Thursday, December 17, 2009

Another Heel of a Loaf: the Senate "Health" "Care" "Plan"

[Added: also, see Ian Welsh's excellent answer to Nate Silver, which was posted at about the time I posted this.]

I am struck that my analysis of three months ago applies with greater force than ever to the likely Senate offering:

  • Big winners:
    • The insurance industry will clean up at taxpayer expense.
    • Big corporations maintain their big hiring advantage over small businesses.
  • Moderate winners:
    • My corporate-employee friends will have an easier time changing jobs.
    • The truly poor will get a bit of help with the insurance they’ll be required to purchase.
  • Half loaves:
    • People who want to quit their corporate jobs & start their own businesses not only lose their corporate insurance, but have to pay the unregulated independent insurance rates.
    • My writer and artist friends will be required to spend scarce money on insurance at unregulated rates. Same thing for the baristas. There may actually be a health advantage to a lower income.
  • Big loser:
    • Social justice.  Taxing the lower middle class and the independent businessperson to the advantage of the insurance industry and big business is unjust.
On the average, I believe, what is in the Senate will be at least a temporary improvement.  But what people like Nate Silver, Ezra Klein, and even Paul Krugman miss is that, in the extreme, some people are going to be required to spend money they don't have, and those people are going to be working poor and middle-class up to household incomes of perhaps $50,000/year. This is going to be a huge political liability for the Democrats: once the mandates hit the shouts are going to be audible from Mars.  It's going to be much harder for that group to save once the mandates come into force; the insurance companies are going to try to set their rates to sop up any extra money these people have.  Hundreds of thousands, perhaps millions, of bankruptcies seem not unlikely.  They're also probably going to blast any employment recovery that gets going in the next few years.

Personally, I suspect we'd be better off waiting until the conservatives suffer more losses. This is so toxic that I don't even want to reluctantly support it. On the other hand, since the conservatives are going to suffer losses anyway, it may be that it will be easier to improve the plan down the road.

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