Or, “Are you healthy?”
A lot has been said about Senator McCain’s proposed health insurance reform plan. He says “I want to make sure we’re not handing the health care system over to the federal government….” Interestingly enough, the federal government has taken care of his health care for his entire life. But on to the plan.
He wants to take away the tax break your employer (assuming you have one) gets for providing you health insurance, and instead give you a tax credit of up to $5000 for buying your own insurance. The thing is, I honestly believed such a plan would work 5 years ago. I now think that such a plan would have worked perhaps 10 or even 15 years ago, but it’s way too late (and frankly was probably too late 5 years ago). Critics say it will cause companies to drop coverage for employees. Yes, yes it does. And that’s the goal.
Senator McCain thinks it will work out to give you $5000 in April to pay for something that costs you $12,000, payable in monthly installments. That’s only problem one. Problem two is that in some states, citizens are required to have health insurance. Talk about raising the cost of living! Furthermore, mandates such as this completely short-circuit the “market actions” that would have brought costs down. Without such mandates, consumers might have demanded quality policies with decent coverage that cost something closer to what they would get out of the tax credit.
The goal — an admirable one — was to bring down health insurance costs by making the insurance industry more subject to the laws of supply and demand. The actual result of such a plan would be people spending way more of their income on insurance without getting a whole lot more for their money.
Just a few things about the bailout package that failed yesterday (NOT because Republicans were being babies, not because “we just don’t understand” how important it is, but rather because that particular package was BAD NEWS): it’s raining investors; consumer spending dropped last month, probably mostly because consumer income dropped on an inflation-adjusted basis (funny about not spending lots of money when you don’t have lots of money to spend); an all too true chart; Congress is — of course — scrambling to polish that turd revise the bill; and 5 lessons from the Credit Crisis.
In closing: a shout-out to those of you in Fort Worth to check out Sheila Ford, candidate for state House of Representatives; you know it’s bad when the BBC is reporting on Americans who live in their cars; a collection of links to accounts of the Great Depression; My Backpack’s Got Jets! (reference); Koizumi the younger is entering politics; Stupid Republican Tricks (what on earth was she thinking when she said that??); about time they started to investigate those fired prosecutors (does “executive privilege” apply after January?); tomorrow is World Vegetarian Day; on the possibility of a Detroit bailout (Citizen Carrie, if you have anything to say please do); and finally, Snow On Mars.
Oooh, boy, am I ever on the spot! 🙂
I can’t imagine how the Big 3 has managed to stay in business over the last year or so. It boggles my mind how companies can rack up these huge losses month after month and not go bankrupt. I admit I’m ignorant on these matters and never underestimate the ability of financial wizards to wave their magic wands and create money out of thin air.
$25 billion sounds like a drop in the bucket. We don’t have the luxury of looking at their books and seeing what’s really going on. If the Big 3 companies do go belly up some day, we obviously will be paying out a lot in unemployment to not only Big 3 workers, but contractors, partsmakers, ad agency workers, workers in IT companies, etc., not only in Detroit, but at plants and agencies all across the country. All of these workers will be competing with other workers across the country for jobs, and this will put downward pressure on wages. The Asian companies will no longer feel a compulsion to pay wages that are comparable to Big 3 wages, so pay at Toyota, Hyundai, etc. plants will flatten out or go down.
I do not anticiapte that the Asian plants will absorb the bulk of the unemployed Big 3 workforce. I predict, and not too many people agree with me, that without pressure from the Big 3, the Asian automakers will not feel the need to expand their operations a whole lot in the US. I think they would do a lot of the engineering and design work back in their home countries or in lower cost countries, and perhaps expand their operations in Mexico and ship their cars across the border.
The U.S. is competing against a country (Japan) that keeps their economy in an endless artificial depression which miraculously allows Toyota to thrive. Keeping the yen as low as possible is a national policy. Japanese companies are increasingly turning to temporary contract workers (and starting to bring in a lot of underpaid workers from other countries). Permanent employees feel compelled to put in as many hours as possible in order to keep their jobs. Both temporary and permanent workers put in a lot of unpaid overtime. Kenichi Uchino is a poster child for karoshi, which is the concept of working yourself to death in Japan. Whenever a worker collapses on the job over there, and the Japanese Labor Board determines it was due to karoshi, Toyota will symbolically apologize to the worker’s family, pay out the cash settlement, then move on. I think given a choice, Big 3 autoworkers would choose company liquidation over working themselves to death in order to compete with the Japanese.
SO, to wrap up, I prefer the free market within national borders to sort out the winners and losers. However, an assist from trade negotiations would be a nice gift. The Big 3 lost their goodwill from the American people a long time ago, and I don’t think too many tears will be shed if they disappear. People just need to realize that there will be a cost in the form of lower wages until the autoworkers all get re-employed for a short period of time in the upcoming green economy bubble.
(And don’t get me started on GM bragging about how they’re this great international company while they give away their technology to the Chinese through offsets, lay off engineers in the US, then help train engineers and set up engineering centers in China, then come to the US taxpayers on their hands and knees and beg for handouts.)