Even as Dick Armey’s dick army continues to do the disruptive dirty work of its corporate-funded organizers (an onion Rachel Maddow has ably peeled for public view), even as its footsoldiers continue to spout fear-drenched talk-radio-esque bullshit about euthanasia, baby killing, and the evil plans of that Fascist Socialist Muslim Negro in the White House (who’s really from Kenya, you know!), even as they’re devoutly convinced they speak for Real America notwithstanding the fact that most real Americans are repulsed and embarrassed by what they see these people doing (and oh, yeah, disagree with them on the issues, too)…
… some folks at the top of the Establishment, those who understand the real interests at stake here (hint: it’s not the footsoldiers) and who are actually capable of making calm, methodical arguments (i.e., they don’t think whoever shouts loudest wins), are showing their hand just a little too boldly.
Case study: Fortune Magazine editor-at-large Shawn Tully’s recent pieces attacking what he dismissively terms “Obamacare.” Just as the right-wing culture warriors are perpetually projecting onto the left their own penchants for intolerance and bullying, likewise class war in America is almost always a top-down phenomenon, even as its practitioners try to cast it as the exact opposite. And Tully’s offerings on this subject demonstrate that phenomenon writ large, in glowing red letters.
Note that I acknowledged his writing only as calm and methodical. I didn’t say it was logically sound. Let’s delve into the details…
Tully starts his most recent column on the topic (“first in a series,” we’re warned) with a thought experiment:
Let’s dream for a moment: Imagine that our nation could start with a clean slate and invent the best possible health care system to replace the current wobbly machine — one that everybody agrees needs fixing.
Hey, great! So far so good. Acknowledging the problem is a terrific way to start: U.S. health care is the world’s most expensive, but it is manifestly not the best, nor even close (much as some try to deny it). Folks with business sensibilities like to learn from “best practices,” right? So why don’t we look at some of the systems used by our various trading partners around the world, and see how they’ve managed to achieve better health-care results for less money. (There are plenty to choose from: frankly, they’ve all done it.)
Sadly, Tully blows this prospect out of the water in his very next paragraph, with this remarkable proposition:
Let’s design a market-based, consumer-driven plan based on the belief that the same free-flowing forces that bring us the world’s finest groceries, cars, and private mail delivery can also deliver high-quality health care at bargain prices.
Hmm. Does he have any evidence whatsoever to support that belief? Has a single other country ever taken that approach and made it work? Umm, no. (The closest analog would be the Swiss system… which has among the highest costs in Europe.) Indeed, do even economists believe that supply and demand can work efficiently on a commodity with such unique uncertainties as health care? Again (as I’ve discussed before), no… as Nobel laureate economist Kenneth Arrow made clear way back in 1963 [pdf].
(Indeed, Tully somewhat misses his mark even with the other examples. Much as we all love to bitch about the USPS, I’d rather not give it up unless and until FedEx offers to deliver my magazines and greeting cards cross-country for a price measured in cents rather than dollars, thank you very much. Anyone who believes that modern supermarkets, overflowing with choices though they may be, actually provide “the worlds finest groceries,” obviously hasn’t read the work of Michael Pollan or seen Food, Inc. And as for the world’s best cars, they actually get a significant subsidy from Japanese trade policies.)
Tully summarily rejects the notion, however, that “the laws of supply and demand won’t work in medicine,” calling it “a misperception that’s gained a shocking degree of credence.” (Funny how that happens when world-renowned economists write papers about it.) Oblivious of the real economics involved, Tully goes on to say that his ideal involves “allowing the market to bring the benefits of real competition and consumer choice.” This would make insurance more affordable, he insists, leading millions of Americans who currently do without to buy it, while those who already have coverage would enjoy more take-home pay.
Thus, he contends, we should “put the consumer in charge”:
Today, millions of workers cling to jobs just to preserve their health benefits. The result of liberating them would be a revolution, with providers tailoring a galaxy of new plans — rich, high-deductible, and everything in-between — to the needs and budgets of consumers writing their own checks.
Now, anyone who’s ever actually shopped for health insurance on the private market (or on behalf of a corporate HR department, for that matter) understands that it’s not remotely a situation where the consumer is “in charge,” or ever plausibly could be. Yet Tully balks at the kind of government regulations that might at least get consumers closer to a level playing field, decrying ideas like the following:
…the Obama plan doesn’t allow for much choice. That’s because it sets extremely strict minimum standards for all the plans the government will approve for sale.
For example, Americans would have to pay for mental health benefits and coverage for their “children” until the age of 26. While many Americans may want that kind of rich coverage, millions do not. So why impose these expensive plans on everybody?
By setting deductibles extremely low — another feature that makes any plan offered under Obamacare extremely expensive — the law would pretty much eliminate high-deductible insurance. Again, that’s what millions of families now have, and what tens of millions more will want, but won’t be able to get.
The Obama bill blocks insurers from charging more for people with unhealthy lifestyles — smokers and those with high cholesterol due to unhealthy diet, for instance — than Americans who exercise regularly and watch their weight. That’s hardly a formula for reducing costs. A free-market plan would allow insurers to offer discounts to people who pursue preventive care and carefully nurture their health. It would charge people premiums based on their actual or projected costs. …Premiums based on cost aren’t allowed under Obamacare. Through a mechanism called “community rating,” it would force the young and healthy to pay far more than their actual cost, and give a big subsidy to older Americans, who generally make more money than young workers and can afford higher premiums.
In reality, “the Obama plan” (i.e., the multifarious bills actually written by Congress) would do these things for very sensible, frankly obvious reasons. Why cover offspring until age 26, for instance? Well, because young people early in their careers often have to take jobs with little or no insurance, can’t afford to buy it on their own, and even if they can are unlikely to do so since, y’know, young people generally tend to be healthy. Doing this keeps them in the risk pool, thereby lowering the average cost for everyone. Expanding the risk pool is a fundamental concept of any sort of insurance—indeed, it’s the only reason insurance works—yet Tully seems oblivious to it.
If Tully knows “tens of millions” of people who want high-deductible policies, I’d sure like him to introduce me to one or two. I know quite a few people who are stuck with such policies, because it’s all they can reasonably afford, but I don’t know anyone who would prefer that option if all else were equal. High deductibles mean you do one of two things: (A) pay more out-of-pocket for basic care, or (B) do without. The very notion that this would be desirable defies plausibility.
And charging people more based on actuarial analysis of their lifestyles is obviously the same kind of problem (except even worse!) as charging them more based on pre-existing medical conditions: it effectively prices lots of people out of the market. If the single paramount goal is to save money, that’ll work, I suppose… but if you accept the premise that we actually want people to be healthy, penalizing them for starting with a disadvantage is not going to achieve that goal. Indeed, one of the notable advantages of employer-provided insurance versus individual coverage in our current system is that rates are set for the group (i.e., the equivalent of “community rating”), rather than the individual. Tully’s approach would leave all the benefits of risk pooling with the insurers, throwing costs back onto the shoulders of individual patients.
(Although, curiously, Tully does want the government to do just one thing: “protect Americans with pre-existing conditions who couldn’t afford coverage in a de-regulated market.” That this contradicts the logic of his other proposals seemingly escapes him.)
He wraps up by saying,
Let’s be honest. A system where consumers are suddenly responsible for their own insurance probably sounds scary to millions of Americans who are accustomed to the comfort of lavish, company-provided plans.
What he proposes should sound scary to everyone… but let’s be really honest: the only conceivable reason Tully would frame things this way is that he’s lived his life in a bubble where people actually have “lavish” company-provided plans as a routine matter. (This is a guy who went to boarding school at the prestigious Hun School, after all, moved on through Princeton and got an MBA at—I’m sorry to say—the University of Chicago, and has spent the last 30 years ensconced at Fortune.)
He’s obviously not acquainted with the real America where nearly 50 million people have no plan (that’s one in six—including yours truly!), another 25 million and rising have inadequate coverage (a 60% increase just from 2003 to 2007—and that was before the recession hit!), fully one-third of American adults spend at least 10% of their incomes on health costs, 60% of all bankruptcies are due to those same health costs, and overall…
in 2007 nearly two-thirds of adults, or 116 million people, were either uninsured for a time during the year, were underinsured, reported a problem paying medical bills, and/or said they did not get needed health care because of cost.
Amazing as it seems, Tully apparently doesn’t know any of those 116 million people. He moves in circles that don’t include them.
