Tuesday, December 22, 2009

Health Care and Inequality

The debate over health care reform drags on with charges and counter charges. When the groups opposed to change want to throw down the gauntlet they will describe the Democrat’s proposals as a “complete takeover of the health care industry.”

Using the words “complete takeover” makes it sound like the private insurance industry once served people who now get health care provided through the government, or have no health care at all.

Opposition groups define the duty to provide health care as their right in private markets. They want health care to be an option that goes with a job. Otherwise the saga of America’s health care is a government takeover of groups ignored, and groups abandoned by the fee for service private sector.

Health care provided through employment leaves retirees out of health care, which is why those over 66, the Social Security retirement age, have Medicare health coverage. Notice that Medicare maintains the fee for service principles favored by the private sector. That’s because Medicare is financed with a 1.45 percent tax on wages, which fee for service advocates contend is just like an insurance premium.

Medicare is just one of the partial and patchwork solutions to health insurance. Since health care for those younger than 66 assumes employment, the unemployed are left out. Congress responded to the unemployed with legislation known as COBRA that allows the unemployed to buy their group health insurance at group rates, but only for 18 months. The time limit assumes the unemployed will find more work with health insurance.

Since jobs that pay low wages, or jobs that use low skills, do not always include health care the working poor are left out. Congress responded with Medicaid, but with strict limits on income and assets. The limits are so low that many families above the Medicaid limit are without health insurance. Congress responded with legislation known as SCHIP (State children’s health Insurance Program) as a Medicaid supplement to cover children, but not their parents.

Workmen’s compensation, which is really health insurance for injuries on the job, duplicates some of the coverage for private insurance policies but ignores the unemployed since it too requires a job.

If a job does not include health care insurance individual and family policies get mysteriously expensive and unaffordable for millions with wages too low to pay fees and premiums charged.

The patchwork of government health care reflects the limitations imposed by private sector advocates with the political strength to maintain fee for service principles.
To have health insurance for the uninsured it will be necessary to address the inequality of wages and income outside a fee for service system. The wealthy will have to pay higher income taxes to support health care subsidies to have health care reform. Most of the public debate tries to disguise this requirement, but reform that insures the uninsured must have subsidies to make up for low income.

The debate goes on, but the wealthy are resisting. Health care reform remains doubtful, but we will see.

Monday, December 14, 2009

Gambling and Taxes

House democrats announced a plan to raise personal income tax rates up to 5.4 percent on incomes over $350,000. The Obama Administration is supporting a similar plan. The additional tax revenue will be used to pay for health care proposals that extend coverage to 37 million people who are currently without coverage.

In a recent article about the proposal in the Washington Post [Health-Care Plan Would Add Surtax On Wealthy, July 15] there were several objections quoted. One objection caught my eye. It was from Senator Ben Nelson of Nebraska.

He said, "Tax is a four-letter word" with voters. Even families not ranking in the top 1 percent of earners hope they're going to be there someday. So they don't necessarily think it's fair."

He used percent to define the rich, which is significant because America is a democracy. Remember in a democracy 50 percent plus one win elections. Therefore, if Senator Nelson is right then the other 99 percent of American voters, not ranking in the top 1 percent, accept having low taxes for the wealthy because it gives them hope they might become wealthy. The 99 percent would include voters from the 37 million without health care; unless someone thinks the richest 1 percent go without health care.

Notice the word “hope” in his statement. Hope is a word often associated with gambling rather than tax policy, or fairness, or anything else. Americans and politicians talk about what is fair and what is unfair, but when it’s time to vote no one has to consider what is fair. They can vote for any reason they want including the hope they will win a state lottery and pay low taxes on their winnings.

There was a time when the wealthy paid 90 percent of their incremental income as income tax. That was back nearly 50 years ago, but it was also a time when state lotteries and gambling was mostly illegal.

For the millions who lived on a wage 50 years ago, there was little hope of becoming wealthy without years of saving, if saving was possible. Gambling mostly took place in black markets and went untaxed.

For the millions who live on a wage today, there is little hope of becoming wealthy without years of saving, if saving is possible, but the gradual rise of gambling overlaps the decline of the top income tax rate, which dropped to 35 percent back in 2003.

I read the media stories about lobbyists and the influence of money in politics, but the vote has not been abolished in the United States. The richest one percent of Americans cannot have low taxes in a democracy without the acceptance or support of millions.

Senator Nelson’s statement adds anecdotal confirmation to what I have long suspected: gambling has more influence on America’s tax policy than any of us want to admit. Gambling gives hope to the many, but low taxes to the rich. Just ask Senator Nelson.

Thursday, December 3, 2009

Telecommuting and Green Jobs

President Obama announced plans to create “green jobs” as part of the Reinvestment and Recovery Act passed earlier this spring. He was quoted as saying "A green, renewable-energy economy isn't some pie-in-the-sky, far-off future. It is now. It is creating jobs now."

The new law provides money and development programs for adopting environmental technologies and helping to expand green projects. Green projects that reduce the use of fossil fuels and expand renewable energy, retrofit buildings, expand mass transit, or longer term initiatives like solar power, wind mill farms and bio-fuels will increase jobs and employment.

Telecommuting could save fossil fuels and reduce green house emissions, which makes it a green initiative but unlike the green projects mentioned above it conflicts with work and jobs. Telecommuting and outsourcing are possible because digital technologies applied in computing and communications let people work anywhere and anytime.

Outsourcing usually has more attention than telecommuting in the popular media, but they are nearly the same and have the same potential to reduce employment. For example, take the customer service representative, which holds 8th place among America’s occupations with 2.1 million total jobs in nearly every sector of the economy, but especially when we need assistance in finance and insurance.

Customer Service Representative gets media attention because America’s corporations outsource some of this work to India and other countries. Many regard outsourcing as the action of ruthless corporate tycoons ripping the heart out of America, but allow me to suggest outsourcing is very much a telecommuting issue.

Over 80 percent of Customer Service Representative jobs are reported for the country’s metropolitan areas, where millions commute by car and donate thousands of hours of their time using up gasoline and wearing out their cars so that others might work. Unlike production workers who must work at factories, Customer Service Representatives work can be anywhere with a computer and a telephone, as the companies themselves have so definitely proved.

Doing computer work from home as telecommuters not only reduces jobs in the automobile industry, car repairs, gasoline, cement, and highway construction, but also for jobs in real estate, office rental, building maintenance, building repair and local government. Quarter-time telecommuting potentially reduces office demand by 25 percent.

The Obama energy initiatives attempt to develop new supplies of energy that will cut down on fossil fuels and green house emissions and create jobs. Politically it should be much easier to do because it avoids sacrifice. Telecommuting confronts America with conflicts and trade offs. Telecommuting can save resources and reduce green house emissions, it will also eliminate jobs.

Business has similar incentives to expand telecommuting as it does outsourcing to other countries. Government has begun to experiment with limited telecommuting. If America gets serious about green house gases it should expect to confront the conflict between energy and jobs. The Obama plan does the easy things first, but it may not be enough. More green initiatives will require us to change the way we think about work and jobs.