Health Reform: A Class Act

Tim-greaney A few headlines from coverage of the passage of the health reform bill:

Winners, Losers in the House Healthcare Bill (Reuters)

Health Reform: What’s in it for you? (US News) 

Already Insured? Get Ready to Pay More (CBS)

Almost immediately after the House vote on Sunday, the media switched its “horse race” coverage from analyzing the politics of the affair to what it characterized as a clash of economic classes. Analysts were often quick to suggest that the average American might find himself in the loser column.  Others offered the conventional  ”on the one hand, on the other hand” pseudo-journalism, probably leaving most to assume (not unreasonably, based on their experience under trickle-down economics) that they have little to gain.  And inevitably, confusion spawns cynicism: The first question on Monday from my 91 year old uncle  was:  ”Do I still have Medicare?”

If we are going to do a triage by economic class, lets get it right:  I’m still waiting for a headline writer to capture the real story of the legislation: Health Reform Law Reallocates Opportunity to the Working Class

One unassailable fact that emerged from the year-long legislative debate is that the working poor and those in the middle economic stratum are the primary victims of our dysfunctional health system.  It is widely recognized that health care debt ranks at or near the top causes of personal bankruptcies. Less commented on, however, is the effect of widespread financial insecurity resulting from the high cost and lack of access to care.  More than 4 in 10 people earning under $40,000 per  year say their household has had problems paying medical bills over the past year. Not only does that statistic imply that many households are adjusting their budgets away from socially-important expenditures, like childcare and education, but it also reveals the personal toll imposed on lower income individuals and families. For those who have insurance, increasing premiums have forced them to take on more risk: Nearly one in five Americans say cost increases caused them or their employer to switch to a less comprehensive health plan, while almost half of all people purchasing insurance in the dysfunctional individual market say they have had to switch to a less comprehensive plan.

The misinformation spread throughout the debate has lent credence to those who would paint health reform as a victory for elites.  Judging from the expressions of outrage about health reform by some middle class citizens, many appear to carry the misapprehension that the primary beneficiaries of the legislation are those unwilling to work.  Nothing could be further from the truth; today’s uninsured are predominantly found in working families. In factover 15% of employed workers and a stunning 41% of low income workers lack health insurance. And given the stampede of employers dropping health care coverage for their workers, the epidemic of uninsurance or underinsurance is undoubtedly spreading upward in the economic class order.

Also under-reported are the many ways the current health care system works to disadvantage the working class. Most prominent is the tax benefit which gives a significant and regressive tax subsidy to wealthy elites.  Excluding employer contributions for health insurance from taxable income–at $168 billion per year– is the largest “tax expenditure” in the budget– and obviously benefits the higher brackets more than the lower ones. (Revising this indefensible and economically inefficient  redistribution would have been a sensible way to help fund reform, but Congress settled for adding some progressivity to the payroll tax and some other taxes aimed at upper income citizens).

In addition, the health care system perversely redistributes wealth in a variety of other ways.  For example, as Mark Hall and Carl Schneider have made clear, hospitals and physicians price discriminate against those with lower incomes:  the uninsured and those in the individual market –who generally lack the bargaining power to command lower prices–pay higher prices to hospitals (often as much as two or three times higher) than those with group insurance.

Even less widely acknowledged is the fact that insurance favors the upper classes in subtle ways.  Co-pays, for example, burden those with low incomes much more severely than upper class insureds. Havinghurst and Richman aptly summarize the “distributive injustice” of the system:

[C]onditioning eligibility for insurer payments on patients’ willingness to make certain out-of-pocket payments causes lower income participants in employee health plans to get disproportionately fewer benefits than their more affluent coworkers receive in return for equivalent premiums

To be sure, the health reform legislation does not assure equal access to care among the social classes; but it certainly is a big step in the right direction.

I doubt that most Americans accept the idea that social class should dictate vast differences in opportunity for our citizens.  The capacity of health reform to lessen the economic and physical burdens imposed on the working class then should be headline news.

A nationally recognized expert on health care and antitrust law, Professor Thomas (Tim) Greaney has spent the last two decades examining the evolution of the health care industry and is a vocal advocate for reforming the health care system and protecting consumers. He also has a strong interest in comparative antitrust law, having been a Fulbright Scholar in Brussels and a visiting lecturer at several European law schools.

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martinMedical Billing Class and Training InformationJoe Smithnicolesnoring remedy Recent comment authors
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martin
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I think it is very true that “the working poor and those in the middle economic stratum are the primary victims of our dysfunctional health system”. It might be a good idea to learn from Canada’s health system.

