A simple question for the tea baggers. Where is the socialism now? Frenetic right-wingers spent a good part of the summer shouting about the “government takeover of health care,” or the “stealth socialist health care plan.” Now that the “Affordable Healthcare for America Act” has been passed by a slim margin in the House of Representatives, there are few traces of anything even resembling socialism. Instead, Americans will find the good, the bad and the ugly of healthcare reform all contained within the 1,990 page bill.
The longer a rotten system lasts, the more any change to it is perceived to be a giant leap forward. In this light, the House health bill contains some positive changes. Insurers will now be prevented from refusing enrollment based on a pre-existing condition or dropping subscribers who become ill. Such policies have allowed private insurers to maintain profit margins and, consequently, are contributing factors to the swelling ranks of the uninsured. Their elimination is certainly a positive reform.
Another provision in the bill removes the anti-trust exemption for private health insurers. Since 1945, insurers have been exempt from Federal anti-trust law but subject to whatever state-by-state provisions existed. Insurers argued that this allowed them to share essential information about pools of subscribers in order to determine risk. In practice, much more than information was shared. The American Medical Association reports that large insurers now control 94% of health care business in most regional markets. A few large-scale private insurers lord over each segment of the country. House Democrats view anti-trust law enforcement as a means to combat this concentration, but it presents a more ominous prospect when viewed inside of the rest of the reform proposal.
Transforming the mass number of uninsured, at last count around 48 million, into potential customers will favor those companies capable of operating economies of scale. In other words, the larger the corporation, the easier it will be to price your way into the new market. For a time, prices may drop, but only at the cost of further monopolization, this time on the national instead of regional scale. Anti-trust law is a notoriously weak weapon to break up monopolies, since enforcement is contingent on the political appetite of whatever administration directs politics in Washington. Removing the exemption is positive, yet creating the conditions to expand the problem of monopolization seems to neutralize the benefits.
Many emotional pleas and an equally large number of words have been delivered for and against the public option. Right-wingers point to it as the crux of the secret socialist plan, while honest liberals made it a litmus test for the utility of the bill. What emerged from the debate is a watered-down version of a public plan sabotaged by concessions made to a vocal right-wing and paid for by campaign contributions to Democrats from the private insurance lobby.
Key to the watering-down was de-linking reimbursement rates from the Medicare schedule. Medicare operates as a price-fixed program where rates are negotiated into annual budgets through the legislature. These are, generally, significantly below rates in the private sector. The House bill version of the public plan will operate with rates determined by the marketplace. This means that the private sector will play a primary role in determining the cost structure in which the public plan will operate. This will end the deflationary effect a Medicare-compensation structure would have and may also mean, as the Congressional Budget Office has argued, that a public plan will be forced to offer more expensive plans than private insurers.
The weak public plan will have negative ripple effects inside the overall reform. The uninsured who can prove financial need, can now apply for “insurance credits” to purchase coverage. However, since the public plan may prove to be more expensive than private plans, it is likely that a significant amount of public subsidies will be funneled into the coffers of private health insurers. This fits with a larger pattern being developed by the Obama administration of funneling good public money into bad private sector businesses that have failed to meet the needs of the American people. The double problems of price inflation inside the plan and the issuance of insurance credits to private companies threaten to drive the already inflated price tag for the reform well past the estimated $1.2 trillion.
In another act of right-wing slight-of-hand, House Democrats shifted the mandate burden from the business community onto individuals. Republican pressure forced the ceiling on businesses mandated to provide insurance to their employees up to $500,000 in payroll. This will allow a significant swath of the businesses to be relieved of the burden of purchasing insurance.
Conversely, individuals will be forced by the government to carry some sort of health insurance. The penalty for not doing so will be a fine of 2.5% of your income. Continued non-payment and remaining uninsured will result in further fines and a possible jail term. This is a bonanza for private insurers, as millions will be forced into a new market for low-cost health insurance. Such plans are sure to skimp on coverage and run high on costs.
The site of the herding will be the new health insurance exchanges. This idea, championed by the conservative Heritage Foundation, will insure that market-based ideology frames the new health care system. Rates will be determined here, insurance offerings will be made and terms of care will be formulated here. All this with the continued logic of the marketplace where profits are a central concern and people’s health an afterthought.
None of the changes outlined above amount to socialism. Nor do they even signal the opening of a road which could lead to a socialist health care plan. The hope for genuine reform rests in the same place as it did before the bill was passed – in the certainty that the private sector will make such a mess of health care that the American people will be outraged enough to move towards socializing health care. A single-payer plan would cut across the good, the bad and ugly of this round of health care reform. Our health would cease to be a commodity and be guaranteed as a human right. Plenty of organizing is needed to win single-payer and, in the immediate term, we have plenty of myths to dispel about the wonders of small reforms.