Monday, January 9, 2006

Health Care: Off the Oven

For the next two days, Terry McKenna will be continuing his series of pieces on the crisis in health care and health insurance here in America. This is one of those issues that, in the midst of a tyranny such as we have had in government these past five years, doesn't merely gets moved to the back burner—it gets pushed clear off the oven.

And there it will lie, on the floor between the range and the wall, collecting dust with the other debris that's been shoved over the edge of the stovetop: Social Security (in the sense of a real and enduring solution); taxation; immigration; poverty; education; the trade and budget deficits; the degradation of the environment; and a dozen or so other issues that have been left to rot in a heap of willful ignorance by this administration and its media lapdogs.

The time may soon arrive when we can get back there and recover some of that forgotten political debris; for somewhere amid that neglected pile of social waste are the issues that will bring us back to life—as individuals and as a democractic nation.

Mr. McKenna, the blog is yours.

While no one was watching, the president slipped in a proposal that would completely destroy the existing health insurance system – and at the same time, remove any responsibility for the uninsured from the well to do and from corporations.

Actually, the president did not do anything, but his agents did (thus he preserves his ability to deny responsibility). His “Advisory Panel on Tax Reform” has generated a wish list of right wing tax provisions. Included among them (see the box above) is the removal of the tax deductibility of employer paid health insurance premiums. We are offered instead the right of individuals to pay for health insurance with pre-tax dollars. Thus, the world of employee benefits is turned upside down. And take note how much the experts expect healthcare to cost. Note the $100 - $300 per month that most employees pay now for family coverage, but amounts up to $1,000 per month.

The theory behind the proposed change is simple:

1. Customers of group health plans are shielded from the true cost of health care. Only if they see the real cost, will they make a genuine effort to contain costs;
2. Group health insurance is not portable, but private health care insurance would be;
3. The cost of employer health care artificially depresses wages. Wages would go up and health care costs go down simultaneously under the new rules.

Before you say BULL SHIT, you should know that many economists like this plan, though not all.

Of course, economists are often wrong. For example, about 30 years ago a few economists decided that the way corporate executives were compensated (mostly salary) was wrong. At the time, most senior managers were paid salaries and provided with performance bonuses tied to sales and expense management. It was thought that the true measure of corporate value was stock price; that if executive compensation were tied to a company’s stock price – executives would make decisions more likely to increase shareholder value. Again, this was a theory, and it took time for it to become common practice – but eventually, it did. The consequence of this practice hit full force in the ‘90’s when senior officers of most corporations took most of their compensation as stock options. What happened was not the creation of more shareholder value, but outright fraud; the collapse of Enron, WorldCom and the like are tragic monuments to this formerly bright idea.

Another example of how economists of are often wrong is epitomized by the Chicago School of Economics. Sure, they are good with monetary policy. But, in favoring a laissez-faire approach, they demonstrate an inability to understand the prosperity of Western Europe. Yes, Europe must confront how to deal with an aging industrial base, where employees are overpaid compared to those of Europe’s global competitors, but we face the same problem – and have no better idea of what to do, other than to mothball American factories. On the other hand, if you want to see a region with wide spread literacy, excellent public health (life expectancy and infant mortality) and a fair distribution of income, you would do well to study Europe, not America.

So… economists don’t have a clue about the consequences of their ideas. Yet they persist. And we keep listening.

—T. McKenna

No comments: