Economics

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Health Care Watch

The American Health Care [non-]system is in decline. The number of Americans covered by employer health care plans actually fell by about 5 million during the past four years, even though the number of people eligible rose by about 10 million. That’s an additional 15 million average Americans for whom the health care system is a distant mirage. Plus for those lucky enough to have coverage the cost is rising rapidly. American industry is in a pickle: how does it contain cost without antagonizing it’s employee base? A national crisis is looming, but before it can be resolved Americans need to face the truth about their system.

It is time Americans stopped thinking that they have ‘the best health care in the world’ and recognize that they are, in fact, way behind most every other industrialized nation. The facts are stark when you face up to them: America spends twice as much on health care as its industrial partners, yet ranks below them in terms of basic results. For all that vaunted money and technology, Americans have shorter life spans and higher infant death rates than anyone else in the industrialized world. That’s a rotten return on investment. Very rotten. Not only this, but Americans are much less likely to see a doctor — they say they are afraid of the cost, or to take the medicines that they are prescribed — they cost too much. Clearly, at least to an objective observer, Americans are getting a bad deal from their market driven system.

Why? Because the system is knee deep in bureaucrats all of whom cost money, and all of whom are fighting to cut or eliminate expenditure rather than to provide care: they do not add to care but they take up a lot of dollars. It is a system designed for accountants not those in need of care. This is truly ironic given that a major criticism leveled at Government run systems is that they are typically bureaucratic, but in this case the reverse is true: a Government system would have less, not more, bureaucracy. Another aspect of this is that the system is fragmented, there are too many players none of whom have the clout that the Government would in the market place. For instance, Americans pay far more for their drugs than anyone else because no one in their system has sufficient power to drive a hard bargain with the drug makers. The Government could do that, but such is the lobbying power of the drug industry that the George Bush’s pet Medicare bill explicitly forbids the Government from using its market power. So the sick and the taxpayers get the shaft while drug company profits are inflated.

America has a system where the rationing of service is by price rather than government allocation. It is market driven. In other words you can get whatever you want if you can afford it; if you can’t then you get nothing. For instance, it is correct to observe that people in Britain and elsewhere wait longer for elective surgery [what’s wrong with waiting for something that is elective?]; but wait times mask a grim reality here in the U.S.: for many people the system simply doesn’t exist because they cannot afford it. So those short wait times are irrelevant, the service isn’t there to wait for. It is a scandal that the world’s richest nation has approximately 15%, and rising, of its population uncovered for health care, and it is delusional nonsense to keep lauding the system as if it’s good. It isn’t.

The fix is obvious: America needs some form of national health care system. It’s time to press for the correct answer. Then maybe the system will deserve the credit Americans currently give it.

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TABOR: Something to Watch

TABOR amendments are cropping up around the country as various conservative groups try to follow through on their ‘shrink government no matter what’ policies. TABOR stands for ‘Taxpayer Bill of Rights’ and is a state level constitutional amendment that restricts the growth of state spending to a highly restrictive formula: population growth plus inflation. The problem with this is that once states start to have economic problems any formulaic policy eliminates their ability to spend money on projects or activities that might build infrastructure or otherwise help the state to recover, or grow at all. Tellingly the only state to adopt a TABOR clause, Colorado, has just voted to get rid of it. During the TABOR years Colorado dropped close to the bottom of all states in education spending and saw its number of children without health care coverage rise — from 15% to 27% of poor children. The vote to eliminate TABOR in Colorado is a major blow to people like Grover Norquist and the Cato Institute whose anti-tax mantra has been such a driving force behind the Republican surge over the past two or three decades. Kansas is a state in the process of considering a TABOR amendment of its own, and now the Colorado example is being used by progressive politicians and advocates there. Perhaps as the middle class starts to see the safety nets it relies on in hard times shreddded by the right wing the realization will set in that a balance needs to be struck, and the counter attack can begin.

I just don’t like the idea of TABOR-style constitutional restrictions on policy making: they handicap a state, and too often are merely a veneer to cover aggressive conservative attacks on the poor. We have enough class warfare being conducted by the Republicans in Washington — case in point the budget cuts now being discussed — we can do without it being constitutionally enshrined around the country at the state level.

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More on Walmart

Following up on my note yesterday about Walmart: Rep. Anthony Weiner, Sen. Ted Kennedy, and Sen. Jon Corzine recently introduced the Health Care Accountability Act in Congress, which would require states to disclose the names of large employers whose workers are on Medicaid as a result of the companies refusal to provide insurance benefits. The purpose of this, of course, is to make public the names of companies inflicting costs onto already stretched state budgets. This Federal legislative effort comes on top of the local effort in Maryland to force companies to provide health care insurance — which failed because the Governor, Republican Robert Erlich, caved in to intense lobbying from Walmart and vetoed the bill. Most recently was the leaked memo from Walmart describing how the company planned to cull ill or potentially costly employees from its payrolls so as to reduce health care expense. Clearly up until now Wal-Mart shows no sign of accepting that its behaviour is anti-social. So we need to push back.

