Every other industrialized nation in the world – and even most of those that aren’t – have some form of universal healthcare, to give their citizens one less thing to worry about. We don’t. We have long preferred to give our citizens the freedom to buy what insurance coverage they can, or choose to do without, or to take a job they might not want and may not be able to do very well because it comes with health insurance at least partially paid for by their boss. That was the only option for anyone with one of those pesky preexisting conditions – find a job that insures your sorry ass, no questioned asked, and never, ever leave it. Forget about starting your own business with your brilliant idea. Forget about even finding a job closer to home so you don’t have a two-hour commute each way. That’s too risky. Stay safe. Stay put. Forget your dreams. Ennui and despair are still better than bankruptcy when the kid breaks his leg, because our healthcare is the most expensive in the world, and there are always complications, even when there are none. Doctors have to eat too after all, and there’s the wife’s Porsche, and the greens fees at La Jolla – and that goes for hospital administrators and insurance executives. And remember, many have jobs that don’t offer health benefits, or don’t have a job at all – you don’t want to be one of “those” people. Financial ruin, or the alternative, a slow death from something you simply have to ignore, are no fun. But you are free. The government is doing nothing to interfere with your life. Remember that. Freedom is a good thing.
The Affordable Care Act was an attempt to change this, even if it wasn’t universal healthcare at all, just new rules about preexisting conditions and whatnot, along with a way to hook up the uninsured with private for-profit healthcare providers though existing private for-profit insurance companies, offering to pay for some of the cost through government subsidies. The government would do what other people’s employers had already been doing. They’d partially pay third parties to cover everyone in the organization, no questions asked, so those folks would have one less thing to worry about – but that’s expensive, so they came up with that individual mandate thing. This only works if everyone signs up for insurance, or pays a small fine for choosing not to, which distributes the cost of those who get expensively sick as widely as possible. That feature had to be mandated, and was.
All this is, of course, an oversimplification of a Rube Goldberg mess of a national health plan, one that satisfies no one, one that only slowly contains costs, over several decades, if we’re lucky, and one that has disrupted the previously wildly profitable insurance industry. Having one less thing to worry about – possible ruin if you or the wife and kids gets sick – still costs serious money, even if government chips in a bit. This isn’t France, where everything is simply covered through high taxes everyone is fine with – always rated the best healthcare system in the world – but it’s no longer pay up or die, or hang onto your crap job at all costs. It’s something in-between, and no one is happy with it.
Those who voted for Obama shrug and say this is a good first step, or when they’re being honest, admit that the whole thing is a god-awful mess, but really, the best that can be done, for now, in a country that hates every damned thing about the French. They also know the website, healthcare.gov, was doomed from the start. It had to coordinate a billion different and contradictory details, flawlessly, in a microsecond, and that was never going to go well. It’s amazing the site has been tweaked again and again to start to work at all. But at least it’s something. That’s cold comfort.
Those who didn’t vote for Obama are in perpetual outrage. This is the end of freedom. The government should not take care of its citizens. People should take care of themselves – that’s the American way. If anyone is going to take care of anyone, that should be the neighbors, or someone in the family – a kindly rich uncle or something – or the church. Leave charity where it belongs, with good-hearted America people, not with the government, as government is never freedom. If a government of the people, by the people, and for the people, as with a church seeing a social need, collectively chooses to take a few initial steps to help its people get health care, it’s still government doing that, not a church – and that abridges freedom. It’s a matter of at which level collective decisions are made. Anyway, the free-market, left to its own devices, without any regulation, naturally, would have taken care of all this stuff. The Invisible Hand of Competition would have done its thing, providing everyone with what they really want at the lowest cost. And there’s something else too. As Obamacare evolves, bosses will lose an important lever to keep people from walking away and starting their own businesses and whatnot. If healthcare becomes relatively cheap and easy to obtain, and portable from job to job, people will walk – and those will be the best people, the clever achievers, and you’ll be left with the dregs. The good employees walk and the marginal drones remain? Obamacare is dangerous. It could ruin quite a few businesses.
Not to worry – the Republicans will ruin Obamacare, at least as much as they can, in the name of freedom, but then it came ruined anyway. Obama early on, long before any first vote on anything, made all the concessions to the private for-profit parities and the free-market guys. The Affordable Care Act was conceived as a structure of concessions to them, on the general principle that the perfect should never be the enemy of the good. But this wasn’t even good. And that’s why we can’t have nice things.
That’s okay. Ninety percent of the country wanted stricter background checks on those buying guns after that Sandy Hook massacre – twenty dead kids does concentrate the mind – and we couldn’t have that either. The majority of Americans have no problem with immigration reform, and the business community wants sweeping immigration reform rather badly, as soon as possible. And Hispanics are increasingly insulted and doing nothing may be the death of this Republican Party that continues to dither on the issue, halfheartedly, but we can’t have that either. It’s the same with the minimum wage. Everyone from economists to the man in the street wants that raised, and we can’t have that either. There’s a pattern here. We’re stuck.
