The Economics of Callousness in the Health Care Debate

The general Republican platform regarding health care and, most especially, health insurance reform was exemplified most clearly and recently by Eric Cantor’s “advice” to a constituent that an uninsured relative with cancer should sell everything they had (meaning, bankrupt themselves and enter a state of poverty) to pay for their cancer care, and then they would qualify for Medicaid. (I won’t mention charities because, although Cantor also mentioned something about “charities”, I’m not personally aware of charities that assist adults with cancer care; as far as I know, Saint Jude’s and The Shriners assist children.)

Most of the response to this statement dealt with the sheer callousness of it, especially in light of the fact that, as a member of Congress, Cantor has access to one of the very best, and most expensive, health care plane in the USA.

What nobody seems to have mentioned, however, is the sheer absurdity of pretending that it is somehow better for the economy to have people going into bankruptcy and sinking into economic poverty, and then qualifying for Medicaid, than it is to, first, make the insurance industry (whose policies of under-payment are largely responsible for the geometric increases in health-care costs) subject to the same anti-trust laws with which other industries must comply; second, eliminate government subsidies to insurance companies and instead pay health care providers directly; and third, extend Medicare/Medicaid to people who are either denied insurance because of even the most minor “pre-existing condition”, or simply cannot afford insurance unless they take Cantor’s advice and end up on welfare and Medicaid.

To begin with, from what I’ve read, the Federal health insurance plan costs approximately $20,000 per congressional position; since all Federal employees are, as far as I know, under the same plan, that means it’s the same cost for every Federal employee. Given this fact, it is especially reprehensible for members of either the House or the Senate to label any insurance plan costing more than $6000 per annum as a “Cadillac” plan; contrary to their claims, even a $10,000/year so-called “Cadillac” plan does not cover a nose job or other non-necessary plastic surgery; many don’t even cover reconstructive surgery following major tissue removal as part of cancer treatment. To consider oneself, as an employee of the populace, to be better then, and thus entitled to more and better everything, than one’s employer is nothing more than egotistical self-entitlement.

Second, once cannot claim, with even a single shred of honesty or believability, to favor both freedom of purchasing choice and a “free market”, yet continue to support the insurance industry’s exemption from anti-trust laws – just like claiming to be a vegan while eagerly and happily devouring 2 pounds of grilled sirloin, such a merely proves that one is either a liar, or an utter dunce.

Third, an individual who goes into bankruptcy is by no means whatsoever the only person affected by tat drop in economic status. Bankruptcy is most often precipitated by either loss, or significant reduction, of income, so that person loses most of his or her ability to purchase manufactured goods. Although it’s easy to sneer that one “loser” doesn’t make much of a dent in the national GDP figures, it’s impossible to sneer (unless on is either delusional, or intellectually deficient) when that loss is multiplied by the current millions of people who’ve lost their jobs. Added to that is the fact that the tax burden on the remaining workers (so as to allow the government to continue its payouts) is increased as people file for unemployment, or lose their unemployment and, still unable to find work, file for both welfare and Medicaid. According to what I could find on Google, in 2007, welfare cost $23.03 billion per month, and Medicaid cost $24.5 billion per month; and New York City alone had at least 1.1 million welfare recipients. The unemployment rate for December 2007 was 4.5%. With unemployment currently edging towards 10%, how much higher are those payouts? Additionally, given that medical costs have risen faster than the rate of inflation, the percentage increase in Medicaid costs would be even greater per person, and that would then be multiplied by the additional numbers of the unemployed whose unemployment benefits have expired.

Last but certainly not least is that a declaration of bankruptcy means that a person’s debt-load is nullified. In other words, whatever unpaid loans, credit card balances, or other debt the individual was carrying no longer need to be paid back; the banks and other lenders have to eat the loss – which merely means that they 1) declare the unpaid debt as a business loss and receive a tax-deduction for part of that loss, and 2) raise various fees paid by the remaining customers. This in turn leads to a lowering of the tax revenue received by the government from those lenders, and a reduction of some spending power by the remaining customers.


Despite the fact that any and all insurance payouts are drawn from the pool created by those who purchase the insurance, some people, such as Cantor, are very fond of asking “who will pay for” a public option (and let's remember that "option" means "The power or freedom to choose") in the immediate short-term - and yet remain utterly oblivious to the longer-term economic end-results of retaining a system wherein individual bankruptcy, and subsequent poverty, is deemed not merely acceptable, but inevitable.

At this point, the question of whether this is hubris that’s almost criminal in its disregard for the nation’s interest so as to favor individual and party interests, or whether it’s some variant of plain simple-mindedness, is irrelevant – the only relevant point is that, for all of the criticisms about the callousness of such a system and its proponents, nobody seems to be addressing the fact that the economic practicalities of “advice” such as Cantor’s recent missive have very real, and long-reaching, negative consequences. Hopefully, someone with a talent for number-crunching will be able to increase the value of this blog entry by adding some real statistical or other numerical comparisons into the Comments section, because it seems obvious that such data might be valuable for the voting public.