Neoliberalism Kills (Part 1)

Originally posted on October 18, 2012 at the New Economic Perspectives blog.

During the run-up to passage of the Affordable Care Act (ACA), I wrote a number of posts here, here, and here assessing the ACA very negatively, and pointing out the shortcomings of the various versions of this bill, preceding its final passage. My focus was on contrasting varying versions with HR 676, the Conyers-Kucinich Medicare for All bill, in relation to its likely impact on fatalities, bankruptcies and divorces attributed to lack of health insurance coverage in the US.

At that time, about 47 million people were uninsured, and based on the rate of 1,000 fatalities per million established by the Wolper-Woolhandler-Himmelstein et al study of 2007-2009, I anticipated 47,000 fatalities in 2010.  In addition, I predicted that

— In the “band-aid” period before the health insurance exchanges became operational in 2014 we were still looking at an average of 31,000 fatalities per year due to lack of insurance, or a total of about 140,000 expected fatalities before the exchanges would be effective sometime in 2014.

— After that we were still looking at 23,000 annual deaths per year through 2019.

— A grand total of expected fatalities of 267,000 by the end of 2019

— The bill will not cover 30 million additional people, as claimed by its advocates, but more like 15 million due to rising insurance costs and un-indexed subsidies in the ACA.

— In addition, due to population growth, we would still be looking at 35 million uncovered and 35,000 fatalities due to lack of coverage.

Now 2.6 years have passed since I made those predictions, and the Commonwealth Fund has just released a new study of the ACA. The study projects what we can expect from ACA coverage compared to what we can expect from a baseline do nothing scenario and from Mitt Romney’s latest pronouncements about his health care plan, which, in all likelihood will be obsolete before election day.

The projections are based on Jonathan Gruber’s simulation model. Gruber was a consultant whose ideas were incorporated both into Romneycare in Massachusetts and the ACA at the national level. Gruber’s model isn’t something one can count on in my view, if only because long-term economic projection models using CBO-like methodologies are subject to accumulating errors over time as well as wide deviations from their policy assumptions in reality. Decade long projections are particularly likely to be science fiction rather than science.

Having said that, however, it’s still worthwhile to use Gruber’s projections as a basis for comparison of the various scenarios, simply because they are likely to under-estimate the rate of coverage, as well as the level of projected fatalities, over time. We can be pretty confident, for example that if Gruber’s model projects 286,000 fatalities over a particular period of time; then actual fatalities will be at least that high.

The Comparison

Here’s a Table I constructed using data from the study. There are four scenarios compared in the Table: The ACA, the Romney Plan as described on his web site, http://www.mittromney.com/forms/welcome-0  a baseline scenario assuming that the ACA wasn’t implemented, and a final scenario assuming that HR 676, Medicare for All, had been passed by June of 2009 either through Democrats  forgetting bipartisanship and using reconciliation, or the Constitutional Option to overcome the Senate filibuster. The Commonwealth Fund doesn’t include this scenario; but I think it needs to be included in any comparison to indicate what might have happened if the President and Congress had wanted to solve the most serious consequence of maintaining the private health industry, rather than simply put a band-aid on the health insurance problem while bailing out the health insurance companies.

Let’s begin by looking at the first three years 2010 – 2012. Think about the numbers for a minute. It’s nearly three years since a Medicare for All Bill might have gone into effect. If we were living under the Romney Plan, roughly 148,200 people would have died. Under the baseline of no legislation at all, the fatalities would have been slightly lower at 146,600, and under the ACA we’ve had nearly 140,500 fatalities. The ACA is slightly better than the other two alternatives; but the conclusion that jumps out at one is that the failure to pass and implement Medicare for All has cost at least 140,000 lives in three years, or 47 times the number of lives lost on September 11, and about 14.6 times the number of fatalities on 9/11, during the Iraq War, and in Afghanistan up to the present, combined. I’ll return to this point later.