As a society we have three ways to respond to ‘Walmarting’ — allow me to coin the phrase. One is to accept that companies can do anything they want, and we all just have to live with the consequences, however nasty they are. Second, we can oppose the company’s actions and try to get them to change [Walmart Watch and Wake Up Walmart are two organizations dedicated to this]. Or, third, we can accept that big companies will always be rapacious and use things like cutting benefits as a way to shore up profits, but realize that we can legislate to get a national health care system so that unethical behaviour by companies doesn’t mean that our fellow citizens have to suffer. Of course we’d all like to think that Walmart and others had some ethics, or social awareness, but they don’t. So I for one will use ‘Walmarting’ as a rallying cry for national health care, which taxes on Walmart profits will help pay for. I can see some neat justice in that.

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Walmart

In case you hadn’t noticed Walmart is now the subject of a class action suit in Missouri where it is accused of systematically forcing its workers to work ‘off the clock’ and of deducting breaks from worker’s time worked. Times must be hard when the nation’s largest employer has to rob its workers like this. I generally don’t like to pick on individual companies, but Walmart will always be an exception: its policies are brutally anti-worker. A substantial number of its employees are so poorly compensated that they cannot support their families even though they are full time workers. [The two most common jobs at Walmart — ‘Sales Associates’ and ‘Cashiers’ earn between approximately $12,000 and $14,000 per year. The national Poverty Line, as determined by the Federal Government, is $15,260 for a family of three]. Its lack of health care benefits is legendary, so bad is its health care plan that many of its employees have to use public assistance to care for their children’s basic needs. That means that you and I are picking up the tab while Walmart reports growing profits and pays its shareholders dividends.

That is the point of my criticism: we are subsidizing Walmart so that they can turn around and offer low prices. Those low prices are only possible because Walmart has taken a page from Scrooge’s book. If it paid a decent wage and gave decent benefits its prices would have to go up. This is a problem for consumers: we like low prices, but do we all realize that some of our taxes are used to offset their underpayment of wages? When we add the tax subsidy and the prices together to get the true economic cost of the products sold by Walmart they don’t look so cheap! Moreover, if Walmart’s competition starts to play the same game, and who could blame them for trying to survive, everyone starts to lose. Wages are bid down, benefits are slashed and the social cost of welfare rises. Walmart thinks it is being smart dumping part of its costs onto the taxpayer, so far it’s been successful. But no wonder its image is awful amongst labor groups: Walmart is relentlessly anti-worker. We should be relentlessly anti-Walmart until it changes.

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More on Those Budget Cuts

While we have been distracted on the leak investigation Congress has been working assiduously to cut Federal spending. The rationale, of course, is that with a very large and intractable deficit, we have to exert discipline or ‘make painful decisions’ in order to correct the problem. As I have said before this is a sham. The problem lies not in the amount spent, except in the pork barrel transportation bill and its infamous ‘bridge to nowhere’, but rather in the amount collected. Federal revenues as a percentage of total GDP [Gross Domestic Product, which is the measure of the size of economy] are at a post World War II low. Spending is not at a historic high, but has risen sharply since Bush took office. For those who like their numbers: revenues in 2005 are at 16.82% of GDP, down from 20.86% in 2000; while spending has risen from 16.13% to 18.62% over the same period. When you include the impact of interest on the national debt, which has actually shrunk as a percentage of the economy because of the low interest rates recently, the budget has gone from a surplus to a deficit in just a few years. The main reasons are the Bush tax cuts which account for about half the decline, and rising defense spending which accounts for a further third. Domestic spending programs account for only a sixth of the shift to deficit, yet they occupy the entire focus of the Republican budget planners. Programs such as special education, the environment, children and families programs, housing vouchers for the poor, and vocational education are all to be cut. Particularly galling is the planned cut in home energy assistance for the poor which is being slashed by 12.7% right as energy prices are rising sharply. There could not be a clearer statement about Republican Party priorities than a cut in energy assistance as heating costs rise dramatically! All this cutting hits the poor and working class, so they are being asked to bear the burden of the tax cuts the wealthy received over the last few years. Oh … and did I mention that as these cuts a being made to help ‘improve’ the budget, the exact same Finance committees are contemplating the continuance of some $70 billion of tax cuts that were due to lapse? Yes that’s right. Those cuts in heating for the poor will be swallowed by tax cuts for the rich. That’s getting your priorites right!

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