Saturday, November 30, 2019

The War on Democratic Party Progressives

Not too long ago, it was all about how Elizabeth Warren was constantly surging upward in the polls. But lately, the law of gravity has caught up with her. Many feel that her Medicare for All plan may well be a loser in a general election even though she has made some adjustments to tack to the center on this issue.

When in the early going she was struggling along, few took her seriously. But when she started gaining momentum, many started to imagine her as the Democratic nominee. And they didn't like what they saw.

Who are 'they'? In addition to many of the moderate Democrats, there are certainly Wall Street and big corporations along with the health insurance industry. And the idea of higher taxes on the wealthiest is obviously not a hit with the wealthy.

While the Democratic field should be shrinking, we now have two new moderates entering the race in Michael Bloomberg and Deval Patrick, sensing that if Joe Biden continues to have difficulties in his campaign, perhaps one of them could assume the role of standard bearer for the moderates.

Indeed in this presidential election along with the previous one, the Democratic Party has been searching for its identity between whether it wants to represent the progressive ideals of major structural change or incremental change promoted by its moderates.

Being a die hard progressive who favors Warren and/or Sanders, I am not a neutral observer. But hopefully the reader can trust me to at least try and provide an even-handed analysis of how each side sees things.

Progressives feel the system is broken where the top 1% have had it all their way both politically and economically. Income and wealth disparity have become so pernicious to our society that drastic changes in how the rich are taxed are the only way to make meaningful change. Obamacare was a wonderful improvement when it came along reducing the number of US uninsured from about 50 million to 30 million. But how much further improvement can be realized by a system that relies on a for-profit insurance industry? As the thinking goes, if for-profit insurance is not part of the solution, it is part of the problem! While more affluent workers may have satisfactory insurance plans, those on the bottom of the economic food chain often have what are little more than junk policies with high premiums, deductibles, and out-of-pocket costs that have resulted in a wholesale number of lawsuits by healthcare providers collecting on bills for their services. Is everybody happy with their private insurance? Not really.

But more than anything else, progressives love Bernie and Elizabeth because they feel the other moderate candidates are just too sympathetic to big money and big business to step on any toes to make any meaningful changes.

On the other hand...

Taking the party too far left is a prescription for disaster. Blowing things up is too scary for too many people. Taking away everybody's private health insurance is a non-starter for many. Free public college is a fantasy for many (even if some countries already offer it.)  And while the Republicans will label anything the Democrats propose as socialism, the label may prove more effective with a more leftist Democrat getting the nomination.

While trying not to favor either argument here, I believe the moderates are getting the better of the messaging right now. Of course, Fox News stands ready to bash any and all Democrats. But in my perception, the major liberal outlets such as The New York Times, The Washington Post, and MSNBC tend to favor establishment moderate Democrats over those on the progressive left.

The darlings of the media pundits nowadays are the so-called Never Trumpers such as Joe Scarborough, Steve Schmidt and Jennifer Rubin among others who have left the Republican Party over Trump and his Republican enablers in Congress. I am a huge fan of their work but when it comes to their recommendations on Democratic candidates, one should take what they say with a grain of salt. Although they have pledged to never vote for Trump, they are by ideology, conservatives after all. Asking them to reluctantly vote for a Democrat while holding their noses is one thing. Voting for a Democrat on the far left for them may well be a bridge too far!

Steve Schmidt had this to say about Bernie Sanders' chances against Trump in a general election: "In America, a sociopath beats a socialist seven days a week and twice on Sundays."

And just for good measure, President Obama looms over this divided primary.  Normally, somebody in his position would maintain his neutrality but the idea of Bernie Sanders winning the nomination was apparently too much for him and he was reported as saying that he would do what he could to stop Sanders if it appeared that he would get the nomination. Other than that, he just expressed his fear of the party moving too far left with either Sanders or Warren.

When you listen to the average voter — even ones who aren’t stalwart Democrats, but who are more independent or are low-information voters — they don’t feel that things are working well, but they’re also nervous about changes that might take away what little they have.

But before we get too worked up over all of this, a reminder it's early! The first primary is still a couple of months away.

Since the progressive candidates in Warren and Sanders are advocating major change over the incremental change of their opponents, the onus is on them to sell their positions and convince most of the Democratic electorate if they are to have a chance at the nomination.

And if their progressive vision is accepted by enough of the Democratic Party, which of them will be the eventual standard bearer for the progressives? That's a question for another day!

