Baby Steps? Obama, Healthcare, and Financial Reform


Congress finally passed a major health reform bill this weekend, and Obama signed it into law yesterday.


The question: Is a health insurance system that outlaws the worst industry abuses, but remains without a public option, still better than nothing?


The most positive news is that the law includes concrete measures that will eventually translate into more health care coverage for more people. Many lives should be improved with this bill, even if the extent, affordability, and quality of corporate health care insurance plans remains highly debatable.


Passage of the health care bill is clearly also a very important political victory for Obama, whose Presidency and party, which has a majority in both houses of Congress, probably would have been devastated by a defeat on health care. It also keeps hope alive for progressive Americans and citizens around the world who would like to see the power of Republicans, the Teabaggers, and the rest of the American right, along with their unrestrained lies and fear- and hatemongering, diminished.


The bad news is that it also translates into a major transfer of wealth to pharmaceutical and health insurance oligopolies, a fact that is likely to make any future progress on health care even more difficult. The new law includes the enormous downside of not including a public insurance option while at the same time legally mandating the purchase of health insurance. These two provisions together amount to a gift to the insurance industry, thus seeming to work against the ultimate goal of making sure every person in America has easy access to high-quality health care.


This legally-mandated expansion of the health insurance market will further consolidate the wealth—and thus the political power—of the corporations that have been behind the blockage of universal public health care for many decades. So while the law includes a new regulatory framework (most of which will go into effect in 2014) that will help customers with badly needed basics like not being denied health insurance because they are sick, or not getting coverage cut after becoming sick, or getting preventive care paid for, it also includes government subsidies that will ultimately end up in the pockets of insurance companies. Within a few years, the law legally mandates an additional approximately 16 million uninsured Americans to choose between a list of private health insurance corporations who, because profit is still the legal priority here, will unquestionably seek to limit customers’ coverage as much as possible in the interest of the bottom line. The unjust power structure at the root of the problem sees no progress, no reform. (It reminds me of the stories of the many trafficked women who, passports taken away and forced into prostitution, are then made to pay rent each month for their shitty room.)


The prospect of a no-public-option-bill was always understood by those in the health industry to be good for business. This is why corporate health insurance stocks rose when the idea of a public option got disrespected by Obama, or seemed increasingly unlikely to pass the Senate.


So health insurance corporations will continue to enjoy the role they have been given, and everyday people should understand that while they have some new rights, the systemic injustices not only have not gone away, they may have just become even more entrenched.  We still have a fundamentally flawed system that gives corporations the right to make unlimited profits by denying people treatments they need to stay alive. As long as we don’t have a public health insurance option available to everyone, American health will, tragically, remain less of a priority than profits.



Next up: Financial Reform?



Now that the health care debate on Capitol Hill has come to a resolution, the US government, eighteen months after bailing out the banking system, will finally take on financial reform. Or maybe, "financial reform," as the case may be.


Whether Obama will parlay the health care victory into real financial reform or just a prop up of the current fragile system remains to be seen, but the latter, unfortunately, is looking more likely, possibly leading to an even worse crash.  I remain hopeful that Obama has learned that making compromises in the interest of "bipartisanship" doesn’t guarantee you any Republican votes (zero Republicans in the House or the Senate ended up voting for the health care bill). Yet looking at Obama’s economic team we see failed regulators and former and current neoliberal champions like Larry Summers, Tim Geithner, and now Patrick Parkinson. What is the likelihood this group, much less a Congress that is largely dependent on Wall Street, is going to dismantle and competently supervise a system they helped make extraordinarily profitable? Let’s hope Elizabeth Warren gets her way instead.


If Obama’s past actions are any measure, instead of real financial reform he’s likely to adapt his policy proposals to the needs of the current power players and ruling class, drum up some pretty convincing populist rhetoric, and get something weak passed that will allow him to claim victory. There’s a pretty good chance we might end up with more baby-steps reform of an entrenched, profit-over-people institution. The major problem here is that with finance, unlike with health care, baby steps don’t help us at all. Leaving any loopholes for financial institutions to continue making bets that led to the 2008 economic crisis will, eventually, lead to another. Financial reform at a minimum needs to break up the too-big-too-fall banks, separate investment and commercial banking, shed light on and strictly regulate behind-the-scenes derivative trading, stop endemic fraud, and otherwise prevent the kind of systemic risk that caused the global economy to collapse.  Financial experts including Dean Baker and Susan George, as well as some European governments, also underline the need for a small financial transactions tax (Tobin tax), that in their view could do much to slow down dangerous trading, as well as create a bailout (or other type of) public interest fund. Allowing the financial casino on Wall Street to continue trading trillions of dollars of risky derivatives without strict public supervision will mean that the same fragile system will at some point collapse again, and the well-being of millions of working families will be taken down with it. Are we going to prioritize profit for the few or real economic security for everybody?


For more info, I recommend reading Simon Johnson, former chief economist at the IMF, at Baseline Scenario –it’s a good place to stay informed and up-to-date on everything related to financial reform. This series of interviews is also excellent.





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