The moral hazards nonesense in bailouts of unemployed workers and small business

The nonsense of moral hazards created in COVID 19 bailouts of small businesses and unemployed workers
https://www.politico.com/news/2020/07/30/senate-gop-unemployment-extension-388170

 Some GOP senators approved large bailouts for business and did not complain if it ran up the federal deficit, or even if it created a moral hazard making it easy for a business to cheat and giving them the temptation to do it.. However, when it came to the low wage earners, all of a sudden it became a moral hazard discouraging them from getting a job and it was too bad if these workers could not pay their rent or mortgage or buy food because their jobs had evaporated in the COVID depression. .  These GOP senators, standing in the way of enhanced unemployment payments are a moral issue unto themselves. It is a " let them eat cake" attitude that long ago became the symbol of class deafness and ignorance, over which many of the elite lost their heads in the French Revolution.  The Heroes act passed by the Democrats in the House includes a bipartisan agreement  on the PPP act extension (aid to small business second round and for PPP aid to small business in the first round that has not been spent yet.   The Cares act passage is being held up as of 8/5 by refusal of some GOP Senators to support it.  Support of small business in the relief package has  bipartisan support.  

 The hardest hit by COVID 19  are restaurants and even some we consider successful are facing tough times.  This from The Colorado Sun tells why some well-known ones are on the edge.  I am a restaurant fan loyalist and I am selfish. I do not want to see my favorites not make it through COVID 19 because going to them is one of my beloved joys in life. However, every one of my children has at one time or another, and likewise, some of my grandchildren, have worked for restaurants. One made the food industry her career; another almost did.  One of the problems is that being a server, a cook, a hotel bar manager has been underpaid and they have moved on to get more education and earn a living wage in another industry.  The question is then why should there be a labor shortage and few want to work? It is because welfare...increased unemployment insurance..pays more than they earned eeking out a living in lower-rung food jobs and restaurants have made ends meet with paying their workers so little even tips cannot make up the difference.  These low paid workers rarely have employer-provided health insurance and Obamacare has been a godsend.  However, the Trump administration is attempting to kill it via a lawsuit that will be heard by the Supreme Court this fall and be ruled upon in the spring.   What it may also mean that to pay a living wage after COVID, restaurants my have to raise their prices and pay their workers better.  The genie of what is a living wage is out of the bottle and starvation wages will no longer be tolerated.  Also, being a food service waiter or cashier or even a busser has the same perils as a grocery store clerk that comes in contact with the public and the self-serving anti maskers who thumb their nose at being responsible for their own health as well as others. There is a risk of catching the virus is a hazard involved in being a server. The other reason is the loss of jobs to even return to since so many restaurants have closed their doors and there is not a job to return to or one within commuting distance.  So much of the problem above and beyond other areas in the country is that so many of them depend on tourist business for customers since tourism is Colorado is one of our major industries.

Miller Hudson writing in the Colorado Statesman addressed the unmotivated worker myth: "The notion that indolent workers can be incentivized to return to jobs that no longer exist before we bring COVID-19 under control is absurd. Until then, keeping those who have lost their paychecks housed and out of soup kitchens will prove cheaper than flooding our streets with an avalanche of homelessness and misery. Colorado’s second bout of economic peristalsis is likely to bring on evictions and a run on MEDICAID, as employer-based insurance coverage expires, threatening the rickety structure of a health system approaching collapse. It’s not a propitious time to be serving as governor." 

If making it possible for the unemployed to survive COVID with an extra $600 is a moral hazard, the small business loans made to restaurants could also be a moral hazard that could come back to haunt them if they were not honest about the jobs they created. Why that was made a loan instead of a cash grant is a mystery to me if there was no accountability now.  If in the future, an audit shows the business lied about maintaining their payroll, rent or utilities comprising 70% of the loan,  and they are forced to pay back the loans, there could be another wave of restaurant closures. The interest rates were so low and the loans were over a 2 years period, there may be defaults, not just in the restaurant sector but in many small businesses.. Auditing all of that is going to be crazy so expect many loans will just be written off a loss to taxpayers and a low-cost  2% loan will be a gift to franchises and small businesses.  The result is those many of those business owners may get away with not providing jobs which was one of the rationales for the bailout loans.  We would just have been better off by making it a smaller grant to small business, a percentage of past income,  than going through this brain damage and future bureaucratic gobbledegook that created a moral hazard, a temptation to cheat.  Why not just consider all of this an economic stimulus

and a humanitarian necessity that puts money back into the economy during the worst economic times since the great depression. States cannot do it because they have balanced budget requirements and the only entity that can is the federal government. 

Response to Facebook Friend who opposed the $600 on the basis it would discourage people from working:

How does that work if there is no job to go back to even if they wanted..50 million jobs have been lost in the US... My guess after this people realize that it takes $15 per hour to not live in poverty or qualify for food stamps. That may be a bad thing if you are an employer, and consumer prices may have to rise, but I think it did give an impetus to legislation. Lucky for me as a rental complex owner my tenants have paid their rent..these are truly tough times. Landlords will be suffering, too. Another legislative impetus will be to either protect Obamacare and expand it or to adopt some other method of making healthcare affordable  It became abundantly clear that insurance tied to employment is not wise..

 https://www.coloradopolitics.com/opinion/hudson-transportation-health-care-issues-loom/article_8dbb0dc6-d544-11ea-9e5f-4bb5388ab2b2.html?utm_medium=social&utm_source=facebook&utm_campaign=user-share&fbclid=IwAR1PywVvFKFVhscPeAOB9gmRLcqtwWExab0ZyFNrCKxO2ShDB1Uvz2h_EeU 

