Ron Brownstein ably sums up the Census Bureau’s final report on the Bush economy.
Bottom line: not good.
On every major measurement, the Census Bureau report shows that the country lost ground during Bush’s two terms. While Bush was in office, the median household income declined, poverty increased, childhood poverty increased even more, and the number of Americans without health insurance spiked.
What went wrong?
In a word: healthcare.
Over the years from 2000 to 2007, the price that employers paid for labor rose by an average of 25% per hour. But the wages received by workers were worth less in 2007 than seven years before. All that extra money paid by employers disappeared into the healthcare system: between 2000 and 2007, the cost of the average insurance policy for a family of four doubled.
Exploding health costs vacuumed up worker incomes. Frustrated workers began telling pollsters the country was on the “wrong track” as early as 2004 – the year that George W. Bush won re-election by the narrowest margin of any re-elected president in U.S. history.
Slowing the growth of health costs is essential to raising wages – and by the way restoring Americans’ faith in the fairness of a free-market economy.
Explaining the impact of health costs on wages is essential to protecting the economic reputation of the last Republican administration and Congress.
If Republicans stick to the line that the US healthcare system works well as is – that it has no important problems that cannot be solved by tort reform – then George W. Bush and the Congresses of 2001-2007 will join Jimmy Carter and Herbert Hoover in the American memory’s hall of economic failures. Recovery from that stigma will demand more than a tea party.
29 responses so far
1 Chekote // Sep 15, 2009 at 1:54 pm
If Republicans stick to the line that the US healthcare system works well as is – that it has no important problems that cannot be solved by tort reform.
This is unfair. The GOP has proposed several initiatives beyond tort reform that would help reduce costs.
http://www.gop.gov/solutions/healthcare
If you want to increase the influence of your blog on the right, then you need to stop adopting every liberal talking point as gospel. I said this as a fan of your site.
2 Chekote // Sep 15, 2009 at 2:00 pm
I mean I say this…. sheesh.
3 balconesfault // Sep 15, 2009 at 2:19 pm
Let’s look at the GOP initiatives that Chekote references, with an eye on whether they will really reduce costs.
We do need medical liability reform, and it needs to be real reform.
Texas has done this. We haven’t seen malpractice insurance costs come down, or health insurance costs come down.
Let’s also talk about letting families and businesses buy insurance across state lines.
Seriously, does anyone believe that Americans have gotten a better deal from credit card companies because they’re allowed to move their operations to the states with the least regulations (Delaware, South Dakota). Certainly our banking system is more responsive to the consumer because Nationsbank is everywhere, right?
All individuals should have access to coverage, regardless of preexisting conditions
This is good from a fairness perspective. This will not reduce costs – forcing insurers to cover customers with preexisting conditions will add to the risk pool, forcing them to raise rates for everyone to deal with that increased risk.
Individuals, small businesses and other groups should be able to join together to get health insurance at lower prices, the same way large businesses and labor unions do
I actually don’t understand why they cannot do so right now. Is there some regulatory barrier to some group of small businesses banding together and negotiating insurance coverage? It seems to me, for example, that many professional societies already do this.
“We can provide assistance to those who still cannot access a doctor.”
That sounds like redistribution of wealth – I thought that Chekote and others were dead set against redistribution of wealth? I guess they were against it before they were for it?
Insurers should be able to offer incentives for wellness care and prevention – something particularly important to me.
This is stupid. Of COURSE insurers can offer incentives for wellness care and prevention. Like the idea of insurance pools, Republicans are basically fighting for the status quo with bright flashing lights to pretty it up.
4 mycelf // Sep 15, 2009 at 3:04 pm
“What went wrong? In a word: healthcare.”
Once again, Bill Cosby echos in my brain, “RIIIIGGHHHTTT”. Such a statement defies credulity.
What went wrong?
They didn’t welcome us as liberators.
There were no weapons of mass destruction.
The Bush administration focused its attention on the Middle East to the detriment of the Mid-West.
People, encouraged by the White House, spent large amounts of money they didn’t have.
Some corporations (shockingly) took advantage of the situation.
The balloon finally popped.
5 joemarier // Sep 15, 2009 at 3:07 pm
I would add high levels of low-skill immigration to the mix of factors affecting the numbers. Particularly the poverty/childhood poverty numbers.
