Prez Debates 2: Indifference and Changing the Premise

After getting through the second round of Prez debates last night (with the forceful help of some astute Twitter companions), I thought I’d do another short assessment of the debates. And then I shrugged, turned off the TV and Twitter, and opened up a book to read.

Last night and this morning, as I read some of the rehashes, I find myself wondering why I’m so indifferent to these debates. Yes, it’s true: there is very little difference between them and every single answer pointed in that direction. Yes, both candidates were lying, and that is reason to be outraged. It’s even true that Obama was “more assertive/aggressive” (take your pick), and I suppose—that Romney was a bully (it’s a little strange to hear that word being bandied about so casually in the middle of a spectacle whether his other “victims” are 1) the sitting President and 2) a highly touted mainstream media talking head, Candy Crowley—and the entire production is a carefully orchestrated play.

I suppose the main reason for indifference is that one cannot be outraged by something when one has so few expectations. It is the primary reason that I have been nearly mute about the R’s (Romney, Ryan and the Repubs) for—the entire election season, and mute about the Repubs since 1988, when the infamous reign of King Ron ended, but the legacy of his battle on welfare, women, and children, was taken up, continued, and expanded by his four successors—Rebublicans (the Bush dynasty) and Democrats (Clinton/Obama).

My outrage arises when or someone—and by extension—some political party, that I thought I could rely on decides it has different loyalties altogether—notice that I said different loyalties—not different priorities.  I understand how it might be important to help out the rich once in a while so that you can pay them back for supporting your campaign, or how it might be important to step back on a campaign promise or two to ensure that some form of social infrastructure –like lending money to the banks to help them from going under—might be needed for the “larger purpose” of “saving the economy.” (Apologies to Matt Stoller for the blatant counterfactual. This is just a hypothetical).

But when someone—or their party—keeps telling you that ‘they’ love you, care for you, and are working so hard to protect you—all the while doing their best to enforce policies and structures that are hurting (mostly) everyone to whom you have some deep-seated commitment, it’s hard not to be faced with a moment of serious reckoning. It’s even harder not to have a “come-to-Shiva” moment when the folks all around you—your friends, your family, your go-to-pundits love, LOVE, this fellow & party that is hurting everyone around you, or—if they admit that he’s horrible—heinous–to everyone you are committed to, but he’s better than the other guy. I have plenty of examples of such heinous policies all over this site.

So what does the reckoning come down to? Acknowledgment that the framework is entirely different from the one typically taught in Political Philosophy 101.  In fact, John Locke and Rousseau are wrong: the purpose of the state may be to protect its constituents—but that is not its intention. Rather, the intention of the state (and its functionaries) is to remain in power.  The most efficient, productive, way to do that it to decide who it needs to ally itself with in order to maintain power.

If we start from that premise, then suddenly a lot of things become clearer: What those (who aren’t part of the 1%, and whose politics are committed to the 98%) want and what the state wants are not only different—they’re in fact antithetical. And so, from that premise, it’s not a surprise that the state won’t act on the behalf of the groups to which they/we are committed. Though unsurprised that the state is uninterested in the 98%, I have to admit some continual surprise that —in the form of the Democrats, the DNC—the state has decided to continue, expand, and (even wage new) war on the 98%–in the United States and especially internationally.

But from the perspective of last night’s debates—there is no surprise. Yes, there is a lot of red-faced blustering and crowing of Chris Mathews et al. over at MSNBC, Nation, CNN, HuffPo, of Chris O’Donnell and Andrew Sullivan (I mean, doesn’t that tell you something about the Democrats’ priorities?) about the “win” that Obama had. By the way, what win?? What does it mean to win a staged performance where the tracks are already set, and you are anchored in one of the two closely aligned grooves? Where 3rd party candidates Jill Stein and her vp nominee Cheri Honkala were arrested outside of the debate site at Hofstra last night, as they were trying to stage a sit-in?  Free speech and protest rights have been undermined–not just by the Republicans but by Democrats.  See my post on H.R. 347 here.

It is not possible to believe anything other than nothing will change–or that it will get worse–under either party.

But the other lesson that can be learned when reading the framework differently—when we see that the intention of the state is not to protect, but to maintain itself–is that States are only responsive to the pressure that challenges their ability to remain in power. Yes, yes: this means that civil society organizations, ngo’s, activists need to find new strategies to pressure those in power. That’s a different direction.  Part of those strategies might include putting the Dems on notice by refusing to endorse, vote, or lobby for them. (Yes. The Nation. I’m talking to you. Among other press, activist organizations, and ‘liberal’ lobby groups.)

