www.bloomberg.com/apps/news?pid=20601039&sid=a48c8UpUMxKQ

  13. run75441

    Yves:

    “Yves again. This is the key element that defenders of this program simply do not appreciate. The “plan” does nothing to fix the underlying problem of our health care system, which is bad incentives that lead to much higher costs than in other countries. This “reform” if anything reinforces the troublesome elements of the current system (by now making it official policy rather than design via official neglect) and worsen the cost equation by further enriching drug companies and extending the role of private insurers.”

    What is the “underlying problem of our health care system, which is bad incentives that lead to much higher costs than in other countries?”

    And what is the plan reinforcing in terms of “troublesome elements of the current system (by now making it official policy rather than design via official neglect) and worsen the cost equation by further enriching drug companies and extending the role of private insurers.”

    I follow your blog consistently Yves and I find the generalities being cited here rather troublesome to having a good discussion of what is contained in this plan to date and what could evolve in the next 2-4 years (dependent upon which time table is used). What is your proposal as a replacement for the Senateor House Bill or do we have to wait another 15 years and watch the cost of healthcare and the numbers of uninsured double before such a plan evolves?

    In 1993 healthcare was ~$800 billion, into 2000 it was ~$2 trillion and in 2009 it is ~$2.6 trillion. This bill does quite a bit to slow these increases down and divert much of the increase to medical care as opposed to the company coffers and alleged expenses. And what if we do nothing?

    “1. In the worst-case scenario, the number of uninsured Americans would increase to 57.7 million in 2014 and to 65.7 million in 2019. In the best case the number of uninsured grows to 53.1 million in 2014 and 57.0 million in 2019. All of these estimates assume that states would continue to maintain current eligibility levels for public coverage. Without this, the number of uninsured would be even higher.
    2. In all three scenarios, we see a decline in ESI coverage rates. The ESI rate would fall from 56.1 percent in 2009 to 49.2 percent in 2019 in the worst scenario and to 53.9 percent in the best case.
    3. Under all three scenarios, there would be substantial increases in employer premiums for businesses of all sizes. We estimate that employer spending on premiums would increase from $429.8 billion in 2009 to $885.1 billion in 2019 in the worst-case scenario and $740.6 billion in the best case.
    4. Individual and family spending would increase significantly—from $326.4 billion in 2009 to $548.4 billion in 2019 in the worst-case scenario and to $476.2 billion in the best case.
    5. Medicaid and CHIP coverage would increase substantially with enrollment increasing from 16.5 percent of the population in 2009 to 20.3 percent in 2019 in the worst-case scenario, an increase of 13.3 million more Americans covered under public programs. Even in the best case, enrollment would increase to 18.3 percent of the population.
    6. Medicaid and CHIP expenditures would grow substantially both because of increased enrollment and because of higher health care costs. In the worst-case scenario, Medicaid and CHIP spending for the non-elderly would increase from $251.2 billion in 2009 to $519.7 billion in 2019. In the best case, spending would increase by 60.7 percent to $403.8 billion.
    7. The cost of uncompensated care would also increase as much as 128 percent in the worst-case scenario and by 72 percent in the best case. Together with the increased spending for Medicaid and CHIP, this would inevitably mean higher taxes even without reform.” http://www.urban.org/uploadedpdf/411965_failure_to_enact.pdf
    As a liberal, I am not happy with the Dems in the Senate as a small cadre of them in conjunction with moderates and independent hold us captive to their wants, their desires, and with their attempts to marginalize Obama. The Senate is not a pretty picture to say the least; but, to shuck this bill as it now stands and which will be modified over the next 2-4 years does not makes sense Yves.

    1. Yves Smith Post author

      run,

      This bill does virtually nothing to contain health care costs (it leaves the underlying incentives of the health care system intact). It sets a cap for underwriting profits which is more generous that in other types of insurance, so the idea that is doing anything meaningful as regards insurance company rent seeking is a joke. It allows them to get a ton more customers.

