By Robert Kuttner
New America Foundation, Demos, November 2012

Today’s prolonged economic slump is fundamentally different from an ordinary recession. In the aftermath of a severe financial collapse, an economy is at risk of succumbing to a prolonged deflationary undertow. With asset prices reduced, the financial system damaged, unemployment high, consumer demand depressed, and businesses reluctant to invest, the economy gets stuck well below its full employment potential.

What’s needed is aggressive fiscal policy – and not the kind of fiscal policy promoted by the austerity lobby to “restore confidence” and allay supposed fears of inflation. The problem isn’t low confidence in deficit-reduction. Banks are now sitting on about $1.8 trillion in cash or government securities – because they can’t imagine where to profitably invest it. Businesses are delaying investment in expansion not because they are fretting about deficit projections for 2023. They are waiting to see customers with money to spend, and general austerity will only reduce that spending power. 
 
But where should this fiscal policy be directed? One, obviously, is investment in a green economy and modern public infrastructure. The other – too little appreciated – is increased outlay in human services, of the sort that can create good, non-exportable jobs and improve the life prospects of the next generation, as well as provide stable, counter-cyclical sources of employment and demand. Government also has the power to structure other service-sector work as decent jobs.

Public investment, including public investment in the service sector, can help the economy climb out of the current deflationary trap – and establish a foundation for a stronger middle class in the future.

The Case for Investing in People
 
The economic collapse triggered by the financial crisis that exploded in September 2008 represented the collision of three trends. One was the license given to speculative finance resulting from increasingly reckless deregulation.

The second trend was the worsening income distribution.

Third, since the early 1980s, the economy has been losing good, middle class jobs, especially in manufacturing.

So where will the sources of increased demand and good, middle class jobs come from? One obvious candidate is the creation of good, professional service jobs improving the quality of education and care for the young, the old, and the sick.

We are shifting irrevocably to a service economy. But there are political choices to be made (or evaded). One path leads to an economy of minimum-wage fast food workers and security guards, many of them with temporary or part time jobs, on one extreme – and billionaire hedge fund managers and takeover artists, on the other. The other leads to a commercial sector of decent wages and terms of work and a human service sector of middle class professionals that serve social needs – which in turn make for a more productive economy and decent society.

Good Human Services as Social Investment and Economic Stimulus

Millions of jobs serving the very young, the very old and the very sick are low-wage jobs. This is a social decision, not the product of private supply and demand, because the qualifications and earnings for these occupations are set socially. A person caring for three-year-olds, for instance, can be a glorified baby sitter with minimum certification as a day care worker – or a well trained professional in child development. The job can pay minimum wage, or it can be a middle-class occupation and career. This social choice governs not just the quality of the job, but the quality of the early education given – especially to young children who begin life with fewer inherited advantages than the children of the professional class and the business elite.

A nursing home worker, likewise, can be a nurse-aide making $8 an hour, or a licensed practical nurse or trained recreation aide earning almost twice that, closer to $30,000 a year. Well-qualified and trained nursing home personnel produce not just better career opportunities and economic stimulus, but better quality of life for the elderly. Having competent staff is more efficient in the long run because there is less turnover, less need for outlays on recruitment, better morale, and fewer incidents of neglect that require far more expensive medical treatment.
 
I’ve done a rough, order-of-magnitude calculation and found that for an annual expenditure of about $100-$150 billion (or under one percent of GDP), we could set a national policy goal of guaranteeing that all human service jobs are professional jobs that pay at least $25,000 a year (which is itself a lower minimum bar than others have suggested). This requires professionalizing some occupations, as well as universalizing the availability of some categories of woefully underfunded services such as early education. As long as the current deflationary economy persists, this funding could come from additional government borrowing. As the economy recovers thanks to the additional stimulus, the normal increase in revenues could pay for part of the cost, supplemented by increased progressive taxation.

One of the great problems of the manufacturing economy, and of some services such as software engineering, accounting, call center work, and repair of jet engines, is that globalization allows these jobs to be done offshore by lower-paid workers. Human service jobs, by contrast, must be performed at home. If we have a national policy of guaranteeing that they are good jobs, there is no risk that they move overseas. We get the quadruple benefit of macro-economic stimulus, better jobs, better quality services, and (in the case of the young) improved lifetime opportunity and productivity.

