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What Financial Equality Really Means

XtinaS passed along this Livejournal post by alchemi responding to Mickey Kaus’s argument that social equality is more important than money equality. And the response begins with “Bullshit,” and continues thus:

Yesterday, at work, I was standing in a urinal relieving myself when one of the founding partners of the law firm next door came in and had a piss next to me. I immediately thought: so this is what Kaus is after. Sure, the guy may spend as much money as I made in ten years on a down payment for a villa for his third mistress, but because we are not socially segregated and can pee next to each other, I should be freakin’ thrilled! Thank you Mickey Kaus.

Snerk.

Alchemi then goes on to define what he means by money equality, and why it’s so important:

I don’t (nor, I suspect, do any of the leftists I know) mind if rich people make money. What bothers us is that there is a tremendous inequality in financial security, financial risks, and financial consequences of disaster. The point is not to have equality in luxury, but equality in necessity; it’s not the financial heights to which one can achieve, but the depths to which one can fall.

Some would claim there is an inherent conflict attempting to manage risk in a complex capitalistic system. My impression is the opposite is true. Disproportionate risks distort the market. They minimize market access, create perverse incentives and prevent efficient solutions.

Despite the conception of the right (and the Democrats who voted for MBNA-approved bankruptcy reform) that bankrupts are simply spendthrifts whose free-spending irresponsibility caught up with them, the hard truth is that a survey showed that half those filing for bankruptcy protection did so after an illness or accident left them with medical bills too overwhelming to handle. And insurance isn’t enough to keep people from disaster. As Elizabeth Warren wrote in the Washington Post in 2005, while the reform bill was still pending:

As part of a research study at Harvard University, our researchers interviewed 1,771 Americans in bankruptcy courts across the country. To our surprise, half said that illness or medical bills drove them to bankruptcy. So each year, 2 million Americans — those who file and their dependents — face the double disaster of illness and bankruptcy.

But the bigger surprise was that three-quarters of the medically bankrupt had health insurance.

How did illness bankrupt middle-class Americans with health insurance? For some, high co-payments, deductibles, exclusions from coverage and other loopholes left them holding the bag for thousands of dollars in out-of-pocket costs when serious illness struck. But even families with Cadillac coverage were often bankrupted by medical problems.

Too sick to work, they suddenly lost their jobs. With the jobs went most of their income and their health insurance — a quarter of all employers cancel coverage the day you leave work because of a disabling illness; another quarter do so in less than a year. Many of the medically bankrupt qualified for some disability payments (eventually), and had the right under the COBRA law to continue their health coverage — if they paid for it themselves. But how many families can afford a $1,000 monthly premium for coverage under COBRA, especially after the breadwinner has lost his or her job?

Often, the medical bills arrived just as the insurance and the paycheck disappeared.

Bankrupt families lost more than just assets. One out of five went without food. A third had their utilities shut off, and nearly two-thirds skipped needed doctor or dentist visits. These families struggled to stay out of bankruptcy. They arrived at the bankruptcy courthouse exhausted and emotionally spent, brought low by a health care system that could offer physical cures but that left them financially devastated.

Think about what it might be like if we had universal health coverage in the US. People who became ill wouldn’t have to sell their homes and go without food. Risk would be spread among the entire country, not just among those in a company. People could have greater freedom to freelance, become entrepreneurs, or simply switch jobs if they didn’t have to worry about how they’d get insurance. The greatest beneficiaries would likely be those who make too much for Medicaid, but not enough to purchase insurance if their jobs don’t provide it. They’re the ones who are in the most vulnerable position, having to forgo health care unless it’s a dire emergency, and least able to absorb the costs should disaster occur.

There are plenty of examples of risks that are minimized because of governmental action, and Alchemi gives a few:

It is because of the SEC that investors feel secure enough to invest in stocks. Without risk management… no stock market. It is because of the FDA that people have confidence in to buy meat. While they would buy meat anyway, it is easier and more efficient when consumers can feel secure that what they purchase will almost always meet minimum standards. Free public education reduces (but does not eliminate) the risk of having groups of unemployed, unskilled and bored people who would distort the market by causing havoc.

I think the recent melamine-in-pet-food-and-perhaps-now-in-the-human-food-supply scandal, ably covered by Litbrit at Shakesville, really points out how there are certain risks that we, as a society, have determined that the individual should not have to bear. And one of those risks is having to determine whether food is safe and free of industrial chemicals meant to give a false reading of protein content. And while Alchemi points to schools as an example of risk management, it’s important to note that school funding is not at all what it used to be, and that huge inequities exist (New York’s prior governor George Pataki, for example, fought tooth and nail against equitable funding for New York City schools, even though he lost at every court level. He infamously said that the “sound basic education” guaranteed by the state’s constitution only required that the schools prepare students well enough to flip burgers), exacerbated by funding formulas that rely on local taxes.

However, nobody but a few true believers on the right really think that government-funded free education for all isn’t a good idea. And after decades in which the specter of “socialized medicine” was used to make universal healthcare seem like some kinda pinko commie shit, people are coming around to the idea of viewing healthcare as something that makes the economy and the country stronger, and isn’t some kind of gift to be grudgingly given to the poor if they behave themselves. It’s just another part of the social safety net, the one that, ideally, catches you when you fall.


18 thoughts on What Financial Equality Really Means

  1. Thanks for the links to both alchemi’s post, as well as the WaPo article. Universal healthcare is something I dream about … when I think about Canada and its people (though the system there seems to have its own deficiencies — wait times but hey at least they’ve got healthcare!). I am a bit pessimistic about it right now though, and doubt it’s going to happen anytime soon … and my pessimism stems from the fact that people in this country have voted for this administration, not once but twice … (forget if one is democrat or republican, how about survival instinct?) –AG

  2. I can think of so many times when I or my family could’ve really been helped out by Universal Healthcare. Both my brothers have massive medical bills from dealing with Kidney stones and gout. When I was a child I rarely ever saw a doctor and only saw a dentist after I became a ward of the state.

    Just yesterday, even with a dental plan, I had to pay $189 for 3 fillings. I had to scramble for the money – some on a credit card, some cash, and I had to empty out the little bit of savings I had left. I wonder what I even have a dental plan for, if it doesn’t cover the costs of fillings.

    My budget is pretty hurt right now from car repairs and vet bills. I’ve had to cancel my next few Dentist appts until I can change my dental plan to something more reasonable, but I have no idea if I’ll be able to afford the payments each month for the more expensive/expansive coverage.

    But I have to, because even I can tell my child has a underbite and that means braces, and there’s no way I can afford those.

  3. Thanks for the coverage. This issue is just driving me crazy right now. A friend of mine was employed by her state government to provide psychological care and assistance to disabled children and so she had health coverage, but to save money the government decided to “out source” her job…to her. So now she’s doing the same job, but with no benefits. Her husband had insurance through his employer, but one of the employees died of a brain tumor so the premiums went up to over $1,000 a month! I’ve been trying like crazy to find her some health insurance that is at least somewhat affordable, but so far no luck. All I can say is AAARRRRGGGGG.

  4. I laugh when I hear about Canadian wait times. I went to the doctor last week and she found something new – a potential heart problem – and it’s more than a month before my HMO can let me have a simple EKG. What are they hoping, that I’ll drop dead first and then they won’t have to pay for the test? When I was a teenager and on my father’s Blue Cross plan and the doc wanted an EKG to check for something, I had it in her office within 15 minutes. My current one has so few doctors who will accept its plan because it pays so poorly that there was only one doctor who would take new patients in my area (my old one stopped accepting them). There is not a single dentist who will take new patients so I’m paying out-of-pocket to go to the dentist. It’s hard to imagine that things could be worse in Canada.

  5. Wait times are like anything- the squeaky wheel gets the grease. The Canadian newsmedia made a huge fuss over hip and knee replacement surgeries and the governments responded by putting the priorities on them. Now there are huge wait times for other ailments- why? Because there are only so many surgical staff and rooms and if one ailment is prioritzed then the others wait. Yet if anyone in the family gets sick- we just go and do not risk losing our home due to a doctor’s visit.

    No system is perfect but I prefer one where the basics are covered without question.

