A Re-write for Obamacare

I believe that health care is an extension of national defense. Disease is a threat to every American and can be every bit as devastating—physically and financially—as a terrorist attack or military invasion. So "providing for the common defense" should include health care for all citizens. But that shouldn't be confused with government-provided health care. In trying to address our system's failings, why would we emulate even more deeply flawed, government-controlled single-payer systems in Canada and Europe—creating an HMO on steroids?

The truth is, we already have universal health care: it’s called the local emergency room. Those who can't afford (or just don't want to pay for) health insurance or doctors can just show up at almost any emergency room for treatment. Did you know that federal law prohibits hospitals from turning those patients away? The cost of their treatment is absorbed by a combination of excessive charges to insured patients and taxpayer funds.

When cars don't receive regular maintenance, they eventually break down; repairs are often far more costly than they otherwise would be. Likewise, those uninsured patients often show up in the emergency rooms with advanced conditions that are extremely expensive to treat. So, not only are the rest of us stuck paying for their health care—it's far more costly than it would be if those patients had received regular screening and preventative care.

Meanwhile, we have a perverse system under which most of our citizens receive health insurance through their employers. It's the only way many people of average means can afford health insurance—particularly if they have a pre-existing condition. All-too-often, no job means no health insurance.

Companies get preferred rates from health insurance providers, as well as coverage for employees with pre-existing conditions, because they buy policies for a large number of people. The companies are also allowed to deduct the cost of those policies from their income taxes—which adds up to hundreds-of-billions of dollars each year. Individuals who buy health insurance don't get those breaks.

Furthermore, because insurance companies pay most medical bills, consumers have little or no incentive to keep costs down. The most crucial piece of any new universal health care package should be this: making sure that individuals have “skin in the game.” That is, Americans should be given a financial incentive to find the most cost-effective health care solutions, in consultation with their doctors, and stay as healthy as possible.

One way to do this would be for the government to create Personal Health Accounts—an enhanced version of today's Medical Savings Accounts. Like MSAs, these accounts would allow individuals to save money, tax free, for medical expenses and low-cost catastrophic health insurance premiums. In addition, the federal and local governments could provide an income-based subsidy to the accounts funded by the reduced outlays for unreimbursed emergency room care and redirection of the health insurance tax deductions from employers to individuals. Any leftover funds in the accounts each year could be rolled-over into a 401K or other tax-free retirement or education account.

This personalized health care paradigm can only work if we have a national market and national standards for health insurance providers—and the equivalent of a nationwide “J.D. Power rating” of hospitals, doctors and health care providers. This would be a set of statistical scores based on outcomes, adoption of best-practices and anonymous peer reviews. The scoring system should be overseen not by a government-controlled board, but by the health care equivalent of the Financial Accounting Standards Board (FASB) which regulates accounting practices by companies. The FASB has an implicit government sanction and is a guidepost for the SEC and other agencies.

With such medical information transparency, and the incentive-based Personal Health Accounts, Americans would have both the resources and the motivation to shop for health care—unleashing the most powerful cost-containment and quality-improvement mechanism ever invented by man: consumer choice.

State-of-the-Art Highway Funding

The North Texas Tollway Authority here in Dallas/Fort Worth has successfully implemented cutting-edge license tag reading systems to collect tolls. This technology can replace the previous state-of-the-art, toll tags and EZ passes. Why not, as part of the huge infrastructure stimulus just passed, design and fund a massive deployment of those systems on highways across the U.S.? This would be a much fairer and more stable funding mechanism than the gasoline tax for theHighway Trust Fund.

This would not only stabilize highway revenues and reduce taxes for those who aren't using highways, it would save energy and lower emissions. Since license tags are correlated with specific vehicles, it would be easy to suspend or reduce tolls for high-efficiency vehicles (hybrids, electrics, etc.).

Michael Moore: Great American, Capitalist Icon

I totally disagree with those who liken filmmaker Michael Moore (no relation to film actor Roger Moore--at least I don't think there is...) to a terrorist. His films, "Roger & Me," "Bowling for Columbine," "Fahrenheit 911" and "Sicko" have achieved a rare if not unprecedented distinction among documentary films: commercial success. Like most documentaries, his films have an unmistakable point of view (at least they're less insidious than many purportedly "balanced" docs on PBS and CNN). But Moore is both a gifted story teller and a brilliant entrepreneur--a multimillionaire, in fact. The over-the-top, anti-Bush mythology of "Fahrenheit" notwithstanding, Moore is uncomfortably on-target in many of his criticisms of the the rich and powerful and the inadequacies of our health care system (see my Blog posts on health care). What makes him even more formidable is the fact that he's FUNNY.

