Sunday, December 12, 2010

Tax Breaks for the "Masters of the Universe" or for the rest of us?

In an Associated Press story from November 28, 2010, “Tax break for employer health plans a target again” (it was widely picked up; here I’ve given the link to the Pensacola News-Journal), Ricardo Alonso-Zaldivar writes about the resurgence of interest in eliminating the employer tax break for contributions to employee health plans. This proposal, put forward from time to time, has been given new prominence by the recommendations of Erskine Bowles and Alan Simpson, the. not dumb and dumber but right-and-righter co-chairs of the President’s task force on deficit reduction, which they have morphed into a task force on cutting taxes. For Bowles and Simpson, it is one of only a number of proposals they make that would take away middle-class tax benefits, and not even the least popular: that honor would almost certainly go to the elimination of the mortgage interest deduction.

The employer’s ability to deduct contributions to their employees’ health insurance goes back to the post-World War II era, when there was tremendous competition for workers (imagine that!) and wage and price controls made it impossible for businesses to compete on the basis of pay, so fringe benefits – specifically health insurance – became a real perk. The unions liked it because they could bargain for this benefit for their members. The losers, of course, were all of us, who did not get a national health insurance program. And for many years this benefit has been a real advantage to being employed by a company with a collective bargaining agreement, and clearly unions will strongly oppose any effort to make it more difficult for them to achieve this benefit.

Meanwhile, some Medicare recipients, concerned about maintaining one of the few benefits the elderly still have, have come out against much of the health reform bill. Many of the most vocal opponents are the wealthy elderly, but unfortunately many middle- and working-class seniors are in this group. This is the subject of James Surowiecki’s piece “Greedy Geezers?” in the New Yorker, Nov 22, 2010, as noted by Tallgrass Activist David Kingsley. While the title might be offensive, many of his points are well taken: “There’s a colossal irony here: the very people who currently enjoy the benefits of a subsidized, government-run insurance system are intent on keeping others from getting the same treatment.” One example of what seniors can see as real cutbacks to their benefits are the cuts to the Medicare Advantage program. Medicare Advantage (also known as Medicare Part “C”) is a program that basically takes your Medicare payment, and an additional payment from you, and enrolls you in an HMO that provides you benefits beyond that which traditional Medicare offers (such as glasses, hearing aids, a better drug benefit, especially before Part “D” was enacted). It was created by the Reagan administration as a way to, at least in part, privatize Medicare, and was accompanied by higher payments from the federal government to these insurers than was spent on traditional Medicare beneficiaries. This was a corrupt program that ACA was right to eliminate, but because those seniors enrolled in it were getting a benefit, they receive a cut. Of course, the cut (appropriately) is much greater to the insurance company, which was getting most of the benefit (the extra benefits received by the enrollees were worth much less than the insurance companies were being paid).

What a great example of divide and conquer! Bowles-and-Simpson’s (now they are one, ostensible bipartisanship aside) proposals, while they were supposed to be about deficit reduction, are all about decreasing taxes. And especially decreasing taxes on the wealthiest Americans and corporations, a strategy that has been demonstrated by the last decade to be extraordinarily beneficial to – the wealthiest Americans and corporations. Trickle down economics, decried by George HW Bush as “voodoo economics” during the 1980 election, are no less so now, although to call them that insults voodoo. Interviewed on NPR’s “All Things Considered”, Bowles-and-Simpson are asked about the criticism of their proposals by economist and NY Times columnist Paul Krugman, who says it is about redistributing wealth upward. While Simpson says Krugman has “lost his marbles”, he doesn’t address Krugman’s criticisms.

