Health care: where to go from here?

Megan McArdle recommends:

Raise the Medicare tax by half a percentage point, and eliminate the tax-deductibiity of health insurance benefits for people making more than $150K a year in household income, $100K for singles.  Then make the federal government the insurer of last resort.  Any medical expenses more than 15% or 20% of household income, get picked up by Uncle Sam.

Ezra Klein recommends:

Medicare buy-in between 50 and 65. Medicaid expands up to 200 percent of poverty with the federal government funding the whole of the expansion. Revenue comes from a surtax on the wealthy.

And that's it. No cost controls. No delivery-system reforms. Nothing that makes the bill long or complex or unfamiliar.

My earlier thoughts are here.

Comments

Forget it. Let people suffer for their own decisions. If they don't want change, let them die in concrete, bearing whatever risk they want and paying for other's healthcare through their own insurance, picking up the deadbeats. Don't even bother. This is just a game to divert. No one has any intention of doing anything, just pretending that they would have had they had the chance. Game over.

They don't want _this_ change so they don't want "change"?

How can people who allege that they are "so smart" be so ........not smart.

Raise the Medicare tax by half a percentage point, and eliminate the tax-deductibiity of health insurance benefits for people making more than $150K a year in household income, $100K for singles.

No, eliminate the deductibility for everybody. But, at the same time, reduce income tax rates by an equivalent amount, making the change revenue and tax neutral.

Then make the federal government the insurer of last resort. Any medical expenses more than 15% or 20% of household income, get picked up by Uncle Sam.

How about, make catastrophic coverage that kicks in at 15-20% of income available at, say, max 4% of income (from existing insurers), with the govt subsidizing low-income and/or sick people as needed? Those refuse to buy any insurance are left with what we have now -- spend your resources until you're poor enough to qualify for Medicaid.

In a good (healthy) year, you spend 5% of your income for catastrophic insurance plus whatever routine services you need. In a bad year, you spend 15-20%. Most people, in most years are paying all their medical costs out of pocket, so we get a good dose of very badly needed market discipline.

The simple solution is to take all federal spending on healthcare. That is now "universal care". Whatever % of GDP that is, codify it. That's the money to be used to provide medical coverage for any American citizen who asks for it. No tax hike or tax cut, that's the money. Anyone who doesn't want universal care, there are no regulations. You can take any drug you like, develop any form of insurance you like, pay out of pocket—whatever.

One country, two systems! Who cares if the cat is black or white, as long as it catches mice?

Andrew:

Do you have MS, diabetes, or any other disease? If so, I am impressed you got reasonably priced insurance. If not, what would you say to those with congental diseases who are priced out of the insurance market?

I believe that there should be the $150,000 cap, but it should be reduced based upon the number of people in the family, not just marital status. Why do we want to discourage people making $200,000 from having children?

anonymous wrote: "revisit the issue twenty years from now"

2007 GDP was 13.7 trillion. Lately it's been falling, but assume we get back to growth of 3% a year.

2007 health care spending was 2.2 trillion. It also dipped a little lately, though for some reasons premiums did not. However, its increases have been running about 7% (although again, premiums have been going up faster).

Twenty years compounded... I get that health care spending will be slightly over one-third of U.S. GDP. You're right, that might help stimulate debate. If not, then we can wait another 20 years, and spending will be over 70% of GDP.

Now, of course I realize that those rates can't continue forever. Health care spending will come into line with GDP growth, one way or another. My own preference is that we try to exert some control over the process, versus (say) some version of the housing bubble bursting.

"The various glibertarians..."
When you say things like that you just shut down people's willingness to listen and consider what you have to say regardless of the merits. The use of terms like "Glibertarians" and "Tea-baggers" and the general dismissive "my way or no way" attitude toward anyone who questioned or criticized portions of the health care reform plan played a huge role in what happened to Kennedy's seat. Like it or not, you have no one but yourselves to blame for alienating voters with this kind of talk.

Actually, chronic conditions are appropriate for insurance--prior to knowing you have a chronic condition. People buy insurance all the time for this reason.

