Huffman Hawks Obama’s Healthcare Ponzi

by Franklin Graham, September 4, 2013

No one said that it was going to be easy to reform healthcare in America. An array of roadblocks has frustrated every attempt to even debate healthcare reform. It was always understood that insurance companies would be a primary obstacle. The profit motive is the bedrock of free-wheeling Capitalism. Large corporations and the small business community were determined to control costs. For decades healthcare costs have far exceeded the rate of inflation and every other measure of the economy. Where would the political will to reign in the exorbitant rise in health care costs come from? Whether it was the cost of insurance premiums, prescription drugs, medical technology, emergency room care, or the bureaucratic morass of administering hospitals, doctor’s offices, and re-imbursements, America’s political elite dithered and/or prevaricated to an extent that would make any Ponzi scheme aficionado blush with envy. 

The characterization of health care in America as a Ponzi scheme is not an idle one. A classic definition of a Ponzi scheme is “a form of fraud in which belief in the success of a non-existent enterprise is fostered by the payment of quick returns for the first investors from money invested by later investors.” (OED) Granted, it is not that health care itself does not exist, it does. However, those who are in a position to take full advantage of the current health care system are the “first investors,” the first in line for benefits if you will. The “later investors” are the vast numbers of the American population left largely outside the circle of coverage or who must pay the high price of obtaining decent health care, if they can get it at all. At the front of the line as “first investors” are elected officials, federal government workers, executives and management of corporations and businesses, and even elements of the health care system itself who are richly rewarded. The latter includes pharmaceuticals, health technology companies, insurance companies, and claim administration companies, to name a few. They all have “good” health care coverage, provided either by tax dollars or the businesses for which they work. Left outside the circle are those who work for a company that does not provide its workers health coverage. Left outside the circle are low-wage workers who do not quite “qualify” for coverage. Left outside the circle are young adults who have too little money to afford the insurance premiums. More will be said of this disparity between the covered and the non-covered.

It is in the light of this reality that Jared Huffman, Congressman for the 2nd Congressional District, sponsored a “panel discussion” last Thursday at Mendocino College to “discuss” the merits of the 2010 Affordable Care Act. The panel was comprised of Mr. Huffman, Mrs. Bonnie Quinn (billed as a coordinator of outreach and policy for Health and Human Services), Mark Quinn (Small Business Administration), Shawn Baldsdon (also from the Small Business Administration), and Greer Viale (whose specific role I did not learn).

From the first moments onward, it was clear that this “panel” was charged with the task of rolling out the wonders of the Affordable Care Act. For the next two hours, a tightly controlled presentation of selected elements of the Affordable Care Act was given, with Jared Huffman moderating the entire affair. In one sense, Mr. Huffman was indeed delivering a message that the majority of the audience wanted to hear. Of the 100 or so individuals present, the majority of them identified themselves as small business owners. In this light, the audience was focused on such elements of the Affordable Care Act as the Small Business Health Options Program (SHOP) which in 2014 offers a tax credit of up to 50% to employers with fewer than 25 employees earning less than $50,000. Reading between the lines, of course, is the indelicate fact that the low wage (in many cases minimum wage) employees may still be paying up to 50% of his or her health care under the business’s plan. How the Small Business Administration could come up with an assumption that $50,000 is a sort of benchmark for wages is a mystery. The vast majority of fulltime low-wage and minimum-wage employees earn between $15,000 and $20,000 before the standard deductions for social security, Medicare Part A, the unemployment tax, and other taxes. Since the so-called living wage threshold for individuals and families was not the focus of the “panel discussion”, the entire two hours took on an unreal, even surreal dimension. One person who talked to me after the meeting helped clarify the matter. He employs young men who earn, on average $10 and $12 an hour, one or more being college graduates. The insurance he offers contributes about 50% of the premium. Still, it costs the employee on average about $300 a month, or $3600 a year. How, he asked, can a person taking home $15,000 a year afford to pay that sum? Naturally, the Affordable Care Act does provide that such a worker may be eligible for a tax credit for part of the cost to him or her of $3600 per year. Even so, someone is going to be paying for that tax credit, that someone being the American tax payer. What is also clear about the Affordable Care Act provisions is that even with a Small Business Administration Options Plan to provide for worker insurance, small business owners will still be paying more for insurance than Big Business, currently about 18% more. The Small Business Administration’s option plan seeks to lower that burden through SHOP. But, it is only speculation at this point that it will. Details of the SHOP program can be found at www.sba.gov/healthcare. To sit through a presentation of the basic features of the Affordable Care Act, the features that the political establishment is focused on, is like wading into the tall grass of a pasture inhabited by wild bulls being raised for the corrida. The simile is appropriate, as the wild bulls were hidden in the six foot high grass of the pasture surrounding the unexcavated Mayan ruins of Oxkintuk. The only warning we had of their approach was the sound of hooves and maddened snorting. We took the only course open to us. We ran for our lives to the nearest high ground. One has to listen carefully to the sound of political speak to understand the dangers lurking in the tall grass of an act of Congress that is over 2700 pages long and which already is burdened with over 20,000 pages of regulations.

