Why meditate on your own sins when it’s a lot more fun to meditate on those of others? Consider the subtext of Jamelle Bouie’s reaction to Virginia Sen. James Webb’s criticism of the PPACA AKA “healthcare reform” AKA “ObamaCare” (a term I don’t care for any more than I do the “Bush tax cuts”). He concludes:
Sometimes, I’m shocked by the fact that anything productive or worthwhile happened in the 111th Congress.
I guess there are those who would say that nothing did.
Here’s my question. Let’s say, as this seems to imply, that the PPACA is absolutely the best possible healthcare reform that could have been produced by the 111th Congress. Is that a recommendation or an indictment?
Well, the ACA gave us “universal” coverage but does almost nothing to control the price spiral. I have a strong suspicion that in the long run this will exacerbate cost growth and leave us in an even worse position. If all Congress can do is make things worse, doesn’t that answer your question?
In a nutshell my view on the healthcare system is that excessive wages throughout the system are the primary drivers of costs, as the head of the Mayo Clinic put it, too many people making too much money. If wages in the sector had grown only as fast as wages in other sectors since 1970 all other things being equal healthcare spending would be 30% lower than it is now.
30% lower is a lot of money. More people would be able to able to carry healthcare insurance. More people would be able to pay out of pocket for healthcare. More companies would offer healthcare insurance to their employees. And so on. That alone would result in something closer to universal coverage than we had in 2009.
Relating to your other post on increasing wages, getting medical costs down would go a long way toward increasing the middle class’s purchasing power. 30% lower health care costs is what, a trillion dollars that could be used to buy things other than insurance?
Ben, self-insured companies would benefit more than individuals.
@Icepick,
Yes, but it’s still a significant source of pressure removed on incomes, even if the lion’s share goes toward employers providing health care. I’m not suggesting it as a cure-all.
Which might even benefit the economy more if it lead to more capital re-investment.
On this point Ben, I am in whole-hearted agreement with you.
Why? It depends on how competitive labor markets are. Right now the employers is paying employees wage+benefits. If you cut the cost of benefits, why would that mean that the employer keeps the benefits savings? The only instance that might happen is if the supply of labor is perfectly inelastic, generally speaking an unlikely situation.
Dave- Do you have a cite for the 30%ACA claim? I read health care a lot and have not seen this one substantiated or even claimed.
More directly to your post, I don’t know of or read anyone who thinks the ACA was the best possible bill. It was what you could get the a 60that Senator to accept.
Steve
When you’re talking about the Congress, that’s the definition of “possible”.
Why?
Depends on the company, but if the savings are 30% and the employee is only paying 20% of costs, then the employee won’t get all the savings. I guarantee you that the companies will NOT just boost pay by 10% to make up the difference. At best they’d split the difference with employees.
Pointless discussion anyway, as it didn’t happen and ain’t gonna happen.
Again, in a competitive market they will absolutely boost pay. Maybe not immediately, but that is the dynamic. Firms that face a competitive labor market will have no choice, but to increase pay.
Basically what you are implying is that firms could right now cut compensation and employees would stay at their jobs. So why aren’t firms doing it right now?
On the contrary. It has other implications as well. People argue that rising health care costs are absolutely a competitive disadvantage to U.S. firms. This is not true. It depends on the growth rate of total compensation. Also, it could be a big factor in why wages are “stagnant”.
For example, if productivity increases on average say, 2% and labor markets are competitive, then workers will see a 2% gain in total compensation. However, if health care benefits are say 20% of total compensation and are increasing at a rate of 10%, then that 2% increase in total compensation will be entirely devoted to health care benefits and the “wage portion” of total compensation will be unchanged–i.e. stagnant.
This is why it is important to look at the entire picture when looking at stagnant wages.
Another implication of this “competitive disadvantage” Bravo Sierra that many like to push is that any and all increases to total compensation constitute an increased competitive disadvantage…wages too. But many who make this competitive disadvantage argument are also bemoaning stagnant wages. But by implication of their competitive disadvantage argument that is an unmitigated good thing.
People who think this way: Kevin Drum, Matthew Yglesisas to name two.
Steve V. Productivity is not always linked to compensation, especially recently.
Steve
Basically what you are implying is that firms could right now cut compensation and employees would stay at their jobs. So why aren’t firms doing it right now?
THAT’S WHAT HAS BEEN HAPPENING FOR THE LAST SEVERAL YEARS! Many people have had their wages cut by 100%, but ignore them. Consider my wife’s case. When the crisis hit in 2008, she stopped getting raises, period. Additionally, hours were cut, which matters a lot to hourly types. On top of THAT benefits were cut and the increases in health care coverage had to be picked up by the employees.
(I will note here that just because one is paying more for somerthing doesn’t mean that one is getting more of that something. Gas prices have more than doubled since Obama took office. But when I fill up my tank I’m not getting twice as much gasoline even though I’m paying twice as much.)
Real wages were declining at her company. How many people left? Well, five people got laid off last May, the first layoff in the firm’s history. Then, at the start of January, my wife switched to a different firm. You can say that’s the labor market in action, but my wife had been looking for another position for a LONG time, and that was the first time she even got an interview. As it was, the only reason that job had opened up was because the previous holder of the job had decided to make a huge career gamble. My wife just happened to check that company’s website shortly after they posted the job, and she had it within a week.
We figured out that it was the first time in over a decade that someone had left her old firm just to get a better job.