There’s nothing new about that. There was Occupy Wall Street in Zuccotti Park, not far from Wall Street, back in September 2011, a lot of drumming and speeches and chanting, without much organization. There was talk of the One Percent and the Ninety-Nine Percent, and of the absurdity of our extreme income inequality, and its immorality, and inefficiency. It was those Too Big to Fail banks, damn it. The government bailed out those bastards to the tune of seven hundred billion dollars, but then some had to fail and only five or six of the biggest were left standing, bigger than ever. They ate up all the weaker banks, although that’s politely put as consolidation, and that means that now, with so few of them left, they really are far too big to fail. Those left standing, however, are making money hand over fist again, and finding ways to do just what they had done before – selling each other complex bundles of hypothetical assets of indeterminate value. There’s a lot of money in that, far more than can be made lending money to businesses seeking to expand or folks wanting to buy that first house, no matter how qualified the applicant. The banks aren’t dumb – this is a simple return-on-investment calculation. A thirty-year mortgage is a low-yield affair. So is a business loan, and small businesses and would-be homeowners now know that even with sterling credit ratings, and verified revenue streams or verified steady income, and low interest rates they can afford, banks aren’t going to lend them that money. Why would they? They have better uses for it. That’s the way things are now, and how they will probably remain – the One Percent still has it all. Occupy Wall Street did a fine job of showing the problems here. Everyone saw them, but not one thing changed. Things actually got worse. Here too we’re somehow stuck. We can’t have nice things.
Maybe we should have a people’s bank, as opposed to some multinational entity full of hot-shot traders in derivatives of derivatives of derivatives that may choose to call itself The People’s Bank. That would be a nice thing, and David Dayen reports that there have been some ideas floating around:
One of the key messages of tonight’s State of the Union address will be President Obama’s willingness to bypass Congress to create jobs and reduce inequality. As luck would have it, yesterday a new government report detailed an innovation that would preserve one of the largest job creators in the country, save billions of dollars specifically for the poor, and develop the very ladders of opportunity that Obama has championed as of late. What’s more, this could apparently be accomplished without Congressional action, but merely through existing executive prerogatives.
What’s the policy? Letting the U.S. Postal Service (USPS) offer basic banking services to customers, like savings accounts, debit cards and even simple loans. The idea has been kicked around policy circles for years, but now it has a crucial new adherent: the USPS Inspector General, who endorsed the initiative in a comprehensive white paper.
It seems the guy was serious:
The Inspector General, who conducted the study with the help of a team of experts in international postal banking as well as a former executive from Merrill Lynch, correctly frames the proposal not as a challenge to mega-banks, but as a way to deliver needed amenities to the nearly 68 million Americans – over one-quarter of U.S. households – who have limited or no access to financial services. Instead of banks, these mostly low-income individuals use check-cashing stores, pawnshops, payday lenders, and other unscrupulous financial services providers who gouged their customers to the tune of $89 billion in interest and fees in 2012, according to the IG report. Post offices could deliver the same services at a 90 percent discount, saving the average underserved household over $2,000 a year and still providing the USPS with $8.9 billion in new annual profits, significantly improving its troubled balance sheet. The report calls simple financial services “the single best new opportunity for the posts to earn additional revenue.”
This might solve a few problems:
As America becomes more of a cashless society, more reliant on some level of financial services (try renting a car without a credit card), the 68 million under-banked are essentially forced into working with predatory businesses, without the kind of low-cost alternative the post office could provide. Banks don’t want these customers; if they did, they would actually make a play for their business. Large banks have closed branches in the very low-income communities with the largest percentages of unbanked Americans. In fact, banks find it more profitable to fund payday lenders that charge junk fees and outrageous interest – currently the subject of a Justice Department investigation – than actually take market share away from them.
Instead of partnering with predatory lenders, banks could partner with the USPS on a public option, not beholden to shareholder demands, which would treat customers more fairly. As the report says, “The Postal Service could greatly complement banks’ offerings,” and in turn help drive out of business some of the most crooked companies in America, while promoting savings and expanding credit for the poor.
What’s not to like about that? And it wouldn’t be that hard:
The postal service, with public trust earned over generations and 35,000 outlets in the best real estate in practically every city in America (in fact, the report notes, 59 percent of all post offices are in “bank deserts” with only one bank branch or less), is well-positioned to deliver simple financial services. In fact, it did for over 50 years. Begun in 1911, the Postal Savings System allowed Americans to deposit cash with certain branch post offices, at 2 percent interest. By 1947, the system held deposits for over four million customers. Though dismantled in 1967 (after banks offered higher interest rates and eroded its market share), the post office continues to issue domestic and international money orders, including $22.4 billion worth in 2011, as well as prepaid debit cards through a deal with American Express.