The shift to upgrading work in the service sector, especially work in the human services, can be part of a deficit-financed macro-economic recovery strategy to address the nation’s current unemployment crisis and slow recovery. But this is not enough. It should also be part of a long-term effort to upgrade both the quality of work and of social services. The mistaken slogan of the February 2009 Recovery Act was “timely, targeted, and temporary.” That precluded any medium or long term planning. To adapt to the needs of an economy of the future, efforts to improve service sector employment need to be planned, pro-active, and permanent.

http://www.demos.org/system/assets/drupal/publications/Kuttner_Robert_Service_Sector_Recovery_November_2012.pdf

Comment:

By Don McCanne, MD

Framing is important. Right now our nation’s fiscal problems are being framed as a budget deficit requiring austerity measures such as a decrease in spending on Medicare and Medicaid. Instead, we should be framing the problem as a need to improve our economy by establishing policies that promote and expand our service economy, especially in education and health care.

What does this have to do with single payer? Simply that an expanded and improved Medicare program covering everyone would provide an excellent avenue to expand and improve the type of health care service jobs that are discussed in this paper.

Robert Kuttner’s 11 page paper on economic recovery and social investment should be downloaded, read in its entirety, and shared with others – especially members of Congress who can’t seem to get the framing right.

Economic Recovery and Social Investment: A Strategy to Create Good Jobs in the Service Sector

By Robert Kuttner
New America Foundation, Demos, November 2012
Today’s prolonged economic slump is fundamentally different from an ordinary recession. In the aftermath of a severe financial collapse, an economy is at risk of succumbing to a prolonged deflationary undertow. With asset prices reduced, the financial system damaged, unemployment high, consumer demand depressed, and businesses reluctant to invest, the economy gets stuck well below its full employment potential.
What’s needed is aggressive fiscal policy – and not the kind of fiscal policy promoted by the austerity lobby to “restore confidence” and allay supposed fears of inflation. The problem isn’t low confidence in deficit-reduction. Banks are now sitting on about $1.8 trillion in cash or government securities – because they can’t imagine where to profitably invest it. Businesses are delaying investment in expansion not because they are fretting about deficit projections for 2023. They are waiting to see customers with money to spend, and general austerity will only reduce that spending power.
But where should this fiscal policy be directed? One, obviously, is investment in a green economy and modern public infrastructure. The other – too little appreciated – is increased outlay in human services, of the sort that can create good, non-exportable jobs and improve the life prospects of the next generation, as well as provide stable, counter-cyclical sources of employment and demand. Government also has the power to structure other service-sector work as decent jobs.
Public investment, including public investment in the service sector, can help the economy climb out of the current deflationary trap – and establish a foundation for a stronger middle class in the future.
The Case for Investing in People
The economic collapse triggered by the financial crisis that exploded in September 2008 represented the collision of three trends. One was the license given to speculative finance resulting from increasingly reckless deregulation.
The second trend was the worsening income distribution.
Third, since the early 1980s, the economy has been losing good, middle class jobs, especially in manufacturing.
So where will the sources of increased demand and good, middle class jobs come from? One obvious candidate is the creation of good, professional service jobs improving the quality of education and care for the young, the old, and the sick.
We are shifting irrevocably to a service economy. But there are political choices to be made (or evaded). One path leads to an economy of minimum-wage fast food workers and security guards, many of them with temporary or part time jobs, on one extreme – and billionaire hedge fund managers and takeover artists, on the other. The other leads to a commercial sector of decent wages and terms of work and a human service sector of middle class professionals that serve social needs – which in turn make for a more productive economy and decent society.
Good Human Services as Social Investment and Economic Stimulus
Millions of jobs serving the very young, the very old and the very sick are low-wage jobs. This is a social decision, not the product of private supply and demand, because the qualifications and earnings for these occupations are set socially. A person caring for three-year-olds, for instance, can be a glorified baby sitter with minimum certification as a day care worker – or a well trained professional in child development. The job can pay minimum wage, or it can be a middle-class occupation and career. This social choice governs not just the quality of the job, but the quality of the early education given – especially to young children who begin life with fewer inherited advantages than the children of the professional class and the business elite.
A nursing home worker, likewise, can be a nurse-aide making $8 an hour, or a licensed practical nurse or trained recreation aide earning almost twice that, closer to $30,000 a year. Well-qualified and trained nursing home personnel produce not just better career opportunities and economic stimulus, but better quality of life for the elderly. Having competent staff is more efficient in the long run because there is less turnover, less need for outlays on recruitment, better morale, and fewer incidents of neglect that require far more expensive medical treatment.
I’ve done a rough, order-of-magnitude calculation and found that for an annual expenditure of about $100-$150 billion (or under one percent of GDP), we could set a national policy goal of guaranteeing that all human service jobs are professional jobs that pay at least $25,000 a year (which is itself a lower minimum bar than others have suggested). This requires professionalizing some occupations, as well as universalizing the availability of some categories of woefully underfunded services such as early education. As long as the current deflationary economy persists, this funding could come from additional government borrowing. As the economy recovers thanks to the additional stimulus, the normal increase in revenues could pay for part of the cost, supplemented by increased progressive taxation.
One of the great problems of the manufacturing economy, and of some services such as software engineering, accounting, call center work, and repair of jet engines, is that globalization allows these jobs to be done offshore by lower-paid workers. Human service jobs, by contrast, must be performed at home. If we have a national policy of guaranteeing that they are good jobs, there is no risk that they move overseas. We get the quadruple benefit of macro-economic stimulus, better jobs, better quality services, and (in the case of the young) improved lifetime opportunity and productivity.
The shift to upgrading work in the service sector, especially work in the human services, can be part of a deficit-financed macro-economic recovery strategy to address the nation’s current unemployment crisis and slow recovery. But this is not enough. It should also be part of a long-term effort to upgrade both the quality of work and of social services. The mistaken slogan of the February 2009 Recovery Act was “timely, targeted, and temporary.” That precluded any medium or long term planning. To adapt to the needs of an economy of the future, efforts to improve service sector employment need to be planned, pro-active, and permanent.
http://www.demos.org/system/assets/drupal/publications/Kuttner_Robert_Ser…

