The American humorist Will Rogers once said, “I am not a member of any organized [political] party. I am a Democrat.” Likewise, today’s Americans could say they don’t have an organized, logical or practical healthcare system: they have Obamacare.
Except not everyone has Obamacare, more properly called the Patient Protection and Affordable Care Act. The United States does not have any form of universal healthcare, but instead a hybrid patchwork of private insurance (employer-provided and individually purchased) and government-provided (social insurance such as Medicare and social welfare such as Medicaid).
US Opposition to ACA and Single-Payer
The ACA itself wasn’t a healthcare plan per se, but a series of compromise consensus reforms, designed to extend insurance to the uninsured and the under-insured (those who couldn’t afford or didn’t want the expense of insurance, as well as those who were kept out of the market because of expensive-to-treat pre-existing conditions) through a series of carrot-and-stick reforms. Its eventual goal was universal health coverage for every American, though not necessarily under one plan or system.
Single-payer – as is the norm in Canada, the United Kingdom and Australia – was a non-starter due to the perceived expense. Actually, healthcare in the US cost nearly 18% of Gross Domestic Product (GDP) in 2015 (almost $10,000 per capita) compared to the cost in single-payer nations such as Canada (10.2% or $4,351) and the United Kingdom (less than 10% or about $4,000). Another concern is the fear that single-payer would lead to Socialism. (Why that is such a fear is tied up in anti-Communist hysteria dating back to before the Russian Revolution that no sane nation is expected to understand.)
The ACA has faced similar criticism, but now that it is faced with potential repeal and replacement by the ruling Republican majorities in the US Congress and the sitting president, it is becoming more popular. The fact that nonpartisan estimates of the costs of both proposed replacement plans left many more people uninsured while reducing taxes on the wealthiest Americans has not gone unnoticed either.
Considering the Singapore Scheme
Now that the two plans are stalled, possibly dead, members of both mainstream political parties are considering other options, including seeing what other countries do to deliver better healthcare at less cost. One nation’s healthcare system that some analysts have said the US would do well to emulate, at least in part, is Singapore.
Last year Sean Masaki Flynn, an associate professor of economics at Scripps College wrote that Singapore is in the top-five for several categories – infant mortality, maternal mortality, life expectancy – and (according to Business Week metrics) the healthiest country in the world. Singapore spends 4.9% of its GDP on health care, or about $381.
Earlier this year Conservative New York Times columnist Ross Douthat argued that the Singapore model would be a better and more conservative healthcare plan than any the Republican leadership has proposed but predicted they would never accept it because they would consider it too paternalistic and statist.
How Singapore Manages Healthcare
Singapore seems to operate midway between a single-payer system like in the UK and the total free market favoured by the US Republicans. In Singapore:
- Insurance only covers catastrophic health problems.
- Patients fund it through mandatory health savings accounts – 8-10.5% of income, based on age – held and invested by the government, but tax-free, interest bearing and inheritable.
- The government supplements the accounts as needed, up to 80% of the total bill.
- Prescriptions and doctor visits for ordinary ailments are ordinarily paid for by the patient out of pocket.
- The vast majority (80%) of hospitals are publicly run.
- The government strictly controls costs, including prescriptions, devices and surgeries.
Health Savings Accounts
The health savings account (HSA) also is an important element of Republican ACA replacements, though a voluntary one. Though they exist already, taxpayers would be encouraged to place money, tax-free, in a HSA to pay for their medical expenses. The idea is that they will be more careful with spending on health care if it’s their own money. If they don’t spend the money, they get to keep it and spend it on whatever they want.
Unfortunately, many Americans have trouble saving money in traditional savings accounts, so the notion that they will be able to save money in a dedicated health savings account seems slim. It doesn’t seem likely US Republican lawmakers would endorse mandatory deposits – how is this different from a tax? – when the ACA’s individual mandate that all citizens must purchase health insurance is anathema to them.
What about Substance Abuse Treatment?
One thing that the Singapore healthcare plan doesn’t cover (though that could be modified if the US adopted it) is most substance abuse treatment. That’s because Singapore has some of the most draconian anti-drug laws in the world. Dealing in drugs is a death sentence, and illegal drug alone results in mandatory treatment and rehabilitation, including cold turkey detox, paramilitary style training and incarceration.
Dr. Muni Winslow, an addiction specialist, recalls that when he went to work for the Singapore health service, only nicotine and alcohol addictions were to be treated (though for the best alcohol rehab centers Singaporeans often leave the city-state). All other drug users were criminals, and that “the police and prisons are there to treat the drug users”. He got around this, to some degree at least, by recognizing that addiction is usually comorbid with a mental illness, and putatively treating them for the co-occurring disorder of their dual diagnosis.
US Is Not Singapore
But the main problem with the US adopting a Singapore-style healthcare plan may be that the US is not Singapore. There are behavioural differences that lead to worse health outcomes in the US, and so greater health expenses, such as car and gun ownership, and more alcohol and drug use. Far fewer Singaporeans drive, drink or use drugs, and gun ownership is prohibited.
Also, Singapore trusts its government – the same party has ruled since independence in 1965 – and is comfortable with what US conservative Republicans would call a “nanny state”. They considered the more modest ACA a government takeover of healthcare although it left the private health insurance markets intact.
