Month: December 2016

If you were returning to Earth after spending the last 20 years on Mars, you could be forgiven if you thought that using block grants for anti-poverty programs was a good idea.  After all, who could object to providing flexibility for state governments to deal with unique conditions on the ground?  It just makes sense.

Except, in the real world, many state governments are perpetually controlled by people who view the poor (in their eyes, undeserving panhandling minorities) as the enemy, and who are more than happy to make them miserable.  My own state, which turned down federal money for infrastructure improvements and Medicaid expansion, is a good example of that. You can bet that some states will find a way to use block grants to move money around in order to finance tax cuts for wealthy people.  So, when you add the absence of good faith implementation to the cuts that inevitably will follow block grants, you have the ingredients for a war on the poor.

It’s going to happen.  I don’t see any way to stop it.  The questions then become:

1.  How do Trump’s white working class and elderly supporters respond when the scapegoats are duly punished, but their lives don’t improve at all?
2.  How does Trump react to the likely avalanche of stories about how his war on the poor isn’t exactly making America great again?

Once again, be careful what you ask for, because you just might get it, and then, who knows?

 

Bannon and Flynn are scary, to be sure, but they won’t run departments, so no one knows how much influence they will actually have.  Sessions is scary, too, but he will be constrained by the law.  No, the new Cabinet member who frightens me the most at this point is Price, because he can be relied upon to push hard, not just for Obamacare replacement, but for Medicaid cuts and Medicare privatization, and he will have the force of a department behind him.

By any reasonable metric, Obamacare has been a success;  the percentage of uninsured has hit a record low, and the cost curve has been bent significantly. You would think that the program, which is, after all, the spawn of Romneycare, would have the support of the GOP, but you would be wrong.  Obamacare is viewed as an entitlement program for the undeserving poor, so go it must.

What will replace it, if anything?  There are plenty of options, but all of them more or less reflect the GOP’s attitude towards health care and the market, which can be described in the following principles:

1.  Health care is primarily an individual, not a collective, concern.   While there are certain elements of health care that are driven by factors outside of each individual’s control (i.e., genetics, age, and bad luck), in general, bad health is caused by bad choices.  If you live an unhealthy lifestyle, why should I have to subsidize it?

2.  The best way to control costs is to reduce demand.  I have read countless articles that make it clear that Americans do not consume more health care services than anyone else in the world;  we simply pay much more for each one of those services.  Nevertheless, the GOP thinks that rising costs can be addressed by requiring everyone to have more “skin in the game.”

3.  The market for health care products and services is fundamentally similar to the markets for other goods and services, so there is no justification for regulating it differently.  For a variety of reasons that I have discussed in previous posts (local hospital monopolies; unequal bargaining power; lack of transparent pricing), that simply isn’t true.

4.  The private sector is inherently more efficient than the government, and competition is a better way to control costs than the use of a public monopoly.  Again, if you compare Medicare costs to the cost of private insurance, or the American system to any European system, you will conclude otherwise.

5.  The redistribution of wealth through government taxing and spending is immoral.  Hence, tax cuts are good, because they return wealth to its proper owners, but spending is bad, because it benefits the undeserving poor.

With these concepts in mind, what can you expect from the Obamacare replacement plan?  Here’s my prediction:

1.  The individual and employer mandates will, of course, be gone.

2.  Community rating will be watered down dramatically, but will have to continue to exist in a much weaker form for the system to work at all.

3.  The cost of insurance for young and healthy people will go down, but the quality of that insurance will decline, as well.  The cost of insurance for older and sicker people will go up significantly.

4.  There will be no “Cadillac tax.”

5.  The Medicaid expansion will be repealed.

6.  As a result of the foregoing, millions of people will lose their insurance, and millions more will have substantially higher deductibles and co-pays. The transition to the new system will be chaotic, which will hurt producers as well as consumers.  The GOP owns this issue in 2020.