Malice in Wonderland

As we gaze this week at the wonderland we call Congress, it might amaze us that Congress actually shut down the federal government over the implementation of the Affordable Care Act.

Rep. John Culberson of Texas grinned like a Cheshire Cat as he explained it this way in an outlandish interview on CNN, “we do not want the federal government socializing health care as they have in England and in France.”

This is socialized medicine?  Really?

He wasn’t content to leave it there, adding a new “sacred” right to the Constitution to explain further his position.

“The right to be left alone as Americans is probably our most important right.”

As the Mad Hatter would say, “Why, you might just as well say that ‘I see what I eat is the same as I eat what I see.’” 

But Representative Culberson was on a roll.  Literally.  This was two days after he was reported to have shouted “let’s roll!” as House Republicans concluded a caucus in which they re-affirmed their intent to shut down the government if Obamacare weren’t defunded. 

He explained that he was invoking the memory of the 9/11 heroes who brought down the airplane in Pennsylvania that was headed to Washington.  Was the irony lost on Representative Culberson?  That plane was in all probability heading toward the Capitol, and the heroes who brought it down may not only have kept our government open that day, they may have saved Representative Culberson’s life, and the lives of many of his colleagues.

Meanwhile, as Representative Culberson – a House member since 2000 – was giving his interview, some really bad things were happening to Americans hoping for an end to the economic quagmire he helped to create.

The Dow was shedding 129 points in anticipation of the shutdown.  In the last week, U.S. companies lost about $200 billion in value – more than the combined value of every company in Poland.

And we have had to suffer through all this because giving a $6000 tax credit to families earning $50,000 per year who purchase their own private health insurance is too “socialist” for Culberson.

I believe in our government.  I believe it is there to protect our actual rights (not ones Representative Culberson invents) and to work toward the common good.

And I am bothered because there is no charity in Representative Culberson’s view, only malice.

Toward the people who are helped most by Obamamcare – people with serious mental illnesses and other chronic conditions, lower-income workers, and uninsured people, for sure.

And toward the President on a disturbingly personal level, too – because this shutdown is not really about debt or deficit either.

Does anyone really think that if Ronald Reagan – not Barack Obama – were to be magically transported down a rabbit hole to the presidency today, then Representative Culberson would be saying the same things?

Five years into Reagan’s presidency, our national debt, which would triple during his term, was up over 100 percent – more than it has grown during Obama’s presidency.  Our federal deficit had grown from $74 billion to over $212 billion.

Medicaid was being transformed from a mostly long term care program for elders to a safety net health insurance program for families.  By 1988, eligibility was increased to 185% of poverty for pregnant women and children and even more for some through the Katie Beckett waiver.  These are far more generous than the 138% of poverty level Obamacare established for adults with chronic conditions.

Before he left office, piled on top of all that debt, Reagan even proposed the bare outlines of much of what became the Affordable Care Act.

He asked Congress to include catastrophic insurance, limiting out-of-pocket costs to $2,000, for every American covered by Medicare – along with a $60 a year increase in premium to pay for it.  He proposed a federal/state partnership to promote the formation of state-based risk pools to provide insurance for those who could not obtain it.  He called on states to mandate enhanced employer-based health insurance coverage.  And in his February 1987 radio address calling for all of these things, he said that the federal government should work with the private sector to promote public education about the choices and options available.

Representative Culberson was serving his first term in the Texas House of Representatives in 1987.  Do you imagine he – one of only two sponsors of legislation to put Ronald Reagan’s image on the $10 bill- favored a government shutdown to prevent Reagan’s “socialized health care?”

Paul Gionfriddo via email: gionfriddopaul@gmail.com.  Twitter: @pgionfriddo.  Facebook: www.facebook.com/paul.gionfriddo.  LinkedIn:  www.linkedin.com/in/paulgionfriddo/

On the Brink of a Government Shutdown over Obamacare

It is hard to imagine a political strategy less likely to achieve its intended outcome while simultaneously harming the economy than shutting down the government to prevent the implementation of Obamacare.

But that probably won’t stop Senator Ted Cruz from trying.  And unless cooler Congressional heads prevail this week, while he will do no real harm to Obamacare, he may well do harm to the economy.

Obamacare is the law, shutdown or not.  And no matter what, on Tuesday you will still be able to go to any hospital in the country and get treated, your doctor’s office will still be open, and your insurance company will still expect you to pay your premium.

But when the government is shut down, the stock market suffers. 

And a few points on the downside in our stock market that are attributable to a single event may be more significant than you think.

Let’s go back to 1995.  The Newt Gingrich-led House shut down the government twice – on November 14, 1995 for a week and on December 16, 1995 for three weeks.

Until then, 1995 had been a boom year for the U.S. economy.  The S&P Index rose 34 percent for the year.  But on the day of the first shutdown, the S&P was down 3 points, or one-half of one percent.  And on the next trading day after the second shutdown, it crashed 9 points, or 1.5 percent.

What is a one-half of one percent drop in the markets worth today?   

We can do the math for Senator Cruz.

At the end of 2012, the total market value of every company listed on our U.S. stock markets was $18.6 trillion.  The markets are even higher now, so we can estimate that today all those companies combined are worth around $20 trillion.

So one half of one percent – or about 9 points on today’s S&P – would subtract around $100 billion from the value of those companies.  That is roughly equivalent to the annual cost of Obamacare!

So isn’t it ironic?  A shutdown won’t shut down Obamacare, but it could hit businesses harder in one day than Obamacare would in an entire year.  And that’s on the conservative side.

