RSS

Daily Archives: July 24, 2009

Lazy Sundays No. 2

This weekend, I’ve picked out a few really excellent pieces that should get you to re-examine some of the conventional wisdom about things like:

The inside story of why the Clinton reforms failed–and why it wasn’t Hillary’s fault–in
The Hillarycare Mythology
by Paul Starr

Why Rationing is Unavoidable–and Already Taking Place–in
Why We Must Ration Health Care
by Peter Singer

Why rationing *gasp* is actually something to be encouraged on ethical grounds in
Rationing: Why it is Ethical
by Dan Brock

Exactly what Congress is up against viewed against the backdrop of history in
A History of Health Reform
in the New York Times

Headed off for a camping trip at Jordan Lake….

 
Leave a comment

Posted by on July 24, 2009 in Good Reading

 

Fear Not: Confronting the Controversial Issues (Part II)

Here’s the final part of the two-part series….

The New York Times has an excellent article out today that captures the public’s unease about health reform and Obama’s perceived failure to shoot from the hip with all of the details. It’s genuinely helpful to know what sorts of things are running through people’s minds. Paul Krugman has an op-ed that takes a more favorable view of Obama’s remarks from Wednesday night. Now, the third and final fear….

Fear #3 – Government Wants to Tax my Health Benefits
One of the ways that has been proposed to pay for health reform is to make some portion of health benefits taxable for the wealthiest Americans. Comments I received on this topic include:

Regressive taxation is not the same thing as a subsidy. Excluding premiums for employer-sponsored insurance from taxable income reduces the tax revenue the government collects, but does not give them authority on how to spend the extra cash. This argument sounds like the old “rich people only donate to charity for the tax break”. It’s emotionally charged and convincing at first, but the numbers don’t add up. Removing the insurance premium from a wealthy person’s taxable income might give them a tiny break ($400 off a $1000 premium in the 25% bracket), but since they are in a higher tax bracket they are, as you mentioned, already paying far more tax than a poor person. This “benefit” is minuscule by comparison. Furthermore, this exclusion is unlikely to encourage a wealthy person to pay for more coverage than they need, so it isn’t as though a wealthy person is going to carry more insurance just to get a bigger “break”. Spending $5000 to save $2000 just doesn’t make sense.

Facts: This one seems particularly widespread, and generates a lot of public outcry. The funny thing is, it would not likely affect you or most anyone you know personally. At least not in the way people fear. Quickly, how many families do you know, yours included, that earn at least $300,000 a year? How about $1 million a year? Well, those are the people that would see a portion of their health benefits become taxable.

I never equated regressive taxation with a subsidy. Those are two separate points. The subsidy point is simply that the government is helping to prop up the private employer-based health insurance market by foregoing hundreds of billions of dollars in tax revenue every year. I didn’t say it was a subsidy just that that’s the effect it has on things. Health economists everywhere agree on this point, whether or not they support it.

The other point, regressive taxation, works like this: There are six tax brackets in the U.S. ranging from a low of 10% to a high of 35%, which operate progressively (i.e., the higher your income, the higher your tax bracket—although the actual amount of your income paid in taxes is less than that as shown here).

For the sake of simplicity, I will use the 10%, 25%, and 33% brackets here, and salaries will be based on the median salary for that particular tax bracket. An average family health insurance plan runs about $11,000, so I will base my numbers around that, and use $15,000 for a more generous plan.In the first example, everyone has the exact same insurance coverage. In the second example, the wealthier individuals have coverage, while the less well-off individual has no coverage at all, because it was too expensive for their employer to offer.

Now, if we look at the “tax break as % of salary column,” in the first example, the numbers decrease as people get wealthier. That’s because the denominator (i.e., salary) goes up faster than the tax break. But, as we can see from the second example, this figure can be misleading. Here, an individual without coverage has the lowest “tax break as % of salary” (i.e., zero!).

But, back to the first example, what we see is that—if everyone has the exact same coverage in terms of plan cost—the actual dollar level of the tax break goes up with income. Now, the lower “tax break as % of salary” figure suggests that the wealthy may not take much notice of this benefit accruing to them, but as far as real dollars are concerned, the health care system as a whole certainly takes note.

This is precisely why it is suggested that a sizable portion of health reform could be paid for by taxing at least some portion of the wealthiest individuals’ health benefits. Would it not make sense for them to get the same tax break for the same insurance coverage as, say, the middle class get? Perhaps then we could use that revenue to avoid the situation in the second example where the person’s employer can’t afford to offer coverage.

On a lighter note, I did also receive some good questions, which I will work to find the answers to for a later post next week. They included:

  • Of the 47 million uninsured, how many are actually citizens?
  • How many can afford it but choose to remain uninsured?
  • And how many are turned away from care due to lack of coverage?

Don’t forget to check back later this afternoon for this weekend’s “Lazy Sundays” post.

 
Leave a comment

Posted by on July 24, 2009 in Uncategorized

 

Fear Not: Confronting the Controversial Issues (Part I)

Since Wednesday, I have asked folks to chime in with their thoughts on the content of Obama’s health reform press conference. I have received just a handful of comments, mostly tangential to the actual presser, but relevant nonetheless. The comments I got serve two purposes: First, they provide evidence in direct support of Wright’s Law of the E-Death Spiral, which I wrote about earlier. Second, they shed some light on the very common fears many Americans have about health reform and allow me the opportunity to allay these concerns by clarifying some of the more widely held misunderstandings. This is the first in a two-part series.

Fear # 1 – The Public Insurance Option is the Only Option
As I wrote in my “Lies, Damned Lies, and Scare Tactics” post, misinformation regarding the future of private health insurance is being widely circulated online. In fact, many sources claim that private health insurance will be no more—made illegal—in the wake of health reform. My own analysis of the actual text of the House bill finds this completely untrue. Still, an anonymous comment I received reads:

No, it doesn’t say “illegal.” But the lack of choice comes from if you do not have a provider the year this goes into effect, you WILL HAVE the public ins[urance]. Where’s the choice in that? And forget about changing anything in your current policy. You are stuck with that coverage you have on day 1 of year 1 of this plan.

Facts: Having a “provider” is not the issue. Having an insurer is. The legislation, as written, would let you keep your current coverage if you wish, and your current policy could be changed, it just couldn’t be changed in ways that would harm you. That is, your private insurer couldn’t suddenly start cutting benefits and jacking up premiums. If, on the other hand, they decided to become more generous, nothing in the legislation would prevent them from doing so. Put simply, these are consumer protections for the good of the public. The strong opposition here comes from insurers whose ability to earn outrageous profits is being handcuffed.

While there is talk of a personal insurance mandate, nothing requires that you “WILL HAVE the public insurance.” Private insurers must simply participate in the health insurance exchange, which again is a way to make insurers compete with each other on the basis of price and quality (i.e., scope of benefits), which will again benefit the consumer by making insurers more transparent.

Fear # 2 – Government is Going to Start Playing Doctor & Denying Care
There seems to be a very strong sense that government involvement in health care means long waits, rationing, denied benefits, and poorer quality. An anonymous poster writes:

In the press conf last night he said the American people will no longer pay for tests that do not make us better. Since when does a test make us better? The test provides the info needed to take a course of action to make us better. How are we going to know what to do to make us better if we can’t have the tests!!? Yes, they may be costly, but is our lives not worth it? Well some of us may not be, but the govt will decide that issue as well…Why do we need MORE govt in our lives? What does the govt know about my health and what I need? Since when can the govt do a better job than my doctor? Where’s their Medical Degrees?

And from Joel:

Anyone that’s ever spent time at the DMV has a pretty good idea of what state provided healthcare will be like. Or if you’re really curious, ask a Canadian.

Facts: First of all, the Canadian system is single-payer, but that’s not “state provided.” All of the healthcare delivery in Canada is delivered by private providers just like it is here in the U.S. Second, absolutely no one in government is talking about playing the role of doctor. A system like the National Health Service in England, where the government owns the hospitals and employs all of the providers, is not even up for discussion.

What is being talked about is comparative effectiveness research, which involves using empirical data to make sure Americans have access to the best care, which may or may not necessarily be the most expensive care. In all other areas of our lives, we expect to get what we pay for. Why should medicine be any different? It should also be noted that “government” is not going to be deciding what benefits to offer. As Obama noted, there would be an independent commission made up of physicians and consumers that would make those decisions. In other words, you have doctors playing the role of doctor.

The other point made was about the need for care coordination, which includes such things as using electronic medical records to avoid multiple providers running duplicative tests. I’d think people would support that unless they’re just partial to being stuck with needles.

Stay tuned for Part II, and if you have other fears or concerns, let me know, and I’ll do my best to help you get a good night’s sleep….

 
1 Comment

Posted by on July 24, 2009 in Uncategorized

 
 
%d bloggers like this: