Monday, June 26, 2017

beowulf — June 14, 1946 or how to pay for universal healthcare

As I’ve mentioned before, the guy who had universal healthcare figured out was the gruff former Congressman Pete Stark. His Americare bill from 2009 should be updated and made the Democratic alternative to the Senate bill….
Monetary Realism
June 14, 1946 or how to pay for universal healthcare
beowulf

24 comments:

Dan Lynch said...

I admire Beowulf's iconoclastic thinking, but his healthcare funding proposal is complicated and messy.

Different employers contribute different %'s for health insurance, and of course for different plans with different benefits (and different costs in different parts of the country). So Beowulf's way would have different employers paying considerably different tax rates into the new health care system. Am I the only one who sees a problem with that? What would happen when a company is bought out? Would the new owner be perpetually liable for the old contribution rate? If so wouldn't businesses try to evade the tax by liquidating the company and reinventing it as a new company. If Acme Inc closes its doors and then reopens under new ownership as Neo-Acme Inc, what health tax rate would Neo-Acme Inc pay?

Beowulf's proposal might work in the short run but in the long run it doesn't make sense.

By comparison, Bernie's 2016 proposal called for a 6.6% payroll tax paid by employers and 2.2% paid by workers, plus additional taxes on the rich. For most workers and most employers, this would be a wash or even a savings compared to what they are contributing now. Most workers currently pay a helluva lot more than 2.2% for their contribution to insurance never mind the employer's contribution. So while I personally would prefer to pay for health care with keystrokes, I don't see a political problem with Bernie-Care's 2.2% payroll tax.

Self-employed people like myself would have to pay the whole enchilada under both Bernie's proposal or Beowulf's proposal. Did I mention that I would prefer funding health care with keystrokes?

Of course Beowulf is right about interest rates, but that ties into the whole monetarist vs. Keynesian debate that the monetarists won in 1946.

Noah Way said...

2.2% for employees, 8.8% for the self-employed? Screw that.

Unknown said...

Dan,

The idea is to drive employers to the Public Option - that is what Beowulf is driving towards.

Quote:
What Stark proposed is allow employers to voluntarily shift premiums from private insurers to the public Americare plan. Stark, and independent analysts who’ve studied plan (as detailed in link above); believed that the lower premiums of the Americare plan would cause such a rapid shift to public plan that we’d soon have a de facto single payer system (Medicare would be kept separate for the time being but everyone on Medicaid would be folded into system).Since the world is full of people who just want to watch the world burn (when they’re not watching Fox News), I’d tilt the playing field even more by limiting the employer-paid health insurance tax deduction ($260B/yr) to only those premiums paid into Americare.

Unknown said...

The existence of the Pete Stark plan was likely why the Public Option was taken off the table right at the beginning of the ACA debate.

Dan Lynch said...

@Unknown, I read Beowulf differently, that his main idea was to make universal care more politically viable by not increasing taxes:

The clever thing Stark did was realize that the $1 trillion currently paid as private health insurance premiums (mostly by employers, private and governmental) isn’t seen by anyone as a tax, while raising $1 trillion in new taxes (as the John Conyers and Bernie Sanders single payer plans do) would most assuredly be seen as the largest tax hike in history.

Besides the issues I mentioned in my first post, the other issue is that the public supports universal single payer even with a 2.2% payroll tax increase. It's not the public who is resisting single payer, it's the elites. The normally astute Beowulf is misreading the political landscape.

Kaivey said...

The Russians get free health care.

Dan Lynch said...

@Kaivey not to mention Russia has the best maternity leave in the world.

Detroit Dan said...

Congrats on catching a once in a decade post from our friends at Monetary Realism (c:

Neil Wilson said...

Anybody would think public healthcare is complicated and it has never been done anywhere else in the world.

The federal government pays for healthcare, the insurers go bust, banks take a loss and the paying for the healthcare replaces the borrowing currently done from commercial banks.

Largely it all sorts itself out. If you end up with demand pull inflation up the payroll tax a bit to calm things down.

It ain't rocket science. Replace bank lending with government action.

GLH said...

Neil Wilson: Would you explain some about how the banks take a loss and borrowing done from the commercial banks?

Neil Wilson said...

