What do you get when you mix basic arithmetic with advances in technology?
You get the reason Health care gets more expensive with time. Prior
to the days of MRIs, chemotherapy, complicated surgeries, etc. health
insurance didn't have to pay to cover these treatments since they
didn't exist. Now that they exist, it costs money to provide them.
Furthermore, the people most likely to need them are the most expensive
to insure. In order to maintain a viable business model, insurance
companies must minimize costs and maximize revenue (which means screening
out customers likely to ever need kidney dialysis or chemotherapy,
and collecting premiums from people less likely to ever need expensive
medical treatment).
The same basic arithmetic that drives private sector insurance higher
also affects Medicare. But unlike the private sector, Medicare doesn't
screen out patients for pre-existing conditions. Quite to the contrary,
Medicare covers those most expensive to cover; the elderly.
In fact, our current fragmented privatized health care insurance industry
helps drive up Medicare costs. How? By not having any real incentive
to provide proactive treatments for later-in-life illnesses since
those people will be on Medicare when these illnesses crop up. So
it's Medicare who will have to foot the bill, not the private insurer.
In fact, this fragmented health care system places so much of a burden
on public plans like Medicare that we already pay more in taxes alone
for health care than many countries with public plans (don't
believe me? Fine, click here.).
These increased costs get us less coverage for our money. Why you
ask? Private health insurance companies spend a lot of money researching
prospective customers, checking into their medical history and habits
to figure out how much to charge them for premiums or whether or not
to cover them at all. It also has other costs, like marketing/advertising,
dividend payouts, and overpaid CEOs/execs, lobbying politicians to
not pass any health care bill which might threaten their profit margins,
scare ads that misinform the public about such a bill, in addition
to maintaining profit margins. These costs are passed onto us by way
of higher premiums and deductibles. In other words, we pay those costs,
and these are costs that would not exist in a public plan. So the
net effect; we pay more and get less health care than other industrialized
countries (who do have universal health care). As you can see, the
costs of Medicare and Medicaid are one the rise, with or without any
further legislation. Obamas's
health care plan bends the cost curve here and reduces this upswing.
Runaway
health care costs were #1! (health care spending as a percentage
of GDP)
And according to the National Health Expenditure Report, private
health insurance costs have risen at a faster rate than public health
insurance (ie. Medicare, Medicaid). Read
the entire PDF here. Ok fine, don't read it. I know I know. We
Americans tend to have the attention span of a football (thanks a
lot Twitter, Tivo, text messaging, etc). At least look at snapshot
of the report that shows the increases in both Medicare and private
health insurance and note which one has risen more! And remember this
when the Glenn Becks and Sean Hannity's of the world complain about
"inefficient government bureaucracyt" because the private sector,
in cases like this, are loaded with their own inefficient bureaucracy.
See Also:
Not Passing
Health Reform isn't Free
Opponents of Obamas Health Care reform are fond of portraying the
proposed bills as too expensive, often with the assumption that not
passing them is free. The problem here is that doing nothing would
be more expensive than the costs of the proposed bills. Here is an
example of how Fox News Chris Wallace took the CBOs projections out
of context to give a false impression of the net costs of the bill.
See Also:
How we already pay for health care for the uninsured
One of the reasons it's difficult to grasp how a universal health
care plan can actually reduce the cost of health care overall is the
assumption that we currently pay nothing for the uninsured. But this
is far from the truth. Every year, tens of billions of dollars worth
of uncompensated care is incurred by health care providers (mainly
hospitals) and the majority of these costs are paid by the federal
and state governments.
The GOP's Fake Solutions
Wedged between not wanting to accept anything that involves more
government/public infrastructure and not wanting to be seen as the
party thats for staying the course on health care, the GOP continually
insists on a number of alleged solutions they claim will lower health
care costs and extend coverage to currently uninsured or underinsured
Americans. Actual studies from non-partisan sources show these solutions
are either unrealistic or would bring little/no savings or added coverage
in health care.
Some of these solutions sound great in sound bytes, but these arent
realistic methods for seriously reducing costs and expanding coverage
on their own (at best, they chip away from the edges). They are shoot-from-the-hip
suggestions that sound good and appeal to our common sense. But the
subject of health care is not intuitive to us. Its not subject to
the usual laws of supply and demand. So as good as some of these solutions
sound upfront, in practice, they are not very efficient or practical.
See Also:
Tort Reform
Selling Health Insurance Across State Lines
Health Savings Accounts
Reaganomics Demolished
The Middle Class:
It goes like this: Make the middle class think their
tax money is going to welfare queens and don't let them know that
most social
spending goes to the middle class in the form of Medicare and Social
Security. This way, in the name of "small government," lower taxes
on the most wealthy, bust up unions, and let the country's wealth
coagulate to the top as unions have less and less ability to ensure
workers are getting a fare share of the pie. As middle class jobs
pay less and less for the cost of living, continually trick them into
thinking that taxes (not the fact that the rich are soaking
up a bigger and bigger slice of the pie) are what's eating up their
ability to get by. Also, as less tax revenue is collected, the deficit
is racked up because important programs are paid for through borrowing.
