B008TSC33W EBOK
Page 11
USE MEDICARE TO CONTROL SOARING HEALTH-CARE COSTS
An independent commission to come up with cuts in Medicare if its yearly costs rise half a percent faster than the national economy is better than the Republican plan for turning Medicare into vouchers whose value won’t rise as fast as health-care costs. But it still assumes that the rising Medicare costs are the fundamental problem. The real problem is a wildly inefficient health-care system—for which Medicare can be the solution. Some features of the new health-care law will slow the rise of costs—insurance exchanges, for example, could give consumers clearer comparative information about what they’re getting for their insurance payments—but the law doesn’t go nearly far enough.
Medicare’s huge bargaining leverage over drug companies and health-care providers should be used to bring down health-care costs and to move from a pay-for-service system to a pay-for-healthy-outcomes system. We’re spending almost two and a half times more on health care per person than any other advanced nation, yet the typical American doesn’t live as long as the citizens of those nations and we have a higher rate of infant mortality. That’s because here doctors and hospitals have every incentive to spend on unnecessary tests, drugs, and procedures but little incentive to keep people healthy.
For example, almost 95 percent of cases of lower-back pain are best relieved through physical therapy. But American doctors and hospitals routinely do expensive MRIs and then refer patients to orthopedic surgeons who often do even more costly surgery—because there’s not much money in physical therapy. Twenty percent of the people who go into a hospital for diabetes, asthma, or a heart condition are back within a month; they’d do better if a nurse visited them at home—a common practice in other advanced countries—to answer their questions and make sure they are taking their medications. But nurses don’t make home visits to Americans with acute conditions, because hospitals and nurses aren’t paid for making them. Instead of reimbursing doctors and hospitals for the costly tests, drugs, and procedures, pay them for keeping people healthy.
FIGHT FOR MEDICARE FOR ALL
The Republicans’ plan would simply funnel money into the hands of for-profit insurers whose administrative costs are far higher than Medicare’s. The real answer to providing broad coverage and keeping a lid on costs is to allow anyone at any age to join Medicare.
Medicare’s administrative costs are in the range of 3 percent—well below the 5–10 percent costs borne by large companies that self-insure, even further below the administrative costs of companies in the small-group market (amounting to 25–27 percent of premiums), and much lower than the administrative costs of individual insurance (30 percent). It’s even below the 11 percent costs of private plans under Medicare Advantage, the current private insurance option under Medicare. Medicare for all would reduce the colossal waste in the current system. Right now we’re spending $30 billion a year fixing medical errors—the worst rate among advanced countries—partly because we keep patient records on computers that can’t share the data. Patient records are continually rewritten on pieces of paper and then reentered into different computers, which leads to errors. Meanwhile, administrative costs are eating up 15–30 percent of all health-care spending in the United States. That’s twice the rate of most other advanced nations. This money goes mainly into collecting money: doctors collect from hospitals and insurers, hospitals collect from insurers, insurers collect from companies or from policyholders. At some hospitals, billing clerks outnumber physicians. A third of nursing hours are devoted to documenting tests and procedures so insurers have proof.
Estimates of how much would be saved by extending Medicare to cover the entire population range from $58 billion to $400 billion a year. More Americans would get quality health care, and the long-term budget crisis would be sharply reduced.
The new health-care law requires people to buy health insurance from private insurers. This “individual mandate” spreads the risk of someone needing medical care to younger or healthier people, thereby enabling private insurers to afford to take on older or sicker customers with preexisting medical conditions or to maintain coverage indefinitely for people who become seriously ill. Yet the individual mandate is deeply unpopular. It not only offends libertarian sensibilities but also worries some moderates and liberals who fear private insurers will charge too much because of insufficient competition in the industry. Republicans see an opportunity here to destroy the new health-care law by attacking the individual mandate.
But there’s another way to spread medical risks across the public. It’s the same framework used by Social Security and Medicare—public insurance financed by payroll taxes. Not only are these programs enormously popular—“Don’t take away my Medicare!” was a rallying cry among some conservative populists during the debates over the health-care law—but they rest on a more widely accepted relationship among the individual, the government, and the market. Both Medicare and Social Security require every working American to “buy” them, but the purchase happens automatically in the form of a deduction from everyone’s paycheck. Such payments are viewed not as federal mandates that encroach upon individual freedoms, or as payoffs to private companies likely to make even more money from mandatory purchases of their products, but as well-deserved entitlements. Americans are accustomed to paying for public insurance through their payroll taxes. Indeed, the biggest problem with Social Security and Medicare is they’re so popular that politicians have had a hard time trimming their benefits to match payroll tax revenues.
Republican attacks on the individual mandate will create an opportunity for policy jujitsu. We should amend the new health-care law and create Medicare for all—premised on payroll taxes and public insurance, the system Americans prefer. The public will be behind it, as will the courts.
