Fuzzy Math, Part Deux
The New York Times ran an excellent story this week showing how the Obama campaign is promising that 2+1 can equal 4.
Obama's plan for universal health care relies on two sources of funding: reversing some Bush tax cuts and improving the system's efficiency (through such measures as producing electronic records and reducing administrative costs). The essential problem seems to be that, while the plan would produce savings, they would accrue over a decade or longer, not fast enough to cover the massive up-front costs.
On the one hand, I applaud how the campaign is emphasizing that a universal system will actually be cheaper. But Obama is telling Americans that W. was right all along: new taxes, even on the wealthy, aren't necessary for us to have an amazing social benefit (think national security or Medicare Part D). Obama's plan also resembles Republican efforts to privatize Social Security. Both camps fudge the arithmetic to advance an ideological goal. (I happen to like Obama's agenda and despise Bush's.) To be fair, Obama's math seems unrealistically optimistic, whereas Bush was outright lying. But that's largely beside the point.
A new kind of politics would change Americans' attitudes towards government and taxes. More precisely, it would lead Americans to see how much they like the things that government provides, and that taxes are necessary for these services. In Grover Norquist's formulation, government should pay only for police and the military and otherwise "leave us alone." But Americans don't want only "essentials" like a military. They also want Social Security, a safe food supply, clean water, and bridges that don't collapse. And, overwhelming, universal health care. (In an interview with Stephen Colbert, Norquist didn't have an answer to Colbert's professed guilt about driving on highways.)
As a political matter, it seems unlikely that the Obama plan will succeed even once he's elected because, if the money isn't there, he'll have no mandate to ask for it.
. . . taxes are necessary for these services.
Mr. Tedesco enlightens his seventh-grade civics class with a lesson in macroeconomics. Tomorrow's assignment: lock-boxes and kitchen table economics.
July 27, 2008 10:39 PM | Reply | Permalink
And everyone wonders why I stick to the Recent Readers Posts page.....
July 27, 2008 11:03 PM | Reply | Permalink
You can be confident, LisB, that no one on this page wonders.
July 27, 2008 11:09 PM | Reply | Permalink
Ellen, I think your comment misses the point. But we might still be able to agree.
Yes, it's obvious to us that government spending requires taxation. If you want more revenue, you have to collect more tax money. Obvious. Phil's insight is that in spite of how obvious that point is, politicians appear incapable of admitting it. Both Republicans and Democrats lie.
Democrats will say, "You can have all these government programs! (Psst... and don't worry, we don't even need to collect tax money to do it.)"
Republicans will say, "You can pay even lower taxes than you do today! (Psst... and don't worry, we don't even need to cut government programs to do it.)"
As Phil says, a new kind of politics would change this attitude. It would say, do you want to feel safe driving over our bridges? That will cost you X dollars per year. Is it worth it? Do you want to have the government continue its presence at current levels in Iraq? That will cost X dollars per year. Is it worth it?
That way, policies become aligned with true democratic preferences. The way it is now, people are deciding on faulty information. For as obvious as the 7th grade civics lesson is, people forget it. People forget that government programs have a price -- and so do lower taxes.
July 28, 2008 9:57 AM | Reply | Permalink
Sorry; I didn't miss Phil's "point" -- or his "insight" -- he doesn't have one.
We are running a current account deficit of around $800 billion a year. The beneficiaries (China, the GCC countries, Russia, etc.) have to invest the proceeds, and outside the U.S. there's not too much to invest in.
The money's there for the taking (borrowing) not to mention our ability to change our priorities from military spending to spending on health care.
Taxes don't have to be raised.
July 28, 2008 10:49 AM | Reply | Permalink
If, as Obama's team says, there will be a cost savings down the road that will self-fund the healthcare program, then there should be no issue with deficit spending on the program. Why raise taxes?
Deficits are only troubling when they are evergreen and not self-funded through savings. Don't confuse a deficit resulting from a start-up cost with a deficit resulting from an ongoing cost.
July 28, 2008 4:33 PM | Reply | Permalink
I'm with you!
To cite Grover Norquist being "interviewed" by Stephen Colbert?
As comments above and below demonstrate, other countries find it possible to provide quality affordable health care to all of their citizenry at far cheaper cost than the current US system. And as for the "mandate" the author seems to think is necessary, look to Massachusetts -- the Mittcare plan to see how well mandates are working. (They are not.)
The best part of TPM is the Recent Reader Posts page. I do not always agree with the posts, but there are some pretty smart "regular people" over there.
July 28, 2008 10:47 AM | Reply | Permalink
I agree Jade7243; the Recent Reader Posts page is definitely the best part of TPM.
In fact I don't know what I'd do if I should miss a post by LisB or by Melissa Macklin. They're both so intellectually stimulating.
July 28, 2008 11:02 AM | Reply | Permalink
Uh-huh…Computerizing records, cutting fat, denying unnecessary procedures…sounds like 1993! I admit I’m an economics idiot, but until the insurance carrion and the HMO bottom-liners are hog-tied and stuffed in a medical supplies closet, will anything change for the average middle class family (I don't mean those "middle class" people making $250 G)? I believe the country would support single-payer right now. Why not actually practice some of that hope and change, real change, that is preached so eloquently?
July 27, 2008 11:25 PM | Reply | Permalink
Single payer is too controversal and unneccessary. The Netherlands are a case in point. They have better healthcare coverage, spend a third of the US and retain private insurance companies.
July 28, 2008 4:36 PM | Reply | Permalink
Nobody has a simple coherent plan that will win the election. Too many voters are scared of nationalized health care, mainly because of misinformation. Arguing for it would lose Obama's solid lead.
We're getting smoke and mirrors on some issues now, but I am not going to press until we have a cooperative Congess. If, as hoped, there are a bunch of new members they will vulnerable to pressure, lacking the long-term incumbent's safe seat.
July 27, 2008 11:38 PM | Reply | Permalink
Hang on a sec here, Phil... The fact is that most of us who have health insurance right now are overpaying. You can have universal healthcare in the US without raising taxes because all you actually have to do is move us premium overpayers into a cheaper, taxpayer funded system. So yes, my taxes might go up. But if my taxes go up by less than the insurance premiums I'm paying now... who cares? Raise my taxes, by all means. Just raise them by less than what I'm paying now. It's entirely possible for us to have universal healthcare for less than what most of us currently pay for spotty coverage. The proof is in... well... most other countries.
July 27, 2008 11:39 PM | Reply | Permalink
destor,
I think yours was a great argument back in 1992. But it isn't anymore, because the baby boom is a coming to the age when they are going to want to access the absolute best in high tech care for all kinds of quality of extended life problems, and they are going to expect to do that for around the equivalent of the $96 a month Medicare premium that current retirees are now paying.
This is the problem: the price is going up, way up, with the baby boom, all around the world, no matter what system you have, with the baby boom turning elderly. I think if you promise lower price than before for equivalent coverage, you are not going to be able to deliver for quite some time, because of demographic reality.
Better to go with something along the lines of tenaciousd's point downthread, that we spend far more per capita than any other nation. Also, there is the selling point that all varieties of coverage will continue to include more and more "rationing" and escalating premiums according to risk, who do people want to continue do that rationing, a mixture of for-profit companies? Given that people are quite open to government regulation of other types of insurance when things get out of wack or seem "unfair," which is going to happen more and more with health, I think a majority will certainly be open to the government doing the same with health insurance. There are already plenty of polls that show the majority is ready. But you just can't sell it as being bottom line cheaper than it is now for many, because that won't be the reality as the boomers age. It isn't the reality anywhere, costs are rising everywhere in all systems.
July 28, 2008 12:35 PM | Reply | Permalink
Most Americans slept through or didn't have a seventh-grade civics class.
A presidential candidate who promises increased taxes for any reason is committing political suicide.
July 28, 2008 12:23 AM | Reply | Permalink
Tax revenues were higher in every year of the Reagan administration than in any preceeding year. Far from suicide, it was quite popular.
July 28, 2008 10:14 AM | Reply | Permalink
I don't remember him "promising" them, though (and I suspect Mondale doesn't, either); do you?
July 28, 2008 11:05 AM | Reply | Permalink
Read my lips Abdul. Increased tax receipts are not the same as promising to raise taxes.
July 28, 2008 1:33 PM | Reply | Permalink
We don't need a tax increase for health care. The fact is America already spends more per capita on health care than any of the nations with so-called "socialized" medicine. The question is: Where is the money being wasted and how do we redirect it back into the productive part of the system? Bush, if he were a free-marketer and not a crony capitalist, could have tackled this issue. But, he created Medicaid Part-D to create more inefficiency (read: taxpayer-subsidized profits) in pharmaceuticals distribution. I will not support any tax increase until I see how it will save me (numero uno) money. I've been subsidizing low-income care for years now and I'm ready to share the burden with more of my fellows.
July 28, 2008 10:24 AM | Reply | Permalink
The baby boomer retirement bulge makes it all the more important to take away the power the providers, drug cos, and insurance cos have to bilk the current system and and make healthcare decisions based on health. The transformation will be a huge societal change that will throw millions out of work, a factor only Obama acknowledged during the campaign. But if anyone can pull it off I'm sure he can.
July 28, 2008 2:58 PM | Reply | Permalink
I worked in the medical field. We had 18 people in our billing office. We only had 5 doctors. 18 billing people!!!
The reason being is that they each had certain expertise in the coverage for different insurers. For example, billing person A knows what Cigna will or will not pay for, or what documentation you need to provide to ensure that they will.
Same goes for Aetna, Blue Cross/BS, Humana, United Healthcare, a whole host of private insurers, Medicare, Medicare Railroad (which is different), Medicaid - the list goes on.
Do you have any idea how much money they pay the people in the billing office? Do you know just how much a knowledgeable billing person is worth?
Imagine that doctors offices could cut that down to 1 part time person. No claims denied, no hoops to jump through. Along with Electronic Medical Records, this could save a ton.
September 9, 2008 7:47 PM | Reply | Permalink