Contempo Magazine Blog

President-Elect Barack Obama indicated that addressing the health insurance would be his third priority but seeing the relationship to the cost of health care to the cost of employee to business may mean that he needs to move it higher up the priority tree.  Although everyone can agree that poor planning and unrealistic expectations contributed to the out of control health care costs at General Motors, the truth is that for all employers even those that are nonunionized the current cost of maintaining health insurance for employees is unsustainable.

Business needs to be able to determine what are the costs of a job in order to make plans. The current environment creates a situation where the average business may be seeing increases in health care costs of about 40% per year. Regardless of how good the productivity of the worker or the company this cost alone may eventually be the major factor in determining our levels of employment especially for those low wage earners with little skills. We cannot stabilize our economy or our level of joblessness unless we begin to work on health care reform now.

Senate Finance Chairman Max Baucus (D-MT) has released his thoughts in A Call to Action:Health Reform 2009.  This plan would create a national health care insurance exchange where private insurance companies would compete with a basic government sponsored health insurance plan either of which would be employer based.  For those aged 55 to 64 there is the possibility that they could enroll in Medicare. Higher income wage earners who receive employer based benefits would be taxed for their health insurance benefits to help subsidize lower wage earners. Government programs for the poor, disabled, and children would be strengthened. Insurance coverage would be mandated for all Americans.

Health care is so complex and has so many lobbying interests including pharmaceutical companies, hospitals, doctors, health insurance companies, and unions to name a few that it seems almost insurmountable. Already the plan this week has been attacked by conservative and liberal think tanks as quite flawed however many did say it was a useful starting point and in that was an important work.  The plan does address a major problem, that vulnerable group of the population who often are working but can not get insurance unless it is employer based, the 55 to 64 year olds ability to get insurance.

The most significant question for the future of health care in America is whether there can ever be a totally private program supported by government regulation and tax policies or will it be always necessary to have a significant government programs such as Medicare, Medicaid, and CHIP to cover those not covered by private programs.  Making health insurance employer based will likely make the additional existence of a government sponsored program for those not employed like elders, the disabled, the unemployed, the chronically ill, and the mentally ill always necessary.  On the other hand, if we make a consumer based health insurance program that is not specifically employer based then perhaps in the long run a simpler system that would equalize things for the employed and the unemployed might be possible.

The goal of the Baucus programs is to maintain health care costs at the current levels by cutting waste, prioritizing primary care and prevention, setting standards for efficiency, and improving information systems. These are worthwhile endeavors, however, whatever we do the future will likely see increasing health care costs due to the aging of the population and the continued development of medical science. Efficiency is important but realistically  maintaining a high level of  health care for the future will ultimately require that we drastically improve the productivity of the average American worker. If the overall productivity of the economy cannot be increased than no matter how efficient the health care system there will come a point beyond which further expenditures are not tenable and health care priorities will need to be triaged. For example, already many European countries already are limiting care to the extremely elderly in such things as heart disease.

America has to come to terms that there may be limits in a what our health care system can accomplish but also because of that we have to demand that there is a system that is fair to all and with the least waste possible. The Baucus proposal is not perfect but it does bring up many important issues.

Those who wish to abandon government programs now or avoid a national system have to do the leg work to come up with proposals that will deal with both the unemployed, the employed, children and the elderly. A totally private system that is supported by tax policy and regulation such as the Federal Employees Health Benefits Program (FEHBP) which could be adopted as a nationwide program has been advocated by the Heritage Foundation and others. In the long run this would be a better single system of competing private insurers for all Americans and not requiring a government insurance plan for any. If Republicans and other conservatives wish to gain the necessary consensus then they must come up with realistic action plan to implement this program.

Senator Baucus rightly has stated that his plan would take years to finalize and would require a monumental effort to implement.  An argument against massive total reform is that it may be so hard to accomplish and take so long that discussing it is useless. Perhaps the best way to look at meaningful health reform is to do it a step at a time. If we prioritize dealing with insurance for the employed right now and stabilize our government programs than perhaps that will buy us time in the future. We cannot wait three to five years to reform health insurance for the employed because the level of uninsured may swell to above 50% nationwide.  Incremental change in the health care system, a step at a time, may be easier than jumping into the unknown.

Tony Barclay is a retired physician and graduate of Harvard Medical School.

