The Marxism Lite
Well many people are enthusiastic about John Kerry's health care plan. The heart of the plan is a premium rebate pool that will help lower the impact of high cost consumers of heath care have on insurerers. The idea works like this, a small portion of people have very high insurance costs. So high that those covering these people have a strong incentive to make sure somebody else is covering their costs. The premium rebate pool basically acts as a re-insurance program. The government is basically offering isurance to insurance companies. This would lower the costs for those providing medical care/coverage and reduce the incentives to get these people off their plans. This in turn would also lower insurance premiums since when the costs go above a certain threshold the insurance company would not have to pay those costs by itself.
So far, so good. Not a bad plan. There ar some details that are being omitted. First, while this would result in a decrease in premiums it would likely result in an increase in the consumer's tax liabilities. The exact impact on any given consumer is quite unclear, but if this were to remain revenue neutral from a federal budget point of view taxes would have to go up. No problem you might say, Kerry is planning on raising taxes on those who make over $200,000/year. Right, but as has been pointed out before these tax increases, when coupled with Kerry's tax cuts and additional spending don't add up to deficit reduction. Again, one could respond with, "So what, under Bush we have seen a huge increase in the deficit." And you are absolutely right. Here is the problem though: Kerry has been portraying himself as the candidate of fiscal responsibility (see here, here, here, here, here, here, here, here, and here). Kerry and Edwards point out that higher debt today means higher taxes in the future. Well this is true for a Kerry-Edwards presidency as well (assuming they can get this through Congress).
But that isn't the part that strikes me as having some similarities to Marxism. It is the bullet items in Kerry's description of the plan,
Provide Health Coverage to Their Workers. Many companies work to provide quality coverage to all their workers. However, some companies have stringent rules that prevent some workers from obtaining affordable health care. To receive the premium rebate, employers would have to provide insurance coverage to their employees.
Adopt Disease Management and Care Coordination Programs to Improve Quality and Lower Costs. Innovative programs targeting patients with chronic conditions have illustrated that both the human and cost consequences of chronic diseases can be alleviated through hands-on medical management. Employers and their insurers must adopt model programs to receive the premium rebate.
Share Savings with Workers. By substantially reducing catastrophic costs, John Kerry's proposal will make it easier for employers to offer affordable coverage. Firms will be able to provide higher wages, maintain benefits, and make investments that help employers and workers alike. Health economists predict that these savings will automatically be passed onto workers in the form of higher wages and/or other forms of compensation. If employees do not share in the savings, the Secretary of Health and Human Services and the Secretary of Labor would develop policy options to ensure that employers do share these savings with workers.
To qualify for the rebate pool you must adhere to these new rules...these new controls. The last one in particular is troubling. It is pretty much accepted by economists that who pays a given tax is irrelevant. If the tax is levied on the firm it will try to pass those costs on to the consumer. The consumer will react in two ways first by subsituting to un-taxed items (the substitution effect) and to curtail spending in general (the income effect). This means both the consumer and the firm will share part of the burden of the tax. Right now with benefits firms get certain tax benefits as do the employees. By lowering the costs of those benefits the tax benefits change. Should all of the savings go to the employees? Well as an employee I'd like that, but I'm not entirely sure this should be the case. What is distrubing is that John Kerry is willing to force firms to this outcome.
A firm brings together the various factors of production and produces goods and/or services. Firms do this for a profit. The profits go to the firm's owners (shareholders). Some have seen this discrepency between what is paid to the factors of production (the costs) and revenue as rightfully belonging to the worker (labor). Further, this money should be given to the workers. That is the basic concept of Marxism (simplified). That is what I see with the details of Kerry's plan. Now, it is entirely possible that the entire decrease in benefits is translated into an increase in wages/other compensation. However, I am not convinced that has to be the outcome. There are lots of distortions here, and forcing a particular outcome could have negative consequences. If Kerry has some analysis that supports the "correctness" of this position I'd sure like to see it.
This is why Kerry's plan smacks of Marxism. It smacks of the government getting in and mucking around in the market at a low level (i.e. a micro level...micro-managing if you will) ensuring an outcome that in this case is designed to get votes, but may not be the best possible outcome.