At the Edge

Commentary on the Big Issues

Month: January 2017

Free Market Healthcare

The Republican Party is bent upon abolishing the Affordable Care Act — to fulfill both blind ideological dogmatism and gain political capital based on their so-called “free market” policies. Similarly, in India, the Finance Ministry has continued to slash healthcare spending by massive amounts in the name of abstract principles of “fiscal responsibility,” and “free markets.”

All of them are wrong. They’re wrong because free market healthcare doesn’t work — that is objectively the case. The government needs to regulate the health insurance and pharmaceutical industries. So, in this post, I’m going to do two things. First, I’m going to present the simple, common sense logic behind this claim of mine. Second, I’m going to justify this claim with empirical evidence.

The simple logic I’m presenting is the idea that the market has no incentive to offer better access or lower cost to healthcare if there’s no profit to be gained from it. The conservative argument, typically, is that “competition reduces prices.” But it doesn’t change a few facts.

First, insurance companies in countries like the U.S. charge at exorbitantly high rates. So, how much ever the competition, the cost won’t reduce beyond a certain point without government regulation. In fact, the only means to end this is to work toward the nationalization of the pharmaceutical industry — which is bound to be a slow process because (1) we need to maintain the quality of the healthcare system, (2) such rapid nationalization isn’t fiscally tenable, and (3) we need to maintain the jobs created by the pharmaceutical industry. But that does mean government regulation needs to exist.

Second, cost isn’t the only dimension to healthcare access. Insurance companies will continue to discriminate against people who have underlying conditions and, therefore, need healthcare more. They’ll discriminate against people based on financial status since payment isn’t guaranteed. And that’s what they did before the Affordable Care Act in the U.S., and what they continue to do in countries like India. Regardless, conservatives and right-libertarians pretend that Obamacare didn’t change anything — or that it made conditions worse. They also pretend that the abstract “free market” can solve everything like the wave of a magic wand. Only, it can’t.

And this isn’t just my opinion. It’s the opinion of noted economists such as Amartya Sen, Thomas Piketty, and Paul Krugman. All of them agree with this logic: that the private sector is grossly insufficient to fulfill the healthcare needs of the common people.

But even if you don’t buy the plain logic, here’s some empirical evidence. In a previous post, I already outlined that Obamacare was responsible for lower inflation rates of insurance costs, and that it increased access to health insurance. Furthermore, in countries with systems of nationalized healthcare, overall insurance costs a falling sharply — take the case of Canada. In addition, greater percentage of the population is insured in countries that have greater government intervention in healthcare.

The harsh reality is that the fetishization of the free market will get both developed and developing countries nowhere, at least when it comes to healthcare. Government intervention in healthcare is required to ensure that the needs of the people are met.

The Affordable Care Act

One of President-Elect Donald Trump’s key campaign promises has been the repeal of the Affordable Care Act. In this post, I’m going to explore why that’s a bad idea.

What does the ACA do?

The ACA is a very comprehensive form of healthcare reform introduced by President Obama in 2010. The main crux of the proposal was developed by the Heritage Foundation, a conservative think-tank, in the 1989. In the 1990s, something similar to the ACA became the principal healthcare plan of the GOP. Of course, since President Obama’s election, the level of extremism and partisanship within the GOP has persuaded most Republicans to strongly oppose President Obama’s plan — all of them forgetting, inevitably, that it was their plan during the presidency of Bill Clinton. The reason for that is one I’m willing to go over in another post, but, in short, it involves the problems with the American political establishment in general.

The ACA does a lot of things, and I’m going to talk about a few things it does. First, it substantially simplified means by which health insurance could be achieved for multiple people, prohibiting insurers from denying insurance to people with underlying disorders, expanding Medicaid eligibility to 38% higher than the poverty level, expanding the amount of time for which dependents were allowed to be in their parents’ insurance plan, and providing advanceable, refundable tax credits to those unable to afford health insurance. Second, it mandated that all individuals that could sufficiently afford health insurance who weren’t already covered by a public health insurance plan to buy health insurance, and mandated that businesses that employed 50 or more people offer health insurance to all their employees. Third, it substantially changed insurance standards by mandating coverage of essential diseases, contraception, etc. and created public Accountable Care Organizations to give quality care to Medicaid/Medicare patients.

