Ugh. Check out this article from MSNBC: http://www.msnbc.msn.com/id/31595921/ns/politics-white_house/. Prepare for (slow-paced) rant in ... 3, 2, ... 1.
I get it. Pay to play. Making sure that we are not adding extra costs on top of the current projections for the deficit. I know it's important because the average American does not realize what macro-deficits mean, or will do to the nation. Yes, most people think that high deficits mean Doomsday. So, I know why Axelrod and the White House is considering taxing health benefits. It's just stupid, pointless, and will place a hardship on those making below $250,000. Here's why:
Health care premiums are a necessity in life in America, so they will be paid. Right now, the premiums are tax-deductible. Those of us with family who are sick have to pay higher health care premiums than others -- and they can sometimes rise into the range that may make them subject to taxes. People under $250,000 can pay premiums in the range of $18,000 per year. If our employers did not pay for the lion's share of the premium cost, then a good portion of people making between $100,000 to $250,000 will be paying premiums above the limit proposed.
Word is that employers will also have to pay for health care premiums paid to employees. Employers are already shelling out large amounts of cash in order to pay for premiums; if this amount becomes taxable, then employers are going to stop offering coverage. That puts all of the costs for health benefits onto the employee, who are likely unable to pay for the entire premium on their own. Thus, many people are going to fall out of private insurance -- specifically, those whose employers have decided to stop offering health insurance.
This will have a two-fold negative effect. First, the people who come off of private health insurance will try to get onto the public plan that the Obama Administration is proposing. This will put a greater burden on the public plan, and potentially push it out of its projected costs -- severely. Second, as people fall out of private insurance, the premiums to cover the risk will go up for those remaining on the plans -- or, in the alternative, some health insurers will simply shut down. Costs will go up for those who want to stay on private insurance, and the remaining insurers -- likely the ones with significant market power -- will stay in business, and charge even more. Consequently, the public plan will be forced to cover more people than expected -- much, much more.
So, the tax policy is a terrible idea.
What the Administration should be focusing on is decreasing health care costs in the industry. Health care in the United States consumes 17% of the GDP, and is projected to be 20% in under ten years. In the U.K., where the system is mostly public, the cost was only 9.4% of the nation's GDP. In France, where you can get daycare for free, the cost was 10.5% of the nation's GDP. Denmark? 9.0 percent. Canada? 10.0%. So much for the argument that private health care is more efficient.
Here's some more statistics to chew on: 31.0% of the costs for health care in the United States are administrative, compared to 16.7% for Canada. (http://www.pnhp.org/publications/nejmadmin.pdf) While it is true that, in sum, Medicaid spends more per patient on administrative costs, ($509 v. $453 for private insurers), the misleading part of the study by the Heritage Foundation (surprised?) is in its presentation: Medicaid patients make more claims due to age, infirmity, and the fact that they do not need to pay for the care; privately-insured people have strong incentives not to see the doctors when they should, to avoid costs, and to stay "out of the system". (http://www.heritage.org/Research/HealthCare/wm2505.cfm) Either way, it's hard to argue with the proof: Americans pay more for their health care than Canadians or Europeans.
And the results -- life expectancy (from CIA World factbook, cited by Wiki -- http://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy): France (5th in U.N.; 8th, World) -- 80.87 years; Canada (10th in U.N.; 14th, World) -- 80.34 years; U.K. (26th; 37th) -- 78.7 years; U.S. (30th; 45th) -- 78.06 years; Denmark (32nd; 47th) -- 77.96 years.
We need to fix health care, but we should be focused on the costs, not the delivery.
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I'm the author of the Heritage Foundation study you link to above and call "misleading."
ReplyDeleteFirst, you are mixing up "Medicaid" and "Medicare." Medicaid is for the poor; Medicaer is for the elderly and disabled. You said "Medicaid" twice, but my paper was about Medicare. The discinction is vitally important.
Medicare patients do need to pay for care; they typically have higher co-payments and deductible than most private insurance, and they have no catastrophic limit, unlike most private insurance. Medicare paitients do indeed see doctors more, but that's becasue they are old or disabled, nott because the "do not need to pay" -- the DO need to pay.
I suggest you re-read the study since I specifically addressed this issue. Most of the administrative costs are unrelated to the level of medical claims, and what relationship there exists is to the NUMBER of claims, not their dollar value. Only 4% of Medicare's administrative costs are for claims processing -- that's less than 24 cents for every $100 of total Medicare spending. Most of the administrative costs is bureaucracy, not claims processing.
Your life expectancy figures are not comparable, for many reasons. For one thing, different countries have different definitions of a "live birth." A lot of events that are classified as live births and infant mortalities in the U.S. are classified as stillbirths in other countries. This means we get a lot of "zeros" in the life expectancy data that other countries don't have.
Plus, there are all sorts of factors other than health care that affect life expectancy. One is genetics. For example, Japan has the highest life expectancy in the world -- and Japanese-Americans have a life expectancy that is similar to Japan's not to the average American. We have a much more diverse country -- that's a wonderful thing, but it fouls up our life expectancy statistics.