USE THESE ADDED REVENUES AND BUDGET SAVINGS TO INVEST IN PUBLIC GOODS—ESPECIALLY EDUCATION AND INFRASTRUCTURE
The state of the nation’s schools in poor and middle-class communities is a scandal that makes a mockery of the ideal of equal opportunity, further widens inequality, and undermines the competitiveness of the economy. Most teachers in these schools are paid less than $50,000 a year, and classrooms are crammed. These schools can’t afford textbooks or science labs, and they’ve abandoned after-school programs and courses like history and art. The reason: School budgets across America depend substantially on local property taxes that continue to drop in lower-income communities. The federal government should come to their rescue. States also need help financing early childhood education so that every preschooler can begin school ready to learn. And the federal government should help restore the nation’s system of public higher education, which has been decimated by state budget cuts.
Meanwhile, America’s infrastructure is crumbling. Our roads, bridges, water and sewer systems, subways and other forms of public transit, gas pipelines, ports, airports, and school buildings are all in desperate need of repair. Deferred maintenance is taking a huge toll. The American Society of Civil Engineers has given the nation’s infrastructure an overall grade of D. The percentage of the national economy going to infrastructure continues to drop—from 1 percent in 1960 to barely three-tenths of 1 percent in 2012. It’s time to rebuild America while at the same time expanding high-speed Internet and modernizing the electricity grid.
Over the long term the only way to improve the living standards of most Americans is to invest in our people—especially their educations, and the communications and transportation systems linking them together and with the rest of the world. Spending on these is fundamentally different from other categories of government spending because these outlays are investments in the future productivity of our people. There’s no problem with borrowing in order to finance investments in the future. Families do it all the time. While it might be irresponsible for a family to go into debt in order to finance a worldwide cruise, it would be highly responsible for the same family to borrow money in order to help finance their kids’ col
lege educations. Businesses also borrow in order to increase future productivity. If they didn’t, they’d be out of business. Such borrowing makes sense as long as the return on the investment is higher than the cost (principal plus interest) of the borrowing.
It’s cheaper than ever for the United States to borrow. In 2012 the yield on the ten-year Treasury bill was hovering around 2 percent. That’s because global investors sought the safety of dollars. Europe was in a debt crisis, many developing nations were gripped by fears the contagion would spread to them, the Japanese economy remained in poor condition, and China’s growth was slowing. These conditions won’t continue forever, of course, but the dollar will remain a safe haven for many years. It’s the ideal time to redevelop the public goods America desperately needs.
RESURRECT THE GLASS-STEAGALL ACT
There is no good reason that banks should ever be permitted to use people’s bank deposits, insured by the federal government, to place risky bets on the banks’ own behalf. Yet Wall Street lobbyists have made sure the new Dodd-Frank law has enough loopholes to allow financiers to continue to gamble with other people’s money. The so-called Volcker Rule in the new Dodd-Frank Act was designed as a compromise—a kind of Glass-Steagall lite—but under the pressure of Wall Street’s lobbyists it is too weak to do the job. The giant bets JPMorgan placed on risky derivatives that went bad in the spring of 2012 should serve as a loud warning. One way to stop the looting—or at the least limit the ability of Wall Street’s biggest banks to make unreasonably risky bets—is to bring back Glass-Steagall. The act was put in place after the crash of 1929 to prevent financiers from gambling with people’s bank deposits but was repealed in 1999, and its repeal contributed to the crash of 2008.
CAP THE SIZE OF WALL STREET’S BIGGEST BANKS
The other sad lesson of the Dodd-Frank legislation is that Wall Street is too powerful to allow effective regulation of it. We should have learned that lesson in 2008 as the Street brought the rest of the economy—and much of the world—to its knees. The Street’s leviathans do not generate benefits to society proportional to their size and influence. To the contrary, they represent a clear and present danger to our economy and our democracy. The best way to avoid another bailout is to break them up and then put a cap on the maximum size of the biggest banks.
There is precedent. The Sherman Antitrust Act of 1890 and its companion, the Clayton Act of 1914, were designed not only to improve economic efficiency by reducing the market power of economic giants like the railroads and oil companies but also to prevent companies from becoming so large that their political power would undermine democracy. Trustbusters during the first decades of the twentieth century tamed American industry and arguably saved capitalism from its own excesses. We’ve come to a similar juncture a century later, but this time it’s big finance that has to be tamed.
In April 2012, the Dallas branch of the Federal Reserve Bank came to the same conclusion, recommending that the biggest banks be broken up and their size be capped. This is particularly notable in that the Dallas Fed is one of the most conservative of all Fed branches. But it knows from experience. Texas was ground zero in the savings and loan crisis that ripped through America in the 1980s, imposing huge losses on the state.
The Wall Street banks were too big to fail before the bailout and are even bigger now. Twenty years ago, the ten largest banks on the Street held 10 percent of America’s total bank assets. Now the six largest hold over 70 percent. And the biggest four have a larger market share than ever. Their size gives them special privileges at the Fed—lower interest rate charges and special drawing rights—that provide them with a competitive advantage over their smaller rivals. And with this advantage they’re sure to grow even larger. They must be broken up.