The Democrats believe that to maintain power, they need only be assured of serving the 1% (or 2%)—in order to obtain the power and money that they need. In the meantime, the only other part of the strategy is to reassure, comfort, seduce some part of the remaining 49% or 50%–to promise that the Dems love their disfranchised, disenfranchised (sic), and marginalized peeps without providing any proof—in fact by offering smooth lies that can be easily swallowed, absorbed, and regurgitated by “liberal pundits.” (Yes. MSNBC. I’m talking to you.) If this is right, then at some—at any–level, these debates don’t matter, the elections don’t matter for the purposes of making any inroads into political, legal, social justice.

This is why the inclusion of 3rd party candidates would have been crucial: in order to unsettle both the Republicans and Democrats from the safe, comfortable perch by which they can swing their legs back and forth and kick dissenters out of the way. Right now, nobody’s won. The whole thing is lost.

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The Business of Health Insurance and “Obamacare”: What Can We Expect?

Pretty dangerous to be over at Hofstra last night; there were alot of reckless numbers and false statements flying around.  I’m sure there are plenty of excellent rehashes that will be posted, if they haven’t been already. So instead of rehashing the spectacle or valorizing the aggression, I’m just going to post a relevant piece by TransEx‘s very own Robert E. Prasch, who also blogs at New Economics Perspectives and Huffington Post.

Prasch breaks down the myth that Obamacare is about health-care reform. Originally posted over at New Economic Perspectives (the website for the Kansas City School of Economics) yesterday, his column is a clear description of what the ACA in fact is.  It can be printed out and put in your back pocket for easy reference the next time you run across Nicholas Kristof or Andrew Sullivan. Check it out.

And if you want to read some other analyses by Prasch on some of the issues discussed during the debate, links are below.

By Robert E. Prasch

Over the past couple of years there has been considerable back-and-forth over what has been accomplished by the Patient Protection and Affordable Care Act of 2010 (PPACA).  While a short post cannot survey the entirety of this multifaceted law, several elementary confusions have been repeated in public discussions and should be addressed in the interest of clarification.  The most urgent of these is to point out that, despite the Act’s (deliberately misleading?) title, it addresses neither the practice of medicine nor its cost.  At most a government-sponsored institute has been authorized to find and make suggestions.  The Act, then, is not about making health care affordable, but an effort to make health-care insurance affordable – a related but separate topic.  To understand the implications of this, we must consider the business of health insurance.

Private Health Insurance is a Business

The health insurance business is–it cannot be overemphasized–a business.  While its advertising may suggest otherwise, we would do well to remember that business differs from charity in ways that matter.  Being private for-profit businesses, health insurance companies are engaged in the pursuit of profit.  If the health insurer is a corporation, and many of them are, their profits are expected to show steady growth over time so as to satisfy “Wall Street expectations.”  This is not always easy, and firms must be vigilant if they are to achieve these targets.  As is the case for any and all businesses, revenues must be greater than expenses if health insurance companies are to show a profit.  Without profits they will soon cease to exist.  But before this occurs, senior management will be fired.  As they understand this, we should expect these managers to make every effort to avoid this outcome. None of this, it should be noted, implies that health insurers are more or less moral than other firms.  Business is business.  With that point cleared up, let us turn to specifics.

The revenues of health insurers come from customer premiums and the returns on their portfolio of earlier premiums that have been invested.  Their usual portfolio can vary, but it generally consists of government and corporate bonds (about 65%), corporate stock (about 10%), mortgages (including some mortgage-backed securities), cash and other liquid items, and other assets.  Expenses can be broken down into essentially three components.  The first includes all marketing costs, paperwork, and related overheads.  The second is wages for workers and bonuses for bosses.  The third, and by far the largest expense, is the payment of claims.

From the above list it is evident that insurance company profits can rise in one of four ways: (1) revenues from current premiums or past investments can rise (which may imply higher premiums and/or riskier investments),  (2) marketing, paperwork and overhead costs can be reduced, (3) wages and bonuses can be reduced, or (4) payments for claims can be reduced (or at least rise more slowly than revenues).

Given that the payment of claims are, by far, an insurance company’s largest single expense, it is reasonable to suppose that they will work diligently to control or even reduce them.  To this end, they hire staff to negotiate with hospitals and others over the appropriate charges for services provided.  Similarly, they employ a staff to direct customers into lower cost options, assert that the “normal and standard cost” for a given procedure is lower than the bill presented (which means that the patient must shoulder a disproportionate share of the payment even if their insurance contract suggests that they always pay a fixed percentage), or find some grounds to decline care altogether which in the past has included finding grounds for cancelling the policy.

For patients and their families, these cost-reducing decisions can be, as innumerable stories and research has shown, medically and financially devastating.  It is clear to everyone with a beating heart that these – essentially business decisions — are fraught with moral implications.  Yet, of necessity, insurance companies must think of them as part of their normal business operations.  One is reminded of the cliché line uttered by mafia movie assassins, “Sorry man, it ain’t personal, its just business.”