This way, you can then scare the middle class into thinking that an
"entitlement mentality" and "bloated government" are eating up the
deficit (for an advanced country, our tax rates are actually quite
low).
Note the how much less the rich pay in taxes now when conservative
"deficit hawks" pretend that raising taxes on the upper income earners
is not an option for paying the deficit down. Remember, the Post WWII/golden
era conservatives pretend to long for, was an era of much higher taxation
on the rich, and more social distribution. It's the "liberals" who
want those days back. Note the irony of the conservative/liberal labels.
Paul Krugman on the Middle Class
Reaganomics & The Failure of Trickle Down Economics
One of the often-repeated claims "small government" advocates make
is that Reagan's tax cuts and the subsequent revenue 'growth' is proof
of their claim that tax cuts increase revenues (the argument being
that the increased economic growth that results from a tax cut will
produce so much in tax revenue that this increase will offset the
loss of revenue from the lowered tax rate). This claim is unsupported.
Reagan's tax cut was indeed followed by an 'increase' in revenues
but this was during a period of economic recovery. Revenues always
increase when the economy is recovering because GDP is growing and
more people are finding jobs, which in turn generates an increase
in tax revenues. In other words, this wasn't actual growth but a typical
recovery that's virtually indistinguishable from a typical recovery
that's accompanies the ebb and flow of business cycles (see
business cycle graph here).
On the other hand, the revenue increase that followed Clinton's tax
increases was more than a typical recovery. Tax revenues grew beyond
a typical recovery and GDP actually grew, even after the economy reached
full employment.
The data indicates that GDP growth will happen regardless of the
tax rates, and that lowering taxes only lowers the amount of revenue
generated during those periods of growth. In fact, the graph below
shows the gradual decrease on taxes on the top earners (ie. 'the rich')
and the correlation with GDP growth. As you can see, GDP growth remains
stable and hardly skyrockets as the top marginal tax rates are cut.
What does seem to sky rocket though is the
deficit.
Reagan's presidency successfully created an anti-government ethos
whereby government was always the problems, always the hindrance in
people's economic pursuits in a world where wealth was apparently
created in a vacuum and where the government would come along from
left field, tax these hard working individuals of the money they earned
in this vacuum, and distributed it among 'welfare queens.' This legacy
can largely be seen today among angry tea party protesters who, despite
apparently not
knowing much about the size of government or tax rates, are angry
about both. In essence, people like this vote and even rail against
their own interests. These people (the people that actually part of
the grass-roots portion of the movement, not the wealthy interests
that are largely fueling these fires) are often in the very income
bracket that's been battered by de-unionization and lowered taxes
on the top earners to help support the infrastructure for those in
the lower tax brackets. Though part of the American Post World War
2 era, these ideas have become considered not just liberal,
but even 'socialist'
by such people..
Corporate Taxes vs Corporate Profits
We see a similar trend with corporate taxes. As marginal taxes on
corporations have been lowered over the last 30 or so years, we've
not only seen no corresponding boost in GDP or employment rates, but
rather an increase in corporate taxes (meaning the added profits stemming
from lower taxes aren't reinvested into the economy.
See Also:
Ron Paul 2012 & the Tea Party Movement
Both
Ron Paul and the Tea Party have made headlines over the last year
or so. While Ron Paul does not represent the Tea Party (Ron Paul is
closer to representing Libertarians or the self-ascribed Constitution
Party) there are enough similarities in their misconceptions and misunderstanding
of economics and monetary policy to categorize them together here.
Both Ron
Paul and the Tea Party are advocates of smaller government and
lowered (or at least, less progressive) taxes (oddly enough, when
questioned about taxes, Tea Party members were surprisingly unknowledgeable
regarding taxes). It's very easy to score rhetorical points against
government and taxation and comparatively difficult to explain the
benefits of both; the former appeals to our American rugged sense
of cowboy individualism and the latter goes against it. It's easy
to see one’s paycheck and note the taxes being withheld while overlooking
the public roads they take to work, the law enforcement that affords
them safe passage to and from work, the regulations which ensure their
employers treat them fairly, and the property and trademark rights
that make it possible for their employers to operate in a stable capitalist
environment. In any case, Ron Paul's message hits home with many people
who agree ideologically (on one hand you have people, often younger,
who know very little if anything about mainstream economics and simply
take to Ron Paul rhetoric thinking he's onto something that's somehow
been missed by mainstream economists and politicians. That's not to
say that there doesn't exist more knowledgeable Ron Paul fans. They
exist but an in-depth conversation almost always reveals a preconceived
opinion that government involvement in the economy is 'wrong' and
through confirmation
bias, they find reasons to continually believe that less government
is not only 'right' but actually in the best interest for society.