The years between 2013 and 2022 show a marked divergence of the uninsured estimates among the Romney, ACA, and benchmark scenarios. The ACA saves hundreds of thousands of lives compared with the benchmark and Romney scenarios; but it still projects an additional 286,000 fatalities through 2022 under the ACA scenario, and a total of 427,000 fatalities from 2010 through 2022. This compares to nearly 800,000 under the Romney scenario and just over 700,000 for the no change benchmark. Certainly, the ACA is much better than the Benchmark or Romney alternatives, but it’s hard to avoid noting that the most striking comparison is between any of these three alternatives, and the Medicare for All alternative. Had that alternative been legislated in 2009 and implemented by January of 2010, we’d be looking at virtually no fatalities due to lack of insurance rather than 400,000 or 700,000, or 800,000. Since The Commonwealth Fund Report excludes the Medicare for All alternative from consideration, and in doing so, moves the Overton Window of its policy impact evaluation to the Right, it doesn’t bring the real cost of legislating the ACA option to the fore. That cost, based on Gruber’s simulation is 427,000 lives over the time horizon ending in 2022.

What Was the Justification for Accepting the Cost of Those Lives?

There are a lot of reasons, motivations, and political dynamics which together explain why the ACA, rather than HR 676 passed the Congress. I’ve written a lot about these in the past and have imputed corrupt motives to various people involved in the legislative process producing the ACA often enough. But apart from all this, there is the question of justification or rationalization, of why Medicare for All could be so quickly and easily taken off the table without a major fight from the progressives?

Part of the reason was the promise of Administration support for the public option sparkle pony, as it came to be called in some of the more cynical progressive circles. The PO idea split progressives and stripped away support of DC-based progressive organizations from Medicare for All, on grounds that the PO was a more politically “realistic” alternative than Medicare for All. That is a sad story that has been told very often. But looking past it; what was unrealistic about Medicare for All, the type of system that has been successful in providing coverage and lowering costs in so many nations?

Apart from the political opposition from the insurance companies that Medicare for All would have engendered, I think the main justification for abandoning Medicare for All and switching to the PO and eventually the PO-less ACA, was actually neoliberalism. The President, his main advisers, the Democratic leaders in Congress, and most progressives working for Washington progressive organizations were steeped in neoliberal doctrine. They viewed the Bush tax cuts and the two Wars as unpaid for. The ARRA stimulus Act was similarly unpaid for and added to deficit spending and to the debt-subject-to-the-limit. They believed and most believe today that the Federal Government can have solvency problems if the debt-to-GDP ratio increases too much, and interest rates on the national debt are driven up by the bond vigilantes.

A Medicare for All Act would have required Federal spending on health care to rise by $800 – $900 Billion per year over present levels. They were not ready to cover that with higher tax revenues, and they were not ready to deficit spend it because they viewed that as fiscally irresponsible, and believed then and still believe now that it’s necessary to decrease the debt-to-GDP ratio over time.

So, they wouldn’t consider spending for Medicare for All. They wouldn’t look seriously at the hundreds of thousands of lives they were consigning to oblivion, at the bankruptcies and divorces they could prevent, or at the obvious fact that while HR 676 would have cost the Government $900 Billion more in money annually that the Government can create at will and at zero real cost; it would have saved the people who have to pay for health insurance, and health care out of pocket and in the form of “co-pays” $1.8 Trillion annually, thus providing a marvelous boost to the economy. Instead, they just said to everybody, that it was impractical and that the United States couldn’t afford it; but that it would be able to to afford a self-supporting PO bill, and later when that was taken off the table, a deficit neutral insurance bailout like the ACA.

So, here we are at the denouement, neoliberalism, and other false social and economic theories, kill. In this case, belief in neoliberalism has already killed approximately 140,000 Americans since the beginning of 2010. And if we don’t reject it, over the next decade it will kill 286,000 more, more than 2/3 the number of US fatalities during WW II. And these are only the fatalities resulting from a refusal to deficit spend to pass Medicare for All.

In addition, there are also the fatalities resulting from our collective failure to end the joblessness, the crime, the reactions to family breakup, the social disintegration, and the climate change and environmental effects, and all the other serious problems we refuse to solve because we and our leaders have been captured by neoliberalism and its false notions about fiscal responsibility and fiscal sustainability. We have reached the point, now, where it is neoliberalism or American Democracy, or, if you like neoliberalism or us. There is no alternative! Neoliberalism is one of our worst ideas. And as Popper said, life is about killing your worst ideas before they kill you. So, it’s time for us to free ourselves of neoliberalism,  switch to a paradigm that works, and get full employment, Medicare for All, and much else. That paradigm is called New Economic Perspectives Modern Money Theory.

