Health Care Costs Are Killing the Middle Class

Any solution to the health care crisis in the United States must focus in part of slowing the soaring costs of health care and health insurance. Americans spend more on health insurance than in any other advance economy and the cost are rising faster than in any other advanced nation. The consequence is that the middle class is suffering an ever tightening financial squeeze as costs go up and more and more employers shift cost to employees. "Medicare for All" does nothing to lower much less slow soaring costs as a column in the Washington Post points out.  Rather, it merely shifts how skyrocketing costs are paid without addressing the underlying problem.  Obviously, one thing that needs to be done is to end the gouging of patients by the pharmaceutical industry.  Another is to end the empire building of hospital systems that focuses more on a monopoly game against other providers than on the delivery of medical services to patients.  Here are column excerpts:

The idea that most middle-class Americans have been treading water economically is conventional wisdom. It is already playing a role in the 2020 campaign, as the Democratic presidential candidates propose policies (Medicare-for-all, free college tuition at state schools, subsidies for child care, to mention a few) intended to relieve the financial stress on millions of middle-income families.

But the conventional wisdom is wrong — or at least misleading. Although the squeeze is not a myth, it’s highly localized: uncontrolled medical spending. This is crowding out other spending, from wages to defense budgets. If we don’t stabilize health costs (and there is little sign that we will), we should expect the squeeze to continue indefinitely. Income inequality would also probably worsen.

We now have a new study from economist Richard Burkhauser of Cornell University that illuminates health care’s peculiar role. . . . . In recent decades, the median income of U.S. households has grown slowly, stagnated or declined. In 2018, according to the Census Bureau, the median household income was $63,179; in 1999, it was $61,526.

But wait: The official figures don’t count health insurance, whether private or public (employer-paid insurance, Medicare and Medicaid — federal health coverage for the elderly and poor).

The simplest definition included labor income: wages, salaries, farm income and self-employment. Defined this way — and adjusted for inflation — median income has dropped 21 percent from 1970 to 2016. This explains why so many Americans feel squeezed.

However, that’s not the end of the story. A broader definition of income includes all labor income, interest and dividend payments, Social Security, other government transfers and — most important — the value of private and public health insurance. Under this definition, median income rose 68 percent from 1970 to 2016. By this definition — and reflecting the impact of health insurance — typical households have enjoyed a slow increase in living standards over nearly half a century. 

Which definition of income to believe? Why, both, of course.

We have the worst of both worlds. We don’t count health insurance as a form of earnings that would improve median income. . . . . because health spending is concentrated among a relatively small proportion of people. In 2016, the top 5 percent of patients accounted for half of all medical spending, according to data from the Kaiser Family Foundation. By contrast, the lowest 50 percent of spenders accounted for only 3 percent of total spending.

Sanders’s approach is self-defeating and ultimately undesirable. It makes us hostage to explosive health spending. We can’t control what we refuse to control. Almost any systematic effort to curb spending is subject to attack as cruel or immoral, despite the obvious reality that not all health spending is of the same value.

In the early 1960s, before Medicare and Medicaid, which were enacted in 1965, health spending was about 2 percent of federal outlays. Now it is nearly one-third, at $1.3 trillion.

Corporations compound the pressures on take-home pay as frustrated companies shift more health costs back on their employees through higher premiums and deductibles. This, too, intensifies the middle-class “squeeze.”

Total health spending is now about 18 percent of the economy (gross domestic product), about twice the level of many advanced societies.

The effects are felt keenly by middle-income Americans and the poor, because the high cost of modern medicine consumes more of their incomes. We have created a monster, inspired by good intentions, that is slowly and menacingly taking charge of our future.

Crisis for the GOP: Trump Tax Cuts Are Still Unpopular

Yes, I am still pissed about taxes - and so are many other Americans who sadly end up paying more in taxes than those far wealthier and/or many large corporations.  The good news is that perhaps those screwed by the Trump tax cuts - the "corporate greed/billionaire relief act" might be an apt name for the bill rammed through by Republicans -  will vent their wrath come November, 2018.  The only thing humorous about the situation is that Republicans seem blindsided by the public reaction thus demonstrating the danger of living in the Fox News bubble or listening to "economists" who have proven to be consistently wrong since the 1980's.  A piece in New York Magazine looks at how and why voters are rightly realizing that the GOP sold them down the river.  Here are excerpts:

Between 1980 and 2016, the American public never met a tax cut it didn’t like. . . . on each occasion, a plurality of voters were onboard.