6 bradpeterson // Sep 15, 2009 at 3:16 pm
David,
You are pretty correct. I’d also add some of the following clarifications.
1) Income per household went down, but so did the number of people per household. Income per earner on the other hand stayed flat. This was broken down and detailed quite well over at the Skeptical Optimist, with the link found here: http://www.optimist123.com/optimist/2008/10/the-rumor-about.html.
2) Another source which does an excellent job of showing how wages were affected because of the rise of cost of benefits is from the St. Louis Fed. http://research.stlouisfed.org/publications/es/07/ES0707.pdf. They compare total compensation per hour against average hourly earnings. It’s quite easily seen that compensation (benefits + wages) rose well during the Bush years. But wages flattened, because all the extra compensation went to benefits like health care.
7 mycelf // Sep 15, 2009 at 3:28 pm
wouldn’t want to forget them damn dirty foreigners.
8 balconesfault // Sep 15, 2009 at 3:41 pm
wouldn’t want to forget them damn dirty foreigners.
Reminds me of a song performed by a group called the Austin Lounge Lizards, penned way back in the early 90’s:
It’s been five years since we had a raise in pay
And they disallowed my business lunches today
Somebody must have changed the rules of the game
So we’ve found a convenient scapegoat we can blame
It’s those teenage immigrant welfare mothers on drugs
(They’re too lazy to work)
Teenage immigrant welfare mothers on drugs
(They’re stealing our jobs)
Somebody ran this country deep into debt
I called up Congress, but nobody’s called back yet
Sometimes I get so mad I can’t think straight
We’re looking for relief and it feels so great to hate
All those teenage immigrant welfare mothers on drugs
(They’re on the Dole)
Teenage immigrant welfare mothers on drugs
(They’re speaking espanol)
Who’s to blame for the things we’re so angry about?
Who’s to blame for uprisings, downsizings, and the drought?
Who’s to blame for the end of the good old days?
Who’s to blame for that backwards-cap-wearing craze?
It’s those teenage immigrant welfare mothers on drugs
(Let’s build a thousand-mile fence)
Teenage immigrant welfare mothers on drugs
(It’s just common sense)
Teenage immigrant welfare mothers on drugs
(Like the Berlin Wall)
Teenage immigrant welfare mothers on drugs
(Land mines and all!)
Teenage immigrant welfare mothers on drugs
http://www.youtube.com/watch?v=uByGoPGP9wY&feature=player_embedded#t=60
The more things change …
9 Cforchange // Sep 15, 2009 at 3:45 pm
Don’t forget the HSA which after that faltered there appeared to be lacking direct initiatives. The HSA was a great idea but passed off as too complicated where the real problem was that incomes were in a downward trend. Health insuring for less was necessary, not saving for future health.
I run a small business and know immediately how the real economy is operating . Small businesses are the most efficient and do not play with their balance sheets so their results are true blue. In general, when small business is suffering it’s time for big business to develop fiction. That’s where we’ve been folks. For the last decade, it’s all been pure bull, a Madoff moment!
I didn’t need a census report to know how badly incomes have been falling – I experienced this real world. If the ears are open now – just wait until we embrace what has happened to the lower middle class during this time. Along side prisons, we will need big, big mental health institutions. We’ve got more problems than anyone wants to recognize – it’s pathetic.
Many a day I feel I’m passing through something that right out of Steinbeck – vagrancy and toothlessness abound. From dust to crack bowls….
Slowing the growth of health costs is just one part of fixing our economic ills – we need to provide alternatives to a crack career so we have more population earning a taxable income. Then too we also need to confront the processing of our mentally ill instead of ignoring them, that is until they are caught comitting a crime.
10 balconesfault // Sep 15, 2009 at 3:54 pm
Along side prisons, we will need big, big mental health institutions. We’ve got more problems than anyone wants to recognize – it’s pathetic.
Amen. And the standard “pick yourself up by your bootstraps” rhetoric is so divorced from the reality or the mentally ill around us that it’s like trying to talk about solving famine problems by throwing a rope around the moon and dragging it to earth so we can all enjoy the cheese.
Until a lot of these people get a LOT of counseling, and proper medication – they’re not going to make good decisions. Period. It’s not a matter of preaching to them … you might as well try asking for driving directions while speaking in tongues to your local policeman. It’s not going to go well.