Medical Billing Class and Training Information
Guest

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Joe Smith
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nicole
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nicole

Very enlightening. It is very important that everyone realize the new reform is a stepping stone to improve healthcare. I feel that point was displayed very well.

snoring remedy
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Hospice in California
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james Miller
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james Miller

I`m 66 and anyone who has delt with insurance companies/ hospitals and doctors on serious, expensive medical issues has experienced first hand many of the situations and issues in your article. In Texas, Blue Cross and Blue Shield has a virtual monopoly on health insurance. Their influence in Austin ranks among the most powerful in the state. Profits soar. Their exclusion from the anti-trust law should be eliminated.

Lawrence J. Kramer
Guest

[Comment delayed by posting issues (and then I posted this to the wrong thread)…] Ryan – I’m only addressing here the analysis that Mr. Greaney is offering – i.e., that the issue is class. I have not argued that anyone “deserves” not to have healthcare or that not having it is not a burden. I have not offered arguments against the current bill, because I don’t object to the current bill, as far as it goes. I’d just don’t share the Marxist perspective, and I think it leads down blind policy alleys. As regards your numbered points, I think you… Read more »

Peter
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Peter

“Keeping it home how did housing projects and welfare work out for those decendents of slaves?”
Not very well. But if you’re interested in reading a bit of unbiased history of Chicago’s projects you’ll find more than enough vilains, least of all your hated “liberals”. Blacks had always been segregated to a slum ghetto, concentrated housing still in the ghetto did not solve anything.
“The city’s aldermen, responding to the violent, racist opposition of Chicago whites to integration, blocked the CHA’s proposed sites on vacant land in outlying white areas.”
http://findarticles.com/p/articles/mi_qa3945/is_200104/ai_n8939181/?tag=content;col1

Nate
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Nate

“2) Disparities in starting position may be a good motivator, but disparities in opportunities surely are not,” Am I the only person that grew up working fast food? What disparities in opportunities does the left keep refering to? You show up for all your shifts, learn basic math, and don’t steal and 3 months later your a shift supervisor. six to nine months of not screwing that up your a shift manager and a couple years of that your a store mananger. With that resume you get out of fast food or food all together and get a real job.… Read more »

Nate
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Nate

“Why do you assume that poor people are financially irresponsible?” Becuase of all the studies that show average credit scores for income classes and the fact poor people have the lowest. “Are you saying that all poor people are debtors?” And here she reverts to liberal argument, you lefties are so predicatable. You even copied what I said! “A low income person” Notice the two Ls missing, if I wanted to say all I would have said all. Why do you guys play these silly word games? “Are you saying that poor people are drunks and otherwise irresponsible?” You forgot… Read more »

Peter
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Peter

“I could argue all day your party and ideology are stuck in the 19th century. I can’t imagine how looking back at the last 100 years you think liberalism and socialism will do anything but destroy lives and nations.” Nate, was it “liberalism” that transported millions of blacks here for slavery or denied their constitutional and other rights through segregation in a virtual police state? Was it “liberalism” that decimated an entire Native American culture and civilization for expansion, greed and money, and then forced them onto under funded and under serviced reservations? Is it 21st Century “conservatism” that rescues… Read more »

Margalit Gur-Arie
Guest

Wendell, I suspect that if I would have been born in different times and very different circumstances, I would have been a pesky missionary. Nobody is beyond salvation, not even Nate 🙂

Wendell Murray
Guest

“The trouble with this sort of analysis is that it assumes all disparities between haves and have-nots are bad, so any reduction is good.” In fact any reduction is good. In absolute and for the good of all collectively and individually. Class differentiation is a fact of society, but one that should be discouraged rather than encouraged. Access to healthcare in the USA is unquestionably a function of class and income. That is wrong in absolute for any society with the least level of decency and morality. USA society is grossly immoral in regard to healthcare and medical services and… Read more »

Ryan S.
Guest
Ryan S.

Lawrence– Healthcare in the US is a hodgepodge of government, businesses, consumers all fighting one another, and a system that can not be ever 100% streamlined. I think I’ve sufficiently acknowledged the complexity of the system to re-enter the debate. I think you are right to point out that socio-economic issues are inter-related. I never made the case that health care is the end-all be-all of the fight against gross disparities. But it is a problem to be a hard worker, and climb the ladder, if your constantly dealing with basic health questions in life. Though I enjoy your pointing… Read more »