Saturday, February 18, 2012

Employer-Provided Health Care: The Worst Imaginable Model, Why Santorum Would Lose to Obama by 20 Points

The Real Reason Obamacare Is All Wrong
The flap with the Catholic Church over contraception coverage for women has been quite an interesting ride.  First of all, who thought we would be debating condoms and birth control pills in 2012?  Second, the clear exposed divide between the Catholic church's (I believe honestly held) moral principles and its membership's beliefs was on full display.  Third, Rick Santorum's very socially conservative views being put on full display is a preview of things to come if he continues to be a serious candidate for the GOP nomination.

First, to the relevant controversy.  The notion that religious freedom extends to whether or not you have to obey legal regulations is patently absurd.  Bear in mind that we are not talking about Catholic churches themselves, simply the hospitals and schools that they own.  If you believe that religious freedom should exclude them from having to provide contraceptive coverage as a matter of moral belief, where would you stop?

Should Muslim-owned businesses be allowed not to pay taxes because they don't want to pay money to support wars against Muslims?

Should a mining company owned by Christian Scientists by allowed to ignore regulations requiring Doctors on site to treat workers in dangerous situations because they don't believe in modern medicine?

Should an Orthodox Jewish owned business be allowed to refuse to serve women because it has a belief about the role of women in society?

Religious freedom, as protected by the first amendment, is something that we should revere.  But it is not the only value in our society.  In fact, the constitutional protection itself was intentionally drawn narrowly.  All the First Amendment requires is that the Federal Government does not establish a state religion, not that it allows businesses owned by religious people to do whatever-the-hell they choose.

Birth control is broadly accepted in science, medicine and society.  It is safe, effective, legal, economical and prevents unwanted pregnancies and abortions.  There is zero reason not to include it in health care plans because a very small percentage of the population objects.

But the controversy reveals the broader problem with Obamacare in particular and our healthcare system in general.  The issue with Obamacare is that it reinforces the system that we have, once that exists primarily as an employer-provided health care model.

Employer-provided coverage is about the worst imaginable model for a number of reasons.  It leaves, all too often, the decisions around what health care you get up to your employer or to government regulation, which sparks the kind of controversies that we saw over the past two weeks.  Secondly, it makes your access to health care dependent on your job.  Get laid off?  No health care.  Change jobs?  Your health care might change.  Thirdly, it places a huge burden on employers.  Employers that provide good health care coverage can pay upwards of 15% of their payroll towards health insurance, a burden not borne in competing economies where the coverage is either government provided or non-existent.  Finally, it provides incentives that drive up cost, namely largely removing the patient from economic decisions related to health care.

Our backwards system is a product of our tax code.  Employer-provided health care is both income and payroll tax-exempt.  That means that if an employer and employee wanted to have an employee-purchased model, the employee would wind up paying far more in real dollars.

The simple solution, employed in the first-rate health care systems in Australia and France, is to have a basic level of coverage provided by the government and a secondary tier that is available to individuals to purchase out of pocket.  In other words, everyone has access to preventative and catastrophic care, care which is both cost-effective and morally essential to a first-world society.  Industry competitiveness and innovation is preserved through profit motive because of the second-tier of coverage, which is for more advanced coverage.

Obamacare's benefit is that it provides more access to the health care system to more people.  But it largely perpetuates what is broken about the system.

Would Santorum Be the Worst GOP Candidate Ever?
With Rick Santorum's wins so far in Iowa, Colorado, Minnesota and Missouri, his shocking lead in the polls in Michigan, his competitive polling in Arizona and his huge lead in Ohio, I guess we have to actually take the possibility of a Santorum nomination seriously (I'm still not betting on it, but to say I'm still as sure as I have been about Mitt Romney's prospects would be a lie.)

So what would a Romney candidacy mean?

Let's review - Santorum has likened homosexuality to sex with farm animals, has said contraception is morally wrong, is opposed to women in combat because of "emotions".  I actually have more respect than most for Santorum's economic message, which appears among GOP candidates to be uniquely courageous in discussing the needs of working-class Americans, but he certainly has the least distinction to draw versus Barack Obama because of his past support for government spending projects, unions and entitlement expansion. 

With an improving economy and more mainstream views, Barack Obama would utterly trounce Romney.  As we sit here today, Barack Obama is up 6 to 8 points head to head against Santorum, but that is before most of the general electorate really learns about Santorum.  I could easily see Santorum losing by 20 points nationally.  He would lose women massively, possibly by 30 or 35 points.  He would lose Reagan Democrats.  He would lose Northeastern Republicans.  Heck, Santorum lost his Senate re-election bid in Pennsylvania by 16 points.

He'd lose every single state Obama won in 2008.  He'd probably also lose Arizona, Missouri and Montana.  I could actually see him losing some classically solid Republican states such as Texas, the Dakotas, maybe even South Carolina and Georgia.  It would be a wipe-out.

The worst GOP wipe-out in history was Barry Goldwater's 1964 whomping, where he lost by 22 points, lost 44 states and won a mere 52 electoral votes.  My bet is that a Santorum candidacy might do even worse.

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