By Paul Heise
Lebanon Daily News
03/19/2009
President Barack Obama apparently accepts the conventional wisdom about the failure of the Clinton health-care program: That the very powerful economic and political interests (remember Harry and Louise) that roused the country’s fear of socialism to block Hillary-care will again be able to block a universal, single-payer system. So Obama isn’t even going to try.
Is he right to concede this point? That depends. First, is the public perception of a single-payer system really that bad, and is the cost of wiping out the private insurance companies really economically and politically intolerable? The answers: no, and no.
We know that the Republican message machine is working very hard to label Obama with the dreaded socialist stigma. But the American public is aware how crazy that Republican claim is. Only a couple of months ago the Bush administration nationalized half the banking system without hesitating for a moment. So that ploy is backfiring.
The polls show that message is being seen for what it is, an admission that the right wing has no constructive ideas and is reduced to negative smear tactics at the Rush Limbaugh level.
The Obama administration knows this and is making decisions based on that fact. In the student-loan program, it is quite willing to cut out the private-sector middleman to make that program more efficient despite the whining complaints. The government already guarantees all the loans and would save about $4 billion per year.
Yet we have to admit that the huge savings that could come from eliminating the insurers from the health-care industry would come at the expense of a specific group of people.
That brings us to the fact that changes in government programs, instituted for the common good, often concentrate their impact on specific industries or localities. Sometimes the government compensates, i.e., pays off, the losers, and sometimes it does not. Eminent domain constitutes the most common such compensation.
In 1960, when trade liberalization was being considered, President John Kennedy said: “(T)here is an obligation to render assistance to those who suffer as a result of national trade policy.”
The Trade Adjustment Assistance Program was then instituted and has for years assisted workers, firms and communities that were adversely affected by increased imports. In the present day, the president’s stimulus package, The American Recovery and Reinvestment Act of 2009, expanded the coverage and enhanced the benefits of this program.
Change the word “trade” to “health-care” in Kennedy’s statement, and it is applicable to implementation of a single-payer health-care system.
The medical-insurance carriers administer benefits of approximately $356 billion with 450,000 people and a payroll of $22 billion. Compare that with the Social Security Administration, which administers benefits of $700 billion with 80,000 people and total administrative costs of $10.5 billion.
No harm would come to the medical care of the American people by ending the role of the insurance companies. Most of that payroll cost, and other administrative costs, are employed largely in shuffling claims and determining how to deny benefits, tasks that would disappear under a single-payer system. Virtually everything that the medical insurance carriers do constitutes a make-work project.
The general question of compensating the economic losers, in effect buying them off, is a legitimate economic and moral issue that is not settled. What do we owe people when their lives are affected adversely by government policy? Conversely, we do not expect specific winners to pay the compensation.
The question reaches from simple eminent domain to compensation for false imprisonment to paying off trade or health-care affected firms and workers.
The question does get sticky. When western cattlemen demanded compensation for the loss of subsidized grazing rights on federal land, they were rebuffed because it meant that welfare recipients likewise deserved compensation for lost benefits.
The moral question of whether or not to buy off the medical-insurance carriers and their employees is an unsolved political issue that we can only fight about. The economic question, on the other hand, can be settled rather simply by doing the arithmetic. The example of the rest of the world shows you can get far more medical care for far less money without insurance companies.
Single payer is still the most efficient way even if you pay off the insurance carriers and their employees. And that would be the bold change that Obama promised us.
A resident of Mt. Gretna, Heise holds a Ph.D. in economics and is professor emeritus of economics at Lebanon Valley College. His column appears every other Thursday. He can be reached at his blog:
paulheise.blogspot.com
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