Sunday, March 26, 2017

Handout or protection racket?


Blogfriend Ten Bears comments on yesterday morning's post:
They're beaten. Like Social Security and Medicare/Medicaid, the Affordable Care Act is now the "law of the land" and we will indeed be "living with it for the foreseeable future."
A government handout to the insurance industry.
An industry that, notes commenter Tom Riker, "insures millions of people. That includes the Medicaid expansion, helping millions more. That stabilizes the finances of rural hospitals..." And that employs something like 530,000 people, which is a lot of people to throw out of work at one blow in a revolutionary change in the management of the economy. And 40-odd percent of which is nonprofit companies. The ACA contains mechanisms to increase the nonprofit side but Republicans in Congress gutted them, as I tell you all the time.

The for-profit companies don't regard it as much of a handout, either, because of the caps it puts on profits. Eighty cents out of every dollar they take in in premiums must be paid out in claims, thanks to the ACA (that's the minimum medical loss ratio), 85 cents in the large group market that ensures most of us with jobs (and all the overhead has to be paid out of what's left over, before anything gets to the shareholders), and thanks to the list of ten essential health benefits they're no longer allowed to sell the kind of "skinny" plan designed to never pay out any claims at all. They especially don't like the exchanges of the individual market, which is why they're pulling out of them or trying to create monopolies, county by county.

It's not so much a handout as protection money, where the insurers are the gangsters running the street of health care and can fuck you up if you try to do something in their territory. And they don't seem to think it's enough.

The main argument for the ACA not being a progressive law—aside from the canards about the Heritage Foundation, which came up with the phrase "individual mandate" for its Let's-Pretend-We-Have-a-Plan plan when it was combating universal health insurance in the early 1990s, and Willard Mitt Romney, who was forced by veto-proof majorities in the Massachusetts state legislature to accept an ACA-like program (largely designed for them with the participation of Ted Kennedy) and then decided to pretend it was his idea when it turned out to be immensely popular and he was running for president—is based on a confusion between a really good idea and an idea for putting it into operation that may not be so good.

The really good idea is that one should never have to fork over a payment when one goes to a doctor or a hospital, write a check or hand them a card, for a "co-payment" or god forbid the whole bill that would otherwise go to an insurance company. This is how it works in most developed countries, more or less (there are places like Singapore where you always have to shell out something, but they keep it extremely low). People do pay, of course, but mostly through progressive taxation, meaning people and corporations who can afford it foot much more of the bill than individuals who cannot. But the situation that exists in the US, where you not only have to be vetted for financial worthiness in the front office before anybody will take care of you but can end up being bankrupted with medical bills, really doesn't happen elsewhere.

The not necessarily best idea for implementing it is the "single-payer" system used in a rather small number of countries, most famously Great Britain, in which all health care bills are paid by one agency, the government, out of general tax revenues. In this truly socialist system the government itself serves as an insurance company, whereas in most Continental European systems some kind of private capital, generally nonprofit insurers, provides a kind of permanent endowment for the system, giving it stability and insulating it from political attack.

That's one reason for preferring the Continental style to the single-payer style: in the UK since Margaret Thatcher took office in 1979, Tory and "New Labour" governments have imposed austerity budgets on the National Health Service and impoverished it, and a two-tier health care system has grown up, where 10% of the population have private insurance plans which pay doctors and hospitals extra to demand fancier though probably not superior care. Where in France or Germany or the Netherlands the class differentiation is a lot less marked, and conservative governments don't dare to fool with the system.

The other reason for preferring the Continental style in the US is that we're already halfway there, thanks to the ACA. All we have to do in principle is increase the subsidies and get rid of the co-pays (which would eliminate the deductible). Which sounds like a very tall order, because it is—but if that's hard to accomplish imagine how much harder it would be to go straight to a British-style system; it was a lot easier for the Atlee government in 1945, when costs were vastly lower and the health insurance industry didn't exist (remember that they were unable to do it in Vermont, a state too tiny to matter much to the insurance industry, a couple of years ago, after the state legislature passed it into law), as it would have been for Truman in 1948 (but they still wouldn't let him do it).

But a focus on punishing the thugs of the for-profit health insurance industry doesn't get people covered. Better to try easing them into some other business, because you just might succeed that way (how much of the success in moving renewable fuels is predicated on getting Big Fossil invested in them? possibly a lot).

Defending the Affordable Care Act is a little like defending Hillary Clinton last year—I kind of wish I didn't feel obliged to do it, it's stodgy and dull work, and it doesn't seem like a very left thing to be involved in—not what we'd ideally want, I'm sure, however much better than the alternative. But as I work through it, I always find myself less and less embarrassed. It is, as old Joe Biden said, a big fucking deal, and it deserves the defense.

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