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17 RESPONSES TO “NEOLIBERALISM KILLS: PART ONE”

1. John Lounsbury | October 18, 2012 at 11:49 pm |Joe – – –It is not related to the social ethics focus of your discussion but there are also two important economic issues involved that never seem to get real attention. I’ll try to make this brief – thus much valuable detail may be lost.
   1. It was frequently argued from the right that more government involvement in the process of paying for healthcare would be inefficient, the old “government can’t do anything right” credo. Yet when single payer fell off the table and Public Option was its replacement many voices on the right argued that private insurance providers would be squeezed out of the marketplace by “big government”. The bottom line of the argument was price competition would be unfavorable for the private unsurers. Wait a minute!!!! Single payer is no good because government can’t do things as well as the private sector and now public option is no good because the private insurers couldn’t compete on cost?
   There is no logic in all this – just theologic devotion to “principles”.2. One of the primary burdens on business is the cost of healthcare and one of the major uncertainties, we are told, that inhibits expansion of the economy by “job creators” is healthcare cost and cost uncertainty in the next few years. A single payer (Medicare for all) system removes much of that direct burden and most of the uncertainty from small and mid-sized business. If the cost of health care to a company was not dependent on the number of employees but only proportional to company income, a great inhibition to employment growth (if you believe those who call it that) would be removed. Companies would see healthcare costs rise, not when they added employees, but when those employees boosted the company’s income.
   
   
   • Joe Firestone (LetsGetitDone) | October 20, 2012 at 12:58 pm |Excellent points, John. I’ve never understood why small business hasn’t been the strongest supporter of medicare for All, considering the money it would save those businesses and the opportunities created for small business people to start new businesses. Also, I don’t understand today why Walmart isn’t pushing single-payer. Right now, they’re living off of Medicaid and getting pilloried for it. But if we had Medicare for All, no one would worry about the health insurance they offer their employees.
     
     
2. Dale Pierce | October 19, 2012 at 5:49 am |You have it right, sir – “the President, his main advisers, the Democratic leaders in Congress, and most progressives working for Washington progressive organizations were steeped in neoliberal doctrine…” Were and are. That is why there is no discussion, from the *Democratic* side about the looming “fiscal cliff”. The corporate Democrats view this crisis, like every politically engineered “crisis”, as yet another opportunity to out-Republican the Republicans in their willingness to sacrifice the last remnants of the New Deal to some “grand” fiscal-responsibility dodge. The corporate Democrats – a large majority of all Democrats in Washington- are far more tightly trapped in the La Brea tar-pit of neoliberal ideology than any Republican is. Republicans, when put to it, will at least practice military Keynesianism (and send out tax rebates), and will cook the books as necessary, knowing, as Dick Cheney *correctly* said, that, “Reagan proved that deficits don’t matter”.Look to the hills, mavens of MMT, from whence, if from anywhere, cometh our strength. Look to Argentina, to Iceland, to Latvia, to Brazil. And, yes, look to those places where the experiment is even less self-consciously or theoretically grounded. Look at pariah states like Venezuela – which has achieved and maintained food self-sufficiency, ignoring the neoliberal, anti-government cat-calls of local and international elites. Look at the poor Cubans – poor but proud, their backs unbent – who have used scientific medicine and universal coverage to match the U.S, in life-expectancy. Let me say that again. The Cubans – those miserable orphans of the Cold War, beleaguered, as always, by the U.S.-led blockade – have pulled *equal* to the U.S. in life expectancy, by way of their own local version of “medicare-for-all.”America, meanwhile, has been set on a road so low that the self-styled “progressives” dare not even speak its name – not until after they have won their little election and popped their little Champagne corks. Then they will show us the next version of the Obama Plan – the next craven plea for a “grand bargain” with the enemies of Social Security and Medicare. Those who would defend these bastions would do well to get prepared, because the greatest danger comes from the rear – from our erstwhile allies.
   
   
   • Joe Firestone (LetsGetitDone) | October 20, 2012 at 12:59 pm |Thanks Dale, nice statement, and people do need to get ready for the big fight coming up.
     
     
3. Javed Mir | October 19, 2012 at 6:18 am |–full employment, Medicare for All and much else.In nutshell, let USA be a welfare state instead of being a warfare state. They have well educated experts on these issues and can manage it. Maximum economics production and reasonably equal distribution can lead to economics of happiness.
   
   
4. Arlene duke | October 19, 2012 at 8:50 am |Of course Medicare for all would be much better but I don’t think that was a possibility at the time ACA was passed. This article makes it seem that there was actually a choice to be had between ACA and Medicare For All. However, these charts present information that everyone should know.
   