Jared Huffman knows how to make a pitch tailored to soothe the uninformed in an audience. In a mild, almost confidential tone is admits that “The law is not perfect.” Mild applause follows. Asked if his healthcare plan is affected by the new law, he laughed and smiled “We are all in the same boat,” he said. Really? He hastily moved on to other topics. There was no opportunity to remind Mr. Huffman that with a base salary of $174,000 a year, and a subsidy to his health care premiums,(about 72% paid by taxpayers) his family’s insurance burden will likely remain at about 2% of his gross income. He may also still be eligible in 2014 to receive treatment at any military hospital or Washington DC hospital free of charge. For $491 a year, he has access to the US Capital Physician’s office. Compare his benefits to those of low-wage, even minimum-wage, workers who may be paying between 20% and 30% of their gross income for basic health care, with deductions, co-pays and the like. Obviously, many such workers will simply go without.

There is indeed a continuing base-line characterization of all those who will continue to receive little or no benefit from the healthcare system. They are, according to Dan Munro of Forbes Magazine, labeled as “losers.” Losers are those, according to the American exceptional-ism model, who lack enough grit and determination to get ahead and are simply takers of largess to which they have no true right. This class of “losers” includes roughly 50,000,000 citizens without health insurance and another 40,000,000 who are underinsured. This is nothing short of the 19th Century discredited concept that only the fittest survive and the rest must go extinct. The current healthcare reform (ACA), as Dan Munro succinctly puts it, is simply to “relieve some of the backlog.” (America’s Forgotten Civil Right — Healthcare, Dan Munro August 28, 2013.) How ironic that as Mr. Huffman and his “panel” are focused on the challenge of enrolling a mere 5.3 million uninsured by 2017, we are celebrating the 50th anniversary, to the day, of the “I Have a Dream” speech. It is equally important to remember what Martin Luther King, Jr. said in Chicago on March 15, 1966: “Of all the forms of inequality, injustice in healthcare is the most shocking and inhumane.” In no small way, Martin Luther King, Jr. was acknowledging Michael Harrington’s analyses set down in The Other America, 1962. It was that publication which served to focus Presidents Kennedy and Johnson on the need for fundamental healthcare reform which led to establishing Medicare, Medicaid, and the War on Poverty. The tragedy is that today’s political elite lacks the will or inclination to provide real reform that will benefit every citizen, and not simply selected groups or classes, including themselves.

For the present, we are left with a virtual snow storm of empty or half-valid claims as to what the Affordable Care Act may accomplish. It is above all not government run. It is “innovative and competitive,” that is profitable to the few. The individual mandate that begins to kick in come October first is not a “penalty.” It is a “subsidy.” The SBA assures Huffman’s audience that the 18% higher premium costs for small business will come down, though how is not discussed. No one really knows how that will come about. Above all, the ACA is not socialized medicine. Reference to anything smacking of “socialism” is sure to strike fear and loathing in the hearts of “every right-thinking American.” Odd that any collective benefit is never characterized as inclusive, a common good, or a civil right covered under “Life, Liberty, the Pursuit of Happiness”, to say nothing of plain Justice. Americans have been so well indoctrinated that any suggestion that basic health is a right all Americans should have is a “shocking and inhumane” idea. Our sense of living in a civic-minded, good society has gone that far off the rails. But let us return, in closing, with a more even-tempered brief review of the arguments for single payer universal health care. This alternative is the one that the political establishment, Democrat and Republican alike, has sought to bury for at least a generation to come.