Sunday, August 4, 2019

Should the US Get Rid of Private Health Insurance?

The most important issue facing the Democratic Party in this election campaign is healthcare reform. The US spends far more per capita on healthcare on average, twice as much as other wealthy nations. Worse yet, among these nations, only the US lacks universal healthcare coverage with the total number of uninsured estimated to be about 30 million people.

With just about all of the Democratic candidates advocating some sort of universal coverage at a lower price, the devil is in the details! 

Some want to keep our private insurance system and improve upon it. 

Some want to convert to all public insurance.

The rest are advocating a combination of both.

The choice of which path to take is a source of major controversy with the moderates fearing that if the party nominates someone from what they feel is the crazy far-left (See: Sanders, Bernie and Warren, Elizabeth) advocating taking away all private health insurance, reelection will be delivered on a silver platter to Donald Trump.

Maybe we need to take a dispassionate look at both public and private insurance to sort this all out. As we will see, they are quite different!

Public insurance (such as Medicare in the US for those 65 and over) is the government acting as one giant insurance agency handling all claims and payments  hence the term single payer. This is provided as a service to its citizens with no profit motive. The estimated overhead costs for Medicare in the US is around 2-3%.

Private insurance in contrast is a for-profit business. Like any for-profit business, the primary reason for its existence is to make as much profit as possible for its shareholders. This by itself creates a conflict of interest with its policyholders in that there is an incentive to deny as many claims as possible to maximize profit. The estimated overhead costs vary among insurers but around 15% on average appears to be in the ballpark. Indeed, it was deemed necessary that the Affordable Care Act (Obamacare) include its so-called 80/20 Rule to limit private insurance overhead on the policies it offers to no more than 20%.

With the US standardizing on private health insurance and everybody else standardizing on public insurance (or heavily regulated private insurance), this alone would explain a lot of the difference in our per capita healthcare costs.

But there's more! The administrative costs of doctors and hospitals dealing with the labyrinth of individual private insurance companies can be astonishingly high!  Moreover, a giant public insurer like Medicare in the US can better negotiate prices with healthcare givers giving better control over costs. But because of a sweetheart deal for Big Pharma, US Medicare cannot presently negotiate prescription drug prices. An improved version of Medicare can certainly address this problem.

This leads us to a very important conclusion: Because of the way each is inherently structured  public and private insurance cannot compete head to head!!

Let's put this another way. If I am selling a product for my livelihood, I have to include some profit in the selling price. But if my competition is selling the same product at their cost  I cannot compete against that!

So this pokes a giant hole in the plans that propose a mix of public and private insurance.

In effect, this is a political straddle being used by some of the candidates. To keep only private insurance will clearly be seen as not progressive by Democratic voters. But to take away all private insurance and convert it to public insurance is seen by many as too far crazy left. So the 'safe' moderate position is to keep private insurance for those who want it and offer a so-called public option to buy into Medicare for those who want that. But for reasons explained above, this would also effectively put private health insurance out of business.

It should be noted that when the Affordable Care Act (Obamacare) was first legislated, many wanted a public option to be included. But the private insurance industry fought this with all of their might knowing that there is no way they could compete with public insurance. So the public option for the ACA was killed. It is certain that the mixed plans with public and private insurance will meet the same fierce resistance from the private insurance industry as the plans that seek to eliminate private insurance outright.

So by process of elimination, the only straightforward way to both dramatically cut healthcare costs while providing for universal coverage (like the rest of the industrialized world) is a pure public insurance system. One can object that it may be politically toxic but if we are really serious about reforming American healthcare, this is our only effective choice. Presidential candidate Pete Buttigieg was right when he said at the most recent debate that whether a far-left or moderate plan was offered by the Democrats, it would be equally smeared by Republicans as being crazy socialist. But can the Republicans really make an issue of Democratic attempts to improve healthcare when their alternatives have been little more than taking away Obamacare with nothing to replace it? Not surprisingly, the number of uninsured is going up again.

But in the interest of completeness, I have to address at least some of the prominent objections.

Won't expanding public insurance to all require an increase in taxes? Yes, but if the savings in health insurance premiums more than offsets the added taxes, that's a net win for the taxpayer! If the other countries with public insurance have much lower healthcare costs than we do, this is more than ample proof that their system works! In fairness, other countries have their flaws and sometimes frustrations with their healthcare systems. Despite that, it's hard to imagine any other country that already has universal coverage wishing they could adopt the American system the way it is now.