It's no wonder why we see so many Ron
Paul 2012 stickers.
Both
Ron
Paul and the Tea
Party seem to believe that smaller government means far more personal
freedoms. This is difficult to square with the fact that Americans
enjoy far greater freedoms under a larger government large enough
to enforce personal freedoms. The Civil Rights Act of 1964 and women’s
suffrage (19th Amendment) were passed and enforced by a government
acting on behalf of personal freedoms. They did not naturally evolve
into mainstream acceptance.
Furthermore, in nations across the world a clear correlation exists
between size of government and the efficiency of capitalism as well
as such things as average lifespan, lower infant mortality rates and
literacy/education levels. Countries with small governments are ineffective
at providing a structure for efficient allocation and distribution
of capital. Nations like these have a few wealthy individuals who
are surrounded by rampant poverty. A small government is easier to
manipulate (just as a decentralized US would lead to individual states
that were easier to manipulate by wealthy individuals/corporations)
and this is exactly what we see in these countries. Furthermore, here
in the United States, prior to the social safety net provided by The
New Deal (which many small government advocates would like nothing
more than to repeal), America was in fact a nation with rampant poverty
and a small wealthy elite. Lowered taxes at the top, and union-busting
has led us back to this path. The difference is we have a safety net
which keeps our society looking like pre-New Deal America.
See Also:
This is the America of Ron Paul and the Tea Party
Ron Paul 2012 - Ron
Paul and the Fed
Ron Paul and the Federal Reserve
Ron Paul appears to have an Ahab-like obsession with the Federal
Reserve and a return to gold standard-based currency. While the pros
and cons of a having a centralized and partly privatized bank which
operates with minimal transparency along with a fiat currency is certainly
worthy of debate, Ron Paul’s criticism are over the top and are clearly
lacking in credulity. It was the Federal Reserve’s lowering of interest
rates that put an end to the recession of the 1980’s (and likely got
Reagan re-elected). The Federal Reserve could have prevented the Great
Depression by doing the unthinkable and bailing out the failing banks
(the recent bailouts are the reason we didn’t see another Great Depression).
For all of his claims that the Federal Reserve’s manipulation of currency
is bad for the economy, the numbers show that, since the creation
The Fed and the use of fiat-based currency, the US economy has spent
notably less time in a recession. Unfortunately, those with RonPaul2012 bumper stickers are generally ignorant of basic economic history and the disaster that would ensue from a Ron Paul 2012 victory.
While Ron Paul claims that the Federal Reserve creates the boom and bust cycle, these cycles have become less severe as the Fed has come of age.
Ron Paul is using the now well-known wealth disparity here in the US to sell his monetary policy. His claim; the falling value of the dollar is what's hurting working class Americans. But the problem (as noted above) is the amount of dollars going to the top 1% as opposed to lower 80-90%. The value of the dollar isn't hurting those now receiving a much higher percentage of those dollars compared to 30-40 years ago. And the creation of the Federal Reserve in no way correlates to either the disappearance or reemergence of the wealth disparity. In other words, it's Reaganomics, not the Federal Reserve.
See Also:
Ron Paul on Civil Liberties
Ron Paul's stance on civil liberties is perhaps the most controversial. His belief is that the federal government should leave the states to decide on topics like abortion, civil rights, gay marriage, drug usage, etc). He openlly believes that The Civil Rights Act of 1964 was unconstitutional. Not surprisingly, Ron Paul is a hit among racists.
While there are some who apparently favor this approach, the truth of the matters is that it's historically been the federal government who stepped in and mandated civil liberties (ie. Voting rights for women and other minorities, interracial marriages,
women’s reproductive rights). The notion that leaving decisions like these
to the states somehow increases "civil liberties" is simply incorrect. Indeed there are those (like the Christian Right) who would be happy to see certain states
tell a woman what she can or can't do with her own body, and those who wish the Civil Rights
and Voting Act Rights were never passed. But for the rest of us, this is simply a step back on civil liberties.
One more thing needs to be addressed. There are those who believe that "the free market" ensures civil liberties and claim that the Civil Rights Act of 1964 was therefore unnecessary. Aside from the fact that the free market had failed to do so already, this argument has another flaw: at the time, the free market favored discrimination.
See Also:
Paul Krugman, the Middle Class and Income Inequality
Watch this video where Nobel
Prize winner Paul Krugman explains the creation and virtual extinction
of the middle class and increase in income inequality here. If you
want more than this cliff notes version, buy his book, The
Conscience of a Liberal.