Framing is important. Right now our nation’s fiscal problems are being framed as a budget deficit requiring austerity measures such as a decrease in spending on Medicare and Medicaid. Instead, we should be framing the problem as a need to improve our economy by establishing policies that promote and expand our service economy, especially in education and health care.
What does this have to do with single payer? Simply that an expanded and improved Medicare program covering everyone would provide an excellent avenue to expand and improve the type of health care service jobs that are discussed in this paper.
Robert Kuttner’s 11 page paper on economic recovery and social investment should be downloaded, read in its entirety, and shared with others – especially members of Congress who can’t seem to get the framing right.

By Elise Viebeck
The Hill, November 25, 2012

The Obama administration faces major logistical and financial challenges in creating health insurance exchanges for states that have declined to set up their own systems.

Since different states have different insurance markets and different eligibility requirements for Medicaid, Obama’s Health and Human Services Department can’t simply take a system off the shelf as a one-size-fits-all fail-safe.

“You can’t simply deploy one federal exchange across the board,” said Jennifer Tolbert, director of state health reform at the Kaiser Family Foundation.

“Each state is different — their eligibility systems are different, their insurance markets are different. [HHS is] going to have to build these exchanges to fit into the context of each state.”

Experts have predicted that the department will soon have to tap budgets from its other programs to cover exchange costs. Other have said it might charge fees on the insurance purchased in its exchanges once they are launched.

The idea behind the exchanges is to match the uninsured with plans that meet their needs and reflect their eligibility (or lack thereof) for government help.

In practice, the process will require websites that can process massive amounts of personal information from users and yield search results for everyone.

Each portal will require a front end — the interface consumers will use to submit their information and shop for plans — and a specialized back end that is customized based on the state.

HHS will also construct a range of other systems: a federal data hub for verifying user identity; programs for user assistance; a way to certify that health plans meet federal standards; a way to navigate the exchanges via phone or apply for coverage by mail; and so on.

Experts expressed one main concern across the board — that people eligible for Medicaid but not for the exchanges might fall through the cracks in federally run systems, since enrollment in the program is run by states.

http://thehill.com/blogs/healthwatch/health-reform-implementation/269137-obama-faces-huge-challenge-in-setting-up-health-exchanges

Comment:

By Don McCanne, MD

One unique feature of health care financing in the United States is our shameful administrative excesses. The new state insurance exchanges required by the Affordable Care Act (ACA) add to that waste, whether run by the states or by the federal government by default.

To begin with, since the plans offered by the exchanges will be in the individual and small group markets, under ACA they will be allowed to keep 20 percent of the insurance premiums for their own administration and profits.

Next, the exchanges will be much more complex than a mere website from which to compare and choose plans. These portals (exchanges) will require a complex front end to determine eligibility or lack thereof for Medicaid or for the premium subsidies which vary based on the actuarial values of the plans and the incomes of the applicants. Also the managers of the exchanges will have considerable work on the back end in establishing plan eligibility to participate in the exchanges, evaluating the essential health benefits of each plan, confirming that each metal level (bronze, silver, gold, platinum) meets actuarial standards, meeting regulatory requirements that vary from state to state, and providing a mechanism for the purchaser to intelligently navigate the maze established by the exchanges.

Obviously there will be considerable administrative costs associated with these exchanges – costs that are beyond the 20 percent retained by the insurers. ACA requires that the exchanges be self-sustaining, meaning that these administrative costs must be paid by the insurers (beyond the 20 percent) or by the purchases of the plans. Either way, those enrolling in plans through the exchanges will ultimately bear the costs of these administrative excesses.

Finally, physicians, hospitals and other providers of care will continue to bear the costs of the excessive administrative burden placed on them by this fragmented, complex financing system. Instead of providing administrative relief, the exchanges further increase the administrative burden and excess costs of allocating our health care dollars.

Readers already know how over 99 percent of this portion of our administrative waste could be eliminated. Enroll each individual once, at birth, in a single national health program – an improved Medicare that includes everyone. So why aren’t we doing it?

Obama faces huge challenge in setting up health insurance exchanges

By Elise Viebeck
The Hill, November 25, 2012
The Obama administration faces major logistical and financial challenges in creating health insurance exchanges for states that have declined to set up their own systems.
Since different states have different insurance markets and different eligibility requirements for Medicaid, Obama’s Health and Human Services Department can’t simply take a system off the shelf as a one-size-fits-all fail-safe.
“You can’t simply deploy one federal exchange across the board,” said Jennifer Tolbert, director of state health reform at the Kaiser Family Foundation.
“Each state is different — their eligibility systems are different, their insurance markets are different. [HHS is] going to have to build these exchanges to fit into the context of each state.”
Experts have predicted that the department will soon have to tap budgets from its other programs to cover exchange costs. Other have said it might charge fees on the insurance purchased in its exchanges once they are launched.
The idea behind the exchanges is to match the uninsured with plans that meet their needs and reflect their eligibility (or lack thereof) for government help.
In practice, the process will require websites that can process massive amounts of personal information from users and yield search results for everyone.
Each portal will require a front end — the interface consumers will use to submit their information and shop for plans — and a specialized back end that is customized based on the state.
HHS will also construct a range of other systems: a federal data hub for verifying user identity; programs for user assistance; a way to certify that health plans meet federal standards; a way to navigate the exchanges via phone or apply for coverage by mail; and so on.
Experts expressed one main concern across the board — that people eligible for Medicaid but not for the exchanges might fall through the cracks in federally run systems, since enrollment in the program is run by states.
http://thehill.com/blogs/healthwatch/health-reform-implementation/269137…

One unique feature of health care financing in the United States is our shameful administrative excesses. The new state insurance exchanges required by the Affordable Care Act (ACA) add to that waste, whether run by the states or by the federal government by default.
To begin with, since the plans offered by the exchanges will be in the individual and small group markets, under ACA they will be allowed to keep 20 percent of the insurance premiums for their own administration and profits.
Next, the exchanges will be much more complex than a mere website from which to compare and choose plans. These portals (exchanges) will require a complex front end to determine eligibility or lack thereof for Medicaid or for the premium subsidies which vary based on the actuarial values of the plans and the incomes of the applicants. Also the managers of the exchanges will have considerable work on the back end in establishing plan eligibility to participate in the exchanges, evaluating the essential health benefits of each plan, confirming that each metal level (bronze, silver, gold, platinum) meets actuarial standards, meeting regulatory requirements that vary from state to state, and providing a mechanism for the purchaser to intelligently navigate the maze established by the exchanges.
Obviously there will be considerable administrative costs associated with these exchanges – costs that are beyond the 20 percent retained by the insurers. ACA requires that the exchanges be self-sustaining, meaning that these administrative costs must be paid by the insurers (beyond the 20 percent) or by the purchases of the plans. Either way, those enrolling in plans through the exchanges will ultimately bear the costs of these administrative excesses.
Finally, physicians, hospitals and other providers of care will continue to bear the costs of the excessive administrative burden placed on them by this fragmented, complex financing system. Instead of providing administrative relief, the exchanges further increase the administrative burden and excess costs of allocating our health care dollars.
Readers already know how over 99 percent of this portion of our administrative waste could be eliminated. Enroll each individual once, at birth, in a single national health program – an improved Medicare that includes everyone. So why aren’t we doing it?