They need professional help. They need safe refuges. They need access to medication. Perhaps, with all those things, they have a chance at getting back into the productive mainstream. Many will never make it.
11 WildWilly // Sep 15, 2009 at 4:18 pm
Racking up another point toward the special place in hell that is reserved for me, with dripping sarcasm, here it goes.
I am a loyal, true blue, tea party agitator for truth, and I have got mine. Don’t change a thing or I will give you hell.
We have through over a decade of slow motion movement to a lower standard of living that appears to be accelerating. The problems now reach well up into the middle class. The question is can we actually move beyond the partisan bickering and make things better? If not, I expect that major nasty changes in our society are lurking around the corner.
12 liv&win // Sep 15, 2009 at 4:46 pm
Health care reform should never have been positioned as an issue of access for the uninsured. For the last 15 years, the issue has always been COST, COST and COST. It simply costs too much to insure someone, and healthcare is too expensive to not be insured. I fear Obama has figured this out also. He will cut Medicare, again, more…and the cost shifting onto private insurance will accelerate. Soon he will have us begging for public assistance. If the Republic is to survive, health reform which addresses cost must be passed. The problem is, no one has a good handle on a solution(s).
13 Chekote // Sep 15, 2009 at 5:05 pm
That sounds like redistribution of wealth
Helping those who can’t get help themselves is noble.
Mandating equal results independent of effort is socialism.
14 balconesfault // Sep 15, 2009 at 5:11 pm
Helping those who can’t get help themselves is noble.
Mandating equal results independent of effort is socialism.
Sorry – that seems a lot like just constantly mutating terms to fit whatever position you want to take.
Great for discussions with people who fully agree with you, and won’t challenge you … lousy for persuasion.
Just to be clear, however. Are you saying that Big Government using money collected (as some on the right would say, with the barrel of the gun) from working Americans to provide assistance for those who can’t get help themselves is noble?
I’m not disagreeing. I’m just making sure that I’m characterizing your position correctly. I don’t want to misquote it in the future.
15 balconesfault // Sep 15, 2009 at 5:18 pm
live&win: The problem is, no one has a good handle on a solution(s).
I have only seen one ’solution’ which I think has the potential to limit the growth of medical costs.
And that is creation of a Public Option that will create a baseline for private insurance to compete with. Leaving it up to the insurance industry to reduce costs through internal competition has already failed.
Again, almost every other reform proposal now on the table – mandating more people buy insurance, mandating that insurers add pre-existing conditions to their risk pool, or don’t drop coverage on customers whose risk increases – will likely increase the amount of money flowing into the insurance industry, with no incentive whatsoever for them to reduce the standard 20% overhead and profit.
And as much as a lot of people out here keep maligning Medicare – turns out that most doctors actually like it compared to private insurance – because it is administratively much less expensive to manage. Medical practices are in a constant fight with insurers who try to deny or delay payment of claims, and that eats up a lot of resources that therefore can’t be used to treat patients. With Medicare, they will get paid less … but they are guaranteed that they will get paid.
16 roland.lindsey // Sep 15, 2009 at 5:47 pm
Excellent post. I agree wholeheartedly. Honestly, when you look at the traditional levers of tax policy, interest and inflation rates, there is just not much room to make things any easier on business to create jobs and raise income levels, let alone pay for health care. There are many things we can do to encourage business and wage growth, however. Like fix this odious, job-killing system we have in America called Health Care.
I have worked for a 60-employee business for a year and a half, and we have changed health insurance three times in that time. Why? The latest decision to change was a renewal rate that cost 35% more than last year. So much for the free market system giving me a choice.
Dealing with the cost in health care is absolutely critical. It was important in 1990. It was critical in 2000. It is becoming an emergency in 2010. It will be deadly in 2020.
And reforming health insurance alone will not solve the problem of cost. Even if all insurers became non-profits but otherwise performed at the same rate, it would only reduce the cost of health care by 1% of the $2.4 trillion it costs us now.