REQUIRE BIG BANKS TO MODIFY UNDERWATER MORTGAGES
In February 2012, five big banks reached a deal with government authorities over dubious mortgage practices and foreclosure abuses. In exchange for reducing the principal on the mortgage loans of distressed homeowners by $17 billion, the banks were absolved of many legal claims against them. But given that close to eleven million borrowers were underwater on their loans by about $700 billion, this settlement was barely a drop in a huge bucket. Although some homeowners should have known they were borrowing excessively, most reasonably assumed housing prices would continue to rise. It wasn’t their fault that the banks created a housing bubble that burst, causing home values to plummet. And most of the banks’ wrongdoing has never been fully investigated, including possible tax, trust, and securities violations.
There must be a new investigation into mortgage abuses, a broader inquiry that could lead to a much larger package of relief. Allowing millions of homeowners to remain in their homes and reversing the collapse of housing prices would be good for almost everyone, including banks whose balance sheets have been weakened by the slide in home values.
Meanwhile, the bankruptcy laws should be changed to allow struggling homeowners to declare bankruptcy on their primary residence. This will give homeowners more bargaining leverage with the banks to reorganize their mortgage loans. Why should the owners of commercial property and second homes be allowed to include these assets in bankruptcy but not regular homeowners?
GET BIG MONEY oUT OF POLITICS
Finally, in order to get any of this—and more—done, we need to get big money out of politics. If income and wealth in America were as widely shared as in the first three decades after World War II, we’d have less reason to worry about money in politics. But with an almost unprecedented concentration of wealth at the very top, unbridled money in politics poses a clear and present danger to our democracy. The Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission invites the worst corruption we have witnessed since the Gilded Age.
We must clean up the mess the Supreme Court has created. We need Supreme Court justices who will reverse the ruling in Citizens United. And a constitutional amendment making clear that corporations are not citizens entitled to contribute to political elections and that Congress has the power to set limits on campaign spending.
In the meantime, there must be full public disclosure of all donors to super PACs and other organizations that engage in political advertising. Corporations should have to get the approval of shareholders before spending corporate funds—the shareholders’ money—on politics. A shareholder who doesn’t approve should be refunded for such expenses in proportion to his or her share of the company.
Finally, we must have a system of public financing available to any presidential or congressional candidate supported by at least 5 percent of the voting public. These funds would provide $2 for every $1 raised from small donors (each giving no more than $1,000) so candidates can succeed without relying on a few billionaires pumping unlimited sums into super PACs.
One step can be taken without congressional approval: an executive order forcing big government contractors to disclose their political spending, and banning all political activity by companies receiving more than half their revenues from the U.S. government. Lockheed Martin, the nation’s largest contractor, got more than $19 billion in federal contracts in 2011 while spending millions lobbying Congress to get even more. Sixty-four of Lockheed’s lobbyists were former congressional staffers, Pentagon officials, or White House aides. Two were former members of Congress. Lockheed has also been spending more than $3 million a year on political contributions to friendly members of Congress.
Lockheed is not alone. The ten biggest government contractors are all defense contractors. Every one of them gets most of its revenues from the federal government and uses a portion of that money to lobby for even more defense contracts.
That’s one reason the defense procurement budget keeps growing. The drawdown of troops from Iraq in 2011 was supposed to save money, but Lockheed and other giant defense contractors have tried to funnel the anticipated savings into new weapons systems. In 2012, Lockheed delivered a budget bombshell with a pro
posed tab of more than $1 trillion for a fleet of F-35 Joint Strike Fighter jets. In the wake of the Citizens United ruling, there’s no limit on what Lockheed and other defense contractors can spend on politics. That’s why it’s necessary to put an end to this increasingly expensive conflict of interest by banning all political activities by corporations getting more than half their revenues from the federal government.
So here’s the deal: We’ll give you a mandate to do all this and more, we’ll work like hell to elect you or to make sure you’re reelected, and we’ll stand behind you as you try to get this agenda enacted. As long as you stand behind us and make this agenda your own.
THE CORPORATE PLEDGE OF ALLEGIANCE
If the Supreme Court and most regressives insist big American corporations are people that deserve to be treated as American citizens, and be given tax breaks and special advantages to create jobs here, we should expect those corporations to show some loyalty to this country. So why not have big American corporations take a pledge of allegiance to the United States? It wouldn’t be a legal requirement. It would be entirely voluntary. Corporations that take the pledge would be able to say in their advertisements, “We pledge allegiance to the United States.” And American consumers would be free to boycott those that don’t take the pledge. In fact, you might consider organizing just such a boycott.
Here’s what a corporate pledge of allegiance might look like:
OUR CORPORATION PLEDGES ALLEGIANCE TO THE UNITED STATES OF AMERICA.
We pledge to create more jobs in the United States than we create outside the United States, either directly or in our foreign subsidiaries and subcontractors.