      You seem to be caught up in the idea of extending insurance to the uninsured. I agree this is an important goal, but that insurance is not going to make as much of a difference as you believe. You seem to ignore they key point: the “affordable” policies won’t cover much. This is all a huge head fake that enriches the insurers and Big Pharma.

      And people are dying and being denied care now, people who are insured. Being insured is no panacea. You seem to think it is.

      And why do you assume this is going to be “improved” in the next 2-4 years? If there is any change, it is likely to be in the direction of making the plan worse, not better.

      Obama blew it.

      1. run75441

        Yves:

        How do you herd cats (Senate)? There never was a majority there which was the extent of my conversation with Durbin at Showdown in Chicago. The Blue dogs are no more Democrats than what Lieberman is or was. So Obama had 50 Dems and 50 leftovers to contend with for this bill. I am sure you know this as well as I do.

        To my understanding, the 85:15 rule for group and 80:20 rule for individuals is over riding and is a cost control for the overall insurance and individuals. We believe it plays down to the individual in that the same ratio applies to the individual in the amount of medical care applied to that person. When that young person has no claims, we believe there will be health insurance premium cuts. In terms of other ratios as determined by age, family, individual, smoking etc. The 3:1, etc. should play off of that lowest price for the young indiviual. We are waiting for the final word on how all of this plays out with the ratios for younger to older to age to family, etc.

        I am lazy right now; but, this is a C&P of what Maggie Mahar is saying about the Senate Bill:

        “Yes, if you live in a low-income or moderate-income household. Most families in this group who do not have employer-based insurance will receive subsidies to help them cover premiums in the insurance exchanges. The subsidies are available on a sliding scale, and are pegged to income and the size of the household. Families that earn less than four times the Federal Poverty Level will receive help. For example, a single person earning less than $43,320, a couple with income under $58,280, a three-person household reporting earnings up to $73,240, or a family of four earning as much as $88,200, are eligible for ‘premium credits.’

        Under the Senate plan, households at the low end of the scale will not be expected to shell out more than 2.8% of their income toward their share of insurance premiums; the subsidy will pay everything over that amount. At the high end of the ladder, (a single person earning close to $43,320 or a family of four approaching $88,200), the amount they will owe is capped at 9.8% of household income.

        If you are accustomed to generous employer-based insurance, 9.8% of income may sound like an extortionate amount of the family budget to fork over for healthcare. But for the uninsured, the self-employed and those who work for employers who don’t offer insurance, this is less than they would pay today if they tried to buy good, comprehensive insurance in the individual market. And families in the middle of this sliding scale are asked to contribute just 4% to 6% of their earnings.

        Out of pocket payments also are capped. The Senate plan begins by limiting how much even the wealthiest individual buying insurance in the Exchanges will pay out of pocket in a given year to $5,950 ($11,900 for a family). Caps are lower for those who earn less. For example, if an individual earns somewhere between $32,490 and $43,320 the out-of-pocket limit is set at roughly $4,000. A person earning $21,660 to $3249 would pay no more than $3,000. Finally a single person earning $10,830 to $21,660 would never face medical bills that exceeded $2,000.” http://www.healthbeatblog.com/2009/12/glass-half-empty-glass-half-fullthe-senate-has-a-bill—-part-2-of-3.html

        Is there any reason to believe these lower and moderate income people and the uninsured will not have good coverage under these guidelines? I do not think so. What is a gapping hole is the group between 45-64 who make between $50,000 and $100,000 in income and who may find themselves paying 3 times the individual rate. How that turns out is dependent on how the 80:20 ratio is applied to individuals, the undelying 3:1 ratio, and whether it applies to the lowest cost for the youngest person who has no claims.

        Reigning in Medicare Costs which typically run at 6% to private healthcare cdost of 8% is what is being used to control overall charges.

        “an amendment introduced by Joe Lieberman, Jay Rockefeller and Sheldon Whitehouse would strengthen the Commission and let it use financial carrots and sticks to insist that hospitals begin providing better value for Medicare dollars.”