Tort reform is not going to bring our costs significantly down. How do I know this? Look at the size of the medical malpractice insurance industry. Not only is the medical malpractice insurance industry doing very well from a profitability point of view, the cost of medical malpractice is at a 30 year low. In fact, in 2008, the total cost of medical malpractice insurance was $10.7 billion. That is less than one half of one percent of the $2.4 trillion we spend on health care. Total payouts from malpractice insurance? $4.7 billion.
Come on, Republicans. We can do much better than this. And the independents, those people who really decide elections… They know whether or not they did better in the last decade or if they did worse. They don’t care what Glenn Beck says, and they don’t care what Keith Olbermann says. They care about their own situation and their own prosperity. And while Republicans do not solve problems for them, they will vote Democrat. It’s the simple truth.
We hear the comparisons to Canada and the UK and Switzerland, and we laugh it off because we say, “Well sure, they may control costs better than we do, but I’d hate to get sick over there!” And then we lay out a lot of reasons why our system is better.
Except the costs of our system are crushing individuals, business, and our economy. And we Republicans are blind to the reality that our “solutions” to the problem are tiny drops in an enormous bucket. Would you prefer the economic growth of the ’80s or the 90’s to the economic growth of the 00’s? We all would agree that would be preferable. Would you be willing to go back to an 80’s standard of Health Care to achieve that?
If the only substantive choice to contain health care costs is to move over to a Single Payer system like Canada, or a Nationalized system like the UK, then we must support the substantive choice. We can cry about losing our liberty and freedom all we want, but do not forget that economic freedom equals real freedom. That personal liberty is not possible without economic liberty. And the trajectory we are on is one that leads to economic slavery.
If I have to choose between a permanent economic disaster in this country and waiting 3 months for a doctor visit, sign me up for the waiting list.
17 balconesfault // Sep 15, 2009 at 6:20 pm
rolandlindsey “If the only substantive choice to contain health care costs is to move over to a Single Payer system like Canada, or a Nationalized system like the UK, then we must support the substantive choice.”
Thank you. This is a part of the argument I have been making for a long time. FWIW, small businesses are also probably much more affected by clients who declare bankruptcy, and medical costs are the primary reason for 60+% of the bankruptcies in America.
But again, as I’ve discussed elsewhere. At all levels of government, we’re probably already spending well more in taxpayer money than Canada or Great Britain per capita on healthcare. Not just Medicare and Medicaid, which sum up to GB’s per capita spendin on their NHS. Add in:
- the DOD and VA systems
- healthcare for 1.2 million Federal Employees
- $225 billion a year in tax breaks to companies for providing insurance
- publicly funded healthcare for state, county, township, and city level employees across the country
- publicly funded healthcare for 3 million teachers, administrators, and school district facilities personnel across the country
- publicly funded healthcare guaranteed as retirement benefits for retirees of all the governmental systems noted above
It would not shock me to find that a total tally would bring us to $5.5-7 K/year per capita already being paid for by taxpayer dollars. And that doesn’t include individual and company contributions.
We are already paying for a pretty damn good universal healthcare system that would lift the burden from small businesses like yours. For various reasons, we’re not buying one with that money. It’s a lot like buying all the parts to build a car, and hiring someone to build it for you, instead of buying the car from the assembly line. You’ll soon find out that you spent far more than the stock model, with no tangible improvement in performance.
18 Why Conservatives should support Government Healthcare « Cognitive Resurgence // Sep 15, 2009 at 6:53 pm
[...] Frum posted an excellent post on the Bush Economic Legacy over at NewMajority.com. I hope that the Republican leadership reads [...]
19 sinz54 // Sep 15, 2009 at 8:01 pm
balconesfault:
Not only that.
But combined with managed care, it’s likely unworkable.
Today’s HMOs and PPOs typically come with local networks of providers. For example: In Massachusetts where I live, Harvard-Pilgrim offers a very good health care plan. But all the doctors and hospitals in their provider network are located in New England. How does that help someone from outside New England who is looking to purchase insurance? He can’t very well travel to New England every time he needs to see a doctor! He would have to go to a doctor outside Harvard-Pilgrim’s network–and pay a much larger co-pay.
For interstate health care to be practical, we would need a whole new generation of national HMOs and national PPOs whose provider networks cover the entire nation, not just one region of it.
Republicans don’t even seem to be aware that this is a problem.