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ttps://www.politico.com/news/2020/07/30/senate-gop-unemployment-extension-388170

 https://coloradosun.com/2020/08/04/colorado-restaurant-coronavirus-recovery-limbo/?utm_source=The+Colorado+Sun&utm_campaign=66ce910095-Sun-Up&utm_medium=email&utm_term=0_2e5f9a0f1b-66ce910095-66573438&mc_cid=66ce910095&mc_eid=9f829b87ca

GOP should try to make health insurance cheaper for consumers, not more expensive

Assuming the GOP drops the  “repeal Obamacare”  slogan and instead tries  to repair  the Affordable Care  Act , what could they offer?  They should  make all health insurance  cheaper for consumers instead of taking away its benefits, quit proposing implementation delays, and stopping a campaign to scare would be participants away. .  

 Every time  those with squeaky wheels   get  greased by an exemption or delay,  insurance companies warn that reducing the pool of healthy participants  would shift more costs to everyone else who gets insurance. They understand  why any more opt out provisions  and fewer  people covered  only ring up the costs.

Obamacarescaring has been part and parcel of GOP strategy to whack health care reform at the knees, and  their newest attack is to claim the federal site is not secure. Their proposed legislation to notify you of security breaches  is a proposal the administration claims fixes something that” ain’t broke” and is already handled  by other laws. The GOP disagrees. Needed or not, such legislation does not alter Obamacare and would not be the first redundant legislation cluttering law books.

 

What the GOP is  doing is  playing  on  recent news about  security failures in Target and Nieman Marcus’ credit cards and information to scare you from going on line to sign up for health insurance.

 

The GOP has attempted mightily to make Obamacare look like a failure before it even got implemented.  Scaring away potential customers  is not the only tactic the GOP has used  to self fulfill their prophesies. The GOP  has tried to  cripple  access to the system by blocking local navigators signing up people, refusing to expand Medicaid, claiming it  will be too expensive, will not give you a choice of doctors, or is  too complicated to access or is not secure. They cherry pick stories that dramatize  the few who find such is true, and ignore the ever increasing and overwhelming numbers who find it is good enough for them, their friends, co-workers, and relatives.

We can expect the GOP to come up with more ideas to replace and repair Obamacare, but beware their  bearing gifts inside  Trojan horses. Any “repairs” should  not yank the popularly supported requirements of covering pre-existing conditions or young adults on their parents’ insurance, or reinstating lifetime caps on the amount of coverage, or removing the gender and  mental health parity standards. Removjng co-pay free  cancer screenings, or annual checkups, or certain reduced drug benefits from the health care act provisions would not make health care more  affordable to anyone or make  any of us  likely to care for their own health.

GOP “ repairs” should keep the ACA’s  costs reducing provisions. Cost savings measures required of providers  and “pay-fors” built  into the Affordable Care Act, per the Congressional Budget Office, echoed by Simpson-Bowles proposals,    will save  the deficit by  $ 109 billion   over the next ten years  and added twelve years   to the Medicare fund.  

GOP’s replacement proposals  to date  sound nice, but do little.    Health savings accounts only benefit those with jobs and  who do not live pay check to pay check.  Cross state insurance sales and mal practice reform are ideas evaluated four years ago  by the Congressional Budget Office as having minimal effect on consumers’ insurance  rates or do not  result in covering most of the previously uninsured.

Footnotes: updated information:

Rand researchers found that allowing anyone to buy a noncompliant plan would have a far more detrimental effect, raising  exchange premiums as much as 10 percent and decreasing enrollment by 3.2 million, or 26 percent.  By allowing those who got notices that their policies were being cancelled as non-compliant and to keep them for a year would have an effect of  increasing policies offered on the exchanges by less than 1%, “minimal effect”.

http://www.washingtonpost.com/national/health-science/study-allowing-people-to-stay-in-existing-health-plans-unlikely-to-disrupt-exchanges/2014/01/20/e537f6d4-81fb-11e3-bbe5-6a2a3141e3a9_story.html

Re: security of ACA federal exchange websites.  "

By Devin Dwyer
@devindwyer
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Jan 16, 2014 11:58am

Nearly three months after its launch, HealthCare.gov underwent end-to-end security testing and passed with flying colors, the top cybersecurity official overseeing the website told Congress today.

Teresa Fryer, the chief information security officer for the Centers for Medicare and Medicaid Services, told the House Oversight Committee that results from the tests have alleviated her earlier concerns about risks of cyberattacks and theft of consumers’ personal information.

“This security control assessment met all industry standards, was an end-to-end test and was conducted in a stable environment that allowed for testing to be completed in the allotted time,” Fryer told the panel. The assessment was completed Dec. 18, she said.

Fryer had expressed opposition to launching the site on Oct. 1 without proper security testing, but the administration proceeded with the launch against her advice.  She also revealed in testimony last month that several “high-findings” of security risk had been flagged and resolved during intermediate testing in November and December.

Fryer told lawmakers today there have been no successful attacks on the website since Oct. 1, and that mitigation strategies to limit risks to cybersecurity have been effective.

“The protections that we have put in place have successfully prevented attacks,” she said. “There have been no successful security attacks on the FFM [federal marketplace], and no person or group has maliciously accessed personally identifiable information.

http://abcnews.go.com/blogs/politics/2014/01/healthcare-gov-passes-critical-security-tests/