Rep. Judy Biggert and 57 cosponsors
November 16, 2012

SECTION 1. SHORT TITLE.

This Act may be cited as the “Equitable Access to Care and Health Act” or the “EACH Act”.

SEC. 2. ADDITIONAL RELIGIOUS EXEMPTION TO HEALTH COVERAGE MANDATE.
 
(a) IN GENERAL.—Paragraph (2) of section 5000A(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

“(C) ADDITIONAL RELIGIOUS EXEMPTION.—
 “(i) IN GENERAL.—Such term shall not include an individual for any month during a taxable year if such individual files a sworn statement, as part of the return of tax for the taxable year, that the individual was not covered under minimum essential coverage at any time during such taxable year and that the individual’s sincerely held religious beliefs would cause the individual to object to medical health care that would be covered under such coverage.
 “(ii) NULLIFIED IF RECEIPT OF MEDICAL HEALTH CARE DURING TAXABLE YEAR.-Clause (i) shall not apply to an individual for any month during a taxable year if the individual received medical health care during the taxable year.
 “(iii) MEDICAL HEALTH CARE DEFINED.—For purposes of this subparagraph, the term ‘medical health care’ means voluntary health treatment by or supervised by a medical doctor that would be covered under minimum essential coverage and—
  “(I) includes voluntary acute care treatment at hospital emergency rooms, walk-in clinics, or similar facilities, and
  “(II) excludes—
   “(aa) treatment not administered or supervised by a medical doctor, such as chiropractic treatment, dental care, midwifery, personal care assistance, or optometry,
   “(bb) physical examinations or treatment where required by law or third parties, such as a prospective employer, and
   “(cc) vaccinations.”.
 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) shall take effect as if included in the amendments made by section 1501 of the Patient Protection and Affordable Care Act.

http://thomas.loc.gov/cgi-bin/thomas

Comment:

By Don McCanne, MD

H.R. 6597, the “Equitable Access to Care and Health Act,” is a proposed amendment to the Affordable Care Act that would provide a religious exemption to an individual from a penalty for being uninsured, providing that the individual files a sworn statement, as part of the tax return, that “the individual’s sincerely held religious beliefs would cause the individual to object to medical health care that would be covered” under health plans mandated by the Affordable Care Act.

If any medical care were obtained, that would nullify the exemption, and penalties for being uninsured would apply. Theoretically, that would separate those whose religious beliefs regarding abstaining from health care were sincere, from those who would submit a sworn statement merely to avoid the penalty while remaining uninsured. In actuality, even with such religious beliefs, individuals might find it difficult to refuse care in some instances such as major trauma.

If you check the list of cosponsors, you will see that this act does have very broad bipartisan support. It seems like a reasonable amendment, though it still doesn’t protect the rest of us from the costs of care that the person might receive when the medical imperative is greater than the religious conviction.

Is there a better way of doing this? Of course. Include everyone in a single national health program. Do not fund it based on medical need, but fund it through equitable, progressive tax policies. Under such a system, anyone can decline medical care for whatever reason, religious or otherwise (except if the person’s disorder constitutes a genuine threat to public health).

Should a person be required to pay taxes into a universal health care system? I can answer that by stating, as a pacifist, I vehemently object to paying taxes to fight wars. Yet I cannot be allowed the option of withholding my allocated tax assessment assigned to our nation’s military ventures. Nor can anyone be allowed to opt out of paying taxes for any public service that, through our democratic process, we decide to provide for the public good. That includes health care.