It is only when you change jobs with a chronic condition that insurance becomes the issue.

If you like your job and will never move or will never lose your job, or will never be enticed by a higher paying opportunity elsewhere, you'll be just fine under our system.

Lucky you.

I did not make the world this way. In this case with health-insurance tied to employment. Democrats did. FDR to be precise. The solution is to recreate the system in rational form, one step being separation of insurance from employment.

I share this objective with McArdle. Instead of eliminating the tax deductibility you could increase it. Allow everyone to contribute unlimited amounts to health savings accounts that can be used for education or retirement.

What - you mean after all this complication there are simple solutions?

First of all I don't buy your numbers. Secondly, I don't buy that it tripled since 2001. Third, I definitely don't buy compounding that rate for eternity.

And fourth, by some estimates almost 4 times that number of deaths result from medical mistakes or infections obtained while in medical care.

Expanding exposure to the medical system is not such a no-brainer to my mind.

Krugman has argued from history that killing reform results not in better reform, but a failure to address the problem again that can last for decades.

So what that Krugman argues anything. Get a grip. More straw men and trotting out moral superiority and inferiority.

"Yes, it's all [fill in any party's name] fault! Woe to all you evildoers!"

Get a grip. You're still trying to beat those who don't agree with you about the head. Try civil persuasion. Really, that would be a good start. Enough with the apocalyptic determinism and dehumanizing and belittling those who don't agree with you.

Increase the supply of health care providers to cut costs.

Eliminate prior condition provisions.

Allow competition across state lines.

Set up Federal insurance charter.

lark,

No one dies from lack of health insurance in the US, despite this goofy study. Think about it critically. Chronic conditions are the problem with the uninsured, but they don't become diabetic (or develop congestive heart failure, etc.) due to lack of health insurance. Behavior, environment, diet, education, and genetic predisposition are the drivers. How does a yearly primary care visit keep someone who eats at McDonald's every day from becoming diabetic? How can increased time with a clinician change the behavior of someone who lacks a high school education? Unless you really try to understand why people are sick in the first place you're doomed to spend lots of money and get very little to show for it.

No one dies from lack of health insurance in the US, despite this goofy study. Think about it critically.

Do you have any experience with the human condition?

"Patient" thinks "I should go to the doctor, but I don't have insurance." "Patient" does not wake up.

"Patient" thinks "I should go to the doctor, but I don't have insurance." "Patient" does not wake up.

So they die because they take the risk rather than taking on the debt of the doctor bill. Are you also for 30 mph national speed limit. I bet the 30mph speed limit would save more lives than gov. provided universal health insurance.

It is also possible we don't have an even more vibrant individual market already due to the past government interventions have made it this way.

Health coverage was prepaid care from $1 to a max like $3000 sold to groups from the very beginning; it was sold by hospitals which needed steady revenue at a time, the depression, when most people could not afford hospital care and gave birth or died at home. Hospitals initially sold via unions to get a group of healthy people without risk of adverse selection and with low selling costs. Insurers considered health insurance too risky because of adverse selection until hospitals showed them how to do it. The hospitals formed the Blues with legislation allowing the hospitals to collude and fix prices as non-profits in exchange for offering individual plans on the same terms.

For profit insurers cherry picked groups and for the most part drove the non-profits and community rating out, with the death knell being the 1986 tax law changes that taxed non-profits as if they were for profits, eliminating their cost advantage that afforded offering community rating to all, a requirement of their non-profit status and anti-trust exemptions.

But it wasn't the government that made group coverage have the lower cost of economy of scale. Selling and servicing a single policy covering a group of 5000 workers and families is clearly going to cost less and have lower risks than selling and servicing 5000 individuals and families who often can't afford the insurance leading to adverse selection.

The fact that people often go bankrupt because they're sick is not a straw man. It may be inconsequential to those who are employed or otherwise have very good health insurance, but it's kind of a central point.