Insurers use financial instruments. If insurers go bust their counterparties take a loss - some of which will be bank assets. That forces banks to replenish their capital buffers to maintain their ratios - which eliminates deposits.

Detroit Dan said...

Neil-- Are you saying that if I make a capital investment in a bank, the money (deposits) used to make that investment disappears?

Thanks

Matt Franko said...

That process is not well understood Dan...

Neil Wilson said...

" I make a capital investment in a bank, the money (deposits) "

DR Deposits, CR Bank Bonds/Equity. That's it (abstracting away any irrelevant inter bank transfers that may be required).

Which is why when loans create deposits, banks can just create what capital they require by converting the relevant amount of deposits to capital.

It's only ever a matter of price.

When you invest in a bank on the primary issue market you are just downgrading the investment protection on your current investment in the bank (a deposit) in return for a greater potential payout.





Detroit Dan said...

That makes sense Neil. Thanks!

Matt Franko said...

Well they have to reach agreeable terms with the depositors Neil... and they have to accept a reduction in the current owners % ownership...

Neil Wilson said...

Matt,

As I said, it's only ever a matter of price.

Matt Franko said...

They could also use retained earnings if they don't like the available price terms... will take more time but they might view it better than decreasing % ownership at less than favorable price terms... this imo is what they have been doing ...

beowulf said...

Exactly, thinking about it today, I don't even know if limiting tax deduction only to firms buying into Americare is necessary since the price differential alone will pull employers in (naturally I'd leave it in the bill as something to negotiate away).

beowulf said...

No, what I'm thinking is how are you going to get 13 Republican senators and what, 30 to 40 GOP congressmen to vote for it (along w/ all Dems). The one line Republican pols can't cross, they can't raise taxes, ever. The only way to get any GOP support for a single payer bill is by defanging it of any tax hikes.

beowulf said...

Heh, this is third of a three part series I started a couple months ago. I am trying to write more. :o)

beowulf said...

Agreed, especially when it was only bill on table that got to 100% coverage, cut national health expenditures, didn't require big tax hikes AND could be passed by filibuster proof reconciliation bill. HC industry lobbyists had to pop that balloon fast and they did.

beowulf said...

Granted, Dems might not get a single GOP vote for Americare this Congress but in the midterms, candidates running a universal HC plan w/o tax hikes will find it an easier sell than a plan with tax hikes.

Dan Lynch said...

@beowulf said what I'm thinking is how are you going to get 13 Republican senators and what, 30 to 40 GOP congressmen to vote for it (along w/ all Dems). The one line Republican pols can't cross, they can't raise taxes, ever. The only way to get any GOP support for a single payer bill is by defanging it of any tax hikes.

That's a valid point, and I admire your pragmatism.

But Republicans have never really had a problem with regressive taxes on the working class. They just don't want taxes on their class.

My take is that the public supports some sort of national health care program just as long as we don't call it "socialism." This is not new, it was true in Harry Truman's day, too. The obstacle has always been the elites. Conservative elites oppose national social programs for idealogical reasons, and health care providers like the AMA opposed Truman's program because they're well paid under the private system and they'd like to keep it that way. The AMA launched a successful propaganda campaign to convince the public that national health care was "socialism" and that would be the end of civilization as we knew it. I grew up during the cold war and remember hearing that sort of talk over and over again.

As for how to convince Republican congresscritters, I suggest business owners -- like Trump --might be the key. Most business owners consider providing health insurance for their employees to be a headache and would love to have government take it off their hands. For example Warren Buffet supports national single payer. But, at the moment there does not seem to be any business organization making a concerted effort to lobby for national health insurance, and Trump is not showing any leadership on the issue.

Some background:
Polls showed support for Truman's national health insurance, but Republicans controlled Congress, unions were happy with their employer-provided insurance, and of course the AMA was hard set against public insurance.

Gallup: support for Truman's national health insurance started out at 59%, but fell to 24% after AMA propaganda campaign

One additional comment: If Republicans "repeal and replace" Obama-Care, then when Democrats eventually retake power they could repeal and replace Ryan-Care, and then when Republicans retake power they could start the "repeal and replace" all over again. That game could go on indefinitely. If we want a stable system, then it needs to be bi-partisan. The public support is there, the problem is that the politicians don't work for the public.