Advertisements
Posted by: Doug Henwood | September 13, 2009

Radio commentary, September 10, 2009

Thursday morning brought the release of the annual income, poverty, and health insurance numbers from the Census Bureau for 2008. As you might have guessed, the first year of the recession was pretty bad news for just about everyone. Median household income—the income right at the middle of the income distribution, with half of all households having higher incomes, and half lower—fell by 3.6%, the biggest yearly decline since these figures begin in 1967. All racial and ethnic groups took a hit: non-Hispanic whites were off 2.6%; blacks, off 2.8%; Asians, 4.4%; and so-called Hispanics, by 5.6%. Households of all ages lost income in 2008, with the exception of the over-65 set, who are protected by the cost of living increases in Social Security.

A few points. The one-year hit to incomes in 2008 is on a par with the multiyear hits taken in earlier recessions. For example, the 3.6% decline last year is larger than the decline we saw in the recession and weak recovery years of 1999 to 2002—three years of damage then more than condensed into one year of damage last year. And 2008 was only the beginning of the recession. Job losses didn’t accelerate, and unemployment didn’t really spike, until the fall of last year. The Economic Policy Institute estimates that this year’s decline is likely to be larger, in the 4.5–5.0% range. If anything like that happens, the total decline of over 8% will be the biggest recession hit to income since these numbers began 42 years ago. That’s coming after the weakest expansion in modern history. Gains during the 2001–7 expansion weren’t enough to reverse the declines of the previous recession years—the first time that’s happened ever. So before this recession is over—and I mean that not in the formal sense, but in the sense of how average people experience the economy, measured by the job market and household income—average incomes are likely to be 10% below where they were in 1999.

But not so the rich. A technical note before proceeding: these Census figures are derived from a survey of households. Because rich people don’t answer such surveys, and because there are so few of them that it’d be hard to find enough of them to take a meaningful sample, these annual reports miss things at the very high end. But you can get that from tax return data, which is available only with a delay of several years. The economists Thomas Piketty and Emmanuel Saez do just that, and their 2007 numbers were recently published. So while the bottom 90% of the population saw its income decline between 1999 and 2007, the richest 1% gained about 7%. The richest 0.01%, about 30,000 people, saw their income rise by 25%.

Not surprisingly, the poverty rate rose to 13.2% in 2008, from 12.7% in 2007. That’s the highest level since 1997; the Economic Policy Institute estimates that it will rise another 1.5 points this year to 14.7%, which would be the highest since 1992. For whites, the poverty rate was 11.2%; for blacks, 24.7%, more than twice as high. Among Latinos, it was 23.2%.

But some definitions are in order. Official poverty is defined as a pretax income under a specified amount that varies by family size; for a family of four, the line is just about $22,000 a year. This is a very undemanding standard; more honest definitions of poverty would set the line closer to $30,000, which would raise the poverty rate to around 20% or more.

And these figures are just snapshots of a given year. According to the Census Bureau, over the four year period ending in 2007, almost a third—31%—of Americans had at least one period in official poverty lasting two months or more. For a very rich country, we have a lot of poor people, and they are often very poor.

Finally, the number of people without health insurance rose by about 600,000 to 46.3 million. Measured as a share of the population, however, the uninsured remained at a constant 15.4%. But that means without insurance for the entire year; many more had bouts of uninsurance. And again, since the economy of 2009 was worse than 2008’s, the current levels are probably a lot higher—EPI estimates that it’s probably up by 5 million this year.

But apparently that’s not the way the Obama administration wants to count the uninsured. According to a very useful piece by Politico’s Carrie Brudoff Brown on what Obama said in Wednesday night’s health reform speech vs. what he actually meant, the administration says there are only 30 million uninsured, more than 16 million below the Census Bureau’s count. Where’d they go? Well about 10 million are undocumented immigrants, so they’re not worth talking about. Another 5–7 million are people who could go on Medicaid, but have not, for god knows what reason. Presto, 30 million. That’s a nice way to lower the bar, isn’t it?

And what a disappointing speech. Well, no, I can’t say that exactly, since I hadn’t expected much, but it’s terrible policy. The core of it is to require all of us to buy health insurance from private companies—with a $3,800 penalty if we don’t, according to Max Baucus’s proposal. Subsidies will be available for people with incomes of up to $66,000 (or $88,000, depending on which of the four bills floating around you read), but it will still be quite a burden for a lot of us. So instead of getting rid of the insurance companies, and their diabolical profits, executive bonuses, claims denials, and administrative overhead, the president will be delivering them ten of millions of new customers. This will do nothing to reduce costs.

And what about that public option? Well, as Brown’s Politico.com article reports, the insurance companies said they’d accept reforms requiring them to accept everyone, pre-existing conditions or no, only if the gov forced us all to become their customers. And the so-called public option, a government-run insurance company, would have to pay its way without any public subsidies, meaning that its premiums would probably be on a par with, or only slightly lower than, private insurers.