And then, America met the Trump Tax Cuts. When Congress passed the president’s signature legislation in December, it was the least popular tax bill in modern American history — a measure even less popular than the tax hikes passed under George H.W. Bush and Bill Clinton.

For American conservatives, this was a harrowing development. It was one thing for the public to disdain the GOP’s attempts to pare back Obamacare — retrenching the welfare state has always been the sour note in the right’s paean to “small government.” But if fiscal conservatives can no longer sell voters on across-the-board, deficit-financed tax cuts — untainted by any simultaneous attack on the safety net — what are they so supposed to sell them? Initially, Republicans took solace in the thought that their bill’s unpopularity was merely the product of Democratic duplicity. . . . Surely, Americans would love the Trump tax cuts once they got to know them. The proof would be in the paycheck — and, failing that, in a multimillion-dollar Koch-funded ad campaign. Alas: Americans have now been collecting post-tax-cut paychecks for more than two months — and they still don’t like Donald Trump’s signature legislative achievement. In fact, as Republicans fan out across the country Tuesday for “Tax Day” rallies celebrating their law, the vast majority of voters still refuse to accept that their taxes have even gone down. But don’t take my word for it — take the American Enterprise Institute’s. In a new polling analysis, the right-wing think tank concedes that “overall opinion [of the Trump Tax Cuts] is still more negative than positive,” while an overwhelming majority of Americans say that their paychecks haven’t grown conspicuously fatter. . . . while 53 percent foresee a negative impact from “higher deficits and disproportionate benefits for the wealthy and big corporations.” If voters do not believe that across-the-board tax breaks have positive economic benefits — and resent tax cuts for the rich more than they appreciate ones for themselves — then it’s going to be nigh-impossible for conservatives to realize their “small government” vision on the federal level. On Meet the Press last Sunday, Paul Ryan (unintentionally) explained why this is the case. . . . . The most obvious problem with Ryan’s response is that it’s an unabashed lie: After observing the initial effects of the Trump Tax Cuts, the Congressional Budget Office predicted last week that the legislation will single-handedly add $1.85 trillion to the deficit over the next decade.

But a more fundamental flaw in Ryan’s argument is that — to most Americans — it reads like a case against tax cuts. If an unavoidable, demographic change is making it more expensive for the government to meet its obligations to retirees, then why on Earth did Republicans make reducing revenue their top legislative priority?

Further, to the extent that Social Security’s “20th century” design “doesn’t work,” it is because the program is too austere, not too generous. The collapse of private-sector pensions — along with the failure of wage growth to keep pace with the rising costs of health care, housing, and higher education — have left Americans more dependent on Social Security benefits for their retirements, not less: As of 2016, nearly half of U.S. families had no retirement account savings at all, according to a report from the Economic Policy Institute (EPI). Contrary to the GOP’s perennial promise, the benefits from corporate cuts aren’t trickling down. Wage growth is tepid; stock buybacks are soaring. Last spring, 61 percent of Americans told Gallup that their income-tax burden was already “fair” – while just 4 percent told Bloomberg that “tax policy” was the most important issue facing the country. Meanwhile, large majorities of the public — including, in one Morning Consult survey, a majority of self-identified conservatives — voiced support for increasing federal health-care spending. There was no popular outcry for “middle-class tax cuts” in 2017 — let alone, for giant corporate cuts financed by reductions in health-care subsidies. The GOP assumed that voters would come around to its view on “starving the beast,” once they got their share of Uncle Sam’s rations. They assumed wrong.

Democrats are already winning elections in Red America by spotlighting the GOP’s fringe fiscal priorities. In recent weeks, striking teachers have won victories of their own by the very same method. The Koch network can afford to lose such battles. But by passing the first unpopular tax cut in modern memory, Republicans have proven themselves incapable of winning the wider war. When the “rubber hits the road” — and voters are forced to choose between maintaining entitlement benefits and keeping tax rates low — there’s never been less doubt about which they’ll choose.