        This will flow downward to private healthcare as well. Also the emphasis is being placed on primary care as opposed to specialty care. Primary care physicians will see increases in their Medicare and Medicaid reimbursements and there will be reductions in specialist care. This and the above are just a few things coming out of this bill to date.

        People being denied coverage for an illness has always been a problem with private healthcare insurance. I haven’t read that portion of the bill yet to find out how that is handled. In general ESI or private insurance was never insurance at any time because it could disappear under any circumstance. In the past, the only people who ever had insurance were those on Medicare or those covered by the VA.

        Yves, I believe you and some of the stalwarts are leaping before the full detail of the Senate Bill gets out. This is so unlike you guys.

        I will counter your question on what makes me think things will change in 2-4 years. What else do you have in your pocket? If we all sit back and do nothing, then nothing will happen or we can write the Senate (yea, I know write your Congressman) and let them know. I have a trash can in Levins and Stabenow’s office with my name on them. Yves, you have a name, use it. I am just a nobody who isn’t in awe of the Durbins, Levins, or Stabenows.

        What are the alternatives if this one fails, another healthcare bill brought forth? Not likely and as the Urban Institute points out, the problem gets progressively worst far worst than the cost of this bill. I do not see anyone leading the charge for an alternative yet. The Senate Bill is not the best bill and it still is open for change. Those of us at Angry Bear are dissecting it as fast as we can and are waiting for more detail to come out. Too many generalizations being made and I need better proof of my assumptions in some cases.

        1. Doug Terpstra

          “We believe [the 85:15 rule for group and 80:20 rule for individuals] plays down to the individual in that the same ratio applies to the individual in the amount of medical care applied to that person. When that young person has no claims, we believe there will be health insurance premium cuts. In terms of other ratios as determined by age, family, individual, smoking etc. The 3:1, etc. should play off of that lowest price for the young indiviual. We are waiting for the final word on how all of this plays out with the ratios for younger to older to age to family, etc.”

          Forgive the mistrust of anonymous propagandists, but who are “we” in this context? Is this and the following deliberately incomprehensible or is it me?

          “What is a gaping hole is the group between 45-64 who make between $50,000 and $100,000 in income and who may find themselves paying 3 times the individual rate. How that turns out is dependent on how the 80:20 ratio is applied to individuals, the undelying 3:1 ratio, and whether it applies to the lowest cost for the youngest person who has no claims.”

          This 2,000-plus page bill smells like lobbyist sausage to me, perhaps a down payment on the bloated lobbyist-authored tax code, and so far, the only voices I trust are saying dump it. The ‘insurance’ companies warrant disintermediation by a lethal injection.

          I’m curious to read Ives’ response.

          1. run75441

            Doug:

            There are a few of us reading the darn bill, which is more than 99% of the posters on this article have done. We being a few of us at Angry Bear. I see lots of generalities and comments; but, I see little detail. Read Maggie Mahar if you want some more detail some of which which I have incorporated above and also provided a link. Spend some time and read Urban Institute if you wish to know where we are going without healthcare reform. Review the history of costs (which I have provided), if you care to understand how rapidly it is growing.

            It isn’t a great bill, it can be changed, and it is a damn site better than no bill at all.

  14. run75441

    PS Yves:

    Off Topic:

    I (we) did get a nice plug on Duy’s Fed Watch here:http://economistsview.typepad.com/timduy/2009/12/why-christmas-eve.html “Why Christmas Eve” and under my post on Angry Bear: Geithner’s Baa Humbug to Jobs and Labor “Over at Naked Capitalism, they are debating whether Goldman Sachs drove the collapse of AIG by calling for the mark down of CDO by companies . . . ” http://angrybear.blogspot.com/2009/12/geithners-baa-humbug-to-jobs-and-labor.html

    Not that you need a plug. :) Ken Houghton mentioned it to me.

  15. john bougearel

    I am late to the comments in this discussion about health care and financial reform in 2009. But I would like to add the U.S. government’s symbiotic public-private relationship in 2009 has been more about the preservation of big business interests. The unstated policy goal is “business-as-usual,” and what can the govt do to support that end.

