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Algora Publishing - Middle-class suicide
                                               For a Kinder, Gentler Society
Tuesday,
Middle-class suicide
Frank Luntz's pollsters and focus groups have apparently found that the argument that the Republicans now proffer (as they did in 1993), that covering the uninsured is interpreted by many middle-class Americans as forcing them to share use of the specimen room with the underclass, resonates powerfully all across all but the bluest of blue-state America.
Asia Times


Middle-class suicide

By Julian Delasantellis

It's pretty much par for the course for science fiction to tell tales of a bleak and nightmarish future, but even so, Ridley Scott's 1982 movie Blade Runner, from the Philip K Dick novel, Do Androids Dream of Electric Sheep? really piled it on with the dystopian delights.

Set in the year 2019, in a Los Angeles with a population of 100 million (10 times its current population), the movie shows what happens when a society allows its middle class to wither and die. Here, Los Angeles has been rent into two socioeconomic classes with almost no regular contact - a small, far-off wealthy class growing ever fatter and happier on the backs of its slave labor android workforce mining the natural resources of the outer planets, and a vast, polyglot lower class, speaking a bastardized English composed of parts of all the languages of the immigrant communities competing with each other for what few of society's crumbs are available to them. All this is happening amidst a grossly polluted urban landscape where toxic rain regularly falls on the unfortunates.

Now, Scott's fatal future is just 10 years away, and, don't you know, many Americans seem to be expressing a desire to live according to Blade Runner's dire table of social organization. Obviously, they think they'll be up there living blessed and bountiful lives among the elite, but statistical probability would much more likely be having them struggling, or more likely dying, out there in the pools of black rain in the gutters.

Well, the United States citizenry is now telling political pollsters that it disproves of President Barack Obama's plan for near universal health insurance coverage , so forever more it must take responsibility for its actions.

Karl Marx once said that history always repeats itself, first as tragedy, then as farce; and it's true, the US Congressional Democratic Party, as if they were understudies at a community college summerstock production of "How not to run a country", has slipped into the role of its predecessors in the 1993-94 Congress, the institution which morphed into a giant tub of writhing Jello rather than vote on then first lady Hillary Clinton's healthcare initiative.

This was the last time the US actually tried to address its dysfunctional healthcare system in something even remotely resembling an adult fashion, and today's efforts seem to be heading for the same fate; it's almost as if, as the house lights come down, the stage voice announces that "Tonight, playing the role of Compuserve will be Twitter". Obviously, Act III of the scripts are similar; without a fast rewrite, this story will end with yet another thunderous Democratic Party mid-term election thrashing in 2010, then, after another 14 years in exile, perhaps the healthcare issue can be addressed again in 2024.

The problem, here is the same as it was back then, seemingly, it's the same as it's been since time immemorial. While the Democrats have been studying and researching the healthcare problem the way they do everything, as if it were all just another case study assignment at Harvard's John F Kennedy School of Government, the Republicans have been getting the politics down cold, and, once again, that's the more critical feature of the debate.

Simple to swallow
Using a technique that University of California at Berkeley Professor George Lakoff describes as "framing", they have boiled down the entire complex healthcare debate into a way they know common people can understand and support their side of the issue.

"You've got to remember that these are just simple farmers." Jim the Gunfighter (Gene Wilder ) warned unpopular new Sheriff Bart (Cleavon Little) in Mel Brooks's 1974 cowboy howler, Blazing Saddles. "These are people of the land. The common clay of the new West. You know ... morons."

For almost a half century now, the Republican Party has produced brilliant, lacerating political strategists, that always operated pledging full alliance to Jim's teachings - from Nixon guru (and current Fox News chief) Roger Ailes, to Reagan/George HW Bush era gutter streetfighter Lee Atwater, to George W Bush's "brain" Karl Rove, to current master pollster Frank Luntz.

Republicans are now aping a Luntz-generated line that the country does not need a healthcare reform initiative as far-reaching and daring as Obama's; as about 85% of the population is already covered by employer-provided health insurance or the government's Medicare program for the elderly, there's no reason to tip over the applecart.

What's really being said here is that the Republicans are offering upper middle-class white America a deal - reject Obama, stand true with us, and we'll guarantee that on you or your parents' next visit to the doctor in the suburban office park, Mom or Dad won't be distracted from their perusal of the waiting room's two-year-old National Geographics by the din of a single mother unsuccessfully trying to quiet her brood of, as Jim described Bart, "dazzling urbanites" each with their own blaring boomboxes.

