Ph.D. Octopus

Politics, media, music, capitalism, scholarship, and ephemera since 2010

Historic Health Care Bill?

with 4 comments

by weiner

David Frum is calling it “Waterloo.” Matt Yglesias is already labeling Barack Obama as one of the “finest presidents” in history. Wiz remains a skeptical supporter, but sheds some nice historic light on John Lewis.

I share some of Wiz’s skepticism. As I’ve written before, I’d prefer a single-payer or socialized system. Without that, I would have liked a strong public option. I think Dems should have compromised and agreed to serious tort reform, which is actually a good idea, in order to accomplish that.

So this is not a great bill. But it’s certainly better than no bill. Paul Krugman and Noam Chomsky agree on that.

Where Chomsky, and Glenn Greenwald, and Matt Taibbi, and unfortunately, my fellow bloggers Wiz and wotty have it wrong, I think, is in calling the new bill a gift to insurance companies.

Yes, the individual mandate requires all sorts of Americans to become customers of private insurance companies. But many of these people are those who were previously denied coverage. They are the expensive ones.

In fact, as Yglesias argues here, the profit margins for insurance companies under the new plan are not so great. Instead, “the primary driver of high American health care costs is that we spend a lot on health care providers who don’t make as juicy a political target” (his emphasis). Yglesias’ Orwellian choice of words fascinates me here. By “health care providers” he of course means, doctors, hospitals, nurses, physicians assistants, physical therapists, clinical psychologists and all the other people and institutions that actual perform and provide the care.

Americans, like many people, have warm, fuzzy feelings for these people, yet they are the ones who drive up costs and are likely to see most of the new money under the new bill, especially doctors and hospitals. Don’t get me wrong, I think the medical profession can a noble one (my fiancee is about to enter medical school) and physicians and other health care workers should be well-compensated. But the way medicine is practiced in the United States really can turn doctors into businesspeople, in a way that does not happen in Canada or most everywhere with universal healthcare on a largely single-payer or socialized system.

Of course, Big Pharma is also going to see to a lot of profits from the new bill, which is a bad thing. And like Yglesias concedes, insurers don’t “add any value” to society, and they  “are basically just red tape and money spent on socially undesirable risk-screening and profit-taking.” Countries with more limited or regulated involvement of private insurance have better healthcare systems.

Still, I think Americans are going to have to come to terms with a lot of things here. One day, they’re going to have to realize that healthcare should not be treated like a business, or at least not to the extent that it is in the United States. Second, while I think a single-payer system would cut costs and be more efficient, effective and just, more broadly, the bigger welfare state will cost more. As Greg Mankiw rightly points out, “high taxes” are needed to pay for it.

Mankiw’s post is actually worth quoting for its succinct summary of this “trade off:”

I like to think of the big tradeoff as being between community and liberty. From this perspective, the health reform bill offers more community (all Americans get health insurance, regulated by a centralized authority) and less liberty (insurance mandates, higher taxes). Once again, regardless of whether you are more communitarian or libertarian, a reasonable person should be able to understand the opposite vantagepoint.

I think Mankiw is wrong: “insurance mandates” and higher taxes don’t really mean less liberty.” Canadians are no less free because of single-payer healthcare and the taxes that pay for it: in fact, they are more free to quit their job, work part-time and go back to school, start a new business, or even transition from one job to the next.

But I think Mankiw is right that there is tradeoff. More welfare state means higher taxes. But to paraphrase Jerry Seinfeld, America will (eventually) win the pennant with that trade.

It will be a long road. This healthcare bill is historic, but there’s a lot more to be done in order to build a real progressive system.


Written by David Weinfeld

March 22, 2010 at 18:44

4 Responses

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  1. If only because you’ve had the temerity to pronounce moi “wrong,” let me just make a couple of points:

    Yes, Chomksy concedes this bill is better than no bill (it would be hard to imagine a situation more unfair and inefficient than the status quo), but that certainly doesn’t amount to an endorsement, and I really don’t see how you can contest his larger point:

    **”The United States’ health care system is so dysfunctional it has about twice the costs of comparable countries and some of the worst outcomes,” Chomsky told Raw Story. “This bill continues with that.”

    The decades-long critic of corporate power alleged that premiums won’t stop rising as the package is designed in no small part to funnel money into the pockets of the health care industry. “The bill gives away a lot to insurance companies and big pharmaceutical corporations,” he said. **

    To wit, health care related stocks have been surging ever since this bill passed. Certainly, this bill will change a fair number of people’s lives for the better, but Wall St. votes with its dollars, and that surge tells you more than you ever wanted to know about the bill. Essentially, you have the bill being welcomed by the very industry that is supposedly being “reformed,” the very people who got us into this mess. I’ll clothespin my nose with Noam, but I don’t think one should have any illusions about the insurance industry being “reined in” or buy the Reid/Obama line that this is some sort of epochal victory of the people over big money, lobbyists, and the way business is usually done in Washington. If anything, by squandering the genuine appetite for epochal change that was out there – 60% in favour of a public option etc. – this bill risks only further entrenching corporate power.


    March 23, 2010 at 11:08

  2. I dislike the insurance companies as much as you do, my friend. All I’m saying is that the bigger financial winners here are first doctors and hospitals and second Big Pharma. Insurance industry is number 3.

    Clearly the insurance industry likes having more customers, and never wanted the competition from the public option. They certainly stand to benefit here, just not as much as the other groups mentioned above.

    Also, I’ll refer to a debate on facebook a while back where your friend Tim pointed out that while a majority of Americans favour a public option, if you ask them if they favour it if it means tax increases, they say no.

    Like Tony Judt said, Americans want all the goodies of the welfare state, but they aren’t willing to accept higher taxes to pay for them.

    Also, as your pal GG notes, that fact that the “American people” want something isn’t necessarily an argument in its favour.

    Americans have turned against the current bill. But it’s still better than no bill. The The public option is better policy on the merits, whether Americans want it or not.

    Having said all that, I agree that this bill risks “further entrenching corporate power.” But even worse, it risks continuing the culture of doctors practicing medicine as if it was simply a business.


    March 23, 2010 at 11:24

    • I never found Tim’s argument very persuasive. I mean, what do you think would happen to the polling numbers if you told people a public option would drive down health care costs across the board, potentially radically changing the current situation where Americans pay twice as much as anyone else for half the result?

      Also, I read somewhere this morning that the bill is now polling better, that support is rising, so beware adopting Rep’n talking points.


      March 23, 2010 at 11:30

      • Maybe GG was listening in:

        “Kaiser Health News has a new article today — headlined: “Doctors, Hospitals, Insurers, Pharma Come Out Ahead With Health Bill” — which begins as follows: “Most health industry sectors are winners — some bigger than others — under sweeping health care legislation that will expand coverage to 32 million uninsured Americans over the next decade, analysts say.” It details the massive benefits each industry receives, the success they had in killing any real competition and reform in the bill (i.e., the public option, Medicare expansion, drug-reimportation, bulk price negotiations, and an end to the insurers’ anti-trust exemption), and explains: “One indication that the insurance industry is likely to do fine under the bill: Insurers’ shares have soared by an average of 71% in the past year, as measured by the Standard & Poor’s 500 Managed Care Index.” That’s hardly surprising: a former Wellpoint executive was the principal author of the original Senate bill from which the final bill was derived.”


        March 23, 2010 at 11:42

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