    That is a way of saying that the policy within the US government, regardless of which administration since at least as far back as the Reagan era has always put the interests of big business above the public interest, even when backing big business were clearly policies pursuing
    unsafe and unsound goals. US Govt’s public-private partnership over the past 25 years have largely been unsafe and unsound not just for the American public, but for people all over the world. America is not an island, when it acts negligently or unethically, it has an materially adverse impact on the rest of the world. And most of what passes for public policy these days borders on negligence and unethical.

    While this business-as-usual govt policy cuts across all industries, This was made strikingly clear to me while reading Mark Bowen’s Censuring Science this week.

    This book highlights the efforts undertaken by the White House administration since the Reagan presidency to censor the Earth Science with respect to global warming trends. Political appointees to the various White House administrations, not surprisingly, have come from the coal and other fossil fuel industries. Various administrations have been captured by the fossil fuel industries. These appointees have agendas and were responsible for distorting and censoring global warming science. Public affairs officials edited or censored the messages coming from scientists. The redactions downplayed the risks of global warming trends to the public. The public got the wrong message over the past twenty years. White House Policy at these various administrations have taken a “business-as-usual” approach to the anthropogenic (human-related)dangers of greenhouse gases.

    I personally found that some of the global warming science that underscores the human footprint is akin to the human footprint that created the ongoing financial crisis. The products created from both industries release a greenhouse gas that in the long run is neither safe nor sound.

    The terrifying part is watching each administration coming in and continuing its policy of “business-as-usual” relationships with the financial and fossil fuel industries (and now health care reform). Lawmakers and administration officials and appointees (e.g. Mr. Geithner) consistently deny that there is anything wrong or harmful about these industries business models. For example, lawmakers at the Bernanke confirmation hearing consistently framed the language surrounding the collapse of the financial system as “mistakes” thereby denying that anything criminal occurred in the way of securities fraud, or that there was anything markedly dangerous or inherently harmful with respect to the financial innovation and deregulation that led to this crisis etc

    The fact is that that this type of capture of policymakers is not limited to the financial and fossil fuel industries. As many critics of health care reform have correctly pointed out, we find that the health care reform that Democrats under the Obama administration just served the interests of Big Pharma, the Insurers and Medical Equipment companies rather than to everyday Americans their constituents.

    No doubt the health care industry are creating products that give off their own dangerous greenhouse gases to everyday Americans. The health care reform the government just passed is yet another illustration of the govt supporting big business to the detriment of the economy and to the American public.

    The American public should be the highest authority that these politicians serve, but that is not the way the system works. To the extent the US govt has been failing to represent and protect the interests of the American public, our govt system is broken.

    Our model of government is defunct.

    The bottom line is this: the preservation efforts of the gov’t to maintain a “business-as-usual” approach to the private sector needs to change. That is, the entire U.S. public[govt]-private partnership model of “business-as-usual needs to radically change and urgently so.

    And as I said in comments on my “2010” article,

    the business-as-usual language of the public-private partnership model should be reconfigured in ecological terms. The entire framework of the U.S. public-private partnership model should be ecologically couched, based upon long-term safety, soundness, sustainability goals rather than short-term greed.

    This is a radical proposition for the U.S. gov’ts public-private partnership to embrace. Our best hope is for Americans to get informed, get angry, and stay angry at the entire US public-private partnership until long-term measures of safety and soundness have been adopted as policy. And here the American public can benefit by adopting an ecological mindset.

    Yet another industry where safety and soundness has come unglued in recent years is the airline industry. See Bloomberg Caroline Salas’s article “Fatal Flying on Airlines No Accident in Pilot Complaints to FAA”

    http://www.bloomberg.com/apps/news?pid=20601109&sid=aaNPBjZ2kB54
    Reply

    1. Skippy

      Well said JB, profit (short term / one life span) before considering all ramifications with those we share this little ball with is lunacy. May they live long enough to suffer their actions recompense.

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