I don't see why we can't pass the simplest, easiest reforms of all:

1. Switch the pre-tax payment of insurance from employers to individuals.

2. Make health insurance plans available across state lines.

Those two alone would be large steps in the right direction and don't seem particularly controversial.

I believe I've developed a bit of tinnitus as a result of the shrill shrieking going on in the comments section. I'm sure all you kind hearted folks will chip in to remunerate me for my deafness.

Anyway, if we want to go about taxing people to pay for publically provided insurance, why not start with a consumption tax on fast food establishments, say 10%? In doing this the government would provide incentives not to consume poor food and raise some revenues to provide insurance in one swoop.

@john personna

I was addressing your story. I doubt the 45,000 deaths due to lack of insurance study. The Rand Health Insurance study, the Saskatchewan doctor strike, the eight Americans and numerous studies that compare regional health care spending and results study all lead me to that doubt.

Those who claim individual insurance 'works' are arguing counterfactuals - and have apparently never heard of the word "rescission", among others. The reason other insurance markets can somewhat function for individuals are because the stakes are far lower, as is the information asymmetry.

Oh and btw, it is not a coincidence that this particular movement is going down the drain. They ran into the hard place of reality. I said they would. I didn't imagine the collision to be so spectacular.

It wasn't even political reality they ran into. It was economic and organizational realities. As for the political reality, don't blame us, blame the moderates, or blame your boys for not listening. Remember, Massachussetts was the bellweather. Ted Kennedy took this fiasco with him.

Mulp, nice try. FDR set the stage by creating the wage controls. Everything else just responded to the niche created by government.

I agree that the best solution would be just to give everyone a catastrophic insurance policy for free. This seems to solve the problem completely. And it makes no sense that "insurance" pays for routine care. That's not really what insurance is for (compare to car insurance).

Okay, Andrew, you don't "buy my numbers."

Does your opinion have some basis, or are you just venting some hot air? Inquiring minds wants substance, please.

My personal opinion is that if you are advocating for policies that may kill tens of thousands of Americans a year, you have a moral obligation to be informed of the basic realities of the situation. You need to have, in other words, some basic good faith. This is not a novel, in case you are a Rand fan. You need to plow through some reports.

Here are some references for you.

http://www.iom.edu/Reports/2003/Uninsurance-in-America.aspx
(Free online version, several hundred pages, pay attention to the chapter on mortality and uninsurance.)

http://content.healthaffairs.org/cgi/content/abstract/27/1/58

http://www.alternet.org/blogs/peek/81895

http://www.msnbc.msn.com/id/32882064/ns/health-health_care/

Final question: how much death is "acceptable" to you? Would you "accept" a million over this period? Half a million? What puts you over the line?

"IMHO, there are two thoughts on health care:"

Of course your opinion is that there are only two thoughts. Its much easier to dismiss others when you can shoe-horn all opinions that agree with you into the "good" box, and all that disagree with you into the "bad" box. If you had to acknowledge that there are more than two opinions it would not be so easy to villify, ignore, and mock those who disagree with you.

My thoughts on the subject are a little more complex than I can put down in a comment, but I do believe there is room to compromise on both sides. When it comes down to it, I would not oppose a car insurance like requirement that everyone carry a minimum level of health insurance, together with subsidies for those who can't afford it (either cash payments or tax credits depending on income level), and prohibitions on recission and pre-existing condition exclusions--if it were stripped of most of the rest of the stuff in the current bill. There are some important caveats, like I think such a plan should explicitly allow high deductible plans with HSAs, but I won't go into the details. As it stands, I believe there is so much bad stuff in the bill that we would worse off if it passed than if we had no new bill at all.

If the democrats had focused on getting the basic points laid out above passed, and fully and openly explaining them to the public before taking votes, the bill would have been MUCH smaller and easier to understand, and we would have had universal coverage already signed into law with minimal backlash even from people who didn't fully agree--they probably could even have thrown in the public option. This could even have been one step towards more comprehensive reform later down the road.