Did anybody watch Moore's speech in his hometown of Flint, Michigan on C-SPAN several months ago? Despite rhetoric and movie scripts that are often shrill to the point of meanspiritedness, no one can deny that the man is bright, thoughtful and earnest. Those who feel Moore's socialistic solutions would wreck what works and do little to fix what doesn't should debate him--not demonize him. Or, better yet, go out and try to make movies as entertaining and thought-provoking as Moore's are. Is Mel Gibson the only one who's figured this out?

Immigration: Counterpoints to the Conventional Wisdom

Why would any right-thinking person oppose having a U.S. border that's as impenetrable as manpower and modern technology can make it? How can any fair-minded American deny our need for immigrants--or oppose a realistic path to citizenship for those who earnestly long to work here?

We must replace rancor with rationality in the immigration debate--by debunking the myths promulgated by both sides:

"A border fence is inhumane." By that twisted logic, all walls and fences are inhumane. Funneling U.S. entrants to a relatively few well-guarded points would vastly simplify border enforcement and dramatically attenuate the risk of illegals becoming stranded in the desert or victimized in remote areas.

"A national ID card violates our civil liberties" Anyone who's attempted to cash a check or pay with a credit card knows how specious this argument is. Drivers' licenses are defacto national ID cards and no one today can do much of anything without a government issued photo ID. Why not make it mandatory for employment?

"A path to citizenship for today’s illegals would violate American traditions." Basically, the only requirement for U.S. citizenship prior to the 1920s was arriving on our shores alive. An awaiting job was supposedly required and criminals and the seriously infirmed were to be rejected--but there was no reliable system to verify that the immigrants were meeting these criteria.

"Additional large-scale immigration will overcrowd our country." If the entire world population of 6.5 billion was transplanted to the HABITABLE land in the 48 CONTIGUOUS STATES, our population density would be the same as that of Omaha, Nebraska. Not Tokyo or Hong Kong.

"Immigration depletes U.S. resources." Instead of our country being likened to an island with limited food and potable water—where each new entrant threatens the populations’ survivability—a better metaphor for the U.S. is a gold mine. The more men and women can be put to the task of extracting that precious ore, the wealthier we all become. Given the negative impact on Social Security and Medicare of what has been a declining U.S. workforce, we should welcome the addition of the relatively young, productive immigrants who want to work here.

"Mexican immigrants and their offspring unduly burden U.S. social and education resources." It's both unfair and disingenuous to ignore how much the work of this population adds to the income and wealth of their communities--and the resulting tax revenue which funds local social services and public schools. The quickest and most efficient way to "Americanize” immigrant populations is to get their kids into our schools. The burden on hospitals in areas with large illegal immigrant populations is largely a function of disproportionate utilization of emergency rooms for routine medical care. That's not an "immigrant" problem--but a fundamental flaw in our health insurance and delivery system.

"Mexican immigrants dilute the quality of the American workforce." One would think that those who take the substantial risk of entering our country illegally would be among the heartiest, hardest working and most motivated members of the workforce. The still substantial risk of entering the U.S. illegally creates a “self-selection” barrier to those who are slovenly or incapable. On what empirical basis can it be said that the immigrants who built our nation were of a “higher caliber” than those now entering from Mexico? What's needed is a robust system for measuring and controlling the influx.

"The unique U.S. culture is threatened by masses of Mexican immigrants." The influx of nearly four million Germans and Irish over the ten year period before 1855 would be the equivalent, given today's population, of adding some 45 million immigrants to our population. The fact that most of these new Americans were Catholic alarmed many in our then largely Protestant population--and led to formation of the rabidly anti-immigrant Know Nothing Party (whose doctrine Lincoln vehemently opposed—something anti-immigrant Republicans have apparently chosen to forget). After the Treaty of 1848, those occupying the huge territory ceded to the U.S. by Mexico were all Spanish-speaking. As with previous generations of immigrants, second and third generation Hispanics almost invariably adopt English as their first language. Without question, there is a real issue as to how much "bilingual education" inhibits uptake of English.

The Real Causes of Middle Class Malaise

The $13 trillion colossus that is the American economy has produced an unprecedented amount of wealth. While a lot of that wealth has flowed to those “at the top,” what's often ignored is that more Americans than ever before are able to obtain the “necessities of life.” The vast majority of the population can afford enough food to make most overweight, at least 1,500 square feet of air conditioned living space, one or more automobiles, a computer and color television set. So, in terms of day-to-day life, there is a historically narrow gap between the lifestyles of “average” Americans and wealthy Americans. The two items causing the greatest distress for Americans who aren’t wealthy haven't been effectively addressed by the Republicans or the Democrats: health insurance and retirement security.

