This post was not part of my plan for the week – but who am I to resist a little dig at the Republican party? Well, that; and I’ve been doing some question & answering on this topic for a few days now.
What The Hell Is Going On?
The short story:
- The US Constitution requires all federal spending to be approved by Congress.
- Congress consists of the House of Representatives and the Senate. Any new spending bills need to be passed by both Houses.
- The House of Representatives has a Republican majority. The Senate has a Democrat majority.
- The Republicans want any new spending bill to involve a delay in funding of the Patient Protection and Affordable Care Act.
- The Democrats wanted none of that.
So what this meant was that, as of the new Fiscal Year that started yesterday (October 1), no discretionary spending had any Congressional approval. Which is why the government departments whose funding gets approved every year as part of the ordinary business of Congress could no longer continue operating.
- About 60% of the Federal Government’s spending is mandatory, meaning (more or less) that it has already been pre-authorised under existing laws.
- Which is why military spending, Medicare and Social Security benefits, and a few other classes of spending, are not being affected by the shutdown.
- And it is also why the Patient Protection and Affordable Care Act could start yesterday. Most of its funding did not require any kind of approval stamp from those Tea Party Republicans.
The Affordable Care Act? Oh – You Mean Obamacare.
So why is Obamacare causing such a crisis in Congress? It’s been the subject of a Supreme Court ruling, and over 40 attempts by Republicans to get it annulled, minimised, delayed and/or nullified. It’s not particularly popular with the public. So what is it?
Another short(ish) story:
- A large number of Americans do not have health insurance. Mainly, the lower income classes and the youth of today (who are part of the lower income classes if they’re not employed).
- This means three things:
- The Americans with health insurance have to pay higher premiums (in general: the larger the pool of the insured, the more spread is the risk, the lower the premiums – so if the pool is smaller, and is missing the low-risk healthy younger segment of the population…)
- Those higher premiums disincentivise the uninsured Americans from joining healthcare plans.
- Insurance companies are more likely to be bastards about excluding people with prior conditions (again, if it’s harder to spread the risk amongst your customers, then you need to reduce risk in other ways).
- As I read it, Obamacare seeks to address that by:
- Expanding the insurance base to spread the risk
- Subsidising the insurance cost for low-income Americans
- Stopping insurance companies from denying coverage on the basis of past conditions (or of charging higher premiums to those with past conditions)
- Expanding Medicaid so that the private insurance customer base has less risk within it (the elderly are the primary beneficiaries of Medicaid – they’re also one of the high risk categories of healthcare cost)
- The Congressional Budget Office predicted that Obamacare would eventually lower the budget deficit – as the relative savings that it will bring about in government spending, alongside higher revenues from some of the taxes in the Act, will be higher than the cost of the program over time.
- Admittedly, that was before the Supreme Court ruled that it was okay for individual states to opt out of the program.
- Nevertheless, in principle, Obamacare seems like a good idea.
- If it’s unpopular with the public, it’s probably because “subsidised” does not mean “free”. It also carries the possibility of tax penalties for not having health insurance (here’s an alternative phrasing: “the tax code no longer rewards you for being a fool about your health insurance”).
The Republican opposition seems to be centred around whether or not the program will actually increase the government deficit. Of course, at the same time, they’re very much opposed to a tax on medical devices (being some of the extra revenue).
But, I guess, someone has to defend the real losers in this situation (the Healthcare Industry). More powerful insurance houses mean better bargaining power with hospitals and pharmaceutical companies.
Is that too conspiracy-theorist?
So What Does A Federal Government Shutdown Actually Mean?
It means that some departments will close. That the IRS won’t be answering phone calls. That kind of thing.
The real issue is how this plays out in the Debt Ceiling drama that’s been ongoing quietly in the background and is due for a climax in about three weeks time.
I think I’ll save that for tomorrow!