It's a lot less likely that any family composed of "those" people would have health insurance and so would never have been allowed to set up an appointment. That's the main function of American health insurance - it's a gatekeeper, an ever-vigilant, conscientious Cerberus ever separating those who have it from the howling masses of lower middle-class pain that lack it.

When American tourists visit the Italian town of Pisa, home of the famed leaning tower, they feel smug and self-satisfied, confident that their proud engineers and architects could never construct such a poorly made and dangerous building that could seemingly collapse at a moment's notice; that's just about what Italian and other tourists feel upon seeing the US healthcare system at work.

Long ago, it was determined that healthcare was not a market like those for other goods; if your car needed brake service you could just shop around for your best price/quality deal, but if you needed heart service, like open-heart surgery, no matter who in the phonebook you called, the vast majority of potential customers weren't going to find somebody they could afford to do the operation.

The potentially backbreaking cost of your treatments had to be spread around, had to be pooled among others who, in return, would receive assurances that, when needed, their needs too would be covered as well. This introduced the concept of health insurance, the large pools of insurance payers from which payments to doctors and hospitals could be drawn. Also, since the "pool" would always be dry if everybody waited to purchase insurance until they really needed it, the health insurance would have to be acquired and maintained in periods of good health as well as bad.

This fact, and the social dangers thought to be inherent in denying health security to large numbers of potentially desperate people, had most advanced democracies moving by the first years after World War II towards some sort of government-provided healthcare.

But not in America. Doctor opposition to universal government-run national health insurance, sometimes derisively called "socialized medicine", sunk an attempt by president Franklin Delano Roosevelt to include it in later New Deal legislation. No, the American model has public healthcare clearly and undeniably always arriving through the back door.

War orders to arm the Arsenal of Democracy had factories previously covered in rust and spider webs humming along 24/7 by the early 1940s; factory managers couldn't get the workers they needed to fill the orders from the Allies, even before America entered the war after Pearl Harbor.

Roosevelt's wage and price controls prevented factories from utilizing the standard remedy for worker shortages - higher wages. However, a loophole in the regulations allowed extra non-cash benefits to be offered as an incentive to workers. Health insurance was one of these, and most factories were soon offering this as an incentive to keep their large pools of valuable and skilled workers. When the war ended, president Harry S Truman once again reached for national health insurance, once again failing in the face of more medical industry opposition.

But for a long time, this system worked. US factories, with a huge domestic market to serve and most of their foreign competition bombed out of existence, were so insanely profitable that providing what was then cheap health insurance to workers wasn't much of a problem; the idea was to keep workers contented and employed so as to not foment strikes that would turned away have flush customers ready to buy anything in the showroom with their fistfuls of cash (or, even better, their newly introduced credit cards!).

In 1965, president Lyndon Johnson wanted his Medicare health program for the elderly to be expanded eventually into a program for all ages, and in 1970 president Richard Nixon talked about a sort of national managed-care program, but while prosperity raged on there was just no appetite, in the country or in Congress, for big changes.

Then, starting around 1980, healthcare technology spurred healthcare inflation, and with the foreign manufacturing competitors rebuilt and fighting the feeble old American industrial giants for every sale, and so denying them their cushy monopoly rent, there was a problem, and there has been ever since.

In 1975, Paul Bartel directed another future dystopian epic movie, Death Race 2000, about a cross-country car race where the drivers are awarded points by hitting and killing pedestrians. This is similar to the way Americans experience their healthcare system, the big difference being that they experience it not as the drivers but as the pedestrians.

Say, at the beginning of the game, you're a young fellow just starting your career, finally freed from mom and dad's healthcare policy. The objective of the game is simple - you have to cross a street from where you are now, at age 22 or so, to the other side of the street, age 65, when all Americans regardless of income become eligible for the wildly popular uber socialized-medicine government program called Medicare.

Ten years go by, and things are going well - our contestant hasn't yet been hit, perhaps he's picked up a spouse, a few kids, maybe a house. Now the game gets interesting; he's got something to lose.

How well our contestant is going to do depends on two things - his skill and his luck. If he makes it to the other side of the street, age 65, to Medicare, unhit by a racer or untouched by a major medical crisis, he'll win the game. He'll be able to keep everything he's earned in life, that is until he has to enter a nursing home for his final years and Medicare takes everything. If he dies before enfeeblement and infirmity force this, and he's able to pass down everything he owns to his successors, he's really a big winner!

But if he starts taking hits in the middle of the road, he's in trouble. Whether he will be able to continue going on without incurring such large bills that will result in him losing everything in bankruptcy court (for almost all private sector insurance policies have some sort of lifetime or yearly upper benefit limit that has insurance coverage ceasing when broached) is the core of the game.

Without any health insurance, anything much more serious than a few doctor's office visits, maybe a surgery or two or a chronic condition requiring extended treatment, will break him and throw him out of the game . A better-insured contestant can take a few more hits, but even here, a serious, long-term condition such as multiple myeloma will probably push his medical bills beyond his policy's limits, and then he's gone. Even contestants with very good coverage will be thrown out of the game if forced to deal with long-term complex diagnoses, such as those requiring an organ transplant or DNA therapy.

So, therefore, to win the game, unless he's throwing the dice and betting on luck (which millions of Americans are now doing by going without health insurance and then clogging the bankruptcy court when they lose) to get to Medicare and win the game one must be shielded by as much health insurance as possible. If health insurance for the under 65 population is something granted by the employer, how does one get one's employer to provide lots of health insurance?

For millions of Americans these days, the answer is that they're not - either they're losing their jobs or having their hours radically cut back, both of which would result in a sharp cut back or elimination of health insurance; or, faced with its ever increasing costs, the employers are keeping workers on but no longer contributing to their health insurance premia. These are the key reasons why the vast majority of US uninsured, now 47 million and climbing, are still workers or the families of workers gainfully employed - uncovered by health insurance in a nation where health insurance is supposed to come from employment.

Why pick up the tab?
When commentators and bloviators talk about the crisis in US healthcare costs, they're not talking about how expensive it is for somebody to buy a bottle of aspirin with their own money; nobody really cares about this spending. This is called first-party spending, directly by the consumer, on a product. What really is the issue is what is called third-party spending, spending by the medical system which gets passed on to health insurance companies, which then pass these cost increases to the companies paying the workers' insurance. Since here is where the costs are rising, here is where the cutbacks are occurring, so here is where the crisis is now centered.

Why would an employer pick up the bill for most, if not all, of an employee's healthcare tab? The original reason certainly no longer holds much water; with unemployment around 10% wages and benefits are currently being cut, not raised, as they were during World War II.

Employers may pay health insurance benefits to keep workers, especially highly trained and specialized workers, happy and productive; then again, there are plenty of employers enjoying fat and happy lives even though there are pictures of them with devil's horns and cloven hooves underneath the words "OUR LEADER" in the employee cafeteria.

In the US, employers get a tax break for providing employees health insurance. A simple example demonstrates why, as it now is, this system was always destined to explode.

For the sake of example, let's say an employer pays $10,000 for an employee's health insurance - about right for one urban worker with lots of pre-existing conditions, or a rural worker with a small family. Once again let's say, for the sake of example, that the employer calculates his business tax on his personal tax form, specifically, IRS form 1040 Schedule C - Business Gains and Losses, as most small businesses do.

Once again, for the sake of example, let's say the employer is paying taxes at the common marginal tax rate of 28%, the rate assessed when the combination of his, from the businesses' profit and any other income, and his wife's income is between $137,050 and $208,850.

At the 28% rate, when he does his taxes, the business owner gets back $2,800 (0.28 x 10,000) of the $10,000 he spends on his employee's health insurance, meaning that $7,200 of it is from his own pocket.

So, is any employee worth the $7,200 it's going to cost, from the simple example, to cover him? If the answer is no, and if healthcare coverage is essentially unobtainable in America except through employment, then both the employee and general society have a problem, and that problem is the current healthcare crisis.

These days, moving from the bottom of the income scale into at least the lower middle, employers are deciding that, no, the employee is not worth it. Where once America had a broad middle class that almost universally received health insurance from its employers, now an argument can be made that, with large numbers of the uninsured, no person without health insurance can truly be called middle class, since just one brief illness will most like irrevocably eject them from it.

Increasingly, for full-time private sector employment paying less than $50,000 a year or so, and for all of the burgeoning ranks of part-time and temporary workers, there is little or no expectation that health benefits will be part of your new job's pay packet. If you're part of a 10-person shop doing graphic design that grosses $2 million a year. you'll probably get health benefits; the five employees of a coffee shop grossing $250,000 probably won't.

Taking a look at the problem macroeconomically best illustrates the problem. For about the past 15 years or so, healthcare costs in the US have been rising at an average of about 5% a year, while productivity per worker, what the employer actually receives for each new worker, has only increased at a rate of a little over 2% a year.