A friend pointed out to me the other day that the market capitalization—the value of all the outstanding stock—of the publicly traded health insurers is about $150 billion. Add a little premium to sweeten the pot and you could nationalize the lot of them for about $200 billion. The total administrative costs of the U.S. healthcare system, which are greatly inflated by all the paperwork and second-guessing of docs’ decisions generated by the insurance industry, are about $400 billion a year. Those administrative costs are about three times what a Canadian-style single payer system would cost. So that means we’d save about $250 billion a year by eliminating the waste caused by our private insurance system.

In other words, the nationalization could pay for itself in well under a year. But we can’t do that. It’d be Canadian or something.

Meanwhile, we’re hearing from a lot of Democrats/liberals/progressives/whatevers that we have to support health care reform, without much discussion of what’s actually in the proposal(s). ACORN, suffering from its own embarrassments, circulated an email last Thursday urging all of us to call our Senators and tell them to “stand up” to the insurance companies. Stand up for is more like it. Ilyse Hogue, spokestool for MoveOn.org, said in her Facebook status update just after Obama’s speech: “Finally, the president I elected.” What, the corporate-friendly one? That’s probably not what she meant, of course. Columnist David Sirota characterized Obama’s speech as sounding like it was delivered by President Rahm Emanuel. Well, no, it was delivered by President Barack Obama. It’s always the advisors, never the king, isn’t it?

Clearly we haven’t escaped the discursive grip of Ronald Reagan. Obama’s speech evoked the magic of the marketplace, in its fantasy of competition leading to cost control. And he concluded the address with a “God bless America,” a convention now that was introduced to modern American speechifying by Reagan.

Sure, many of these left-of-center supporters, who otherwise should know better, are inspired by the hideousness of so many of the president’s enemies, a gang of racist and ignorant cretins. But you’ve got to hand it to the right. They fight tirelessly for their beliefs, however nutty they can be. They don’t begin a struggle by pre-emptively compromising. I wish I could say the same for “our” side, whatever that is.

Advertisements

Responses

  1. america’s health plan – don’t get sick. Geez, we have to pay $3,800 to those financiers? imagine if King Obama had framed it out that way. . .but wait a minute, I’m just a marginaly single payer advocate with an axe to grind.

    Best, Brian

  2. Very informative post. Amazing that anyone could extol the virtues of the marketplace after what has happened these past many months. But then this is the land of the free.

  3. I’m confused by the championing of the right (which I have read here a few times): “But you’ve got to hand it to the right. They fight tirelessly for their beliefs, however nutty they can be.” Huh? I haven’t the vaguest notion of what beliefs you are talking about. Fear of a black president? Certainly not less govt spending since we saw it explode (Iraq, etc.) under Bush. And what about the prescription drug benefit? Was there outrage on the right about that (well, no, since it was a gift to big pharma).

    Sorry, we have two things going on: corporate control of our politics, and a flat out “surge of white racial resentment, loosely disguised as a populist revolt.” (Barbara Ehrenreich, NYTimes 9/12/09). So you want us (left) to be more like them (right) in fighting tirelessly for our beliefs? What beliefs? I’m not entirely confident the left really does share a core set of beliefs, unless you get down to the most general 1. “the govt (or collectively “we”) are capable of doing some things that are worthwhile for society and which the market is incapable of.” And 2. diversity in our society is a good thing.

  4. Peter Keane, a lot of people on the right really believe in the justice and efficiency of the unfettered market, and the virtue of American imperial power. I don’t. But they’re not all racist cretins. Maybe it’s because I used to be on the right that I think that it’s worth engaging with their ideas – not the nutters, of course. But they’re not all nutters either.

  5. Agreed. It’s why I try to read some of (what I regard as) the intelligent right. In fact, I’ve always had a suspicion that thoughtful/intelligent conservatives have quite a lot in common w/ thoughtful/intelligent liberals (ugh, I hate those labels). I just think an ugliness has arisen (which Barabara E. mentions) that, if left unmentioned, will be thought of as conservative thought. It’s not , it’s just racist ignorance. I think you wisely point to the superficial/easily-duped “liberals” that fail to see Obama’s “more-of-that-same” corporatism (I agree & I think it’s a drag, but for 100 other reasons, I like having him as pres., given any realistic alternative). I just think it’s as important to call out the nastiness for what it is.

    I would note: who among is does not have some fear of “other” — white for black (and vice versa), liberal for conservative (and vice versa) , etc. Best to recognize that (in ourselves and others) and not have it totally derail the conversation (and indeed not allow it to drive our convictions).

  6. Why A Strong Public Option Is Essential – By jacksmith — Working Class

    Robert Reich explains the pubic option: http://bit.ly/dDYSJ http://robertreich.blogspot.com/

    John Garamendi on the Public Option and the Grassroots: http://bit.ly/TJMty

    It’s not just because more than two thirds of the American people want a single payer health care system. And if they cant have a single payer system 77% of all Americans want a strong government-run public option on day one (86% of democrats, 75% of independents, and 72% republicans). Basically everyone.

    It’s not just because according to a new AARP POLL: 86 percent of seniors want universal healthcare security for All, including 93% of Democrats, 87% of Independents, and 78% of Republicans. With 79% of seniors supporting creating a new strong Government-run public option plan, available immediately. Including 89% of Democrats, 80% of Independents, and 61% of Republicans, STUNNING!!

