Matthew Yglesias Hates Your Mama...

(Has Matthew learned to ignore me yet? I guess we'll find out.)

It isn't that Matthew Yglesias is stupid. After all, he went to Harvard. No, it's more a matter of his being a rent-seeking pundit rather than an entrepreneurial pundit. Rather than going to work and saying This is what's right and this is what's wrong, Matthew goes to work and asks What am I supposed to say is right and what am I supposed to say is wrong? Then, and only then, does he sit down at the computer.

Or maybe he's just partisan above all else.

I only mention the obvious choices because clearly Matthew is intelligent enough to know this is abject nonsense from the truly progressive point of view:

And of course you see something similar in the fulsome conservative defenses of the prescription drug tax giveaway that the Affordable Care Act repealed. This is how the political right operates—there’s a lot of rhetoric about free markets, and a lot of institutions that are staffed by people who very sincerely believe in free markets, but no real organized political movement on behalf of free markets except insofar as market-talk bolsters Republican Party electoral fortunes or rich people’s desire to pay lower taxes.

Irrespective of what I think about the Medicare Plan D Retiree Drug Subsidy (RDS), the true progressive should - if they were really interested in affordable health care - be howling along with AT&T, Verizon and Deere (not to mention unions such as the AFL-CIO) to restore the tax incentive Obamacare has reduced. But since Matthew isn't a true progressive, and isn't really concerned about affordable health care for all, I'm going to have to lay out the true progressive's case for restoring the RDS to a full 28%.

Shameful, isn't it?

Matthew would love for you to believe the RDS is corporate welfare. After all, that's what he's been told to tell you. But that isn't what the RDS is, and I'm pretty sure he knows that. The RDS is what we grownups like to call a tax incentive. And as you will see, there is a crucial difference between a tax incentive and a tax giveaway.

When the legislation for the Medicare Part D drug benefit was being crafted, it was decided - as a matter of public policy - that encouraging businesses to offer the benefit as part of their employee benefits package for present and retired employees was a Good Thing. This was done to make the benefit more affordable for those employees. And that's how tax incentives work: You provide someone an incentive, via the tax code, to behave in a manner that you believe will further stated public policy goals...

Public policy goals such as ensuring the Medicare Plan D drug benefit covers as many individuals as possible in a manner that involves the least possible out-of-pocket cost to the individual recipient.

A tax giveaway, on the other hand, has no public policy objective. It exists independently from any particular public policy objective. Suffice to say, the RDS fits the definition of a tax incentive, and not a tax giveaway.

In this case, the implied contact in this tax incentive was as follows:

In order to maximize the number of recipients and to minimize the cost to those recipients, the federal government promises to subsidize approximately 63% of the cost of the benefit if the company will subsidize the other 37%

That was the Deal.

Now Obamacare has come along and torn up that particular implied contract and offered another Deal:

In order to maximize the number of recipients and to minimize the cost to those recipients, the federal government promises to subsidize approximately 53% of the cost of the benefit if the company will subsidize the other 47%.

It doesn't take a degree in Philosophy from Harvard to spot the Flaw in the Plan, now does it? The tax incentive being offered is now less attractive to one of the two parties in the implied contract. This tax incentive is also now less of an incentive to those parties considering entering to such a contract with the federal government in the future. The upshot of this?

The public policy goal of maximizing Medicare Plan D benefits at the least possible cost to individual recipients has been made more difficult to attain. 

In other words, in this specific case, Obamacare has made affordable health care less affordable to a large chunk of the electorate. The American Benefits Council is now warning that as many as 2 million of the 6.3 million retirees receiving benefits under the RDS could end up losing the benefit because of Obamacare's reduction of the tax incentive. How that is in furtherance of President Obama and the Democrats' state public policy goal of making health care more affordable for all is beyond me.

Then again, I didn't go to Harvard. 

But if you're really serious about maximizing affordable health care coverage - and isn't one of the hallmarks of the true progressive? - you simply cannot believe Obamacare's reduction of the RDS is good public policy.

You might if you were a fiscal conservative, though... 

As I demonstrated here, the only one who wins under the scheme of taxing the RDS subsidy is the federal government. Everybody else loses, and when I say everybody else I mean everybody. And if Matthew would like to explain where I got it wrong, and why he doesn't hate everyone's retired parents, I'd love to hear from him. If he passes on that opportunity, I think it safe to say this:

This is how the political left operates—there’s a lot of rhetoric about affordable health care, and a lot of institutions that are staffed by people who very sincerely believe in the idea of affordable health care, but no real organized political movement on behalf of affordable health care except insofar as policy-talk bolsters Democratic Party electoral fortunes or progressives' desire to win partisan battles at all costs.

Comments

[holly dei]

Good turnabout, Dennis, but take pity- inverted logic is a Progressive disease that Sickcare will only worsen.

This bill has been so poorly conceived and cobbled together that it can be none other than Foot in the Door legislation designed with the Law of Unintended Consequences in mind. Every session of Congress to come will get a hack at further "reforming" our healthcare system and the middle classes. The fix is in.

[Peter VE]

Don't confuse us with facts.

[bubbly]

I'm concerned you leave out the part of the Bush law that makes it illegal for the U.S. Government to actually bargain for lower pharmacuetical prices. This law does away with that which IS THE BIGGEST COST TO AMERICANS.
Repub's came up with nothing new, dressed it up as help for American's, gave it an important sounding name and then made it illegal for the government to get the best prices (like Canada for example).
You're a loser.