Perhaps this shouldn’t be such a surprise… because if we look at a piece he wrote just a few weeks earlier, he framed all this in terms of what he calls five “cherished aspects” of the current health care system we would “lose” with reform, and one can’t help but conclude that these things would only be “cherished” by the independently wealthy. They include (one by one):
1. Freedom to choose what’s in your plan
The bills in both houses require that Americans purchase insurance through “qualified” plans offered by health-care “exchanges” that would be set up in each state. The rub is that the plans can’t really compete based on what they offer. The reason: The federal government will impose a minimum list of benefits that each plan is required to offer.
Those requirements would include obvious frivolities like (gasp!) prescription drugs and mental health coverage. Obviously all those millions of people clamoring to buy insurance that doesn’t actually cover their basic needs (the kind so many enjoy today!) just wouldn’t be served.
2. Freedom to be rewarded for healthy living, or pay your real costs
As with the previous example, the Obama plan enshrines into federal law one of the worst features of state legislation: community rating. Eleven states, ranging from New York to Oregon, have some form of community rating. In its purest form, community rating requires that all patients pay the same rates for their level of coverage regardless of their age or medical condition.
Gasp! The healthy would subsidize the sick, and the young would subsidize the old!
I think we’ve already covered this: that’s how insurance works. It’s called spreading the risk. It’s done that way because nobody without a crystal ball actually knows what their “real costs” are going to be. The only people willing to take the risk of “paying their real costs” are the rich, the poor, and the crazy… but by doing so, they make things costlier for everyone else.
(By the way, Congress isn’t going to mandate exactly equal costs for everyone. Tully acknowledges that the Senate bill proposes a 2:1 ratio: “insurers would be barred from charging any more than twice as much for one patient vs. any other patient with the same coverage.” Apparently that’s still just too fair for him to countenance.)
3. Freedom to choose high-deductible coverage
…Hundreds of companies now offer Health Savings Accounts to about 5 million employees. Those workers deposit tax-free money in the accounts [and] can use the funds to buy a high-deductible plan — say for major medical costs over $12,000. Preventive care is reimbursed, but patients pay all other routine doctor visits and tests with their own money from the HSA account…
The bills … would prevent patients from choosing stripped-down plans that cover only major medical expenses.
I know people (a few) who have HSAs. I don’t know anyone who likes HSAs. They generally choose them because it’s the only affordable option their employers offer. Frankly, though, HSAs don’t work except for the kind of people who can afford to max out their 401(k)s, the kind for whom a pre-tax setaside actually adds up to a decent amount of money and still leaves enough take-home pay to make ends meet.
(Nor, by the way, is it remotely clear to me where Tully draws the line between “preventive care” and “routine doctor visits.” But the way his “consumer-driven care” works in the real world is this: people tend to avoid care that they have to pay for out-of-pocket. What that means is that lots of preventive care simply doesn’t happen, problems that could be prevented aren’t, and the long-term effects are worse health outcomes and higher costs for all of us.)
4. Freedom to keep your existing plan
This is the freedom that the President keeps emphasizing. Yet the bills appear to say otherwise…
The House bill states that employees covered by ERISA plans are “grandfathered.” Under ERISA, the plans can do pretty much what they want — they’re exempt from standard packages and community rating and can reward employees for healthy lifestyles even in restrictive states… But after five years, they would have to offer only approved plans, with the myriad rules we’ve already discussed.
[Meanwhile, consider] employees who aren’t under ERISA but get actual insurance either on their own or through small businesses. After the legislation passes, all insurers that offer a wide range of plans to these employees will be forced to offer only “qualified” plans to new customers, via the exchanges.
The employees who got their coverage before the law goes into effect can keep their plans, but once again, there’s a catch. If the plan changes in any way — by altering co-pays, deductibles, or even switching coverage for this or that drug — the employee must drop out and shop through the exchange.
Horrors! Reform actually migrates coverage toward consistent standards! Plans that change don’t get to act as if they’d stayed the same! And people would actually have to choose among plans that are competing fairly on a level playing field, comparing apples to apples in the open market!
But, umm… wait… isn’t that what Tully and his brand of conservatives claim to want?
Well, no, apparently not.
And let us make no mistake: Tully doesn’t actually care whether anyone gets to keep their current employer-provided plan. In fact, in the first column quoted here, he specifically proposes eliminating the employer tax deduction for health coverage specifically so that employers would drop it, and workers would have to go shopping for coverage of their own. That’s pretty much the proposal John McCain put forward during last year’s campaign, the one that virtually every analyst said would actually reduce coverage and increase costs, and which was roundly rejected at the ballot box. But Tully liked it then, so it’s no surprise that he’s echoing it now.
