POLICY: More scenarios about the future of the system from The Industry Veteran

Yesterday I left you hanging with three scenarios as to the future of the system; muddling through; complete collapse leading to government takeover; and system self-reform. The Industry Veteran thinks that I’m on the right track but that I need to consider some other alternatives:

Your alternative scenarios for health care economics seem a bit too despondent to me. You’re quite right to say that the stakeholders in power will try to muddle along with the same bailing wire approaches, but that’s the way the American political economy works. Our system disdains national planning, preferring instead to let the market (i.e., the oligopoly capitalists) decide. That means things must approach the crash and burn stage before our power elite considers making substantive corrections. (Any time they do point to a distant crisis well in advance of its onset, e.g., Bush and Social Security, they’re usually trying to rig the system even more radically in their favor.) Throughout American history this predisposition has often placed progressives in the anomalous position of hoping for worse because that’s the only road to better. Now as far as your alternative scenarios, #3 is wish-upon-a-star thinking. Hope is not analysis and any expectation that the rational adults in health care manufacturing will act wisely by curtailing costs seems too far fetched to take seriously. More likely the earth would cease to revolve upon its axis, continents will crash into one another and the meek will inherit the earth. The question then becomes, what will cause muddling through to fail and turn the health care system into something approximating a nationally administered system? And when will this happen?

You’re probably correct in stating that health care emerges as a more acute crisis during recessions and, right now, the business cycle appears to be on an upswing. This means 2008 may not be a pivotal year for reorganizing health care. Again youÂ’re correct to point out that the old moles of aging baby boomers (talkin’ ’bout my generation) and the ever escalating costs of new health care technology keep burrowing beneath the ground, making the soil ever more friable for fundamental change. What are some other factors at work here?

(1) I look for small employers and state-local governments to stagger beneath the inequitable, irrational weight of health care costs before the large companies do. Even though the top 500 usually maintain self-funded health insurance programs for their employees, health care also causes problems for them, not so much in terms of the absolute costs, but from the competitive disadvantage they suffer if they have to compete against Japanese or other foreign companies who don’t bear such a heavy a burden. I recently reviewed some of the debates over Social Security when Roosevelt proposed it during the 1930s. Auto moguls such as Knudsen at GM favored it because they felt confident of their ability to pass along the cost. Seventy years later automotives are a much more mature industry. Foreign competition constrains their ability to pass through the health care costs but I don’t look for them to take the lead in nationalizing health care. They’ll be around to play a supportive role. I also imagine that other businessmen clearly understand that the current system creates a forced transfer of income and wealth from themselves to health care manufacturers and they will no longer continue to permit it.

(2) The increasing stratification of health care into a two-tiered system represents too obvious a threat to the establishment’s managers. Just as the Vietnam war in the late 60s and early 70s caused students at elite universities to question some fundamental tenets of our entire political and economic system, stratified health care can disaffect wide swathes among the middle-aged and elderly. If social class works through a health care system to baldly determine life or death, too many people can ask too many, disruptive questions. We can see signs of this already from the fact that many elderly, sick people in the middle class must "spend themselves down" to Medicaid eligibility and the states are growing more stingy with these programs all the time.

(3) There is also the possibility, one to be fervently desired, that by 2008 popular discontent with the Iraq war and Bush’s overreach on gutting Social Security will provoke a pervading discontent with his entire program of crony capitalism and evangelical, social Darwinism. (I love your phrase, "theocratic fascism," but the last time I used it, my colleague in New York said, "High fallutin’ terms like that are why John Kerry lost.) If disenchantment with the reactionaries does come about, it’s entirely plausible that the next president, Democrat or Republican, may create a nationally administered health care program as a sort of less contentious sop to a broader, popular discontent. Nixon, after all, pushed the EPA partly as a distracting palliative to his Vietnam war.

In summary, 2008 may not be the year of reckoning, but as Bogart’s Rick said to Ilsa, "Maybe not today, maybe not tomorrow, but soon, and for the rest of your life."

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