As these lines rise and diverge, the growing space between the two lines becomes a veritable Potter's field where many workers' dreams of an American middle-class lifestyle are being entombed. With medical care costs, and thus health insurance premia, rising faster than what the average employee brings to the business, it's no wonder that the obvious solution to employer's high cost of health insurance as a third payer is to stop paying the subsidy and let the employee try to get sufficient healthcare from the almost impossible position of an individual first payer.

This is the insane manner in which the system currently is trying to deal with high and rapidly rising healthcare costs - to deny access to it for those with, as measured by their wages, marginal economic benefit to the economy, and to keep on re-marking the sufficient social utility line ever upward.

As I said, when you lose your health insurance you go from having a third payer pay your costs to you trying to do it as a first payer, which very few can successfully do for any length of time. Nevertheless, the system is spending a lot less on your health needs (unless you start showing up in emergency rooms, another story in and of itself) than previously. This reveals the true nature of the uninsured problem to the ruling classes - instead of being a critical public policy problem that must be addressed, their suffering with little proper medical care frees up resources that affords the elite to be cosseted and comforted with the super care they believe their station deserves.

Thus, Blade Runner's 2019 bifurcation of society into lots of poor and a few rich moves ever closer. Frank Luntz's pollsters and focus groups have apparently found that the argument that the Republicans now proffer (as they did in 1993), that covering the uninsured is interpreted by many middle-class Americans as forcing them to share use of the specimen room with the underclass, resonates powerfully all across all but the bluest of blue-state America.

The irony is that many of those who didn't want to share their medical care with the uninsured will soon probably be doing precisely that, as the "not pulling your productivity quota to earn it" machine ejects them from the doctors they see with their health insurance, those with the Manet lithographs on the wall, onto the long, hard benches of emergency rooms and urban health clinics, with their interminable waits, screaming babies launching infected phlegm projectiles, and "FIGHT AIDS" in 50 languages posters on the wall.

The policy wonks at present negotiating healthcare reform in Congress are looking at various small fixes to the problem. With universal care, ejecting the economically marginalized from the system will no longer be available as a cost-containment strategy. A proposed so-called "public option" government-run healthcare program might put some competitive pressure on the cozy relationship between the health industry and the health insurance industry, by forcing efficiencies in the present practice wherein the insurance companies take the distended cost structures of the doctors, hospitals and health clinics, add on their own bloated management costs and profit margins, and then pass the costs of the entire inflated monstrosity to insurance payers.

Will it work? Well, it's going to cost probably between US$1.5 trillion to $2 trillion (compared with the $1.8 trillion 10-year costs of George W Bush's 2003 tax cuts) over the next decade; that has to account for something. It probably will do little to improve America's currently lousy healthcare outcome standings vis-a-vis almost all developed, and a whole lot of non-developed, countries; these are due to the country's very poor rural infant mortality statistics, as well as the growing plague of what is sometimes called diabesity - maladies such as diabetes and obesity which accrue to a society as it grows wealthy enough to enjoy the sedentary lifestyle brought on by workers not having to break their back with manual labor to earn their keep. The rest of the industrialized world should be seeing this soon enough.

But, speaking of costs, what is the value to the world of a stable American middle class? Not even counting the fact that the American middle class has time after time proved its mettle as the group willing to buy all the consumer products the developing countries of the world can hurl at it, what is the value of an America not descending to levels of social desperation reminiscent of Germany in the 1920s or the former Soviet Union in the 1990s?

What is the value of an America impervious to the siren songs of nativist irredentists sweeping down into Washington (perhaps originating in Fairbanks, Alaska?) at the head of an army of the sickly, hungry and dispossessed, blaming all the country's troubles on the usual suspects - the foreign, the black, the brown, the yellow, the non-Christian, the people who actually read math textbooks?

Another future-as-hell epic, Richard Fleischer's 1973 Soylent Green, has New York City police detective Robert Thorn (Charlton Heston) investigating the source of a mysterious new food product, Soylent Green, designed to feed an overpopulated and starving world . He is none to happy to find out the truth.

"It's people. Soylent Green is made out of people. They're making our food out of people! Next thing they'll be breeding us like cattle for food. Soylent Green is people!"

Well, the American middle class is at present being voluntarily consumed so the rich can have their healthcare. Still, a great many of them oppose any Obama health plan; it's not easy to warn somebody that they're about to be eaten alive when you find them waiting patiently under the ketchup nozzle.

Julian Delasantellis is a management consultant, private investor and educator in international business in the US state of Washington. He can be reached at juliandelasantellis@yahoo.com.


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Middle-class suicide