People like Senator Cruz don’t want to think about this, so they might look at it another way.

They will tell you that we spend around $3 trillion annually on health and healthcare in the United States.  That is about 15 percent of the market value of all of the companies that are publicly traded on our stock exchanges.  They will argue that this is way too high.

I agree. We can probably do it much less expensively if we put more resources into prevention and public health, like other countries do.

Of those $3 trillion, federal state, and local governments directly or indirectly pay about 71 percent of the bill.  We pay another 12 percent out of pocket.  The remainder is paid by privately funded private health insurance.

So can Senator Cruz assume that if we repeal Obamacare, we won’t have to pay that 71 percent?  The answer is no, because these are pre-Obamacare percentages.

And what effect will this government takeover of healthcare formerly known as Obamacare have on these percentages?

Thegovernment’s share might go up 2 or 3 percent, private insurers might pay 1 percent less, and our out-of-pocket share will go down a couple of percentage points.

It is hardly seems worth working up a Congressional lather over this.

But consider something to which all members of Congress ought to be paying attention. 

If our stock market were to go down just 1.5 percent because of a shutdown, as it did after the last shutdown, then $300 billion will be lost to publicly-traded American companies.  That is equal to the total market value of every publicly traded company in Belgium, Turkey, or Chile.  It is twice the market value of every publicly-traded company combined in Israel, and three times the market value of all the publicly-traded companies in Ireland, Austria, or Kuwait.

Remember the years-long effect that the collapse of the Greek economy has had on the European and world economy?  $300 billion is approximately four times the total value of every publicly-traded company in Greece before the meltdown.

That’s something to think about on the brink of a shutdown.

Paul Gionfriddo via email: gionfriddopaul@gmail.com.  Twitter: @pgionfriddo.  Facebook: www.facebook.com/paul.gionfriddo.  LinkedIn:  www.linkedin.com/in/paulgionfriddo/

Six More Reasons Why Obamacare Won't Be Repealed

The House of Representatives voted to repeal the Affordable Care Act for the 40^th time last week.  It did this before balancing the budget, passing a jobs bill, reforming election laws, or anything else that might actually improve its standing in the eyes of the general public.

So what began for some members of Congress as principled opposition to federal “overreach” has turned into a political punch line:

“How many more votes will it take for the House of Representatives to repeal Obamacare?  It doesn’t matter, because the House doesn’t count anyway.”

The very first column I wrote after the mid-term election in 2010 was entitled “Six Reasons Why Health Reform Won’t be Repealed.”  In it, I argued that there were at least five substantive reasons why the Affordable Care Act would not be repealed in spite of the Republican House takeover.  These included the popularity of the expanded Medicare benefits, the benefits to early retirees, the benefits to adult children, and the benefits to those with chronic conditions.

I concluded with a political reason.  People who were already upset at the high cost of health insurance would never vote for someone who would vote consciously to make that cost even higher.    

That is as true today as it was then.

So, almost three years later, here are six more reasons why Obamacare will remain the law of the land even after 2016, no matter how many more meaningless repeal votes the House takes between now and then, or how many Senators suggest shutting down the government to prevent its implementation.

First, states with expanded Medicaid programs will never support the repeal of that provision of Obamacare.

That means that neither will most of their members of Congress, no matter how they vote for show.  At present, those states have 205 representatives in the House.  By the end of the year, that number should be closer to 238.  In other words, by next year, states with expanded Medicaid programs will have a majority in the House of Representatives.

Second, the infrastructures to implement Obamacare in all fifty states are now being established – and one of these is an advocacy infrastructure.  Ironically, the advocacy infrastructures may become even more potent in states that have opposed Obamacare.  Because those state governments are giving them no help, they can marshal anti-government on behalf of Obamacare.  For example, the enrollment efforts of Florida CHAIN and its allies already show an impressive level of planning and sophistication.  And they will only get better in the days to come. 

It is difficult to repeal any governmental program.  It is even more difficult when there is an organized effort to protect it.

Third, the existing Medicare program for current and newly-enrolling Medicare beneficiaries is still untouchable for politicians.  

That includes the Obamacare changes that are now an integral part of Medicare – better prescription drug coverage and better wellness benefits.  Imagine being the politician who wants to take away those!

Fourth, unless and until the Congressional Budget Office changes the way it projects budget impacts, you can’t repeal Obamacare without adding to the deficit.  And, for the record, no one in office or running for office favors adding to the deficit.

Fifth, too many people – as many as 25-30 million, by most estimates – are going to benefit directly from the tax credits beginning next year.  If you repeal Obamacare and raise the annual cost of their health insurance by thousands of dollars, they will notice.  Suggesting that they can just become uninsured probably won’t cut it.  And they will probably vote against you in the next election.

And finally, the House lost the issue’s long-run political debate right after the 2012 election, when it replaced “repeal and replace” with simply “repeal.”

“Repeal” may be easier to argue in the short-term, but opponents have to have a plausible alternative to Obamacare to build their constituency.  And they don’t have one.

So whether or not Obamacare becomes more popular in the days to come, to most people it will be much better than nothing.

Even if the House casts forty more votes to repeal it, and even if more senators join the tin-eared chorus threatening to shut down the government over its implementation, Obamacare is here to stay. 

And all the members of Congress already know this.

Paul Gionfriddo via email: gionfriddopaul@gmail.com.  Twitter: @pgionfriddo.  Facebook: www.facebook.com/paul.gionfriddo.  LinkedIn:  www.linkedin.com/in/paulgionfriddo/