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Spite Is Part Of It

by Patrick Appel

TNC responds to my criticism and admits that Lieberman's actions are fueled not just by spite for Democrats. One of TNC's commenters takes issue with my reading:

Patrick's analysis is a little too shallow on this one. I understand that Connecticut based insurers line Lieberman's election coffers, but that hardly means that he is somehow looking out for anyone but himself, let alone "his state" as Patrick intones. Without evidence that the reform would cause insurers to employ less people in Connecticut, Patrick's argument is simply that looking out for the people who pay your campaign is a valid role for a politician. Realistic for a politician - definitely - but certainly not valid in a normative sense.

Patrick's argument is that the interests of a state include the interests of the stockholders of corporations that employ people in that state. Not very convincing to me.

Another reader writes:

When you ask "What about the Connecticut insurers? They make up a sizable part of contributions to his office" you imply that protecting the profits of an industry in a Senator's state or those of his contributors is a motivating factor in his voting on a bill. Setting aside Lieberman's claims that the millions he's received from insurance and pharmaceutical interests play no role in his decision (ahem), I think it's worth looking at Connecticut's other representatives on Capitol Hill:

Senator Dodd: Insurance: $1,249,006 (#3), Pharmaceuticals/Health Products: $222,950 (#16), Health Professionals $327,800 (#12)

Rep. John Larson (CT-1): Insurance $73,200 (#2), Pharmaceuticals / Health Products $19,296 (#13), Health Professionals $66,050(#3)

Rep. Joe Courtney (CT-2): Insurance: $10,000 (#16), Pharmaceuticals / Health Products $15,267 (#9), Health Professionals: $24,000 (#4)

Rep. Rosa DeLauro (CT03) Insurance: $13,250 (#11), Pharmaceuticals / Health Products $7,250 (#17), Health Professionals $40,550 (#2)

Rep. Jim Himes (CT-4): insurance : $64,787 (#3), Pharmaceuticals / Health Products: $25,846 (#14), Health Professionals $16,600 (#18)

Rep. Chris Murphy (CT-5): Insurance: $28,000 (#8), Pharma (not in top 20), Health Professionals: $64,820 (#2)

Lieberman: Insurance: $427,894 (#7), Pharmaceuticals / Health Products $297,090 (#10), Health Professionals: $359,370 (#8)

Lieberman's contributions are right in line with the others'. Dodd represents the exact same industries, while both Larson (Hartford) and Himes (Stamford / Greenwich) have a very large insurance industry presence in their districts. All the others voted or would vote for Health Care (House and current Senate versions).

Yes, but Lieberman isn't getting money from the Democratic Senatorial Campaign Committee or Democratic Congressional Campaign Committee and therefore isn't captive to the Democratic party's agenda. Money doesn't tell the whole story and part of the equation is Lieberman's particular brand of centrism and his loathing a rather large segment of the Democratic party, but I don't by that Lieberman is acting entirely out of spite; he's acting out of political expediency and spite. Another reader writes:

Some have made the obvious connection of why Joe might want to scuttle recent health care proposals, that he is representing one of the largest industries in his state, but few have elaborated on why these companies might oppose it. Namely, the proposal to institute a brand new 1.16% premium tax effective next year is driving the industry mad, and for good reason.For one thing, no one budgeted it and it will mean huge dollars that can’t be recouped via premium increases.  Also, the industry is operating at a tight 2% margin, despite what most believe, and this will slash it in half.  Actually, no one seems to recall that it might be a good idea to have insurance companies that are financially secure. They are the ones that have to be around in the future to pay our skyrocketing bills.

I asked where this reader got his numbers and he followed up:

Looks like last years profit number was 3.3%, according to this article by Ezra Klein. I was an actuary at a very large plan and we explicitly priced for a 2% margin. The premium tax is in the Reid proposal, Sec. 9010, Imposition of annual fee on health insurance providers. The 1.16% is an estimate of the percentage of 6.7 billion that will be raised annually to the total premium for the industry of around 505 billion (that number comes from AHIP, I believe. The 1.16% is not exact but its close for many insurers). This starts in 2010. Insurers will have to add it to premiums as soon as possible, which will probably be later next year or January 2011. In the meantime it eats into slim margins. Not to mention the fact that its payable whether the insurer makes money or not, since its based on premium.