   
   • Bayard Waterbury | October 19, 2012 at 2:16 pm |Arlene, remember that Medicare for All (also known as Single Payer) had at least 60% support in the medical community, and over 70% support from the general public. It could have been done, but it wasn’t even allowed in the debate so strong were the counterveiling lobbies.
     
     
   • Joe Firestone (LetsGetitDone) | October 20, 2012 at 1:38 pm |Arlene, I think it was Obama’s choice. Imagine a world in which Obama did this:1. Met with Harry Reid in December of 2009 and demanded that he organized the Senate in January without the filibuster allowed. All decisions to be made by majority vote. Reid wouldn’t have liked it, but in the atmosphere of that time with the precipitous economic collapse in progress and with Reid due to run for re-election 2010 anticipating a need for Obama’s strong support, I think Obama would have gotten what he wanted.2. In January, lobbies Congress not to change the mark-to-market rule for the big banks to let them hide their insolvency, appoints a progressive as Chief of Staff, rather than Rahm Emanuel and then nominates Jamie Galbraith as Secretary of the Treasury, and Randy Wray as his Chief Economic Advisor, while giving Sheila Bair a free hand at the FDIC. He also appoints Bill Black to handle prosecutions arising out of documents uncovered in the process of resolution. Result, the five big banks get taken into resolution in February, their economic and political power destroyed, and FDIC regulators guarantee a free flow of funds to businesses to fuel the recovery.3. The ARRA is then passed with no need to conciliate Republicans or very many Blue Dogs, since only 50 plus one Senate votes are needed to pass the ARRA. The composition and size of the Act are changed. It’s now $1.6 T in size, and contains full payroll tax holidays, State Revenue sharing of $1,000 per person, and a Federal Job Guarantee program, because Galbraith and Wray recommended that, and there was no need to worry much about what the Rs or the blue dogs thought. In the event, since there is never any doubt that the President has the votes he needs in a filibuster-less Senate, Republicans start climbing aboard the ARRA so they can say they had a part in the Recovery. The final vote for the ARRA is not 80-20 in the Senate.4. In February, the President makes it known he wants a health care reform bill and that he’s in favor of Medicare for All legislation. He asks the Democrats in Congress to come up with alternatives and makes it clear that he wants an alternative bill formulated with Democratic input alone, and he also wants one implemented within 6 months of passage and specifies a deadline for passage by the end of April. Result he gets HR 676 by the end of April and orders Kathleen Sibelius to implement it in 6 months, which she does. people strat enrolling in the Fall of 2009.What do you think happens then to the rest of Obama’s presidency? Do you think there would have been a tea party at all?So, not only do I think there was a good chance to pass Medicare for All at the beginning, I also think Obama blew it. He was so entranced with bipartisanship BS, that he sacrificed the success of his presidency on the altar of futile attempts to win bipartisanship. Obama studied Reagan too much, and FDR too little. He needed a Green New Deal. Instead he created a Red victory in 2010, and possibly one in 2012 as well, depending on how these last weeks go.
     
     
5. Bayard Waterbury | October 19, 2012 at 2:12 pm |Neoliberalism is also known as neoconservativism, but, either way, to discover its massive pitfalls and the rapage of the world’s major countries, I recommend the reading of The Shock Doctrine by Naomi Klein. This book is a terrifying journal testifying to the incredibly nasty, evil and deadly corrosive social, polical and economic effects arising from the economic policy prescriptions of the “Chicago School” which doctrines were developed under the leadership of Milton Friedman and his cohort, Joseph Hayek, the Austrian economist. Reading this book, which cronicles the growth of this doctrine from its beginnings in South America to Indonesia, Eastern Europe, the Soviet Union early 90’s, and finally China and the United
   States. Actually in America, it came here first with the Reagan Trickle Down debacle, and has progressed to banking with the 1999 deregulatory scam called Gramm-Leach-Bliley, and recently into both the bogus insufficient banking reregulation of Dodd-Frank, and the reform of the ACA. It is like an economic viral infection. It has been proven not to work on every level, and yet, even in Europe today, the vast majority of the austerians who are controlling the debate there are going to bring down the Eurozone under its policy dictates, and in the US in our current obsession with the national debt. It is a viral, toxic doctrine that could easily end up crashing the world’s cultures like even Nazi Germany couldn’t do.
   
   
   • Bayard Waterbury | October 19, 2012 at 2:30 pm |Correction: It is not Joseph Hayek, but Friedrich Hayek. Sorry for the error.
     
