Monday, 17 August 2009

The only way is down for Obama

Everybody seems to have been taken by surprise with regards to the vitriol directed at the proposed health-care plan by the new US administration led by Barack Obama. Town halls have been hijacked by Republican activists and the “debate” has turned nasty. It has even evolved into an international conflict, with the British PM Gordon Brown twittering in support of the NHS. A loony Tory has joined the “debate” and spoiled the party for David Cameron, for he has all but won the next General Election save a monumental surprise or reversal of fortune. Mr Hannah’s extreme views makes someone like Cameron, a True Blue since birth, look positively socialist.

The public and the media have very short memories. Have we collectively forgotten that a huge percentage of the US public have not accepted, and will never accept the legitimacy of Barack Obama’s presidency? Not only he is a Democrat, which is bad enough for these people, but he is also a black man (ok, technically mixed race), from a foreign father, and his middle name is Hussein. Against all the odds, he won the presidential election and, against all the odds, is still alive. Still, this has not deterred hardcore Republicans from doing anything possible to get him out of office. Some even have started a campaign to question his place of birth [BBC] and thus his eligibility for Presidency.

I have never believed in Obama’s message of hope. I never bought the dream that Obama will change the USA, let alone the world, for the better. [previous post]

It is beyond the powers of any politician, head of super power or not, to improve the world –whatever that means. Obviously, almost anybody is going to be better than that ignoramus of George W Bush and his cohort of reactionary, corrupt, war-mongering lunatics. At least Obama will not make things worst, which is all we can hope for with regards to anything coming from the US politics establishment.

The Obama-bashing excuse now is the proposal for a reform on how to provide health care in the US. Perhaps one could argue that his mistake was to start a consultation. Blair did not have such qualms when he introduced a defacto privatisation of the NHS in England. But then again, he had an absolute majority in Parliament and did not need to bother with silly things like seeking consensus.

For my sins, as part of my job I have spent some time in the past poring over the financial statements of American companies. Most people now that some companies (like Ford or General Motors) have pension liabilities well in excess of their assets. But most people don’t know that health-care premiums are crippling American companies as much as their pension payouts.

In the US, there is no National Health Service (or a publicly funded health service of any kind) that provides universal health coverage. In the land of free-market dogma, health care has been completely privatised and some 47m of Americans do not have any health cover. Health provision is covered by private health insurance. If you are taken ill, and have no insurance or insufficient insurance, the hospital will recover the cost via any legal means, including forcing the patient into bankruptcy and selling his assets, including his home if he owns one.

The problem with such a system is the same as the car sales problem identified by Akerlof. Since the vast majority of us are ignorant about health matters, the insurers have more information about the potential cost of future health care than we have. It is a classic problem of information asymmetry and it will produce the same result in any market, whether is used cars or small company shares.

In the US, employers provide employees with private health cover. This is not the same as in the UK, where many of us have private cover provided by BUPA or a similar organisation. Private health cover in the UK is mostly a way to jump the queue for minor operations like a hernia or sport injuries, or bowel disease. If you need heart surgery, you will be treated in the NHS.

In the US, there is no universal provision of health care so you are left to your own devices. If you have a job, your employer will pay contributions towards a given level of cover. However, this level of cover is sometimes minimal, particularly if you don’t have a management or professional job, so the employee tops up the private health insurance cover with tax deductible contributions. The more you pay, the more you are covered for. In the last few years, the costs have rising so rapidly that companies are cutting on the level of cover provided, leaving employees to fork out the remaining contributions. This has also been driving lower disposable income for salaried Americans.

And it is this discretionary aspect of private health care in the US that is at the core of the problem. If people are pushed to decided whether to have an improved lifestyle (bigger house, bigger car, second residence, golf club membership, etc) or to have better medical insurance, a lot of people will not have the discipline and willpower to pay an ever rising percentage of their income towards their medical plan. It is easier to keep up with the Joneses by diverting that extra income into discretionary expenditure with higher utility.

Hard-line Republicans and the far-right lunatics have come out against any reform claiming that the NHS is almost a Stalinist government death machine. They sprout that any attempt to introduce any kind of social welfare in the US will be the start of socialism. Nothing should surprise us about these collection of ignorant thickos. What is surprising (or perhaps not so) is that they have chosen the British NHS as their target instead of say, the French or Canadian systems which are much better and cheaper to run.

Once again, while I was writing about this topic, I came across a column that explains in a more succinct way what I am trying to get at. [Sunday Herald].

And herein lies the problem, something the author only hints at: most Americans believe that if you don’t have adequate insurance is because you have not done well in life, because you are not trying hard enough. (it can also be because you value playing golf above your family's health). Work hard and you will have good medical cover. Introducing a minimum of state-sponsored medical health care system would be akin to providing something for nothing. This is anathema in the US.

This may strikes us Europeans as mean-spirited and downright nasty. No Christian compassion in the most evangelical Christian nation on earth. It is one of life’s paradoxes (do you remember when I wrote about how people who are in support of the death penalty tend to be against abortion and vice versa?). In US politics, the same people who reject the teaching of evolution in schools, are the most outspoken defenders of economic evolution for other human beings: survival of the fittest is alright for your fellow citizen but not for the rest of the species.

Obama will not win this battle, because he is trying to change something at the core of American citizenship: you get what you work for. Most US citizens believe that people who do not have insurance are layabouts, work-shy, socialists or even worse atheists, and therefore have zero-sympathy for their “self-inflicted” plight.

This will be the first of a many battles that Obama will lose. Half the country has not accepted and will not accept his presidency and will do their utmost to derail any possibility of a second mandate. The countdown has already started. The Obama dream is already fading away and the only way is down, down, down...


Tom said...

An interesting post and yes, I fear you may be right. What disappoints me most about Obama's handling of the healthcare issue is that he has a genuine mandate to put something really good in place.

One thing I must say, though: most Americans (as all the opinion polls confirm) are fully supportive of a state backed national health insurance program (remember: no one has proposed the nationalisation of hospitals, doctors and nurses as happened in the UK). What the far-right and their buddies in the insurance industry and FNC have managed to do is make a lot of noise. As usual in America it seems like everyone (even the Democratic President) feels the need to compete for 'most compassionate conservative of the year' award and Obama has been tricked into abandoning his principles.

That was terribly weak of him and it certainly suggests that the transformative promise of his election has evaporated into nothing.

Pilland said...
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