Volatility

November 14, 2010

The Austerity Mechanism of the Health Racket Bailout

Filed under: Bailouts Only Propped Up Zombies, Corporatism, Health Racket Bailout — Russell Bangs @ 7:30 am

 

Obamacare is meant to be a bailout for the health insurance rackets and an austerity bill wrapped up in one. Its design is fundamentally simple: Redistribute wealth from the people to the insurance rackets. (It also preserves and enhances many other rents like those of the drug racket, but the main goal is to officially entrench the insurance sector.)
 
In principle, the goal of health insurance is to sell a policy and extract premiums but not pay for treatment. That’s the business model, and no rational insurance cadre would seek anything different. In the same way, anyone who supports the existence of the health insurance companies at all, let alone supports this bill which radically aggrandizes them, ratifies this goal. (It is of course completely irrational for anyone who doesn’t profiteer in this way to support this goal.)
 
Anyone who rejects that goal has to reject the rackets’ existence, desire their eradication, and demand Single Payer.
 
The individual mandate is the direct vehicle of this wealth redistribution from people to gangsters. There are many indirect mechanisms in the bill meant to enhance the effect of this mandate. Most of them boil down to a simple plan: Force people out of employer-provided insurance and into the individual insurance “market”.
 
Health care is a core government function. The government has long abdicated this responsibility. For a long time it shifted the burden primarily to employers. Today the government wants to continue to shirk its responsibility but also to liberate the employer as well. The intent is to maintain a broken system whose main goal is not health but rent-seeking, but to minimize how much employers have to pay toward maintaining their workers in the face of that system. We can say that the health of the worker, part of the worker’s necessary maintenance, is no longer as important to the employer as it used to be, in today’s state of permanent mass unemployment. So logically, the employer’s next step is to withdraw from all responsibility for the worker’s health. In Marxist terms, this is another increment of surplus value extraction.
 
Since Single Payer would have involved the government reassuming its responsibility, and since both workers and employers would have paid for it (although they would have paid much, much less than they pay today), the idea was rejected out of hand by the elites.
 
Instead, the plan is to push the atomized individual into the individual market, where she alone bears the burden of facing and paying for the insurance racket and the health care system as a whole. (This is the same as the plan everywhere – the individual is to stand naked, alone, and confused before the awesome might of the predatory corporation. The health racket mandate is a particularly stark example of a general elite strategy.)
 
Here’s an eagle’s eye survey of the facts of this bill: It will not lower premiums, and will significantly raise them on the individual market (that’s according to their own house organ, the CBO). There will be an excise tax on good employer-provided plans. (Meanwhile crap plans at employers like Walmart will receive public subsidies. So whether Walmart provides insurance or drives people onto Medicaid, either way the taxpayer will pay for it. That’s assuming the subsidies materialize at all, as opposed to just leaving the worker helpless, with no coverage at all and no way to pay the mandate penalty. Either way the employer doesn’t pay.) There’s no enforcement mechanism whatsoever for the “regulations” which will allegedly moderate rate increases and force the insurers to pay out on claims. In spite of Obama’s constant lying mantra about how “if you like what you have, you’ll get to keep it”*, the bill is intended to encourage employers to move toward higher deductibles and co-pays, or to just drop employee coverage completely. (Meanwhile the allegation that if employers don’t provide insurance they’ll make up for it by paying higher wages has always been a trickle-down lie. It doesn’t happen in reality. It’s a lie.)
 
[*This Orwellian slogan really means, “If you fear that the bad plan you have will be replaced by something even worse, you’ll get to keep it.” But as I said that too was a lie. Obama always intended to make it far worse.]
 
So the redistribution is simple: The bill would take from those already in the market, from those who rationally opted out of the market, from duly negotiated union compensation packages, and from the taxpayer. It would give primarily to the insurance rackets. Their own Medicare actuary projected that workers will end up paying more, and that all costs will involve shifting burdens from employers to workers.
 
Since this plan was passed, the intended processes of moving people from employer insurance to individual insurance have accelerated. At the same time the insurance rackets have launched part two of their own campaign to maximize extractions and minimize payouts. Having gotten a plan with extremely weak requirements and “regulations” passed, they’re now seeking to gut those regulations as well.
 
Let’s survey some examples:
 
A study found that the bill will exacerbate the existing trend of employers passing a greater proportion of the cost of rising premiums onto workers, and that workers face ever-higher deductibles. This places the bill in class war context. There’s also increasing traction for the idea that employers should pay only a fixed amount, no matter how much insurers continue to jack up rates. So much for “keep what you have.”
 
As part of a general campaign to offer allegedly lower-cost policies, insurers are pushing policies that would restrict doctor choice in return for a lower premium. (So much for “keep what you have”.) Of course there will be no restraint on jacking the prices back up once this diminished baseline for the quality of a normal policy is established. This is part of the plan to get the old managed care idea in through the back door. Obama is also allowing them to use the new “regulations” for coverage of sick children as the pretext for dropping child-only policies completely. Here’s one example of using the bill to drop an existing, better kind of policy in order to use the extortion mandate to force the same people to buy new, much worse, much more expensive Stamps.
 
