This Week: Trading Health Now (sort of) for Poverty Later

"Quote" of the Week

The Social Security Trojan Horse: Health Care Now, Poverty Later

90 Percent Favor "Fundamental Change" (at least) in Health System

Greetings,

Sorry, no room for the standard scintillating editor's note this month. So I'll just say "Welcome!" to all the new readers, especially the ones who read my recent article in Counterpunch.

That's it. On with the show!

Nygaard

"Quote" of the Week:

This week's "Quote" is in the form of a quiz. Can you guess which country the New York Times was talking about on March 5th, when they said:

"But [a certain country]'s military modernization efforts, particularly its drive to develop advanced weaponry, have been raising concern from ... Tokyo to New Delhi, where officials are worried that the buildup could be as much offensive as defensive."

Did you guess the United States? That would be correct, but it's not what the Times was talking about. The Times was talking about China, whose defense budget is now roughly one-fourteenth (7 percent) the size of the U.S. military budget. And which, "Most defense analysts agree" is building up its military capacity in part "to be capable of creating a deterrent to American military intervention."

Doesn't make sense? But it does, within the doctrinal system. Just repeat after me: When the U.S. attacks, it is defense. When other countries try to defend themselves, it is offense.

The Social Security Trojan Horse: Health Care Now, Poverty Later

In the mythology surrounding the Trojan War of about 3,000 years ago, the Greeks supposedly built a huge wooden horse and offered it as a "gift" to the Trojans. The Trojans accepted it, interpreting it as a symbol of Greek defeat. Instead, the Greeks had packed it with their soldiers and, once inside the walls of Troy, the Greeks jumped out, opened the gates of the city to their troops waiting outside, and the Trojans succumbed in a bloody massacre. The lesson of this myth is widely understood to be: Don't trust your enemies, even their gifts may be tricks aimed at hurting you. "Beware of Greeks bearing gifts," as they say.

I don't spend a lot of time thinking about the events of 3,300 years ago, but this particular story came to mind as I listened in recent weeks to "President" Bush talking about his proposal "to make basic, private health insurance available and affordable for more Americans." That's the gift. What's hiding inside of that gift? I did a little research, and here's what I found out.

First of all, remember that the top domestic priority of the Bush administration in its second term was to transform the Social Security program from a guaranteed system of social insurance (inadequate, but still worthwhile) into a hit-or-miss system of individual investment. That priority went down in flames, and that resounding defeat has been one of the great organizing successes of the Bush years for people like you and me.

But just because it has been defeated does not mean that it cannot be resurrected. In fact, the National Committee to Preserve Social Security and Medicare points out that "For the third year in a row, the President has included in his presidential budget his plan to divert payroll tax revenues out of Social Security into private accounts. In addition, he continues to support drastic cuts in Social Security benefits by means of a plan known as ‘price-indexing.'"

Those plans are likely to go nowhere in a Democratic Congress, which is no doubt why the Bush administration decided to go the Trojan Horse route, wrapping a stealth attack on Social Security in a proposal on health care.

The "President," wishing to capitalize on popular discontent about the genuine health care crisis that this country is facing, has put forth a couple of proposals. He says he believes that "For [most] Americans, private health insurance is the best way to meet their needs." And his proposals reflect this stated belief, which he may or may not actually believe.

The first proposal is called the "Affordable Choices Initiative" (sic), and it "encourages states to take federal funds used to support hospitals and other health care providers that provide care to the uninsured and instead use the funds to pay for ‘basic private health insurance' for uninsured residents." This is a bad idea, but I won't go into it here, since it has nothing to do with the Trojan Horse. If you want to know more, go look at an analysis by the Center on Budget and Policy Priorities (from which the above quote is drawn).

The other initiative proposed by Mr. Bush is one where the federal government would offer a tax break to people that they could then use to purchase private insurance. The "President" says that "families purchasing health insurance will pay no income or payroll taxes on $15,000 of income. Single Americans purchasing health insurance will pay no income or payroll taxes on $7,500 of income."

Doing the Math

Some people may be aware that, since we still have a somewhat progressive income tax in this country, people with low incomes pay little or no income tax. So, Bush's income tax exemption will not help them, since there's nothing to be exempt from. But what all workers pay, even if they only earn $10 a year, are payroll taxes. The "payroll taxes" that everyone has taken out of every paycheck are Social Security taxes and Medicare taxes. Combined, those taxes amount to about 9 percent of your paycheck.

The Tax Policy Center, in their February 14th analysis of the proposal, succinctly reminds us that "Not everyone would benefit from the proposal. ... at least some [people] would still find coverage prohibitively expensive, even with the tax savings, either because their health status would cause high premiums or because their income is too low." My thoughts, exactly. Here's the math on it:

The tax exemption in the Bush proposal would add up to an extra $682.50 a year for workers to spend on health insurance. Meanwhile, the average annual premium for that insurance comes to something like $4,200 a year, on average. That's roughly six times the exemption, or a gap of about $3,500. If you're talking about a family plan, the exemption goes up to $1,365, but the cost of the average premium for a family policy is much higher—about $11,500. The gap here is roughly $10,000.

So, it's hard to take Mr. Bush's proposal seriously, since it's a rare low-income worker who is going to be able to come up with an extra $3,500 a year if they can't come up with $4,200. Still, it is something, and I suppose the "President" is hoping that people are so desperate that they will be glad to get something rather than nothing when it comes to health care.