The fact is that the wealthiest are doing great and everyone else is being penalized. This cannot be justified by any reasonable economics, voodoo, trickle-down, Friedmanesque or anything else. The elite have a Congress that they have bought and paid for, as discussed in his November 28, 2010 column, Still the Best Congress Money Can Buy, by the NY Times’ Frank Rich. He refers us to recent Times articles documenting the recent enormous corporate profits (“Corporate Profits were the highest on record last quarter” by Catherine Rampell, November 23, 2010) and profligate spending by the Wall St. “masters of the universe”[1] (With a Swagger, Wallets Out, Wall Street Dares to Celebrate, November 23, 2010, by Suzanne Craig and Kevin Roose), while the Times’ editorial page reminds us that while they grow wealthier regular people, who still can’t get jobs, also can’t even get their unemployment benefits extended (The Unemployed Held Hostage, Again, November 28, 2010).

Our health system has long been terrible, in lack of equitable access for many while there have been enormous profits for the insurance and pharmaceutical industries, in excessive interventions and procedures for the well-insured masquerading as the “best health care system in the world”, quantity masquerading as quality even for those who have had health coverage. As developing countries such as India seek to develop their own health systems, the US is notable as a model for what should not be done (see the interview with Nobel-prize winning economist Joseph Stiglitz in the Times of India 'The US model of private health insurers is inefficient, expensive' (thanks to Don McCanne in his wonderful Quote of the Day). The ACA was a first step to fixing it, but scarcely a final one. It is time to stop talking about how to inflict more economic pain on the bulk of Americans, unemployed and working, until we stop giving the store away to the elite.

Surowiecki notes that “seniors think of Medicare as an “entitlement”—something that they have a right to because they paid for it”. Why not? Even though he notes that today they “get far more out of Medicare than they ever put in,” he adds, appropriately, that “There’s nothing wrong with this: the U.S. is rich enough so that the elderly shouldn’t have to worry about having health insurance; before Medicare, roughly half of them didn’t have it”. He’s right on that. And we all should have it – Medicare for all, coverage for all of us. After 45 years of it working for seniors, it is time for it to be an entitlement for everyone. Something, finally, for the 99% who are not the “masters of the universe”. Sounds good to me.

[1] A phrase coined by Tom Wolfe to refer to Wall St titans in his 1987 book The Bonfire of the Vanities, Farrar Straus and Giroux.

1 comment:

Unknown said...

An excellent posting--mostly. Still, as we have discussed previously, it is a mistake to ignore those persons, many seniors included, who object to what was passed as "healthcare reform" but which, to unfortunate extent, will pay for its all-too-meager extensions of health coverage by "trimmings" of Medicare--and I do *not* mean only the cuts to Medicare Advantage plans, which have indeed largely advantaged the insurance industry. As noted previously, and over the past year by many beside me, the administration (and, generally, fiscal conservatives') view that Medicare "trims" of up to 9% can be paid by eliminating "waste" etc. depends heavily on taking the Dartmouth Health Atlas data as showing that "less intensive" health care--specifically, fewer specialist visits, tests, and rehospitalizations--has as good results as more intensive care; and yet the Atlas data do not, and cannot, show this, since these are retrospective data on the patient cohorts' last two years of life--that is, are an interesting study of costs, not a cost/benefits analysis. Yet Mr. Orszag and subsequently Mr. Obama, not to mention much of the federal legislature, for some strange reason could not see this last fact; one wonders, but can imagine, what preoccupied their minds so. Whatever it is, and lobbyi$ts cannot be excluded, the result is that instead of Medicare for all, what has been emplaced will save monies--the big goal of the no-taxers--not by removing for-profit insurance from the equation but by removing some facets of health care. I respect your emphasis on primary care, I respect the long trend to give nurses more respect, but I also live in a region (one of those lower-cost ones) where available health care tends to be in the hands of primary care physicians and de facto "managed care," and where a phonecall to one's physician will rarely get past the nurse, and this care lags, you see, and is too often unsafe. Yet this is the care of the future--and to lump as rightwingers or hypocrites all "geezers" who object to this compromise (like all of this administration's compromises, more nearly a loss)is simply wrong. We do need healthcare reform--real healthcare reform--to improve people's health, not on which to balance a budget gutted by tax cuts for the rich and by wars that, in any case, do not prevent (and in fact increase) the U.S. fall from power.

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