Friday, May 12, 2017

Healthcare and Income Redistribution

"He went to him and bandaged his wounds, having poured oil and wine on them. Then he put him on his own animal, brought him to an inn, and took care of him. The next day he took out two denarii, gave them to the innkeeper, and said, “Take care of him; and when I come back, I will repay you whatever more you spend.”
Luke 10:34-35

Maybe it’s not always about the money, but it’s about the money often enough to suggest that’s always a good place to start.

In Jesus’ famous parable, the last thing the Good Samaritan does for the man who was beaten and robbed is to leave money with the innkeeper for his continued care, and promise the innkeeper that if it costs more he will repay “whatever more you spend.”

In an article in Friday’s New York Times, Thomas B. Edsall outlines the effects of the American Health Care Act recently passed by the House of Representatives, and he begins with the money.

The bill cuts more than $800 billion from Medicaid over ten years and basically redistributes the money from those at the bottom of the income pyramid to those at the top. “By 2022, when the provisions of the AHCA would be fully effective,” he writes, “those in the bottom two quintiles would pay higher taxes, up to $160 annually, according to the nonpartisan Tax Policy Center. Those in the middle of the income distribution would get an average annual tax cut of $240; those in the fourth quintile, a cut of $510; and those in the top 20 percent, an average tax cut of $2,830.”
“The distributional impact of the tax provisions is most apparent in the highest income brackets: those in the top one percent, whose household income is more than $770,000, would get an average tax cut of $37,220. Those in the top 0.1 percent, who make $4 million or more, would get an average reduction of $207,240.”
“According to the nonpartisan Center on Budget and Policy Priorities, at the highest point of all, the 400 households with annual incomes exceeding $300 million apiece, the tax cut would be worth an estimated $7 million.”
The combination of repealing billions of dollars in taxes that were used to pay for the Affordable Care Act, and slashing the subsidies provided to those on low incomes means that when we compare the economic impact of the ACA with the AHCA we see huge redistributions of income in the House plan that flow from the poorest to the richest Americans. 

The politics in this are not nearly as clearly delineated as one might assume. Donald Trump was elected by white working class voters who voted for him overwhelmingly. That constituency was critical in Wisconsin, Michigan, Ohio, and Pennsylvania, the key states in his electoral college victory. But the voters who put him in office are the very ones who will suffer the most under the repeal of the ACA and the implementation of the AHCA.

Senator Joe Manchin, a conservative democrat spoke with Mr. Trump about his home state of West Virginia, where Trump carried every county and won the state vote with 67.9% compared to 26.2% for Hillary Clinton. According to Manchin’s account, he told Trump:
“Mr. President, 172,000 West Virginians got insurance for the first time. These are working people, but they’ve got something they never had before. They don’t know how they got it, they don’t know who gave it to them, they don’t know the Democrats, nothing about, ‘It’s Obamacare.’ They don’t know any of that. All they know is they’ve got it. And you know what? They voted for you, Mr. President. The Democrats gave it to them but they voted for you. They’re going to know who took it away from them.”
One of the strangest observations in all of this is that so many Americans voted against their own self-interest. Lower income voters were overwhelmingly for Trump, while upper income voters were solidly for Clinton.

One of the reasons that working class white voters supported Mr. Trump is race. In his Times article Edsall cites a piece in the March 23 issue of Rolling Stone in which Bridgette Dunlap points out that manipulating racial and ethnic animosity is a tried and true political strategy. She called it “divide and rule.”
“The rich guy convinced much of the white working class that he would ‘take back’ the country from the rest of the working class and other undeserving non-white and non-Christian people, as well as the coastal elites giving those folks jobs and handouts at the expense of ‘real’ Americans. It’s a strategy as old as this country.”

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