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Everyone agrees that General Motors has two problems.

The first problem they have is “legacy costs” which are the high costs of health care they must pay for retired employees. Every worker at GM is currently paying for the benefits of 2.5 workers who are retired.  While the national average that workers contribute for their own health care is 32%, non-salaried workers at GM only pay 7% for their own health benefits. The retirement budget will actually double in the next few years because nearly half of almost 400,000 workers who are currently in the program are going to retire in the next five years. In fact the leader of the United Auto Workers, Ron Gettelfinger, has said the only way out of the health problem is for the United States to adopt a national federalized health insurance program.

The other problem is simply that GM and the other Detroit automakers in trouble simple have no idea about how to make cars that Americans want.  Toyota foresaw the need to make fuel efficient cars in the 1970s and made it a major point of its global growth. Meanwhile American automakers spent most of their money lobbying Congress to pass import taxes on foreign small cars and allow American car makers special allowances out of making gas efficiency a priority.  Each year they made a few inferior small cars as tokens and instead focused on making profitable SUVs. By making the big SUVs they played a definite part in convincing the American public that energy dependence and forward thinking energy policy were unnecessary.

Toyota spends millions of dollars studying what their customers want. They have a special think tank in Torrance, California which constantly collects data. In fact, according to Fortune magazine they have a special name for this type of research ” genchi genbutsu - go to the scene and confirm the actual happenings”. Toyota has invested in thousands of U.S. workers and built U.S. plants in areas of the country that needed employment. They advanced the concept of the hybrid car to the extent that they came up with the only successful hybrid concept on the market.

Finally, the United Auto Workers do not want to compromise.  The labor movement is important in industrialized societies to protect workers but the current situation is out of balance.  The labor unions themselves assisted executives at GM and the other companies to move in stupid directions of marketing and product development. In press releases, the UAW has basically said that under all circumstances they must be the highest paid workers in the world.

The United States bailout of Chrysler years ago was said to be a success by some because there was a profitable return on the loan. However, it was a dismal failure because it did nothing to change the behavior of the most juvenile industry in our country.  Compare the auto industry in America to the computer industry or the aircraft industry which are fighting bitterly against world competition instead of asking for government handouts and bribing their local Congressman and Senators as has happened in Michigan.

Artificially maintaining GM and the other failing Detroit automakers will suck up possible resources that could be used to further decentralize the industry. In California,  a company may be able to make electric cars for $10,000  if it can find the funding. This is an industry that needs to be diversified and not held by a few corrupt companies in one place in our nation. To those that say our national security demands we help GM and the others, I say it is exactly for national security that we must allow diversification and the development of more competitive companies who understand that innovation not corruption is the way to success. If our country really needs change than we need to find new companies to develop new and better types of vehicles.

Tony Magaña grew up in McAllen Texas, attended Texas A&M University, holds a doctorate from Harvard University. The co-founder of Contempo Magazine has participated in Valley business for over 20 years.He is a member of the National Association of Hispanic Journalists.
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The foremost “conservative” of our time, the late William F. Buckley, was asked in an interview in 2007 by Bill Steigerwald to define conservatism.  His answer was

“Conservatism aims to maintain in working order the loyalties of the community to perceived truths and also to those truths which in their judgment have earned universal recognition. Now this leaves room, of course, for deposition, and there is deposition — the Civil War being the most monstrous account. But it also urges a kind of loyalty that breeds a devotion to those ideals sufficient to surmount the current crisis. When the Soviet Union challenged America and our set of loyalties, it did so at gunpoint. It became necessary at a certain point to show them our clenched fist and advise them that we were not going to deal lightly with our primal commitment to preserve those loyalties.

That’s the most general definition of conservatism.”

This elegant description of conservatism is a message often forgot and misunderstood by so many. Since Mr. Buckley first starting writing about what he called conservatism in the 1950s there have been several alterations to the original concept. Modern conservatives are divided into three schools. The traditional libertarian conservatism of William F. Buckley, the traditional conservatism of the late Russell Kirk, and the neoconservative movement of William Kristol.  Although they share common features they have significant differences that can allow for major disagreements about how to approach an issue.  The first issue the Republican Party has to deal with in the Obama era will be to understand the differences in these concepts.

Libertarian conservatism took parts of old European traditional conservative principles and combined them with libertarianism. Some tenets included small government, fiscal responsibility, extreme personal freedoms as long as they were not infringing on others, protection of private property, and a limited foreign policy.

Russell Kirk did not believe that libertarians had a role to play in conservative thought.  His idea of conservatism more closely followed the European model of conservatism that there was a destiny to be fulfilled.  Tradition, religion, culture, and custom were each inter-related and interdependent on each other. For society to go forward all the components of this foundation must be preserved.

The Bush Presidency was marked by the predominance of neoconservative thought over the other forms of conservative ideology. Instead of the believing that societal and world problems might eventually be resolved spontaneously over time if basic principles are met, neoconservative advocated an active interventionist rule in world affairs. This is why many traditional and libertarian conservatives opposed the Iraq war.  Domestically the funding of billions of dollars in programs to intervene in society by neoconservatives explains how the deficit ballooned.

To those who say conservatism failed in America they are right and they are wrong.  The Bush Presidency represented a major shift away from the major themes of the libertarian conservative model of Conservative government. The traditional conservatism of Russell Kirk lead to the Great Depression and the neoconservatism of William Kristol lead to the failed Bush Presidency. Republicans seeking public office need to return to libertarian conservatism.

Ronald Reagan’s Presidency was much more closely identified with the William F. Buckley style of conservatism then the current neoconservatism. Although he often stated that “government is the problem” he also said the government had to do well at those things it was required to do.  Republicans need to understand that small government is much different than no government.

The Constitution of the United States specifically grants the Federal government the power to regulate interstate commerce. This implies that regulation is not a bad word in and of itself. Regulation of commerce to control union power to prevent another General Motors disaster and regulation of corporate executives to protect the private property rights of retirement account stockholders are both within the realm of conservative actions. American corporations need to return to what they were originally envisioned. Corporations have two basic purposes, to provide a continuing service or product in an economically competitively manner and to provide a reasonable return to their stockholders who provide them capital.  Republicans can take the lead of laws providing for transparency in corporate governance removing the restrictions on stockholders rights, making boards and executives more accountable to stockholders, passing laws making executive stockholders liable to minority stockholders such as in California state law, and making dividends more important than capital gains.

The Constitution mandates that the Federal government shall promote the general welfare which clearly implies that broad powers are given to make a better health care system. Instead of Republicans sticking their head in the sand screaming laisse-faire they need to get to work. If they do not want a big government system then they need to spend the time and effort to really examine building a brand new system.  Privatizing health care without totally revamping the health care insurance industry will sure fail.  Government leaders must stop making false promises that the overall costs of health care are going to go down due to technology use or due to prevention. Everyone has police or fire services and so it should be with health care.  Excessive medical costs for useless administrative functions, worthless expensive medical treatments, inflated liability costs, and expensive redundancy in hospitals are just some of the areas that should be addressed.

Our libertarian roots should steer us away from contentious social issues which may infringe upon personal freedoms. Forcing employers to screen their employees for legal immigration status is a violation of conservative principles. Similarly if two people want to form a legal union of the same sex our libertarian values would say fine. On the other hand protection of the unborn, the elderly, consumers,children,employees, and others is imperative.

We must link freedom and personal responsibility together. We should not stop a motorcycle rider from wearing a helmet if he so chooses, but it is unfair to ask the public to pay taxes for his lack of personal responsibility. User fees or taxes for high risk or irresponsible behaviors like smoking, eating fast food, and gas guzzling vehicles for example should take the place of public taxation for the consequences.

The Republican Party has failed in its attempt to close public schools and convert everyone to a private school system. Education reform offers them the chance to develop ideas which will appeal to those Americans who want a better life for their children. Almost one third of American children never graduate from high school.  Although testing and vouchers may have a role, recent research that shows that developing the concept of community and parent interaction in public schools such as is present in private schools can dramatically improve schools holding power against attrition. The Republican Party has an opportunity here to form alliances with teachers and educators instead of the current confrontation.

Most importantly, conservatives must begin every discussion with ” based upon my principles  I have this specific plan.. “and not just be negative “know nothings.”

Tony Magaña grew up in McAllen Texas, attended Texas A&M University, holds a doctorate from Harvard University. The co-founder of Contempo Magazine has participated in Valley business for over 20 years.He is a member of the National Association of Hispanic Journalists.