Is Ted Cruz Unelectable?

I have had many react with revulsion to Ted Cruz's win in the Iowa caucuses and the man in general.  Cruz is proving to be precisely the type of lying sleaze bag that goes hand in hand with those who constantly profess their religiosity as demonstrated by the directive sent out to his minions to spread the lie before the caucus voting began that Ben Carson would be dropping out of the presidential race.  The good news about Cruz is this: more than 2/3 of Republicans did not support him.  Better yet, as a piece in Vox lays out, he is likely un-electable - he's sort of a national level Ken Cuccinelli who is loved by the foulest elements of the GOP base and viewed with horror by everyone else.  Here are highlights from Vox:

The Republican Party establishment has a bad case of Trump-Induced Terror these days, but there's an even more plausible candidate in the race who's running on an even more unelectable agenda.  May I introduce to you Texas Sen. Ted Cruz.

People know that Cruz is extreme. But few people fully recognize exactly how unpopular the Cruz policy agenda is likely to be once it is exposed to the light of day.

In an era when no politician of either party wants to cut retirement benefits for current seniors or raise taxes on the middle class, Cruz has quietly stumbled into proposing a gigantic tax increase on middle-class retirees. The media hasn't noticed yet, and liberal groups don't seem all that eager to point it out — perhaps because they're hoping to save their ammunition until after Cruz is actually the nominee. Cruz's appeal is rooted in his deep understanding of the GOP base and sophisticated grasp of the modern media landscape. But he's never run in a meaningfully contested general election of any kind, and trying to do so on an anti–middle class, anti-elderly policy agenda is extraordinarily unlikely to succeed.

If you're not paying close attention, Cruz's tax plan can just look like a more extreme version of every other Republican tax plan — a big, budget-busting tax cut for the wealthy. But in reality, it contains an idea so obviously politically toxic that his entire agenda for selling it seems to be to obscure the fact that he's proposing it.

But let's be clear: Cruz is calling for a 19 percent federal sales tax that would apply to all purchases of goods and services made in the United States. This is possibly the single least voter-friendly idea one could imagine.

His "business flat tax" is a sales tax, not a corporate income. And it's a 19 percent sales tax, not a 16 percent one.

Replacing large swaths of the existing tax code with a high national sales tax is so politically ridiculous that most people are probably completely unaware of the argument for doing it.

To liberals, this is a terrible idea, because it means that the lion's share of the benefits of Cruz's plan would flow to the small number of people rich enough to be deriving a significant share of their income from investments. Ten percent of the population owns almost 85 percent of the financial assets in the United States, while the bottom 75 percent of the population owns less than 4 percent.

Cruz's sales tax would, on its own, be a devastating blow to the finances of poor and middle-class Americans. But Cruz largely neutralized that by eliminating payroll taxes and endorsing a significant boost to the earned income tax credit.

The downside is this will leave a $3.7 trillion hole in the federal budget over 10 years.

But the true political disaster of the Cruz plan is its impact on the elderly. Retired people, by definition, don't work. They are not paying payroll tax, and they will not gain any money from an increase in the EITC.

On average, the elderly pay less than 9 percent of their income in taxes, and they spend more than 100 percent of their after-tax income. Cruz's proposed 19 percent tax on that consumption would hammer this group, especially its lower-income members. No politician in American history has ever been so crazy as to propose a 19 percent cut in Social Security benefits, but Cruz's tax plan would have an even more adverse impact on retirees' living standards.
[G]iven the modern-day Republican Party's reliance on the elderly vote, it's a total disaster. Cruz deserves kudos, to an extent, for following his ideological commitments where they lead him regardless of the political implications. But it's a completely unworkable electoral strategy.

Trump as nominee would certainly be a risky (and probably disastrous) leap into the unknown. But Cruz as nominee would be a leap into something we've actually seen quite clearly before in 1964 and 1972 — a factional candidacy by a senator from the fringe of his own party caucus who gets drubbed on Election Day.   

Read the entire piece.