Public Policy and Governance – Page 330

Who Do They Work For?

Theoretically, members of Congress work for us–for “we the people.”

Whatever the theory, it’s clear that many of them think they work for those whose campaign contributions put them in office. To take just one recent example, ask yourself who would benefit from Paul Ryan’s much ballyhooed new budget proposal to replace Medicare with subsidies allowing the elderly to purchase insurance in the private marketplace? It doesn’t take a genius to answer that one: the beneficiaries of those subsidies would be the insurance industry.

I’m sure it is simply coincidental that insurers are among the most generous of campaign contributors.

As the Congressional Budget Office analysis pointed out,

A private health insurance plan covering the standardized benefit would be more expensive currently than traditional Medicare. Both administrative costs (including profits) and payment rates to providers are higher for private plans than for Medicare. Those higher costs would be offset partly but not fully by savings from lower utilization stemming from two sources. First, private health insurers would probably impose greater utilization management than occurs in Medicare. Second, private plans might restrict enrollees’ ability to purchase supplemental insurance plans; enrollees would thus face higher out-of-pocket costs than they do in Medicare, and that increased cost sharing would encourage lower utilization. On net, for a typical 65-year-old in 2011, CBO estimates that average spending in traditional Medicare will be 89 percent of (that is, 11 percent less than) the spending that would occur if that same package of benefits was purchased from a private insurer.

In other words, this plan would cost the government more money. To the extent there would be any “savings,” they would come from shifting costs to the individuals covered. Protecting the disabled and elderly from those costs, of course, was the original purpose of Medicare. Essentially, this program would screw over the recipients and give a windfall to the insurance companies.

What is amazing to me is how utterly bald-faced this proposal is. Have we really convinced the American people that giving more and more to the “haves” at the expense of the most vulnerable is in the national interest? I was never a fan of the Robin Hood theory of government–robbing the rich to give to the poor–but I am appalled by the current “reverse Robin Hood” ideology, where we rob the poor to benefit the rich.

Well, we certainly know who Ryan works for. And it isn’t us.

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Balancing the Books

When most of us talk about “balancing the books,” we have a mental image of a bookkeeping ledger (for those of you too young to recall keeping financial records on paper, those ledgers were books filled with graph-like paper, on which one recorded assets and liabilities). The point was to balance revenues with expenditures.

Somehow, our discussions of the federal budget has operated on a different premise. Even David Stockman, Reagan’s first budget director, has noticed the change, and I think it is fair to say he isn’t especially impressed with the House Republican budget plan, which deals with only the “debit” side of the ledger.

“It doesn’t address in any serious or courageous way the issue of the near and medium-term deficit,” Stockman told Brian Beutler. “I think the biggest problem is revenues. It is simply unrealistic to say that raising revenue isn’t part of the solution. It’s a measure of how far off the deep end Republicans have gone with this religious catechism about taxes.”

I’m old enough to remember when David Stockman was considered impossibly conservative. But I am also old enough to remember that the real Ronald Reagan–whether you agreed with all his positions or not–looked very little like the icon that contemporary Republicans worship.

About that Social Safety Net…

Congressional Republicans are now proposing that, starting in 2022, new Medicare recipients be allowed to choose from a list of guaranteed coverage options, and “be given the ability to choose a plan that works best for them.” According to Paul Ryan, the plan’s author, “This is not a voucher program, but rather a premium-support model. A Medicare premium-support payment would be paid, by Medicare, to the plan chosen by the beneﬁciary, subsidizing its cost. The premium-support model would operate similar to the way the Medicare prescription-drug beneﬁt program works today. The Medicare premium-support payment would be adjusted so that wealthier beneﬁciaries would receive a lower subsidy, the sick would receive a higher payment if their conditions worsened, and lower-income seniors would receive additional assistance to cover out-of-pocket costs.”

According to Ryan, this budget proposal “gives seniors the freedom to choose a plan that works best for them and guarantees health security throughout their retirement years.” The plan and its details can be accessed at http://budget.house.gov/UploadedFiles/PathToProsperityFY2012.pdf

Physicians for National Health Care has analyzed this proposal. The physicians’ diagnosis?

“Under Republican control, the House Budget Committee proposes phasing out the traditional Medicare program and replacing it with an insurance exchange offering a variety of private plans with the government’s role limited to offering a premium support (same mechanism as a voucher) to apply toward the purchase of a plan. This converts Medicare from a defined benefit (specified benefits are covered) to a defined contribution (the premium support being a specified dollar amount contributed toward the purchase of a private plan).

This proposal treats the budget as the patient, curing the budget problems with the trade off of further burdening the Medicare beneficiaries who are already paying too much out of pocket. It shifts future increases in health care costs from the government to the beneficiaries. It is much easier for Congress to control federal spending by limiting the value of the premium support rather than trying to reduce the benefit package.