Why should the ACA not be abolished?

The Republicans have been trying to abolish the ACA for a long time, since they seem to represent corporate interests more than the Democrats do. This isn’t me supporting the Democrats — my cynicism of the US political systems, or of these so-called “democracies” that serve interests of Big Money rather than the people in general, applies to all partisanship — but acknowledging the reality that the GOP is even worse, because they’ve drifted off the political spectrum into the realm of the far-right. Not nearly as far-right as fascists, but pretty right-wing.

The level of partisanship the GOP engages in is staggering — the only reason they want to engage in such mass privatization of healthcare is that their voter base doesn’t want their hard-earned money wasted on the “irrelevant” poor. President-Elect Trump is definitely substantially more reasonable in terms of economics than most of the GOP establishment, when you consider the existence of movements such as the “tea party,” and the “Freedom Caucus,” that simply don’t have a replacement plan. They simply don’t care, insofar as they get votes and campaign money.

The point is, the ACA has helped the people. Not as well as I would have liked it to have, but it has. It has given 23 million people health insurance, and has saved over 50,000 lives. The basic utilitarian argument applies. The idea that it has caused the increase of healthcare prices is similarly ridiculous — in fact, it has been credited with slowing down the inflation of insurance prices. In addition, the Congressional Budget Office estimates that 18 million people would lose their insurance in the first year of ACA repeal.

If you’re abolishing the ACA, you’re going to have to have a more effective plan. Some people do. The GOP doesn’t have one, nor does the Libertarian Party (whose plan is the lack of one). Unless the US government wants to kill its own people, it would be ridiculous to abolish the ACA.

How should the healthcare system be reformed?

There’s no doubt that there are problems with the ACA. My problem with the plan to repeal it is that there’s no alternative that has been suggested, outside of extremely free market plans that are typical of the Freedom Caucus and similar far-right portions of the GOP (as well as the substantially less important Libertarian Party). Two main problems: (1) things like the medical device tax often disproportionately affect middle-income people, and (2) large pharmaceutical and insurance companies continue raising costs, harming both the people and the government.

The first problem requires some alternative means of taxation to fund the ACA, which could mean moderate hikes in the capital gains and income tax brackets, specifically at the top rates, and the closing of corporate tax loopholes. The second problem — which directly ties into the first problem — has a few solutions, which I’m going to talk about. But to explain the second problem, healthcare in the US is substantially more expensive than any other country in the industrialized world — twice as much as, for instance, Denmark.

First, a public health insurance option should be introduced with substantially lower prices than ordinary insurance companies. This would prompt more people to go with public health insurance and possibly create the competition required to reduce healthcare costs. Second, substantial cost-controlling reforms need to be introduced. Here, I would support multiple of Secretary Hillary Clinton’s proposals, such as her plan for lowering prescription drug costs. I would also propose similar measures to reduce insurance costs. Third, I would consider tougher antitrust legislation, the details of which I’m not sure of, but which would regulate insurance companies and expand the Affordable Care Act’s current regulation.

President Obama signing the ACA into law. Source: Wikipedia. Public Domain.

All of this could eventually even make Bernie Sanders’ single-payer plan possible — essentially expanding the public insurance system, or increasing Medicaid/Medicare eligibility, to one hundred percent coverage, which would be ideal but is currently not financially tenable as a result of the power Big Pharma holds over the American people.

It’s time to fight the ideological dogmatism and corporatism entrenched within the American political system, by working towards giving people a right to healthcare.

