In my latest reading of War on the Middle Class: How the Government, Big Business, and Special Interest Groups Are Waging War on the American Dream and How to Fight Back, Lou Dobbs goes into a variety of issues: that roughly half of federal income taxes are paid by the middle class; how corporations dodge taxes; how the influence of certain lobbyists encourages corporate outsourcing, which hurts workers; and how the bankruptcy law inflicts pain on a lot of responsible people who are bankrupt due to high medical costs.
(UPDATE: See here for Walter Williams’ argument that the rich pay most of the federal income taxes. Moreover, according to this article, Dobbs was critical of President Obama’s proposal to raise taxes on those who make over $250,000 a year.)
What I want to focus on in this post, however, is what Dobbs says about government subsidies for health insurance companies and health care organizations. On page 41, Dobbs states the following:
“Health care is too expensive for many families, and more and more companies are opting to drop full coverage from the benefits they offer employees. Yet our government is giving $10 billion in subsidies and risk-sharing payments to insurance companies and health care organizations that sign on to the nation’s Medicare program, which the Bush administration revamped in 2003. That money goes to businesses that are part of the problem, not to the working men and women who need the help.”
Dobbs is probably talking (at least in part) about Medicare Advantage, which is something that President Barack Obama’s health care plan would cut. Paul Krugman states regarding Medicare Advantage and the Affordable Care Act (see here):
“Medicare Advantage is a 15-year failed experiment in privatization. Running Medicare through private insurance companies was supposed to save money through the magic of the marketplace; in reality, private insurers, with their extra overhead, have never been able to compete on a level playing field with conventional Medicare. But Congress refused to take no for an answer, and kept the program alive by paying the insurers substantially more than the costs per patient of regular Medicare. All the ACA does is end this overpayment.”
After Paul Ryan was selected as Mitt Romney’s running-mate, I watched a video in which Ryan was talking to President Obama about health care. I did not understand everything that Ryan was saying, but Ryan did criticize the cuts to Medicare Advantage, since there are seniors who are enrolled in that, and Ryan seemed to fear that the cuts in Medicare Advantage would result in a reduction in their benefits. What Ryan was saying baffled me somewhat—-here’s a Republican who is a big proponent of cutting government spending, and all of a sudden he’s concerned about how a government cutback will affect people. But I wonder if Ryan is right. I don’t care for corporate welfare, but I also don’t want to see people’s health care get cut. Even if the government, by ending its overpayments to Medicare Advantage, is aiming to tackle the high cost of the companies’ overhead, is there any assurance that the health insurance companies will reduce overhead rather than health care? Since it’s cheaper for Medicare to pay for patients than for Medicare to give money to private health insurance companies (at least according to Krugman and the articles to which he links), why not have Medicare take over Medicare Advantage and run it itself, without the private health insurance companies?
I’ve long wondered why Republicans—-even Republicans who are big on reducing government spending, such as John McCain and Paul Ryan—-were opponents of the government reducing its subsidies to private health insurance companies. That made no sense to me. Now, I think I understand a little better: Medicare Advantage was intended to exemplify the conservative principles of choice in health care and competition. But, according to critics, it’s turned out to be expensive and inefficient corporate welfare.