  6. I had someone argue to me that my in-laws (currently dealing with several problems with the “wait and hope” method) would be worse off under the Canadian system because as elderly and not completely healthy people, they would be low priority. This after I’d pointed out that they’re getting little-to-no care at all currently because they can’t afford it. They have a much better chance of getting to the top of a long waiting list than they do of winning the lottery, which is the only way they’d be able to afford decent health care now.

    Apparently to some people, waiting for healthcare because you can’t afford to pay for it is more morally acceptable than having the same wait because of your priority ranking. I don’t get it.

  7. Agreed. Funding for government schools (in constant dollars) is much, much higher than it used to be. Are you satisfied with the results?

    Two words for you: unfunded mandates.

  8. CTD – And did it keep up with inflation or supply&demand?

    More kids, more expensive equipment. Is financing keeping up?

    With schools turning to soda and snack companies for extra money to afford new computers/band equip/text books/etc. Not to mention all the fundraisers for all that stuff too. And the occassional strike from teachers who aren’t getting paid enough, or get their medical benefits screwed with, etc… somehow, I don’t think so.

  9. Are you seriously asserting that all (or even a majority) of the enormous growth of spending on government schools over the last 30-40 years has come as the result of federal DoE mandates?

    Most of these mandates do come with (ever-increasing) federal funds, and states can usually decline them if they deem the federal money insufficient. They usually don’t.

    Even so, with well over $400 billion spent on public education each year, the compliance costs, while they can be high in absolute terms, are a drop in the bucket when looked at as part of the overall picture of government education spending.

    If, on the other hand, you are saying that the federal government’s ever-increasing role in education has succeeded in little more than wasting three-quarters of a trillion dollars of taxpayers’ money while producing nothing in terms of actual results, then I’m with you all the way.

  10. Rhiannon ,

    And did it keep up with inflation or supply&demand?

    Yes. In inflation-adjusted dollars per pupil, government spending is at an all-time high. In the last four decades, it has more than doubled.

  11. Okay. if we’re going to play fast and loose with educational spending and liken it in any way as an american model for something that actually does good…then I gotta say something.

    Well, several things.

    1. One of the largest segments in school budgeting is special ed. We pay schools to deal with things that doctors should (and in some cases have to) deal with. Subsidized health care would alleviate some of that and perhaps let schools focus on education.

    2. We have no psychiatric care nationally. Which is a large part of why we have huge homeless problems in our major population centers. Health care with mentall illness coverage migh t help some of that, too…freeing up librarians to actually be librarians instead of untrained crisis mental health workers.

    3. Educated people have better tools for understanding how their bodies work. They are more able to take care of potential problems in a timeley fashion…thus releiving some of the health crises.

    4. One of the other major drains on both the school funding AND on the actual foci of teaching are unnecessary standardized tests. We test to and past the point of stupidity, in terms of results in the classrooms, results in teacher morale, educational content and child testing fatigue effecting diminished and unreliable results. Our curricula SUCK, largely because we teach test points…in Houston, there is a huge trend of identifying the minimum skills test bullet in lesson plans. This means that if content is not covered in a MINIMUM SKILLS test, then it essentially doesn’t get taught. WHICH means, that motivational complex material that kids are more able to relate to and emotionally hook onto tends to be bypassed.

    What we can learn from the model of nationalized education would be to avoid incompetent and underqualified political appointees (Think Coach Paige, and the case of the falsified special ed classifications) and make sure that testing of the system is conducted in an ethical and rational way, without an eye to immediately deployable punitive measures instead of real analysis and improvement.
    But if we haven’t learned those lessons from this administration already, then we demonstrably need the education reform more than ever. Vicious cycle, 101.

    AS an aside… has anyone here heard of an aussie band called Machine Gun Fellatio? They do a song called “I’m a Muthafucka on a Motorcycle”…The lyrics are brash and hard and swing to this woman’s richly Rosemary Clooney voice. Zow.

  12. Are you satisfied with the results?

    I wouldn’t say satisfied, no. But I do think we have made more than double the progress given where we were in 1965. Your statistic is a bit misleading in that regard.