What about those who are happy with their private insurance obtained through their employers? We would have to demonstrate to those people that the public plan would be at least as good as what they have - which in most cases we should be able to do.

That aside, there are many disadvantages to our peculiar linking of health insurance and those we work for. Here are some:

Lose your job, lose your health insurance. In addition, there are far too many Americans who hold on to jobs they may actually hate because they don't want to lose their health insurance.

Companies can change insurance companies from year to year. Your present doctors may not be available in the new insurance plan offered.

Health insurance from an employer is not really free. It's part of the total compensation package. If the employer no longer had to pay for health insurance, at least some of that money may be available as additional salary.

Health insurance also has to be built into the price of the product or service that an employer offers to the marketplace. For example, Ford estimates their total healthcare costs for 2020 will top $1 billion. Surely this has to put Ford along with other US manufacturers at a price disadvantage compared to cars assembled outside the US where there is public insurance. This in turn creates an additional incentive to move manufacturing away from the US  as if we need one.

Finally, it is interesting to note that more and more US companies are already bypassing private insurance for their employees, instead choosing to self-insure and use the insurers only as administrators.

Although private insurers appear to be little more than unnecessary middlemen in all of this, one can expect them to fight to the death to keep their share of the healthcare dollars they have been skimming from the top all of these years. Admittedly, making changes in the short run may well be impossible in the present political climate. But if we play the long game and if our new (hopefully) Democratic president uses the bully pulpit effectively to persuade the public, there is hope for someday in the future. Let's just hope it all happens in our lifetimes!

Saturday, June 29, 2019

Elizabeth Warren Is Coming On Strong

I have long been an admirer of Elizabeth Warren.

She first became nationally known as a member of academia shining a light on the problems that America's middle and lower classes have faced. Among the books she has authored, the one that got her known by some of the general public was The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke.
Warren and her daughter Amelia Tyagi wrote The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke. In the book they point out that a fully employed worker today earns less inflation-adjusted income than a fully employed worker did 30 years ago. Although families spend less today on clothing, appliances, and other forms of consumption, the costs of core expenses such as mortgageshealth caretransportation, and child care have increased dramatically. The result is that even with two income earners families are no longer able to save and have incurred greater and greater debt.
And Warren did a great deal of research into bankruptcy laws and became a noted authority as a law professor at various universities. Although she is now known as a liberal populist, she was originally a staunch Republican, once believing that for example, people filing for bankruptcy were little more than deadbeats.  As she explored more, she concluded that almost all of these people were victims of an economy and poorly conceived financial laws that were stacked against them. From then, she eventually became a Democrat and dedicated herself to being a watchdog for the lower and middle classes.

It doesn't appear that Warren originally had any ambitions for an elected office. But because of her efforts to champion the causes of the little guy battling against corporations and financial institutions, President Obama appointed her to help form a new agency, the Consumer Financial Protection Bureau. Obama then made the next natural move which was to announce that Warren would be the agency's first Director.

Republican and various business interests put up a great deal of resistance, with the Republicans vowing that she would never be approved by the Senate causing Obama to withdraw the nomination. The plan was to relegate her to obscurity, hopefully never to be bothered by her again.

That backfired - big time! Back in Massachusetts where she lived, Republican Senator Scott Brown was up for reelection after previously winning the late Senator Ted Kennedy's seat in a special election. The Democratic Party persuaded her to run.  A video of a 2011 speech circulated around the Internet with a magnificent speech to start her run.
There is nobody in this country who got rich on his own. Nobody. ... You moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea. God bless. Keep a big hunk of it. But part of the underlying social contract is, you take a hunk of that and pay forward for the next kid who comes along.
It was an election race that was followed throughout the country. Brown had all the money that corporate America could muster against her. Did she have a chance? As it turned out, she won by a relatively comfortable 7 percentage points. Now she gets to regularly torment the same people who tried to get rid of her on her Senate seat on the Committee on Banking, Housing, and Urban Affairs.

Many wanted Warren to run for president in 2016. Perhaps not wanting to battle Hillary Clinton who many perceived to be the presumptive nominee, she declined. Instead, Bernie Sanders decided to run to represent the more liberal wing of the party. At age 66, this was thought to be her last chance if Clinton was elected to serve a pair of 4 year terms - as many expected. But Donald Trump scored an improbable upset victory.