Western Foreign Policy

Western foreign policy has, for ages, tended toward imperialism. The exceptionalist and nationalist tendencies of U.S. foreign policy during the Cold War, with notable examples including military intervention in Vietnam and Latin America (e.g. the virtual destruction of El Salvador in the Reagan years), have not been forgotten, under the Clinton, Bush, or Obama administrations. I doubt they will be forgotten under a Trump administration either. The two core ideas in modern international relations dialogue — idealism and realism — are both imperialist, and ignore the reality that the pursuit of economic and political interests internationally brings about massive human cost, as well as cost to international stability.

Idealism began by telling us that the pursuit of democracy, human rights, and justice was paramount. Today’s idealism tells us that when a foreign leader engages in human rights violations, you intervene immediately — and the people who do the intervening tend to be NATO countries, led by the U.S., the UK, and France. But they don’t do it for idealistic reasons. Idealism simply serves as further justification for the military action often carried out, which changes global power structures in various manners, effectively seeking to establish a hegemony based on concepts of “Western exceptionalism,” or something to that effect.

Realism is even more dangerous. The notion that the pursuit of “democracy” was why the U.S. invaded Iraq is illusory. The first claim was the presence of “weapons of mass destruction.” The reality: the dictator of Iraq was a threat to American interests abroad. They began with sanctions, which caused hundreds of thousands of children to die, and many more adults. Then, military intervention of what was probably the weakest country in the region further weakened and virtually destroyed it. That was bound to happen. The political instability that followed should have been predicted: the sanctions had already destroyed most of the country. The war was worse, of course, and led to the current state of affairs.

President Bush announces the Iraq Resolution. Public Domain image; taken from Wikipedia.

Similarly, realist motivations — possibly oil, or, more likely, the misguided quest for “international stability,” led by Secretary of State Hillary Clinton — led to the intervention in Libya. What did that cause? Substantial economic and political instability — Libya is currently engaged in civil war between its elected parliament and a militia coalition, while facing substantial threat from terrorist groups. Even the U.S. doesn’t benefit — this realism is misguided, and potentially destructive.

Military intervention is also influenced by what President Eisenhower called the “military-industrial complex.” Corporations in many countries — especially in the West — use government spending to push their own interests. The Defense industry, for a long period, was fueled and strengthened by military intervention. To quote Professor Noam Chomsky:

Eisenhower’s military-industrial complex is not quite what is generally interpreted. In part, yes, it’s military. But a main function of the military, or the National Institutes of Health, or the rest of the federal system, is to provide some device to socialize costs, get the public to pay the costs, to take the risks. Ultimately, if anything comes out, you put it into private pockets. And, again, this has to be done in a way that protects state power and private power from the domestic enemy. You have to say it’s to defend ourselves against Grenada or Russia or Guatemala or somebody. If you get people frightened enough, they won’t notice that their taxes are going into creating the profits of IBM and Merck twenty years from now. Why not tell them the truth? Because then they might not make these decisions.

You might argue that these were good decisions, like it’s nice to have computers. But that’s not really the point. The point is, who should make those decisions? Suppose you would ask people in the 1950s. Suppose there was some pretense among the educated classes or the power system, some belief that we ought to have something like a democracy. So then you would ask people, you would try to get an informed public to decide, do you want computers twenty-five years from now, or do you want health services now and schools today and jobs today and a livable environment for your children? What’s your choice?”

At the point at which some random corporation gets to control and dictate global power structures (and not just domestic ones), the world becomes more dangerous.

I’m not a pacifist. There are obviously cases where intervention is justified — against multiple major terrorist groups, or to prevent genocide. The U.S. should have, without a doubt, intervened in Rwanda to prevent the Rwandan genocide, or reduce its effects. Similarly, India did the right thing in 1971 when it acted to prevent the Bangladeshi genocide. But at the point at which a country engages in intervention to fulfill its own political and economic interests, with substantial human cost and no humanitarian benefit, there is no justifying the destruction caused without going down to the level of sheer intellectual dishonesty.

We need to be prepared to check the abuse of international power, and to exercise restraint when it comes to military intervention.

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