Or, Now is the time to fix this, before we all die.
By Karl Spain
As ridiculous as it may seem, I see a way out of this health care impasse which is threatening to blow up into a little civil war right here at home, at a time when our economy and our spiritual health cannot afford one.
The President is probably just as surprised as many others to find out how far behind and dysfunctional the Obamacare website, and plan for that matter, are starting to look. He can still pivot and turn on this, and come out ahead, but he needs to take advantage of the window available for the following; “Grand Bargain to avoid Civil War.”
Or, more politely, let’s trade a new health care bill for a new corporate tax bill.
The new health care bill will scrape the exchanges and divide health care into a 4-part health care system.
Leg 1. The first leg of the 4-part system will be an end-to-end single payer health care system for every American under 25, that will begin as a hybrid whereby children will keep their doctors, have complete access (paid) to hospitals, and be handled through the existing billing system of the health insurers, but the insurance company’s portion of the bill will be funded by the government. As cost containment measures and the details about how the single payer system will work are proposed, and successfully tried, they can be implemented, but for now, we need to keep the wheels on and cover the kids. It’s dangerous to think we can just throw up a website, and change an industry this big and complex.
Leg 2. The second leg is the existing health insurer portion. Take the regulations off; let them compete broadly with plan designs and prices. Health insurers will get an enormous amount of relief from the cost savings associated with not having to cover children under 25, (Leg 1), making family plans and single only plans — very affordable, and very available. The public naively thinks you can simply write a law making something more expensive, and that the supply will remain un-affected. The laws of economics do not work that way.
The government can however, offset this windfall (no more kids on private plans) for the health insurers by forcing them to cover everybody regularly employed, not just full-timers. This works because single person insurance is very affordable, cheap even, the corporations buying this insurance for their employees (yes, that’s what they’re doing) would benefit from this, it would level out the playing field, allowing them to hire full-timers again — instead of an army of 30-hour-and-under; poorly motivated and poorly trained part-timers, all of whom currently are very careful not to clock in for one extra hour, so they don’t hurt their public benefits. I ran a company with 350 employees for years, and I can tell you, this change would have been very welcome.
The third leg is the existing Medicare and Medicaid programs which handle the indigent and elderly. Again, as cost containment measures are proposed and tried they can be implemented down the road, but for now, we need to keep these programs functioning since they cover the remaining holes in the health care net.
The fourth leg is hospital reimbursement reform. This needs to be undertaken in order to make the other 3 legs solid. This is where they can begin experimenting with real cost containment, For example, the government needs to physically put first line/triage/emergency care right in front of every emergency room in America. You walk in, need a tetanus shot, or any other routine medical matter, no matter who you are, or how old, everybody really, you get one. If you need something more serious then these mini-emergency centers can provide; they refer you down to the emergency room next door. Of course, all ambulances would arrive at the regular ER.
I would task the set-up of this to the military doctor corp, supported by a lot of civilian RN and doctors assistants, serving two purposes, they could train up and deploy three to four times the number of military doctors currently trained. This would simultaneously strengthen our military preparedness and allow the government front-line access to health care for the very poor. The government currently pays the bills for these people, anyway. But, this may turn out to be a huge cost containment feature if the Feds use these new storefronts, co-located with hospitals, to directly distribute cost-free prescriptions and low cost generic alternatives.
Taken together, legs 1 through 4 are probably revenue and cost neutral, (no one knows for sure, these types of calculations are notoriously unreliable because the data set is built from many different parts, none of which are unbiased themselves), I admit however, the health insurers will initially, probably, come out a little ahead. But the children and the poor will definitely come out ahead as will the corporations who are strangling with health care costs and issues, distorting their business plans into pretzels.
Part Two of the Grand Bargain is corporate tax reform. The president has offered 28%, as a top nominal rate, down from 35%, and has even suggested compromise on Obamacare was possible in return for Republican interest in this topic, which strangely, the Republican leadership completely ignored.
But the juxtaposition of the current unpopularity of the Republican Party AND the President’s offer, leaves the opening for this blog post. In other words, who the hell am I? What right do I have to suggest a way out of this mess that greater minds haven’t already thrashed out? But IF the President has already suggested such a bargain, I can plausibly argue, it’s possible, hence this post.
Here on the corporate tax reform side of the Grand Bargain, the President can be magnanimous without costing himself a penny. He should offer a lot more than just lowering the top rate from 35% to 28%. The tax tables are so riddled with loopholes anyway, like wormwood almost, the Treasury only collects 20% of corporate profits right now. That is correct, not a typo, there is 15 point spread between the nominal top rate and the amount collected. The true story is even meaner.
The little corporations and pass-through (sub-chapter S) corporations are carrying the load, at the high end of the tax rate schedule, while the big companies with generous loopholes, and an army of lobbyists and lawyers, are paying 13% collectively, or just 1/3 the nominal top rate they should be paying. The heart breaking truth is, even that number is mis-leading, as some big corporations pay nothing at all, despite tens of billions in cash flow, and tens of thousands of employees worldwide. Look that up; it’s a fact, and a bad one for this country, you need to see it for yourself.
Thirty years ago, with lower corporate profits, corporations contributed 3 out of every 10 federal tax dollars collected by the Federal treasury. Today that number is 1 in 10. Guess who makes up for all that missing corporate income tax revenue? That right, the rest of us.
The President could theoretically offer the Republicans a cut in the corporate tax rate, all the way down to 25%, and the government wouldn’t collect a dime less, if they converted the tax to a revenue neutral standard, like a 2 % of corporate gross revenues tax. The new “California” style tax would replace the existing tax on profit. The “California” style tax plan is sensible, corporations love it, and it would immediately bring in, between $50 billion and $100 billion more a year to the Federal treasury while allowing corporations to stop the rampant profit hiding schemes they currently deploy, all of which hurt the economy by hurting the velocity of money.
The President didn’t want the current version of Obamacare either; he wanted Single Payer. Give it to him in Leg 1 (under 25 year olds), but let the current system, serve as the bridge. The Republicans and the corporations (and pretty soon, the 6 million that being dropped by their insurers) who want Obamacare gone — would make this deal in a heartbeat. Even the unions have turned on this health plan; this is real trouble for the President. I say, save the progress made on the health front by trading the important elements above, for meaningful tax reform that will simultaneously lower the national debt and create velocity in the money supply.
This tax plan will lead to growth. Profits alone, without improving money velocity, equals no growth. We need growth; this reform will ignite a long sustained period of growth. Best of all, the Republicans could do this, all of them could vote for a change in Obamacare AND a tax cut, because all of them have pledged (in writing) not to raise taxes. Even the no-more taxes movement could support this bargain (and they don’t support much), since this side of the bargain is a cut in the tax rate, and the other side (changes in Obamacare) is tax and revenue neutral.
Good luck Mr. President, from a loyal American.