    If I wanted to spew misleading statistics I might point to the fact that we are behind 20 other countries in education spending per percentage of GDP. Or behind 37 other countries in education spending as a percentage of government spending. But, speaking as an economist, such statistics are primarily useless.

    Lies, damned lies, and statistics.

  13. Overall government-funded free health-care for all is an immensely beneficial thing. Living in England it terrifies me to think of what will happen when friends who’ve emigrated fall ill. There are pitfalls, however, especially once you become accustomed to having that free care.

    MRSA, anyone? The UK government keeps juggling with the UK health budget and way too much goes into administration, far too little into paying the most important members of staff- the cleaners, night staff, nurses and everyone that does the dirty work.

    Also, it’s almost impossible to find an out-of-hours doctor and utterly impossible to have a home visit. Nothing worse than being too ill to get out of bed and see a doctor but not so ill you’re willing to waste an ambulance on yourself- so you just lay there and either self-medicate with non-prescription drugs or wait until you get better or worse.

    Overall- much better in financial terms, but expect cost-cutting measures, longer waiting lists, poorer care once in hospital and less thorough tests. (My Gran had to help feed another patient last time she went into hospital with angina pains because the poor lady was unable to care for herself and the nurses barely had time to dump the food plate in front of her before moving on).

  14. On behalf of DKos I denounce Alchemi as a communist. I shall talk to my good freind Markos Moulitsas and see if we can’t arrange a banning in abstentia.

    Living in England it terrifies me to think of what will happen when friends who’ve emigrated fall ill. There are pitfalls, however, especially once you become accustomed to having that free care.

    Actually I was in england a few years ago and, in contrast to what we have to put up with in america, the NHS is the greatest thing I’ve ever seen. In the extreme ends of the care system it seems to have troubles (MRSA, waiting lists for operations and stuff etc…) but while I was in england, that I could just go to a GP or a hospital and get a breast exam without making myself homeless made me fall in love with the damn thing.

    And to be fair, any system that’s been attacked by both Thatcher and Blair like it has would have the problems it has had, it can be run well, it just hasn’t.

  15. Bunny, the same problems, and more, happen in the US system.

    Administrative costs? Hospitals often have as many people working to keep track of the billing for all of the various insurance companies as they do nurses. That gets added to the cost of medical care, plus the cost of administration within an insurance company. Administration is a gawdawful mess. Just keeping track of the multiple payers multiplies bureaucracy in a way that a single-payer system couldn’t do if it tried.

    You don’t get house calls here, either. And there are very few after-hours clinics. If you’re lucky, your doctor will work in a practice where they take turn being on-call at night, and you can call an answering service to have them have the on-call doctor meet you at the office. But such service most likely won’t be available at all. You wouldn’t get a nurse to feed you, either – maybe an orderly if you’re in the hospital long-term, but more likely the family would have to do it (more unpaid female labor!) or you’d wind up on a feeding tube.

    As far as waiting lists go, the hospital “emergency” rooms are backed up with non-emergency cases of the uninsured who show up at the emergency room because they can’t be turned away there. If what they need isn’t something that can be provided in an emergency room, there isn’t even a waiting list to get on to, if you don’t have insurance and can’t pay. Waiting lists based on actual need would be a vast improvement.

    And insurance companies, by limiting fees, can force cost-cutting measures as draconian as any government bureaucracy. With the added problem that a for-profit insurance company is primarily responsible, not to the people they care for, but to their shareholders, and the people they care for generally can’t pick and choose based on a trade off for services they really want versus cost, they are stuck with whatever their employer offers. You at least have a chance that the way you vote will affect the administration of your health care.

    I haven’t heard of any situation where care in a Western European single payer system is worse than the fate of being uninsured in the US system. And almost no situations where it is worse than being an ordinary working person with ordinary health insurance or a HMO. Most of the complaints seem to be in comparison to the ultra-rich who can afford to pay for what they want here. But the ultra-rich can pay for what they want there, too.

  16. Re: education spending.

    In the past it was efficient to seriously underpay teachers because you had basically half the population with no other career options at all. Of course education spending has had to increase faster than inflation; schools have competition as employers now.

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