20 sinz54 // Sep 15, 2009 at 8:09 pm
liv & win:
I have the IDEAL solution to the rising costs of Social Security, Medicare, and health care in this country. And it is simply this:
HAVE MORE CHILDREN!
The costs of health care and old age care are rising all over the Western world, not just in America. Even in countries with single-payer systems like in Europe, costs are rising.
And that’s because life spans are increasing, folks are living longer–but they’re not living out the remainder of their lives in good health. They’re living with one or more chronic illnesses.
And with birth rates declining, there aren’t enough young taxpayers to foot the bill for the care of the previous generations. Today, there are only two taxpayers for every retiree. But 200 years ago, a mom typically had some six to eight children, so there were far more taxpayers than retirees.
Put away your birth control pills. Stop having vasectomies. You and your honey just do what comes naturally. And the demographic population distribution will rebalance itself.
21 ltoro1 // Sep 15, 2009 at 11:22 pm
Have more kids? Sinz, I happen to agree fully with you on this one. The only problem is that with the reported decline in real income, this also becomes more unaffordable. I guess we have to root for Octomom, Jon and Kate, and that couple on TV with the 20 kids.
22 greg_barton // Sep 16, 2009 at 12:47 am
Frum sayeth:
Wow. I don’t think I’ve ever heard a self identified conservative ever say that workers could perceive a free-market economy as anything other than fair.
23 txanne // Sep 16, 2009 at 12:51 am
After this week I feel like we need to have a non-partisan Civility March on Washington, because we are going nowhere fast.
As for healthcare cost, it really galls me to hear people who profess that we are the greatest country in the world attack any real talk of medical savings as pie in the sk. Where is the “We are America, we can do anything” spirit?
Anyway a few articles I have found interesting lately
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a09dX4NiJ714
Atul Gawande:
Dr. Peter Pronovost’s checklist
http://www.newyorker.com/reporting/2007/12/10/071210fa_fact_gawande
The Cost Conundrum
What a Texas town can teach us about health care.
http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande
24 SFTor1 // Sep 16, 2009 at 2:37 am
It seems that the health care debate is turning. Could it be we might have conservatives with us soon to throw out this nonsense we call a health care system, and start over with something that works?
If for no other reason we need affordable and transportable health care to take the burden off the business sector. That means one risk pool and a single payer, and a nationwide network of private providers who can constantly innovate health care delivery.
The insurance companies? Nothing more than an anachronism. They have got to go.
25 greg_barton // Sep 16, 2009 at 9:59 pm
The debate is pointless. Democrats will pass something with absolutely no Republican support. In 40 years you’ll have conservatives yelling at town hall meetings, “Keep the government out of my universal health care!” And that’s that.
26 johnmarzan // Sep 16, 2009 at 11:20 pm
blame healthcare for economic crash? why not blame the housing crisis + $140/barrel oil for economic collapse?
27 sinz54 // Sep 18, 2009 at 1:18 pm
sftor1:
Yes, WITH ONE PROVISO:
NO ONE should be forced into accepting less or worse health care under YOUR proposed system than they currently enjoy.
That means: No long lines and long waits waiting for care; no denial of treatment due to overly expensive Quality of Life Years (QALYs); no long waits for elective surgeries; and no cuts in payment to hospitals. NO PATIENT should have to give up anything they currently have (which for many upscale employees of large corporations includes paid acupuncture and subsidized memberships in Weight Watchers and health clubs).
NOW, go ahead and construct a health care system “that works.”
Lots of luck!
28 balconesfault // Sep 19, 2009 at 7:37 am
NO PATIENT should have to give up anything they currently have (which for many upscale employees of large corporations includes paid acupuncture and subsidized memberships in Weight Watchers and health clubs).
Sinz, of course, is assuming that the market will bear all of these for those upscale employees forever into the future. But how many layoffs have we read about from those same large corporations just in the last year? Last winter and spring, it seemed that every time we opened the paper it was Company X laying off 300, or Company Y shedding 2,000, or Company Z reducing their workforce by 10,000 employees.
29 cwillia11 // Sep 20, 2009 at 7:05 pm
Government policy at both the state and federal levels is driving up health care costs. True the Bush administration did very little to remedy the situation but the Democrats are running the show now and what they are up to will drive health care costs up further resulting in the perceived need for direct government management of health care.
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