— “The Financial World According to Inya” Column,
by Inya Ivkovic, MA
I truly believe that capitalism and socialism can coexist and are not mutually exclusive. Perhaps the years of perpetuating the American Dream have pre-programmed our collective psyche not to trust anything that is not implicitly meant for an individual. Perhaps the possibility of short-term pain for the sake of a statistically and academically obscured long-term gain seemed too abstract for ordinary Americans to wrap their heads around. Whatever the reason, it took America decades to get to the point of, if not equating, then at least depolarizing the concepts of capitalism and socialism through the passing of the most significant bill in the U.S.’ recent history — the U.S. healthcare bill.
At 17.3% of gross domestic product in 2009, the U.S. current healthcare system is the most expensive in the world. Yet, by the end of 2010, it would leave approximately 50 million Americans uninsured. By 2019, the number of uninsured would rise to 60 million. If Barack Obama did not persevere in his fight to overhaul the healthcare system, it would be subject to rapid deterioration, adding over one million Americans every year to the list of uninsured.
Unfortunately, under the current system, the list of uninsured is not the only list of shame, for lack of a better word. There is also the list of the underinsured, which would include people whose policies have high deductibles, high premiums, and low reimbursements, which are pushing more and more Americans into debt, or, more often recently, into bankruptcy, every year. In 2007, there were an estimated 25 million underinsured Americans. By the end of 2011, there could have been 35 million.
When a government does not care for the health of its citizens — and, sadly, it could have afforded it long time ago, if not now — this is a dark stain on the entire country. But, as it has been said, better late than never. After an arduous year and having been so close once before, only to have it taken away by political viciousness and his own blunders, President Obama has finally managed to push the controversial $940-billion plan to overhaul the often-paradoxical U.S. healthcare system through the House of Representatives.
In the climatic days and hours just before the bill had passed, the White House warnings were chilling, as most truths tend to be. “If you’re an American under the age of 65, there’s roughly a 50-50 chance that you will find yourself without coverage at some point in the next decade,” said President Obama. “There but for the grace of God go any one of us.”
Not that I think President Obama’s plan to fix the ailing system is perfect. Actually, I think it is far from it, considering that the business of insuring Americans under 65 would be left to a handful of insurers that are likely to have skyrocketing administrative costs. And then there is the mountain of money it would cost, almost $1.0 trillion, which, in the current context, might just be the straw that breaks the camel’s back. Let me be clear, President Obama’s healthcare plan does not provide for a single-payer system, such as exists in Canada or the U.K. However, considering the political headwinds he has been facing and unrelenting special interest lobbyists with deep pockets, President Obama’s healthcare plan is surprisingly broad, bold and well-reasoned.
Implementing the overhaul of the U.S. healthcare system would result in a net reduction of 32 million uninsured Americans, or to having about 95% of the U.S. legal population with adequate healthcare coverage within the next 10 years. By 2019, President Obama’s plan would ensure that approximately 24 million low- or middle-income citizens who do not have the advantage of employer-sponsored insurance would receive annual subsidies, averaging about $6,000 per person, to buy their own insurance policies from insurers competing for their business on the state-created insurance exchanges.
Although these subsidies would not start until 2014, many other popular reforms could start as soon as next year. For example, there is a measure that would prohibit insurers from denying coverage to people who have pre-existing conditions and permitting young people to stay insured on their parent’s employer-provided policies until they are 26, instead of 19 currently.
According to the new bill, the costly $940-billion healthcare overhaul could be looked at as “the glass is half full, rather than half empty.” According to President Obama’s calculations, over the next 10 years, implementation of the healthcare bill could cut the deficit by $138 billion, partly because Americans’ incomes would be taxed at a higher rate and partly due to new taxes on investment income. While this is what is vexing so many opponents to the healthcare reform, the financial equation is nearly square, whereby 10 years’ worth of higher taxes would pay for six years’ worth of subsidies.
The plan could be rendered useless if the White House cannot control its healthcare costs. The overhaul plans to revisit Medicare, the ravenously expensive public healthcare plan for seniors, where President Obama has promised to “bend the cost curve” as far as it can go to help pay the total tab. Of course, managing the costs of social programs is always easier said than done, but not impossible either.
The House has voted “aye” on President Obama’s healthcare bill, and now it is before the Senate to be signed off on, thus making approximately 80% of the bill the law of the land. The Senate’s upper chamber would still have to approve certain amendments to make the bill fully functional. As expected, Republicans are already promising to thwart the process, but only 51 votes are needed under a process called “reconciliation.” Additionally, even if the bill gets stuck in the upper chamber, the White House could still implement the original Senate bill.
As I’ve said earlier, I do believe that capitalism and socialism can coexist. President Obama’s healthcare reform clearly shows it. America currently has about 50 million uninsured. The U.S. also ranks well below several industrial countries on nearly every major “quality of life” indicator, such as life expectancy and infant mortality. There is much work to be done to bring the American Dream closer to reality, but at least with the healthcare reform, the U.S. has established a solid starting point.