Those two kinds of examples demonstrate the vise which is being closed upon us, as we’re crushed between employer abdication and insurer predation. If the bill works as intended, we’ll end up having to buy worthless policies on the individual market at extortionate rates.
 
Meanwhile they’re also clamped and squeezing upon the bill’s nominal protection measures. In the face of insurer and employer whining, Obama has already unilaterally granted dozens of waivers for meeting even the minimal quality and cost requirements of the bill. So it’s clear that the quickest and cheapest lobbying route is to simply demand a waiver or else..[fill in the extortion threat here: we’ll have to drop coverage, we’ll have to abandon the market, etc.]
 
So there’s a brief discussion of how this bailout bill, as part of its “austerity” facet, will absolve the employer and drive the productive workers out of the relatively better employer-provided coverage and into the individual Stamp market, where they’ll be forced to buy racket Stamps of zero value, at extortion prices.
 
The absolution is the austerity, the extortion is the bailout.

5 Comments

  1. Russ,

    Another excellent post. You’ve been en fuego lately.

    I hadn’t thought of things in the way you state them in your post, but what you’re saying is completely consistent with what our financialized economy requires to maintain the illusion of perpetual growth that determines stock prices. Once you get to a certain size, you can’t increase your topline revenues fast enough to keep up with expectations, so you have to increase your margins by cutting your costs. (As Ross Perot said way back when he was running for POTUS, healtchare costs are the single largest cost for employers.) And when you can no longer grow either your revenues or your margins, you have to “cheat,” which includes “regulatory arbitrage” to change the rules of the game in your favor.

    “Obamacare” is a boon to the health insurance companies because it instantly layers on topline revenue growth. It is also a boon to other employers, who can argue with a straight face that they don’t need to offer health insurance because Obamacare has them covered. This, in turn, leads to a loss of bargaining power with respect to premiums, which will allow the insurers to marginally increase their revenues.

    Instinctively, there must be market-based ways around this. For example, there doesn’t seem to be any reason why one couldn’t form a corporation that exists to collectively bargain on behalf of its customers/shareholders. (One of things that the architects of neoliberalism didn’t realize is that their own tools can be used to dismantle their system.)

    I agree, though, that healtchare should be single payer to avoid predatory behavior.

    Comment by Tao Jonesing — November 14, 2010 @ 1:52 pm

    • Thanks again, Tao.

      Instinctively, there must be market-based ways around this. For example, there doesn’t seem to be any reason why one couldn’t form a corporation that exists to collectively bargain on behalf of its customers/shareholders. (One of things that the architects of neoliberalism didn’t realize is that their own tools can be used to dismantle their system.)

      I’ve tossed around the same idea: How can the corporate form be used for anti-system movement purposes?

      I assumed the thing would have to be privately held to keep out the kind of shareholder who would demand profit-seeking for its own sake, but otherwise it seems like that form could bamboozle them in lots of ways.

      For example, if you wanted to organize a militia, don’t organize it informally, let alone as a political party. Organize it as a Blackwater-type security outfit. Never mind that all the “employees” would actually be farmers and so on, and their only real security duties would be to present a counterthug front vs. any corporate thugs who wanted to fuck with them. (The “revenue” would be the equivalent of membership dues in a club, except technically everyone would be paying the collective “corporation” for security services.)

      That’s one example, and yours is another. Maybe the workers shouldn’t form a union, but instead a corporation whose shareholders happen to be the workers themselves, who don’t pay union dues but buy stock, and who don’t have union reps but “corporate executives” who just happen to come from their own ranks.

      So there’s two examples. I bet we could come up with others.

      Comment by Russ — November 14, 2010 @ 4:36 pm

      • It’s really hard to know the tipping point (maybe we’re there right now). 25 million people who want to, don’t have work right now … is that right? 50 million on food stamps? The perennial, I’m talking 3 years, plus, homeless in my ‘hood seem to have been ‘picked up’ as of late. Gettin’ kinda Chile around here.

        When Aetna merges Cigna, and they realize that they can’t make the same bottom line with obese, smokers in mid-west (mid-east?) states and disengage, and there are zero options left for HUMAN BEINGS (sorry), then what… last one out turn out the lights; you have to move to a state CIG/AET is willing to insure, temporarily.

        This is not going to be prudent.

        Comment by tawal — November 15, 2010 @ 3:44 am

      • They’re all just trying to loot while they can before the final collapse.

        They mean to shift the entire burden of the collapse onto us, while they reconstitute a Dark Age aristocracy.

        Comment by Russ — November 15, 2010 @ 6:00 am

  2. […] bail out the insurance rackets, and more generally to benefit corporatism (since it’s also a pro-employer austerity policy.)   Even the moralizing propaganda of it is redolent of classic colonialism. The lies about […]

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