     
   • Joe Firestone (LetsGetitDone) | October 20, 2012 at 1:41 pm |Friedrich August von Hayek, born in Vienna in 1899. More trouble than he was worth!
     
     
6. ezra abrams | October 23, 2012 at 5:23 pm |One technical quibble: you repeat the statement that the bill is 1600 (0r 1800 or 2000) pages long.
   Now, it is true, if you get the pdf, it runs to 1800 odd pages; I assume thats how it would print.
   But if you put it into 1 inch margins, and cut out all the boiler plate legalisms, it would be a lot shorter; my guess is that most of the important stuff would fit in 100 pages or so (eg, the section on limits on lifetime caps is ~4 pages, but the relevant material is ~1/4 of a page)you have written a lot of words, and maybe I missed it, but you didn’t seem to address a fundamental issue:
   are we, on average, better off with obama care then with no bill ?
   as you yourself pointed out
   http://my.firedoglake.com/letsgetitdone/2009/11/01/an-evaluation-of-nancys-masterpiece-the-band-aid-period/
   see esp your own points 3, 4, and 5
   there is a lot of good in the bill, good that started already.My impression is that the liberals were so disorganized and out of it (they actually thought it mean’t something when the A Weiner D-NY [yes, that weiner] said that Pelosi had promised a floor vote on the PO; all the liberals were saying, see we have a floor vote..
   yeah, and I’ve got a bridge in Brooklyn you can have, cheap.Obama care may or may not suck; that isn’t the issue; the issue is, are people better off.
   
   
   • Joe Firestone (LetsGetitDone) | October 24, 2012 at 1:20 am |Ezra, Better off than what? Better off than we would have been if the Ds had gotten rid of the filibuster and passed HR 676, Medicare for All? I don’t think so? Better off than we would have been if they had used reconciliation to extend extend Medicare to everyone over 45? I don’t think so? Better off than we would have been if they had insisted Medicare for All, been defeated in Congress and then ran on Medicare for all in 2010? I don’t think so! If you want to make an assessment of whether we’re better off you have to be fair about it. You want to restrict the comparison to the narrow standard of whether the ACA is better than doing nothing in 2009, 2010, 2011, 2012, 2013, and 2014, when it finally goes into effect. But that’s quite an unfair standard of comparison.The opportunity cost of passing the ACA was incredible. It took all of the political steam out of the movement for HCR for awhile, because people are either trying to repeal the ACA or are waiting to see how it works. It also led to the Ds losing Congress in the 2010 elections and, in turn, led to the impossibility of Congress doing any more to facilitate economic recovery, provide more State Revenue sharing so State Government jobs could be saved. It led to R legislative victories at the State level all over the country and to attacks on women’s rights and to the comprehensive voter suppression efforts we are now seeing. In fact, I think the opportunity cost of passing this terrible was so high that my assessment is that we would have been much better off if it had been killed before it was passed.On the length of the bill, if I frecall correctly the final bill was 2300 pages in length and no one really understands it except the lobbyists who wrote it. Also everything you have to say about length being deceptive also applies to Conyers-Kucinich HR 676. That was a 35 page bill, so perhaps most of the important stuff would have fit into 15 pages? I mean, what’s your point. Mine is that the bill was too lengthy for intelligent laypeople to read and understand. But this is not true for the 35 page Conyers-Kucinich Bill. That’s easy to read and to understand the benefits it provides to people and how the taxes that would be levied along with it.
     
     
7. Pingback: Neoliberalism Kills: Part Two – New Economic Perspectives
   
   
8. SocraticGadfly | October 25, 2012 at 4:07 pm |Neither Obamacare, nor the “public option,” nor Medicare for All, as best as I can determine, have adequate cost controls compared to other developed nations.The failure to stipulate that such cost controls need to be part of national health care is, let’s call it …Paleo-progressivism.I don’t want “Medicare for All” if we’re still spending 50 percent more per capita than other developed nations, or more, for health care.Period.There are times where legitimate financial constraints on medical insurance under any name need to be considered.http://socraticgadfly.blogspot.com/2012/10/paleo-progressivism-neo-progressivism.html
   
   
   • Joe Firestone (LetsGetitDone) | October 25, 2012 at 6:55 pm |The Taiwan system was modeled on American Medicare. Cost control has been largely successful because providers now negotiate with only one buyer. Monopsony does wonders for increasing costs.