So Warren will get a crack at the presidency at age 70 against the incumbent Donald Trump. Running against an incumbent president can be a tall order. But with Trump's record unpopularity in his poll numbers, about a couple dozen Democrats - including Bernie Sanders are vying for the nomination.

Warren decided to go against the grain and immerse her campaign over the issues. Her campaign stops were about all issues, all the time. She came up with almost countless and well thought out plans for seemingly every issue under the sun. It got to the point where "I have a plan for that" bordered on self-parody.

Warren’s Policy Proposals

(From the NYT article Elizabeth Warren Has Lots of Plans)
Senator Elizabeth Warren has been rolling out detailed policy proposals nearly every week since March, outpacing her major Democratic rivals.

JAN. 24
Wealth tax»
FEB. 19
Universal child care»
Breaking up big tech companies»
Corporate executive accountability»
Corporate taxation»
Public lands»
Student debt cancellation and free college»
Maternal mortality»
Military housing»
Puerto Rico debt relief»
Opioid crisis»
MAY 15
The military and climate change»
MAY 16
Pentagon contracting»
MAY 17
MAY 31
Indicting a sitting president»
“Economic Patriotism”»
Green manufacturing»
Of course, this appeals to policy wonks like me. But I have to wonder about some of the other candidates who offer much less in the way of specific policy solutions. How can someone envision him or herself as a future president without already having created a lot of ideas on how they can solve the problems they will certainly encounter?

With only Warren (along with Sanders) refusing large donations from Wall Street, it appeared that she would be at a permanent disadvantage against her rivals. And indeed, she started slowly. But her plain authenticity and dogged determination to passionately focus on plans to fix America has begun to pay off and at the time of this posting, she is second or third in the various polls behind Joe Biden.

Her passionate liberal populism is gaining her support. But Democratic voters have to solve the question of who has the best chance to defeat Trump in 2020. Some say that a moderate (or centrist) has the best chance in a general election. But moderates seem to have trouble getting a passionate following and can underperform like for example, Hillary Clinton in 2016. Like him or hate him, one must agree that Trump has a passionate (but relatively small) following. Although Warren may be too liberal for some Democratic tastes, she also unarguably has a passionate following.

So many ask what is the point of all of the plans if Senate Republicans are able to block most or all of them. It is accurate to say that just about every bit of social progress we have made in our history was at one time considered impossible. Think of women getting the right to vote, legalizing marijuana, or gay marriage to name a few examples. It takes time but somebody first has to get the ball rolling to have any chance of success.

Of all of plans she has, perhaps the most problematic is her (and Bernie Sanders') version of Medicare for All which advocates for switching all private insurance to public Medicare insurance. This is a tough sell to people who already have private insurance through their employers. This will undoubtedly lead to pushback from not only Republicans and the insurance industry but also many Democrats!

But there is another side to the argument. Conservative Washington Post columnist Megan McArdle had these surprising (for her) comments on Warren's plan in a recent op-ed Elizabeth Warren had better hope voters want radical honesty:
Piecemeal reforms that don’t touch employer insurance, or don’t touch it much, may modestly expand coverage. But they won’t fix everything else that’s broken in the current system — and for that reason, the piecemeal reforms would probably be too expensive to pass.
So if you’re serious about creating a European-style health-care system, then you have to be serious about abolishing private insurance.
Call it high risk, high reward. Warren is calling for major government changes. Go big or go home. I will conclude with these remarks to open her 2020 presidential campaign:
It won't be enough to just undo the terrible acts of this administration. We can't afford to just tinker around the edges – a tax credit here, a regulation there. Our fight is for big, structural change. This is the fight of our lives. The fight to build an America where dreams are possible, an America that works for everyone!

Saturday, March 23, 2019

Invasion of the Socialists!

At the time of this posting, most of the Democratic candidates for president have been announced although there may be a few more. Although many of them may be quite liberal, others may run as moderates.  But it doesn’t matter to the Republicans who label everybody not on the right as socialists. Indeed, President Trump included this dire warning about socialism as part of his 2019 State of the Union speech.
"Here, in the United States, we are alarmed by new calls to adopt socialism in our country. ... Tonight, we renew our resolve that America will never be a socialist country,"
Facing low approval ratings, various probes and a failure to accomplish some of his key campaign goals ahead of his November 2020 re-election bid, the president appears intent on stirring fears about the political ideology. A Trump campaign spokesman said that the rhetoric about socialism "resonates with the vast majority of hard working Americans who recognize that Trump's patriotic capitalism is benefiting all Americans nationwide."
This Red Scare strategy is hardly a new idea in the Republican playbook. FDR and Truman were called socialists. During LBJ’s term, there was Ronald Reagan with this famous warning about the horrors of socialized medicine if, God forbid, Medicare was ever passed back in the early 60s. More recently, Obamacare and the proposed improved Medicare plans have been decried as socialist.