On health care, Democrats continue to bash the pharma industry, one of America’s great success stories, and push policies that would create a government-run HMO on steroids. Republicans natter incessantly about “tort reform,” as if that’s some kind of panacea for our shameful health care system imbalances. The truth is that our current largely employer-based health insurance system, far from being a pillar of Capitalism, is a remnant of our World War II wage-controlled economy and a huge disincentive to both job mobility and entrepreneurialism. It places far too much of the health care burden on major U.S. manufacturers—who have the unlucky distinction of having employed a whole lot of workers for generations. This puts us at an enormous disadvantage with foreign manufacturers whose workforces receive health insurance from government systems (never mind the fact that those government systems have severe problems). Our employer-tethered health insurance system also discourages potential entrepreneurs from striking out on their own and upwardly-mobile workers from leaving big corporations for small, newer businesses with less generous health plans. Hardly a “pro-Republican” paradigm. A Mitt Romney-style health insurance mandate, combined with a tax code that pushes heath insurance premium deductions to individuals instead of employers, encourages Health Savings Accounts paired with low-cost catastrophic coverage and a federal subsidy for low income workers, would seem to be the basis for a real solution—not Hillary Care.

Retirement income security is the other big difference between the wealthy and the rest of America. Today’s world requires a new retirement security system that coordinates--and, perhaps, unifies--pensions, Social Security, 401Ks and other tax-favored retirement accounts. The money is certainly there—what’s lacking is imagination on the part of Republicans and a willingness on the part of Democrats to give up the perennially potent Social Security issue. A system that merges Social Security’s forced savings and employer match with individual control of the accounts is the only way to ensure that politicians can never raid Americans’ retirement accounts. At least a portion of those accounts should be tied to the overall growth of the economy through benificiary-controlled private investment; the remaining contributions should fund an insurance pool to underwrite a guaranteed minimum benefit. This hybrid would almost certainly be less costly than our current pay-as-you-go Social Security system which is entirely reliant on inflows from a shrinking workforce.

Clearly, empty rhetoric about income inequality is a waste of time. We should be crafting policies that get to the heart of “middle class malaise”: health care and retirement insecurity. To borrow President Reagan’s words in his 1981 inaugural address, “simple, but not easy.” The question is, which politicians from both parties will have the savvy and moxie to seize this opportunity?

Social Security: "Individualization," Not "Privatization"

Regrettably, the Bush team has done an abysmal job of marketing the concept of individual social security savings/investment accounts. They've done an even worse job of enforcing any semblance of message unity among Republicans on the issue. South Carolina Senator Lindsey Graham, among others, has even openly entertained the idea of raising the earnings cap for Social Security--which would constitute one of the greatest tax increases on small business owners in American history.

First, the loaded term "privatization" should never have been allowed to take root. The Bush White House should have aggressively pushed the much more accurate term "individualization."

Secondly, demagogue Democrats have so far succeeded in selling the proposition that the transition to individual accounts would "explode the deficit" and increase the national debt burden on our children and grandchildren. Yes, increased government borrowing would be required to cover near-term shortfalls in the Social Security Trust Fund caused by diversion of payroll withholdings into individual accounts. However, as former Reagan Cabinet Secretary Jack Kemp has aptly pointed out, all of that government borrowing would be offset by the cumulative savings held in the individual Social Security accounts. So there would be no increase in the net national debt. And, unlike government borrowings, individual social security accounts would be largely invested in private business--fueling job-creation and innovation.

Finally, the magic of Social Security isn't how the funds are invested but the forced savings by employees throughout their working lives and the required employer match of those savings. The most disingenuous Democratic party rhetoric put forth so far: "The Bush proposal does nothing to enhance the solvency of Social Security." Individualization would enhance the solvency of the entire Social Security retirement package for retirees--combining the certainty of traditional pay-as-you-go Social Security with the faster growing (but, historically, also very secure) individually owned accounts. This would dramatically reduce demands on the Trust Fund and significantly lessen the chances that payroll taxes would have to be increased--or Social Security benefits decreased--to shore it up.

There is no 20 year period in the past century where stocks haven't outperformed expected going-forward returns on Social Security. However, in another communications strategy blunder, private Social Security accounts have been made synonymous with the phrase, "putting Social Security funds in the stock market." Money in individualized Social Security accounts, as in today's 401Ks, could be partially or entirely invested in money market accounts, U.S. Treasury instruments, corporate or municipal bonds, etc. And even if a "floor" was to be placed on payout from private accounts--the equivalent of a collar--the cost to the Social Security Trust Fund would, under almost any economic scenario, be vastly lower than paying all future retirees under the current system.

Clearly, individualized Social Security would do much to bolster the rapidly eroding bedrock of American retirement income. It would have the added advantage of individual ownership by each retiree--putting Social Security money totally outside the reach of Washington politicians for the first time. However, as every Democrat operative and officeholder knows, fixing Social Security would also eliminate the most consistently effective political weapon Democrats have had against Republicans over the past 25 years. Democrats have clearly shown that they will do everything in their power to keep from surrendering that weapon.