This difference in perspective raises a crucial observation.  Every society must decide, by some process, how goods and services are to be distributed amongst the population.  Most of us would agree that some items, such as ice cream or the vagaries of current fashions in clothing, are best left to markets.  The difficulty, and this is the largely unmentioned issue, is that most of us also believe that decisions fraught with profound moral implications – such as life and death — should not be left to the vagaries of the market.

If this supposition is correct, then the problem with privately-provided health insurance is less with the specific performance of the firms involved than with the fact that many, if not most, of us consider basic health care to be closer to a right than a commodity to be distributed according to the contingencies of price and income.  As such, we find the normal business decisions of health insurance firms, decisions that are necessary and essential to their business operations, to be at best amoral if not immoral.  That people are awarded bonuses for denying care to people they have not met, and on the basis of little more than a cursory look at a chart and some statistics based on national averages, strikes most people as wrong.  Again, if this were the market for ice cream or fashionable clothing, our response to the cost control efforts of for-profit health insurance companies would be very different.  But it is evident that firms are routinely making decisions that are fraught with the deepest moral significance.

Obamacare: What Does It Do?

As mentioned, when reading popular discussions, blogs, and more than a few newspapers, one is left with the impression that many people are confused about the distinction between health care and health insurance.  Stated simply, the PPACA does not grant anyone, anywhere, a guarantee of adequate health care.  The Patient-Centered Outcomes Research Institute that has been founded as part of the Act may, at best, fund investigations designed to uncover and publicize inefficiencies in the delivery and cost of health care.  But they cannot mandate changed practices.  At best, these revelations can be accompanied by exhortatory language.  Someone, somewhere, somehow, is then supposed to do something.

What PPACA does do is require that every American find a way to acquire health insurance.  Most likely, as in Massachusetts, this will be enforced through the tax code.  This suggests that those without health insurance will have to pay for insurance out of pocket and then await compensation in the form of a tax rebate.  If this is indeed the plan, it should raise important questions concerning the liquidity or credit-worthiness of America’s poorer households and the many well-known issues surrounding predatory lending that were not addressed in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

Perhaps it is obvious, but it also needs to be stated, that on its own the health insurance mandate modifies neither the incentives nor the profit motives of private health insurers.  That said, some useful changes are embodied in the Act.  For example, in exchange for the law’s producing just under 50 million new health insurance customers through its mandate, health insurance companies will be required to spend 80-85% of the premiums they receive (depending upon the firm’s size) paying for health care and, additionally, to cease terminating contracts after the disclosure or revelation of “pre-existing conditions.”  Now, with the additional revenues anticipated from millions of new customers, the first of these requirements may or may not prove to be an imposition.  I would, however, caution everyone to be wary of the accounting rules used in calculating what is known in the industry as the Medical Loss Ratio.  It is often, and correctly, said that the devil is in the details (this is especially the case when an industry can employ legions of lobbyists).

As to the second requirement, it speaks only to the grounds by which a proposed course of care may be refused.  Let us consider the problem logically and from the perspective of a profit-seeking firm.  If there are potentially grounds, from A to Z, by which to deny or modify a proposed course of care, and grounds A are excluded, that still leaves grounds B to Z.  Perhaps none will be found applicable and the care in question will be duly authorized.  But perhaps alternative grounds can be identified, and it should be evident that the incentive to find such grounds remains.  Maybe the insurance company will find the course of care proposed by a patient’s doctor to be “overly experimental” or “unlikely to be effective” in light of statistics based on national averages that they may have on hand but whose source or author they will refuse to disclosure (believe me, I have tried).  Alternatively, they may declare that the “normal and standard cost” of the course of care proposed is one-half of what the hospital charges, thereby forcing a family to “chose” between a course of care and penury.  These problems can be expected to remain.

According to the American Journal of Medicine, 62% of all the people who declared bankruptcy in the year prior to the financial crisis, 2007, were ruined by an illness they could not afford.  Worse, the majority of those who declared bankruptcy that year were covered by heath insurance.  Stated simply, health insurance, even assuming that it actually becomes affordable to everyone, will not end of the dread of financial ruin in the event of a severe illness.

This brings us to the matter of the how much assistance will be provided to help families meet the mandate.  We are told that everyone up to 400% of the poverty level will be eligible for a subsidy (based on a sliding scale).  Given the current political environment, with its bi-partisan vogue in favor of austerity, I will leave it to the reader to speculate whether or not these subsidies will remain adequate as health costs and thereby health insurance premiums continue to rise.  We can be certain, however, that the mandate will remain in place long after the subsidies become inadequate.  And, what of the days when American families had to chose between adequate care and penury?  Such dire choices will remain a part of our reality the day after the PPACA has become fully operative and every day thereafter.

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Other relevant posts by Robert E. Prasch:

“What to Look for After the Election: Social Security Under Assault”

“The Obama Administration, the 49 State Mortgage Settlement, and the Spin: A Study in Shamelessness”

“Dealing With the Unemployment Problem”