When Republicans and right-wing media routinely call anybody or anything not Republican as socialist. it becomes a routine part of any conversation about Democratic ideas for them.

When somebody in a conversation with me starts calling out those on the left as socialists, I have a simple rejoinder: What in your mind is the definition of socialism? This often leads to stunned silence. They really don’t know what a socialist is. They are just repeating what they hear from others on the right.

For the record, Wikipedia defines socialism as “characterized by social ownership of the means of production.” In a capitalist country such as the US, the means of production is overwhelmingly the private sector except for certain services that are best handled by the government. To my knowledge, no Democrat has ever advocated turning over all private production to the government to run. So in this case, the socialist label is a misnomer and little more than a pejorative to instill fear that the next stage after that may be communism.

Unfortunately, there are those on the left such as Bernie Sanders and Alexandria Ocasio-Cortez who openly label themselves as democratic socialists which only pours gasoline on the fire. But what’s strangest of all is that neither of them are really democratic socialists!  

Here, Wikipedia defines democratic socialism as advocating the conversion of a capitalist society to a socialist one which neither Sanders nor Ocasio-Cortez are in favor of.

The system that most liberal Democrats favor is social democracy where changes are advocated within the capitalist system. The Scandinavian countries with their comprehensive benefits and safety nets are examples of social democracy but are not socialist.

With all the people being called socialists, one has to wonder how real socialists feel about this. In fact, real socialists think Bernie's a sellout for billing himself as a socialist when in fact he is not!

So how will this all affect the Democrats’ primary season? For one thing, a number of Democrats are trying to head off all the attacks on them as socialists by proclaiming to anybody who will listen that they are indeed capitalists. Whether this will work is anybody’s guess.

Most observers feel that the top issue in not only the past 2018 midterm but also in the upcoming 2020 presidential election will be healthcare. Hardly any other issue brings out more cries of socialism. But in reality, the private insurance industry has been well taken care of throughout.

Take the dreaded Obamacare, labeled as “government takeover of healthcare.” In reality, the idea which completely preserved private insurance was based on ideas developed by the Heritage Foundation, a conservative think tank and first implemented by Republican Governor Mitt Romney in Massachusetts. It was quite successful in reducing the number of uninsured there.

But for Romney to hope for the Republican presidential nomination, he had to take a very contrived position that while his Romneycare was successful in Massachusetts, the nearly identical Obamacare was a disaster for the nation so he along with the other Republicans resorted to their tired “repeal and replace” mantra.

Despite its many faults, Obamacare shrunk the number of Americans without health insurance from about 50 million to 30 million. But compared to all the other industrialized countries with universal healthcare, that’s 30 million too many! I hope that our next healthcare plan will finally cover all US citizens.

So while in the last presidential election, only Bernie Sanders was in favor of Medicare for All, some improved version of Medicare has become a de facto litmus test for all of those running for the Democratic presidential nomination this time around.

For those in the US under 65, Medicare is seen as free socialist health insurance that provides free socialist healthcare. Those of us 65 and over know better. For starters, $134 is taken out of our Social Security benefit each month to help pay for our Medicare coverage. But more importantly, Medicare was purposely designed to have enough coverage gaps so almost everybody has to buy some form of private insurance in addition to fill those gaps!

So while just about everybody on the Democratic side is proposing their own versions of Medicare for All or some form of expanded health insurance, the devil is in the details! Some like Bernie Sanders advocate replacing the entire private insurance system with public insurance. But will those who are happy with their private insurance through their workplace be willing to give up that insurance? Others are advocating a hybrid of private and public insurance. Needless to say, it’s complicated! 

While none of this will come to pass unless the Democrats capture the presidency and both houses of Congress in 2020, we can examine the alternatives and come up with a healthcare plan for America’s future in the meantime. In closing, I am asking the American voters to choose or reject the candidates and their ideas based on their merits - and reject those whose only response is to label everything they don’t approve of as socialism!