5. Freedom to choose your doctors
The Senate bill requires that Americans buying through the exchanges… must get their care through something called “medical home.” Medical home is similar to an HMO. You’re assigned a primary care doctor, and the doctor controls your access to specialists. The primary care physicians will decide which services, like MRIs and other diagnostic scans, are best for you, and will decide when you really need to see a cardiologists or orthopedists.
Hey, does anyone else remember the ’90s, when health care reform opponents were promoting the HMO model as an example of how the private market could keep costs down? They didn’t seem to mind the limits then. (And of course it was an epic failure at achieving that goal, but at least it kept the government at bay for a few more years.)
Realistically, of course, unless you have the kind of gold-plated C-level insurance package that Tully and his friends apparently do, whatever coverage you have right now already puts you in an HMO (or a PPO) that limits the doctors you can choose. The choice is usually wide enough that most people can live with it, though (both figuratively and literally).
What’s more, Tully’s comparison notwithstanding, “medical home” is actually different from and better than the HMO model… studies show it allows more provider choice, improves access to primary care, and also (not incidentally) has higher-quality health outcomes.
Through all of this, Tully makes it glaringly clear that he doesn’t actually care about health outcomes. His vision of “reform,” his “best possible health-care system,” is one where lots of people continue to get stuck with (or in his parlance “choose”) inadequate coverage (or none at all) that doesn’t actually meet their needs. Lots of needless suffering would happen, of course, but that would all be off the books, so the cost of the health care system might at least seem lower.
Needless to say, much of that suffering would be borne by the very same hoi polloi demographic that’s currently crowding town hall meetings and shouting down the more numerous (but more civil) folks trying to have a rational discussion. However, the execs who run insurance companies would do just fine, as would the other kinds of people who get profiled in (or, apparently, who produce) Fortune Magazine. In the real world, the only people who could possibly “cherish” the “freedoms” Tully describes are those making money off of them… or those who are otherwise wealthy enough that they just don’t have to worry about it.
We shouldn’t be too surprised at where Tully’s loyalties lie. After all, this is the guy who last fall published a piece trying to argue that
[the] five million households that earn between $250,000 and $500,000 a year… [consist of] people whose financial situation can be summed up by the phrase “high earners, not rich yet.”
“Look in the mirror, Fortune reader, and you’ll probably see a HENRY,” he continued (pushing his self-coined acronym), before going on to lavishly praise the imagined exemplary qualities of his imagined readers. But his core point was this:
Obama and the congressional Democrats frequently refer to households earning over $250,000 as the “rich” and the “wealthiest Americans.” But whether the HENRYs are truly “rich,” or ever will be, is debatable. In Fortune‘s interviews with two dozen HENRYs from Charlotte to Concord, Calif., what emerged was a portrait of families a world away from the private jets, luxury vacation homes, and heated garages with Bentleys and Porsches lined up headlight to headlight that typically represent America’s vision of “rich.”
At no point did it ever occur to him that perhaps that “vision” was woefully, even dangerously detached from reality. He did manage to acknowledge that 5 million households is actually a tiny fraction of the 112 million total households in this country, yet he wrote,
Sure, it’s hard to weep for families that earn more than 98% of American households, especially when median family income stands at $50,000 and the middle class is getting pummeled by falling home and stock prices. Unlike millions of Americans, most HENRYs don’t need to worry about making the next mortgage or credit card payment. Still, HENRYs are getting a bad rap…
While there’s no consensus definition of how much wealth or income makes someone rich in America, here’s a reasonable proposal: Many Americans would consider a family wealthy if it enjoyed either a large net worth today, something on the order of $3 million, or an income big enough to pay for a luxurious lifestyle… The HENRYs don’t rate as rich by either standard.
If being among the wealthiest four percent (Tully’s math was off) of the population in the wealthiest country on Earth doesn’t qualify one’s lifestyle as “rich” or “luxurious,” then the terms are absolutely meaningless. Or, perhaps, there’s just something deeply wrong with the perspective of the person trying to redefine them.
Either way, Shawn Tully makes it very clear whose interests he really cares about. The same is inescapably true for anyone else pushing this intellectually blinkered and morally bankrupt line of argument. One can only wish that a few of the Teabaggers would stop shouting long enough to realize it for themselves.Tags: class war, health care, insurance, McCain, Rachel Maddow, Shawn Tully