The proposal would adjust the premium support for those with greater health care needs, but that is very difficult to do in a timely manner in that an adjustment next year doesn’t help to relieve this year’s increased costs. Also risk adjusting is very difficult in that it requires having a precise assessment of each individual’s health status and anticipated needs. It is a profound change from the current Medicare program in which equitable funding through the tax system is divorced from the uniform benefit package which everyone shares.

The proposal also would reduce premium support for wealthier Medicare beneficiaries, requiring them to pay more for exchange plans. Actually this principle of progressive financing already exists. Although the current standard premium for Medicare Part B is $96.40 for most individuals ($115.40 for new beneficiaries), it is indexed to income. Those with an income of $214,000 pay $438.20 (including an added Part D premium only for higher-income individuals).

Although progressive financing is an equitable concept, it belongs over on the tax revenue side for funding of the entire Medicare risk pool. By having it as a progressive premium on the benefit side, it fractures solidarity by creating a desire for the wealthy to obtain their own coverage and care independently of Medicare, since they are paying higher premiums anyway. Once they are on their own, they would look upon Medicare as a welfare program, not unlike Medicaid except with much fewer benefits, and chronic underfunding would be inevitable.

The debate that we should be having is over an improved Medicare for everyone. The sad state of politics today is certainly exemplified by the fact that those supporting the transfer of wealth from the masses to our plutocracy have been able to reframe the debate as a need to save our federal budget by cutting back on our social programs, especially Medicare and Medicaid (while reducing the tax rate on the wealthy from 35% down to 25%). What ever happened to common decency?”

What, indeed. In the same budget proposal, the GOP advocates drastic cuts in Medicaid, which provides (limited) medical assistance to the poor and disabled–and added tax cuts for businesses and wealthy individuals. I can’t help being reminded of the question posed to infamous Senator Joseph McCarthy: “Until this moment, Senator, I think I never really gauged your cruelty or your recklessness.You have done enough. Have you no sense of decency?”

Stripping basic rights from workers and women, launching attacks on immigrants and gays, taking benefits from the poor and elderly to pay for tax breaks for the rich…I guess we know the answer to that question.

Tea and No Sympathy

There is an old joke that begins “Why tax the rich?” Answer: because that’s where the money is.

For some reason, the current crop of Tea Party Republicans in Congress continue to look for money in all the wrong places. Their insistence on spending cuts not only ignores basic economics–the sorts of cuts they are promoting would reduce consumer spending dramatically, and throw us back into recession–the cuts they are proposing are mean-spirited and inequitable.

Paul Ryan, the current poster-boy for “fiscal conservatism” unveiled a budget that would eliminate Medicare in favor of “subsidies” allowing the disabled and elderly to purchase private (far more costly) insurance. My husband and I were watching his press conference, as he explained this; as my husband pointed out, in reality this would be a “subsidy” all right–to private insurance companies.

The GOP budget was all like this: lots of pain for the have-nots, lots of gain for the already-haves.

Now, my well-meaning libertarian friends will argue that it isn’t government’s place to help people. Private charity, they believe, will take up the slack. However naive I may consider that belief, it does not answer a more basic question: if government is supposed to simply “get out of the way,” if the state is to be properly trimmed back to function only as a “night watchman,” where are the proposals to strip away all of the benefits government is lavishing on the well-to-do?

I’ll consider those proposals to strip the needy of the last shreds of the social safety net when those “limited government” advocates also propose removing the cushy tax breaks enjoyed by businesses, the subsidies to obscenely profitable oil companies, and the mortgage deductions for second and third homes.

Until I see those proposed “cuts,” and efforts to make the effective tax rate on millionaires approach the truly confiscatory policies being proposed for the poor, I’m calling this what it is: despicable.

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Sermon for a Sunday Morning

Last week, Vermont Senator Bernie Sanders renewed his call for “shared sacrifice” in addressing the budget deficit.

In remarks made after it was reported that some of this nation’s largest and most profitable corporations paid no U.S. taxes despite posting huge profits, Sanders said it is grossly unfair for congressional Republicans to propose major cuts to Head Start, Pell Grants, the Social Security Administration, nutrition grants for pregnant low-income women and the Environmental Protection Agency while ignoring the reality that some of the most profitable corporations pay nothing or almost nothing in federal income taxes.

Sanders has previously advocating tax reform to close corporate tax loopholes and eliminate cushy tax breaks for oil and gas companies. He has also introduced legislation to impose a 5.4 percent surtax on millionaires that is calculated to yield nearly $50 billion a year. The senator has said that spending cuts must be paired with new revenue so the federal budget is not balanced solely on the backs of working families. “We have a deficit problem,” he said, “and it has to be addressed. But it cannot be addressed on the backs of the sick, the elderly, the poor, young people, the most vulnerable in this country. The wealthiest people and largest corporations in this country have got to contribute. We’ve got to talk about shared sacrifice.”

So many people insist that this is a “Christian nation.” Wouldn’t a truly Christian nation follow Sander’s advice?

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