Thursday, March 17, 2005

Nothing Up My Sleeve...

Given that destroying Social Security is clearly a lost cause, why is the administration still trying so hard? Evangelical Capitalism suggests that it supplies a smoke screen for the bankruptcy and tort 'reform' measures.


Blogger Management said...

There has been an interesting confluence of events over the last month that shows just how morally bankrupt Evangelical Capitalism is. Since the inauguration George W. Bush has made Social Security “Reform” his top priority and has campaigned aggressively for it across the country. It is interesting to note that he has yet to unveil the specifics of his plan but it has still elicited vociferous responses from across the political spectrum. Social Security was once called the “third-rail of American politics” and this description certainly still applies. The president has kicked over a hornet’s nest of activity as groups from the AARP to Republican members of Congress have voiced concern over President Bush’s plans (whatever they may be).

The opposition to this measure threatens to deal Bush his first significant political defeat in over four years in office. A recent poll among Congressmen suggests that Social Security "Reform" is dead on arrival. This is makes no sense for a Karl Rove-directed campaign. His strategy has always been to go after sure bets such as tax cuts, moral outrage, and false patriotism. It is clear that Social Security “Reform” is very risky from a political standpoint. The media have been quick to point out that Bush is willing to do this because he considers this to be a legacy issue and an opportunity to take the quintessential Democratic program and turn it into a Republican issue.

There is another possibility: that this whole effort is nothing more than elaborate smoke screen to distract us from some real issues imposed by Evangelical Capitalism as well as to advance key, but unpopular, Evangelical Capitalist interests. This makes sense when you consider the classic Karl Rove strategy, which resembles nothing so much as a cheap conjuring trick. Pay no attention to what this hand is doing, the magic is happening over here. It worked when the economy was doing badly enough to cost Bush his job in last year’s election but he was able to cast himself as the patriotic candidate who will save us from those nasty terrorists. Alternatively, Bush was the moral crusader stomping for a politically-impossible Constitutional Amendment banning gay marriage. The gay marriage issue was another conjuring trick that served to distract the very people that have been disadvantaged by Republican economic policies. You can be unemployed and still vote for the incumbent if you feel morally compelled to do so by a spurious issue.

So what is the Social Security Trojan horse covering up for? There are two issues dear to Evangelical Capitalists that have quietly (or more quietly than might have otherwise been the case) worked their way through Congress: legal liability “reform” and bankruptcy “reform”. The third, related issue is one that Evangelical Capitalists would prefer to keep in the closet because it exposes the contradictions in a way that perhaps no other issue does: the healthcare crisis.

Both lawsuits and bankruptcy have a direct connection to the healthcare issue. The supporters of lawsuit “reform” made that connection explicit when they argued that lawsuits were driving up medical malpractice insurance costs and increasing healthcare costs across the board. A recent editorial in the Seattle Post-Intelligencer by Thomas Shapley indicates just how fallacious this reasoning is. Of 10,000 malpractice claims filed in Washington State in the last decade, only 2,700 resulted in any payment to the injured party and of those only 200 paid out more than $1 million in damages. In over 6,100 cases the insurance companies paid nothing other than administrative costs. In other words, the insurance companies are doing a good job of holding down their exposure to such suits and yet seem to maintain a healthy profit margin. However, Evangelical Capitalists like to point this issue as an “obvious” abuse of the legal system. What they are really doing is shielding corporate abuses from responsibility for their consequences. Since government no longer regulates under Evangelical Capitalism, lawyers have to perform the same function in the courts (more on this in future blogs). While this doesn't work from an economic sense, the solution is not to cut off this final avenue for redressing grievances against the system.

Bankruptcies have every bit as much of a connection to healthcare but it is much more obscured by Evangelical Capitalists who brand this issue as a personal responsibility issue and point to those who run up their credit card debt on non-essential items and then simply declare bankruptcy to get out of their responsibilities to their creditors. If this were such a personal responsibility issue then why has this bill taken 8 years to get passed? The reason is simple: it is an outrageous attack on the hard-pressed American middle class.
In a recent study of bankruptcy filings a group of Harvard researchers discovered an amazing fact: more than 50% of these filings were as a direct consequence of a healthcare emergency. Even more amazing is that half of those people had health insurance but were driven into bankruptcy by co-payments and coverage gaps such as the 80/20 requirement most insurance policies have today.

Most Americans know this drill and I can speak from personal experience. Last December my wife had to have gallbladder surgery. Despite my full insurance coverage our out-of-pocket expenses for this routine surgery are rapidly approaching $1500, which is a significant burden on the family budget of a college professor. I don’t consider myself to be poor and I am not considering declaring bankruptcy. However, my wife’s medical problems were not that serious when compared to some other possibilities. More serious medical problems were apparently enough to create the 75% of the healthcare-related bankruptcy filings made by families who were making more than $25,000 at the time of their filings. The average medical-related debt in those cases was almost $12,000.

If these two issues had been exposed to the harsh scrutiny of a real media inquiry, they would have almost certainly failed in Congress. Instead, most of the attention of their potential opponents was squarely focused on Social Security and these two issues were essentially slipped through the system without anyone paying all too much attention to them. Additionally, there is a related issue no one is talking about that dwarfs Social Security in dollar figures and that is the Medicare gap. While the Social Security gap could largely be fixed with some relatively minor adjustments to the system such as raising the cap on taxable income to $120,000 combined with raising the retirement age to 70, Medicare’s gap is far more significant. Most experts put its potential shortfall at 5 to 6 times that of Social Security. The reason for this is simple: In addition to generational pressures, Medicare has to deal with rising costs from it healthcare providers. You can’t fix those costs unless you fix the healthcare system and that is something that Evangelical Capitalists can’t, or won’t, do.

Evangelical Capitalism cannot deal with healthcare because it fails to conform to economic logic and we will discuss this issue in much greater detail future blogs. For now, consider the simple fact that healthcare forces us to consider the dollar cost of human life. Most people spend 80% of their lifetime healthcare expenses in their last year of life and a very significant percentage of overall healthcare spending goes to an extremely small percentage of the population who have exotic illnesses. It’s easy to say, “let’s just cut these people off and save a huge amount of money on the system,” but that becomes a different equation when it’s your grandmother, your brother, or yourself we are talking about here. In a privatized healthcare system, these kinds of decisions are left almost entirely in the hands of the consumers of the system and those consumers don’t respond to economic logic. Instead, they drive themselves into bankruptcy and/or pass those costs onto a financially-overburdened healthcare system.

The United States has the most privatized healthcare system in the world when compared to similarly developed countries, yet we pay considerably more than anyone else for that system (around 13.2% of GDP compared to 6.7% for the UK in 2001 - Source: Statistical Abstract of the United States). The reason is simple: Evangelical Capitalism argues that privatization and monetarization of problems makes sense when it is clear this doesn’t work when applied to healthcare. Bankruptcy and lawsuit “reform” are designed to shield some of the chief proponents of the idea of Evangelical Capitalism from the consequences of that support and it is only with the smokescreen of the Social Security debate that these two efforts are getting through the system. It is likely to take the unmasking Evangelical Capitalism to roll back these efforts.

8:42 PM  

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