Over the last two decades, support for single payer universal healthcare has come from an impressive array of academic and policy analyses. A summary of a select few will amply make the case. In June, 1991, for instance, the General Accounting Office report concluded that “If the U.S. were to shift to a system of universal coverage and single payer, as in Canada, the savings of administrative costs (10% of health spending) would be more than enough to offset the expense of universal coverage.” That same year, in December, the Congressional Budget Office (CBO) concluded that “…all US residents might be covered by health insurance for roughly the current level of spending or somewhat less…” In April, 1993, the CBO scored the impact of such a plan: “While taxes would increase by $856 per capita…private sector costs would decrease by $910 per capita.” Clearly, in the early 1990s, there was momentum, even in Congress, for universal, single payer healthcare. The independent studies and policy analyses uniformly concluded that it could be accomplished with net savings to the US economy and its citizens.

Senator Paul Wellstone introduced Senate Bill 491 in December, 1993, the American Health Security Act of 1993. By then, however, the insurance industry lobbyists and conservatives inside and outside of Congress had marshaled strong opposition to any real reforms being proposed. Hillary Clinton took the brunt of vicious attacks for daring to support healthcare reform through a White House initiative. In the end, nothing was done.

Fast forward to February 2009. Barack Obama has just taken his oath of office. Congress is delegated to take the initiative in crafting healthcare reform legislation. A so-called gang of 8 lawmakers are given the task, including the Chairman of the Senate Budget Committee, Senator Max Baucus. Almost immediately, Senator Baucus, a majority of one, declares that any form of universal single payer reform is “off the table.” He was determined to see that no real debate of how to reform healthcare would unfold. Instead, as some insiders have confidently asserted, the health insurance lobbyists and lawyers crafted the bill that was to become the Affordable Care Act of 2010. More than one exasperated lawmaker was heard to complain that real reform could have been drafted one a single sheet of paper---extending the Medicare system to all citizens. Instead, Congress passed the final bill at over 2700 pages, with no member of Congress ready to admit that he or she had actually read the entire text of the bill. Landing on President Obama’s desk, a President desperate for any kind of legislative “victory”, it was quickly signed into law.

Comment from MoveOn.Org on August 29, 2013 encapsulates the dangers immediately facing the Affordable Care Act of 2010. “If younger, healthier people don’t participate, then costs will skyrocket and Obamacare will fail.” Opponents to the act are tireless in their efforts to dismantle the act before it comes fully into force. They await a so-called “death spiral” of Obamacare. They have cause for optimism. While there are 22 million young people eligible for Insurance under the act’s provisions, they are the least likely segment of the population to have the wherewithal to buy insurance, even with the substantial subsidies they will qualify for. Congressman Huffman and his fellow Democrats have fanned out across the country during the congressional recess to sell the program. Their message is highly scripted and targeted to a narrow constituency, especially the ever hopeful small business community. It is unfortunate that no political will, let alone courage, is to be found among member of Congress that will allow a real debate on healthcare reform.

A personal disclosure: As a retired person, I do have good healthcare through my HMO, with the security offered by Medicare and the modest premium I pay. I am fortunate indeed. My three grown sons, however, are not so secure. It is they and most of their friends who talk to me about what they face in “the real world.” It is their generation that has been most affected by low employment, low wages, and a grinding anxiety about what the shape of their world has become. They lack the same optimism that I felt at their age. It is they who are struggling to make things better for themselves and the world at large. The lack of a real, humane healthcare system, one free of a profit motive that thrives off the pain and suffering of others, makes them question the “American way.

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