That’s my wife’s example. We can look at the median income numbers (the numbers that continued to crater long after the recession ended) and see that she cannot be alone.
I know of a fair number of anecdotes, as well, but that isn’t really important. Real wages have been declining for a great many people the last few years. There’s your economic model in action!
In the long run it is. Taking short term fluctuations and trying to extrapolate is very problematic. Looking at a 30 year time frame and yeah, it is more the case that productivity gains translates into wage gains.
And please note I am talking about total compensation, not just wages–i.e. your “take home” pay or that part of your compensation aside from benefits.
Also, I looked at the data on FRED and it looks like there is a high degree of correlation over time between real hourly compensation and hour output. A quickie regression of compensation on output gave a pretty damn good fit. Even when looking at 1990 onwards the fit is still pretty good. However, when looking from 2008 to 2011 (admittedly not many observations) the fit is not so good. To give an idea of fit for the full sample output/hour explains over 95% of the variation in real hourly compensation.
Let me be clear, it isn’t just right now it is true everywhere and anywhere. That is we should see compensation trending down over time not up.
Since that is not the case, the hypothesis should be rejected.
A person losing their job is absolutely not the same thing as a pay cut.
Confusing the long term with the short term is not very helpful.
Now, could something cause this long term relationship to break down? Sure, but it probably wont be the market, but most likely a government policy.
This is a nicely compact explanation that I actually understood:
Don’t know if it’s true or not, but well-explained.
On the larger issue. Yes, this is what Obama could get from a Republican Congress that made it clear they were not interested in governing, only in stopping the president.
I’ve never thought this was end-game, this was opening shots. And — if it passes the Supremes — what was accomplished was political not economic. It established the principle of health care as a right, and it established that we’re all in the pool, like it or not. So, both a right and a responsibility.
If the ACA is upheld the discussion becomes how we maintain this right, and how we enforce this responsibility. With that starting point we can discuss. Without it we had significant portions of the population catching a free ride, and we had others indulging in the politics of resentment.
Americans get health care as a part of being American, and they pay for it, too. That’s the ACA.
Notice how we don’t look at free speech, freedom of religion, freedom of assembly, elections, due process, etc…. as budgetary problems? We could. Due process is expensive. Tax breaks for churches are expensive. Even free speech has costs associated with it. But we start with an assumption that those things are writ in stone and will be paid for. That’s the shift we’re undergoing with health care.
Once the debate becomes how and not whether, we can begin to move toward solutions. “How” focuses the mind on practical matters. “Whether” is philosophical. The whether discussion can go on forever, the how discussion soon gets down to practicalities.
“I wonder whether we should go to the moon?” vs. “We’re going to the moon, how do we get there?” Which one gets you a rocket?
@Michael Reynolds
… Without it we had significant portions of the population catching a free ride, …
I am not sure who the “free riders” are, but I would like to sign up as soon as possible.
When you do not have insurance, there is no free ride unless you are on a government program. Medical services are like any other product. You pay for it. They send you bills, and you pay them or get onto a payment plan. If you do not pay them, you are sent to a collection agency, and they hound you. It is like any other bill you do not pay. Eventually, you will be broke and/or bankrupt. For some services, you pay upfront, or you do without.
Health insurance is not cheap for most people. It may be chump change for some, but it is not for me. In addition, it is taxable income when purchased privately, and those taxes include Federal & State income tax, FICA, and Medicare. This is about an additional 25% or more. (If you do not qualify for a gov’t program, you are probably in a higher tax bracket.)
You will be glad to know that the uninsured seem to get better faster and need less tests. If you need an MRI, you had better be able to pay at the check out counter, and some places want to be paid first. Of course, anybody can verify/falsify this with an experiment. The next time you need medical services tell them you do not have insurance, and you too can be a free rider.
“For the Snark was a Boojum, you see.”
The free riders are the young and healthy who take the risk of not getting insurance. While they are uninsured they are betting they’ll stay healthy, and if they don’t they use taxpayer supported services in many cases. They may be billed but if they can’t pay they don’t.
I was a bit fast and loose with paying bills when I was young. Never declared bankruptcy, but also never paid those bills. My unpaid utilities, rent, whatever, just got passed along to other people more responsible than myself.
@michael reynolds
What taxpayer supported services? They are means tested, but if you know of ones that are not. let me know.
Times have changed. I can assure you bill collectors do not relent anymore. They will report the delinquencies to the credit agencies, and if they can get a judgement against you they will. This is how people go bankrupt from medical bills. If you do not have anything to take, you probably qualify for gov’t services, and you are not paying.
If you know where I can get an MRI without paying $950.00 up front, let me know. The bills from the last ER visit are still coming in, and they have any intend to get paid.
If you do not have health insurance through your work, you are screwed. A private policy for a young and healthy person is still a substantial portion of their income. That is the reason people do not get health insurance. I would like to see it taxed as income. If you want to generate revenue for the government, there’s your gold mine.
“For the Snark was a Boojum, you see.”
Steve V, after five years of this trend, lifetime earning have been substantially altered for a lot of people. That is a long-term effect, whether you want to admit it or not.The effect isn’t as substantial as it is for the long-term unemployed (frankly, anyone unemployed non-voluntarily for more than two years will be lucky to work minimum wage ever again) but it is there.
Thanks Michael, coming from you that says alot…you being a writer and such.