It’s this point which, the Inspector General contends, would allow the USPS to potentially dispense banking services immediately, without Congressional approval. The Postal Accountability and Enhancement Act (PAEA) of 2006 put restrictions on offering new “non-postal” services. However, the report points out, “given that the Postal Service is already providing money orders and other types of non-bank financial services, it could explore options within its existing authority.”
Hey, we could have at least one nice thing, as Congressional approval might not be necessary. Since they approve nothing anyway, screw ’em. Get this done:
The report suggests three types of potential products. First, it proposes a “Postal Card” that could make in-store purchases, access cash at ATMs, pay bills online, or transfer money internationally. Customers with paper checks could cash them at the post office or deposit them through their cell phones, loading them onto their Postal Card. Second, the USPS could offer an interest-bearing savings account, again through the Postal Card, encouraging savings from communities with little in the way of a personal safety net. Finally, the Postal Service could offer small-dollar loans, effectively an alternative to costly payday lending. The fees on all these services would be drastically lower than anything in the marketplace today.
All that sounds fine, and Dayen ends with this:
Maybe it’s time for President Obama to step in. He’s been looking for something to show he can help improve the lives of ordinary Americans, regardless of Congress’ inaction. Here’s a perfect opening on an issue of equal access, of affordability, of saving an American institution. Sure, the banks will squawk: the chief counsel of the American Bankers Association has already pronounced himself “deeply concerned” – but as the IG report shows, they have no interest in serving this community. So surely that won’t stop the President from urging the USPS to take advantage of this lucrative and worthwhile option – unless he values payday lenders and greedy middlemen more than the financial security of the Postal Service and millions of poor Americans.
Dayen is being sarcastic, but it’s easy to sense that he knows there’s always a reason we can’t have nice things, even if that doesn’t stop Elizabeth Warren:
About 68 million Americans – more than a quarter of all households – have no checking or savings account and are underserved by the banking system. Collectively, these households spent about $89 billion in 2012 on interest and fees for non-bank financial services like payday loans and check cashing, which works out to an average of $2,412 per household. That means the average underserved household spends roughly 10 percent of its annual income on interest and fees – about the same amount they spend on food.
Think about that: about 10 percent of a family’s income just to manage getting checks cashed, bills paid, and, sometimes, a short-term loan to tide them over. That’s more than a full month’s income just to try to navigate the basics.
The poor pay more, and that’s one of the reasons people get trapped at the bottom of the economic ladder. But it doesn’t have to be this way.
She’s a senator now. She’s working on it, because she also knows that Congress will always find a way to make sure we don’t have nice things, even if their approval isn’t necessary. Endless hearings about what has already been done can screw up anything too.
Paul Waldman knows that:
Some people have referred to this as a “public option” for banking, which is an accurate description, but makes it more likely that Republicans will recoil in horror as they catch the whiff of the dreaded Obamacare about the proposal. But the big banks – the ones with all the power in Washington- should be perfectly fine with it, since they’re not interested in these customers anyway.
Helaine Olen says no, Waldman should look at the data:
Turns out banks are not actually losing money on low-income Americans.
In fact, the less than wealthy have turned into a nice little profit center for the big banks. If these customers want to stay, the banks make them pay. The median overdraft charge is $34 at large banks and $30 at smaller financial institutions, according to a report from the Consumer Financial Protection Bureau. The result? Moebs Services, a financial research firm, estimated banks took in $32 billion in overdraft fees in 2012.
Never pass up an opportunity to screw a sucker out of his money. That’s another reason we can’t have nice things, and Felix Salmon considers those payday lenders:
Non-banks compete on convenience, not on cost, and tend to be open very long hours; while the Post Office has the advantage that a lot of the underserved go there anyway, it’s still going to have real difficulty competing with Western Union, check-cashing stores, and all the other high-cost non-bank financial-services shops which do exist in the ZIP codes without banks.
That means the Post Office would have to imitate the big boys:
In order to make a postal bank work, it needs to be a postal bank: it has to be able to take market share away from existing banks. That in turn means that the existing banks will fight tooth and nail to prevent such a thing from ever seeing the light of day.
Okay, we can’t have nice things. It was only an idea, like the imaginary sort of French-style Obamacare the left was hoping for and that terrified the right. We got something between humane socialized medicine with cost containments and get-rich-or-die Social Darwinism, and no one is happy. Ah well, sooner or later you stop expecting nice things, ever.