The Trojan Horse

But, wait a minute! Very few people seem to have noticed this, but Social Security benefits are calculated, in part, based on taxes paid in. So, if workers were to get an exemption now from Social Security payroll taxes, as Mr. Bush has proposed, they would pay for it later by taking a cut in retirement benefits later. And it could be big. Here's Len Burman from the Tax Policy Center: "A family earning $30,000 a year could see its retirement benefit cut in half."

Economist Dean Baker did the math on another hypothetical low-income worker. "Imagine," he says, "a worker whose pay averages $20,000 a year. Currently, this salary would get this worker $11,000 if she started collecting benefits at the normal retirement age. Under President Bush's proposal, the worker would only be credited with $5,000 a year towards her Social Security benefits, getting her $4,500 a year when she retires." A master of understatement, Baker adds, "This is a big difference."

As the Tax Policy Center says (in footnote #7 of their report) "The proposal's far reaching effects on Social Security—changing both taxes and benefits—warrant further and more detailed analysis." Isn't that part of why we have a "Free Press?" So they can research and report on the plans of our elected officials? As Baker says, "insofar as [President Bush's health care plan] is taken seriously, the media should explore all its implications, especially its implications for the Social Security benefits of low wage workers."

And so they should. I've only seen two mentions of this in the mass media. One was on page two of the Business Section of the January 30th Washington Post. The other was the February 2nd Kansas City Star, also in the Business section.

So, there's your Trojan Horse: The "gift" that looks like increased access to health care for millions of United Statesians carries within it a hidden attack on the Social Security program.

[I encourage readers to let their elected representatives know that they see through this scheme, and let them know you won't tolerate any attack on Social Security, no matter how attractive the Horse in which it is packaged. If you're the kind of person who likes to know a lot before you call, go to http://www.urban.org/UploadedPDF/411423_Presidents_Standard_Deduction.pdf ]

Since we've seen that the Bush plan is not even a good gift, I don't expect the proposal to go anywhere. But something is going to happen in regard to health care in this country, and soon. Readers of the corporate media would be unlikely to know anything much about the growing movement for genuine health care reform in this country. I'll say a few words about that in the next Nygaard Notes. Elsewhere in this issue I'll mention just how ready for real change United Statesians seem to be.

90 Percent Favor "Fundamental Change" (at least) in Health System

If I were to design a health care system, I would start out by looking at what we know, and what we do not know. General, population-wide health statistics are what we know. That is, we know (roughly) how many people are going to get cancer this year, and how many are going to have serious accidents, and strokes, and heart attacks, and so on.

What we do not know is exactly which individual people are going to have these health problems.

So, if I were to design a health-care system, what I would do is to budget for how much it would cost to effectively treat the numbers of people who are likely to have these health needs, and then ask everyone to pitch in some money, according to their ability to pay, to share the costs of taking care of all of us. In other words, some sort of socialized system or, as a compromise, a single-payer system.

Does this sound "unrealistic?" Does this sound "radical?" Perhaps. Certainly the corporate media considers it so. As evidence, I offer a comment from the front page of the March 5th New York Times. In an otherwise-excellent human interest story about a middle-class woman unable to get insurance after she lost her job, the Times inserted this comment:

"Politicians are once again speaking about universal coverage as a goal, though opinion polls show that many voters still oppose the idea of a government-run health care system."

How odd! Just three days earlier—March 2nd—also on the front page, the Times ran a story on "the latest New York Times/CBS News poll" on health care. As the Times reported it, "One question [in the survey] offered a choice between the current system and a national health insurance program covering everyone, administered by the government and financed by taxpayers. Thirty-eight percent said they preferred the current system, 47 percent the government-run approach."

So, it appears to be true, as the Times reported in the later article, that "many voters still oppose the idea of a government-run health care system." But that "many" is a smaller "many" than those who "prefer" a "government-run" program. I repeat: How odd!

The Times survey asked a bunch of other interesting questions. Perhaps the most interesting was this one:

"Which of the following three statements comes closest to expressing your overall view of the health care system in the United States: 1. On the whole, the health care system works pretty well and only minor changes are necessary to make it work better. 2. There are some good things in our health care system, but fundamental changes are needed. 3. Our health care system has so much wrong with it that we need to completely rebuild it."

Here are the remarkable results: "Minor changes" = 8 percent. "Fundamental changes" = 54 percent. "Completely rebuild" = 36 percent.

There you have it: Fully 90 percent of respondents said that the health care system needs "fundamental changes"—at least!—or that we need to throw it out and design an entirely new one. This is consistent with results from earlier polls. The Times even asked people, "Would you be willing or not willing to pay higher taxes so that all Americans have health insurance?" 60 percent said they would be willing to put their money where their mouths are.

So, perhaps that "entirely new" system that people seem to want could be something along the lines of the one I suggested at the beginning of this article. Or not. In any case, in light of what people are telling opinion pollsters, it's hard to think of a proposal that would be "too radical."

Certainly not "too radical" would be the United States National Health Insurance Act, introduced into the U.S. House of Representatives on January 24th with 59 co-sponsors. This bill "would create a publicly financed, privately delivered health care program that uses the already existing Medicare program by expanding and improving it to all U.S. residents, and all residents living in U.S. territories." In other words, a "single-payer" system, financed by U.S. taxpayers.

You haven't heard of it? Not surprising. The bill has been almost completely ignored in the U.S. media. Bizarre, isn't it? More on this in a future Nygaard Notes.