Instead they tried to take ten steps in the direction they wanted to go all at once, and by doing so, made it impossible to explain everything in the bill to the public before voting, and put a much larger burden of persuasion on themselves than they would have had to bear with a bill that didn't go so far. This forced them into a position where they had to tell the public "close your eyes and open your mouth" and squelch any dissent with "its this plan (which you don't have time to even understand, yet alone debate or tweak) or nothing." They should have known this approach would backfire, and it has, big time.

Also, you may not intend to, but you are, in fact, villifying people for their opinions. You said "Even though I knew it was coming, I'm amazed that so many in this MR comment stream are of the social Darwinist mold. Why is it your problem when someone else suffers? If you are religious, read your Bible. If you are nonreligious consult the compassion inherent in your human genetics. If you are an outlier without religion or compassionate genes ... thank God you are an outlier."

That may be what you think, but it also villifies people who lean toward the second position you described, which really wasn't all that terrible, by condemning them as "outliers without religion or compassionate genes."

Then there was the whole "normal people" comment, which pretty strongly implied that a particular person who disagreed with you (and by association, any readers who even tentatively thought he might be even partially right) was abnormal. Finally, there was your dichotomy where there are only two thoughts on healthcare, one full of warmth and compassion (which presumably supports the house bill--or is it the senate bill?) and one heartless and cruel (which I guess includes everyone who opposes the current bill for any reason?--that may not be what you mean, but it is how the comment comes off)

Regardless of your actual intentions, I'm fairly certain that the average reader of your comments would take them to mean that those who oppose the current bills are not only wrong, but are also bad (selfish, greedy, incompassionate) people. Even if that is not what you mean, that is how you come off, and I promise you that it negatively affects the impact your comments have on those who read them. Good news is you're not alone, I think that has been the tone from the left side of the fence this whole time, and I think it is a big reason for what happened in Mass.

john personna if you please I would love to read your thoughts on my compromise plan:

http://un-thought.blogspot.com/2009/09/healthcare-compromise.html

The state would provide insurance to all Americans but the annual deductible on the insurance would be equal to the family’s trailing year adjusted income minus the poverty line income (say $25,000 for a family of 4) + $300. So a family of 4 with a trailing year adjusted income of $30,000 would have a deductible of $5,300. A family of 4 with a trailing year adjusted income of $80,000 would have a deductible of $55,300. Middle class and rich people could fill the gap with private supplemental insurance but this should be full taxed. This would encourage the middle class and rich, who are generally capable people, to demand prices from medical providers and might force down costs

Doug,

Those are good questions. One thing I would point out is that there will be tremendous savings if everyone had preventative care. Moreover, if the nation's workforce is healthier, the economy will benefit. Indeed, healthcare for all children will likely improve the number of young adults available for the armed forces, a boon to national security.

So, universal healthcare would provide cost savings, generally. But that is long-term.

I am not sure how to pay for it in the short-term. I would like it to be something on the lines of: 80% of what employeer now pay for healthcare goes to pay for the new system. Since, under the new system, employers will not have to cover basic costs, it will be good for employers. They can spend the other 20% how they want (or pocket the difference as profit). That would be a start...

As for what is covered... that is a good question, too.

I would point out that, as consumers, we have little choice in the matter today. Most of these decisions are made by our employers. So, we would just be shifting responsibility from employers to the government. It is not a panacea, but it is better, because it will free us up to move jobs without having to worry about insurance.

"Most of these decisions are made by our employers. So, we would just be shifting responsibility from employers to the government. It is not a panacea, but it is better, because it will free us up to move jobs without having to worry about insurance."
The problem I have with this is that at least with employers you have many many many HR people at all different companies looking at the different available plans, and making trade-offs between costs and benefit levels, and insurance companies competing for their business. I really think this competition and freedom of choice is going to have a lot of built in advantage over having one government commission declaring a one-size fits all package for everyone.
If you limit the government to mandating a minimum benefits level, and then allow the insurance companies to offer the minimum or anything above it, you still have at least some competition and room for choice to allow people to find the best cost-benefit trade off for them.

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