The US probably can’t implement the Singapore scheme, but it can certainly improve its healthcare delivery and better control costs. Canada, the UK and other single-payer nations are better models to emulate.
Suspect Detained in New York
Following an explosion in midtown Manhattan, a male suspect has been arrested in New York.
The blast occurred on Monday morning near 42nd Street and Eighth Avenue, just one block from Times Square, in one of the busiest parts of New York. Eyewitnesses have said that a man entered the train station with a pipe bomb attached to him before detonating it on a platform. The suspect, Akayed Ullah, suffered burns after the device failed to explode properly and three others sustained minor injuries. New York’s mayor Bill de Blasio confirmed that the incident was a terror attack, making it the second in less than two months. Back on October 29th, a terrorist killed eight people by driving a truck into a busy Manhattan park.
Trump Attacks the WTO
Argentina joined Latin American leaders to strengthen the WTO system in the wake of Trump’s recent comments.
Over the past several months, President Trump has accused the WTO of an anti-American bias and his government is actively blocking the appointment of new judges to site on the WTO’s body. Other WTO nations view this as an attempt to fundamentally alter the system, which has for decades prevented trade wars among its 164 members. Yesterday, at the WTO meeting in Buenos Aires, WTO nations urged the US to re-commit to the organisation’s principles and strengthen the existing relationships within the current system.
Republicans Without Principles: Roy Moore and the Tax Bill
The Republican National Committee (RNC) joined with Mitch McConnell and approximately 18 Republican Senators in urging Roy Moore to resign. They pulled campaign funding and took the moral high ground…until the Senate voted on the tax reform legislation and they discovered that they only had one vote to spare.
The Alabama election takes place on December 12, 2017, before the date of a final vote on the reconciled tax bill that Republicans hope to place on the President’s desk before year end. And so, following the lead of the President, who is satisfied that Roy Moore not only denies but “totally denies” all allegations against him, the RNC changed direction and agreed to re-dedicate its support for the alleged perpetrator of over eight sexual assaults, four of which were on minors.
The Senate Tax Bill
Analysis of the Senate Bill has been extensive in the past few days. It has highlighted several problems arising from the hasty way it was passed.
Firstly, the alternative minimum tax (AMT) has not been repealed. Under current law, AMT is 20% compared to a regular tax rate of 35%. The bill passed by the Senate has both at 20%. Because certain deductions permitted against the regular tax liability are added back for AMT purposes, most corporations will, unless this is fixed in conference, now pay AMT rather than regular tax.
Additionally, the base erosion anti-abuse tax (BEAT) is a problem. It’s complicated. It’s intended to protect the tax base from US parent companies making payments to overseas affiliates whose earnings will be subject to a lower tax rate. But it will have negative consequences for the US taxpayer who reduces its US tax bill by any number of legitimate tax credits available to investors in renewable energy or low-income housing.
It’s not clear if these problems are oversights or intended features. It’s hard to admit the truth – that this was passed too quickly and without due consideration – because that is the point made by the Democratic Senators. Perhaps, as Nancy Pelosi said in respect of the Affordable Care Act, “We have to pass the [healthcare] bill to know what’s in it”. It was a terrible argument then; it’s a terrible argument now.
Christmas for the 1%
The 1% wealth bracket in the so-called Blue states of California and New York will be negatively impacted by the elimination of deductions for state and local tax and the limitation of the property tax deduction to $10,000. Overall, however, it is clear where the benefits of the Senate Bill flow, state, local and property taxes notwithstanding: to those making over $1,000,000.
The reduction in the corporate tax rate that has been approved will, according to many the CEOs interviewed, result not in additional investment in human or other capital but rather in share buybacks and increased dividends.
Why is the 1% Angry?
Senator Charles Grassley observed that the importance of repealing the estate tax was to ensure that those productive members of society would not be punished for a lifetime of thrift and hard work:
“I think not having the estate tax recognises the people that are investing, as opposed to those that are just spending every penny they have, whether it’s on booze or women or movies.”
The quote from Grassley raises a great point: fundamental attribution error. People are comfortable attributing outcomes to others based on their character and disposition: the poor are lazy; that’s why they are poor; the rich are rich because of hard work and intelligence. When explaining their own misfortunes, however, people are inclined to attribute causation to external circumstances. Gressley reinforces this fundamental error by his tactless comment.
The last ten years have been extremely rewarding for the top wealth slice of US society. Corporate earnings have been strong, and the financial markets have delivered robust returns to those who have been able to participate. It is not clear why either corporations or the wealthy have any reason to complain.
The middle and lower classes, on the other hand, have struggled with wages that have been essentially flat over the same period and with health, education and housing costs that have been climbing. It was this constituency that Donald Trump appealed to in his bid to be elected.
One of the unfortunate features of this tax bill is that, while everyone will enjoy tax cuts for the next ten years, the benefits will flow disproportionately to those with incomes over $500,000 after ten years. Individual tax cuts will phase out unless extended, whereas corporate taxes will remain at the same level. Consequently, the benefits of the corporate rate cut – increased dividends and share buybacks – will continue to flow to those with incomes over $1mn.
There is hypocrisy on both sides of the political divide, but the Republicans are running the show at the moment and the ‘house’ is beginning to look very crooked indeed.
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