    It’s not just because it will lower cost. Because a strong public option will dramatically lower cost for everyone. And dramatically improved the quality of care everyone receives in America and around the World. Rich, middle class, and poor a like.

    It’s not just because it will save trillions of dollars and prevent the needless deaths of millions more of YOU, caused by a rush to profit by the DISGRACEFUL, GREED DRIVEN, PRIVATE FOR PROFIT MEDICAL INDUSTRIAL COMPLEX!

    It’s not just because every expert in every field, including economist, and Nobel laureates all agree that free market based healthcare systems don’t work. Never have and never will. The US has the only truly free market based healthcare system in the World. And as you all know now, IT IS A DISASTER!

    It’s not just because providing or denying medically necessary care for profit motivations is wrong. Because it is WRONG! It’s professionally, ethically, and morally REPUGNANT!, Animalistic, VILE and EVIL.

    THE REASON THE PUBLIC OPTION IS ESSENTIAL:

    The public option is ESSENTIAL because over 200 million of you are trapped in the forest of the wolves. Which is the forest of the DISGRACEFUL, GREED DRIVEN, PRIVATE FOR PROFIT MEDICAL INDUSTRIAL COMPLEX! With no way out except through needless inhumane suffering, and DEATH. While the wolves tear at your flesh, and rip you limb from lib. Then feast on your lifeless bodies like a dead carcase for transplant parts.

    At the most vulnerable times of your lives (when you were sick and hurting), millions of you have had to fight and loose cruel, but heroic battles. Fighting against the big guns of the DISGRACEFUL, GREED DRIVEN, PRIVATE FOR PROFIT MEDICAL INDUSTRIAL COMPLEX! in the forest of the wolves. All because you have no place else to go. You have no other CHOICE!

    But the PUBLIC OPTION will give you someplace safe to go. And it will give us someplace safe to take you. The public option will be your refugium (your refuge). Where the wolves cannot get at you when your down, hurting, and vulnerable. Where everyone who needs it can find rest, security, comfort and the care they need. Protected by the BIG GUNS of We The People Of The United States. THE MOST POWERFUL PEOPLE AND COUNTRY ON EARTH.

    This is why it is so critical that we do not lead another 50 million vulnerable, uninsured Americans into the forest of the wolves, without the protections of a Strong Government-run public option. We The People Of The United States MUST NOT LET THAT HAPPEN to any more of our fellow Americans. If healthcare reform does not contain a strong public option on day one. YOU MUST! KILL IT. Or you will do far more harm than good. And millions more will die needlessly. Rich, middle class, and poor a like.

    To those who would continue to obstruct good and true healthcare reform for the American people, and who seek to trap millions more vulnerable Americans in the forest of the wolves. We will continue to fight you. We are prepared to wage all out war against you, and will eagerly DESTROY! you. Time…is…UP! YOU HAVE BEEN WARNED! No Co-op’s! No Triggers! NO INDIVIDUAL MANDATES! without a Strong public option on day one.

    Healthcare reform can be the GREATEST! Accomplishment of our time and century. A time when future generations may say of us, that we were all, AMERICAS GREATEST GENERATIONS.

    BUT WE MUST ACT!

    I therefore call on all my fellow Americans and the peoples of the World. To join us in this fight so that we may finish becoming the better America that we aspire to be for everyone.

    SPREAD THE WORD!

    I have been privileged to be witness as many of you fought, and struggled to take your first breath, and your last breath on this earth. Rich, middle class, and poor a like. Life is precious.

    Whatever the cost. WE! MUST SUCCEED.

    God Bless You My Fellow Human Beings

    jacksmith — Working Class

    No Triggers! http://www.huffingtonpost.com/jason-rosenbaum/a-trigger-for-the-public_b_277910.html

    Triggers http://www.huffingtonpost.com/david-sirota/weve-seen-these-triggers_b_283583.html

    Krugman on heathcare (http://krugman.blogs.nytimes.com/2009/07/25/why-markets-cant-cure-healthcare/)

    Senator Bernie Sanders on healthcare (http://www.youtube.com/watch?v=RSM8t_cLZgk&feature=player_embedded)

  7. […] who also gets quoted about economics in Alan Abelson’s column in Barron’s. He remains unimpressed with the public option and explains why. And what about that public option? Well, as Brown’s Politico.com article […]

  8. […] and Left Business Observer editor Doug Henwood is more than happy to spoil the garden party. In his latest radio commentary, he presents this sobering report, which reveals how much as a society we have […]

  9. Even Reaganites have abandoned “the discursive grip of Ronald Reagan.” Paul Craig Roberts declares for single payer.

    http://www.counterpunch.org/roberts09142009.html

  10. Significant chunks of the health insurance business do not have publicly traded stock, most notably much of Blue Cross Blue Shield that is not in WellPoint, and the California gorilla Kaiser Permanente. So there is no stock to buy. In fact, you could just pass a law folding them into a single payer plan. Of course, there is the outstanding debt of all the insurers to pay off. And you cannot use the anticipated administrative savings twice, once to cover the uninsured and again to pay for nationalization.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: