House GOP shuts down government, harming workers and economy alike

The federal government remains in partial shut down today after the House GOP, spurred on by a fringe element of Tea Party extremists, refused to pass legislation authorizing a budget until and unless funding for the Affordable Care Act is eliminated or the implementation of some of its important features are delayed.

The problem is that the ACA is already law and has been delayed once so that insurance exchanges could be set up. The GOP demands for rolling back so-called “Obamacare” therefore amount to blackmail and coercion by a minority of politicians who lost the legislative fight to defeat it. Now like children who can’t get their way, Republicans are using the budget battle and looming debt-ceiling crisis to try and gain concessions to which they have no right.

The GOP says it is the party of responsible economics and ordinary Americans, but when one looks at their track record, all that can be seen is a list of failures and lies:

1. The GOP’s economic ideology and subsequent policies under President Bush deregulated the economy, particularly the financial sector, to risky levels never before seen. As a result banks and financial institutions engaged in increasingly irrational behavior in order to make short but huge profits that led to the Great Recession in 2008. The idea that markets work better without government interference is a facile talking point, but in reality it means leaving capitalists to do whatever they want no matter how the risky the outcomes. Government oversight of the financial industry is not the same thing as “interference” unless one thinks it is better to let wealthy and powerful banks and hedge funds to loot the financial sector and outsource the cost to the taxpayers, which is exactly what happened. The rich got richer, but Americans had to foot the bill for it in the form of government bailouts of banks, the auto industry, and housing market.

2. The GOP’s opposition to the Affordable Care Act is also an irrational piece of fantasy motivated by the false economic ideology it continues to promote in the face of overwhelming facts that “free” markets basically amount to permitting market failures. The problem of uninsured Americans is the single largest example of a market failure in recent history. Over 50 million Americans lack health insurance because the costs have exceeded the demand—individuals and businesses alike simply cannot afford insurance because of sky-rocketing medical care costs and declining marginal profits of insurance companies. The Affordable Care Act uses markets to incentivize competition and create better access for the uninsured. Why does the GOP resist using market exchanges for providing health care? The answer is that Republicans irrationally assume (along with a public blitz of misinformation) that the federal government is making a grab for health care, and that “socialist” Obama is undermining democracy, but this is red herring and racism rolled into one. The truth is that the Affordable Care Act will help millions of ordinary Americans get access to health insurance they could not otherwise afford, which means that the GOP’s opposition to it reveals that it really doesn’t care about ordinary Americans at all.

The sad fact is American politics is increasingly partisan and divisive because it is increasingly driven by personalities, and they are increasingly uneducated, ill-mannered, and downright spiteful personalities. Just listen to Rep. Steve King (R-IA) who claims that Republicans are “right” that the Affordable Care Act will destroy America. Since the law went into effect yesterday, the sky hasn’t fallen but Republicans like King keep on believing they are right, and this dangerous mentality of extremism is at the root of the problem. It must be rooted out methodically before this fringe minority destroys America and the global economy along with it.

Does the Affordable Care Act create more part-time work? 2 perspectives

One of the objections to the Affordable Care Act is that it will encourages employers to cut employee hours to create more part time work in order to avoid the law’s requirement that it provide health insurance benefits for all full-time employees. This means that workers hours will be cut and as a result employees will find themselves without insurance and declining wages. Recently, two different economist have offered competing arguments for and against this objection.

Does the ACA’s requirement that employers provide insurance for all full-time employees create more part-time work?

The answer is yes according to Casey Mulligan, a professor of economics at University of Chicago. Read the full article here.

However, a recent analysis of the difference between predicted part-time work and actual part-time jobs created since the ACA went into effect shows that there is no evidence to support this objection. Jared Bernstein, a Senior Fellow at the Center for Budget Policy and Priorities, investigated the data and found no proof for this commonly made criticism of Obamacare. Read the full article here.

Hidden tax on expensive health care coverage may hurt public workers

Under the Affordable Care Act (ACA) many states that see the wisdom of compliance are setting up health insurances exchanges, but under a little known provision called the “Cadillac Tax,” public unions in particular may be punished for winning their members generous plans with little flexibility for changing them.

The tax was inserted into the ACA at the last minute with the encouragement of many economists who argued that generous plans made consumers insensitive to the spiraling costs of health care. Plans with greater benefits and coverage gained popularity among government employees, police officers, firefighters and teachers unions, but effectively insulated the individually insured from absorbing the skyrocketing costs of coverage.

The tax will affect public unions employees adversely because their plans, which are covered by collective bargaining measures, are more difficult to change without incurring substantial losses. As a result workers will be penalized by the ACA for having good health care coverage, a result that was not intended according to many economists.

“I think it was misguided all along,” said former labor secretary Robert Reich. He complained that the tax amounted to “a blunt instrument that could too easily become a bargaining chip for cutting back benefits of workers. Apparently, that’s what it’s become.”

According to the tax measure, any plan with a cost above a certain threshold in 2018, $10,200 annually for individual plans and $27,500 for family plans, will be taxed at 40 percent of their costs in excess of the limit. Although some cutoffs exist for retirees and some workers in high-risk professions such as police officers, the tax will hurt a number of public union employees.

Many see a disadvantage here that runs contrary to the spirit of ACA to make health insurance more accessible by making it more affordable. Public employee unions from Boston to Orange County are now trying to find ways of cutting health care benefits to avoid the tax charge set to take place in 2018. However, some economists contend that reining in the costs of health care is what the ACA is primarily designed to do.

“This is intended to shift compensation away from excessively generous health insurance toward wages,” said Jonathan Gruber, an economist at MIT and Obama health care policy advisor.

SCOTUS upholds ACA, including individual mandate for the uninsured

In a surprising ruling the Supreme Court today announced that the Americans With Care Act (ACA) is, in fact, constitutional according to the broad tax authority granted Congress by the Constitution.

Opponents of ACA were also dealt a stunning defeat in their argument that so-called “Obamacare” is unconstitutional because it permits the federal government to overreach its legitimate constitutional authority to regulate interstate business according to the Commerce Clause. The majority ruled that the ACA’s individual mandate is not an interstate commerce issue. Chief Justice John Roberts, writing for the majority in a stunning reversal of the swing vote normally reserved for Justice Anthony Kennedy, claimed the law allowed a choice to uninsured but penalized them with a tax if they chose not to get health insurance. That was the Obama administration’s back up argument, and the Supreme Court agreed.

The fact that Roberts sided with the majority and wrote the opinion underscores just how important this ruling is for non-partisan legitimacy of the new health care law. Although critics have scorned the law as “socialism” and derided it based on false assumptions and ignorance about the law’s many benefits, the ruling today represents a major victory for progress in developing a health care system that is both fair and just.

Some benefits of the Affordable Care Act:

  • Children will be able to stay on their parents health plans until age 26, an important benefit in an economy with high unemployment and shrinking benefits.
  • Insurers will no longer be able to discriminate against persons with prior medical conditions.
  • States must set up insurance exchanges so that market competition among firms will deliver low cost insurance to the uninsured.
  • Individuals who can afford insurance but lack it will be penalized by a “free-rider” tax, ensuring that their uninsured medical costs are not passed along to those persons with insurance in the form of higher premiums, more costly health care delivery, and higher taxes for public emergency rooms.