Spitzer and the Health Care Mob

Though Spitzer’s proposals were hardly revolutionary and would have done little more than slow expansion of the $45 billion program, the state’s health-care lobby reacted fiercely to the plan, as they have to every legitimate effort to contain costs over the past decade. An alliance of the health-care workers’ union Local 1199 and the Greater New York Hospital Association fired off TV ads attacking Spitzer’s proposals and urging him instead to squeeze savings out of the profits of health-care insurers and drug companies. The groups’ spokesperson also linked Spitzer’s reforms with Bush administration efforts to control the growth of federal health-care spending...'Taking on Albany's Gorillas,' Stephen Malanga, City Journal, 3/5/2007

Poor Governor Spitzer. Hot off the backs of lawbreaking corporations (except those contributing to his gubernatorial campaign), he finds himself face-to-face with the New York State health care "system." This is a system hacked together by local, state, and federal officials, a truly bastard child of the Great Society legislative madness of forty years ago.

The feds mandated that Medicaid be carried out by the states on their own dollar; the states mandated that localities raise taxes to fund Medicaid; health care workers organized and demanded more money and benefits; and, to round things out, the people demanded more and more Medicaid coverage. The trouble with these closed loops is that, sooner or later, such systems will cause a) bankruptcy or b) mass exodus of overtaxed citizens. Bankruptcy has been staved off so far, at least in New York City, where $26 billion in bonuses in the banking and brokerage trade kept taxes flowing. But people are leaving.

New York City lost several hundred thousand middle income citizens last year. When you get north and west of Albany, large towns are caught between the squeeze of taxpayer flight and increasing demands for Medicaid funds. Not a few of them are becoming ghost towns. Practical wisdom suggests that one should look at the basis for rising costs as a possible source of information for fixing the problem. This is what Governor Spitzer is trying to do.

But practical wisdom, if one can think of such politics as a maneuverable sports car, collides head-on with the political SUV of hospital patients, hospital workers, and hospital managers and owners. Emotions, expressed in newspapers, on television and radio, and before constituent crowds rise to fair imitations of Verdi. How could you not ask for more taxes on a rich homeowner to pay for my daughter's transplant?

Funny thing, most homeowners aren't rich. Most, if they don't have full title to the house, are up to their eyeballs in debt. Throw in school taxes for schools where most parents would rather not send their children, utility costs going through the roof, not to mention the prodigious expense of hiring contractors to make repairs, and most homeowners qualify as property poor. But, in populist (or socialist) arias, the strongest melodies are howls about rich owners and poor workers and patients. Nobody asks about who's paying the speaker or for the ads. Once hysteria becomes the pre-eminent means to manipulate voters and legislators, rational reform is only possible through government edict. This is not likely to happen in New York State before the edict of bankruptcy ruins hundreds, if not thousands, of formerly middle class towns.

Luther