No one wants to pay for health care

That is the topic of my latest Bloomberg column.  It does not focus on single payer, but that is the part I will pass along to you:

Another way to manage health-care subsidies would be a single-payer system, and some commentators suggest that is where the Democratic Party is headed. I wouldn’t be so sure. Obama made his (partially incorrect) “if you like your health care plan, you can keep it” promise for a reason. The Americans who get health insurance through their jobs often enjoy privileged access to doctors and benefit from superior reimbursement rates.

If the price of covering the sick is for millions of wealthier and more influential people to give up those advantages, I don’t see that happening. The health-insurance industry and other medical lobbies will be opposed, too, with doctors fearing that a single-payer system would bargain down their reimbursement rates. Even a relatively progressive state such as Vermont could not make a single-payer system happen.

You can think of current debates over health policy as a game of hot potato in which “who loses?” and “who pays?” are questions nobody finds easy to answer but also questions that no party can ultimately avoid. Obamacare didn’t come up with a sustainable answer; neither, so far, have the Republicans.

Do read the whole thing.


Of course, the "no one" means the wealthy who pay most of the taxes that fund Obamacare. Indeed, no one wishes to pay taxes and Trump and the Republicans wish to accommodate no one.

The wealthy, the young, the men, the residents of states with high state taxes, well-known tax-cheat George Soros... the poor, who already, in our current system, net tens of thousands of dollars in expenditures and thousands in hard cash in return for 5% of their ZMP work...

Now that you have described over half the population, we can all agree that everyone should pay into a shared system that serves everyone equally. Thanks.

Yes, that's the point. The group that doesn't want to pay is much larger than "the wealthy" as rayward had suggested. I'm still hopeful that the AHCA will include ACA-level targeting of political enemies so that the left can remember that weaponizing the tax code and the IRS is a bad thing.

'so that the left can remember that weaponizing the tax code and the IRS is a bad thing'

They already remember - Nixon is not that far in the past, after all. Particularly not in the current moment, where the inevitable comparisons between Trump and Nixon keep bringing up all that old history - enemies list of political opponents included.

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"weaponizing the tax code"?

I thought the main matter of concern in the present tax code was to make sure that all areas of activity where Trump or friends are concentrated should receive beneficial treatment.

That's not OK. But it doesn't seem oriented towards specifically harming anyone, regardless of the massive harms it is liable to cause.

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I thought the point being made is quite different: that, for example, men who are just barely above the poverty line will now work themselves to death subsidizing middle class women who are much better off than them.

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If you were more honest, you would characterize this as "from each according to ability, to each according to need." Which, up to a point, I'm on board with, unlike your crafty marketing spin.

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"Indeed, no one wishes to pay taxes..."

... then taxes should be low -- because our noble elected representatives in government "represent" and vigorously pursue the majority preferences of citizens, right ?

Of course, we know that our government representatives tax & spend at outrageous levels... and simply borrow/print money to avoid directly taxing citizens for the true cost of endless government extravagance.
Representative-Government in practice is far removed from its rosy theory

ObamaCare & Republican ObamaCare-Lite are basically coercive wealth-transfer/welfare programs. They have nothing to do with genuine insurance models and are fraudulent from the getgo. Any serious economists' talk of single-payer options for these type welfare programs is also highly deceptive.

(P.S. lower end workers pay plenty of "income taxes" which the politicians deceptively label "payroll taxes". Legally, there's no difference between payroll and income taxes; at the federal level the money all ends up in the same place (spent)

I can't let the notion that low income people pay payroll taxes going challenge. It is wedded to their much higher in title meant rate for Social Security; a low income person replaces 80% of his lifetime income In Social Security if he has enough quarters, but a high income person at the margin only replaces I believe 15%.

In some sense the low income and high income person both might be "cheated" out of their Social Security, having paid payroll taxes. However I don't think any reasonable person believes that will happen.


SCOTUS has repeatedly ruled that Social Security payroll/income deductions are purely "taxes" -- and those SS taxpayers have no legal claim whatsoever to any benefits. Congress has complete discretion over any SS benefits paid out and could permanently end all SS payments tomorrow, if it chose to... and keep everything previously paid in SS income taxes.

Payroll taxes are highly regressive and include much more than the 15.3% FICA tax ... like workers compensation & unemployment insurance that only a minority of lower income workers ever get their money back in benefits.

For FICA, there's no evidence those payroll taxes are a wise use of each worker's very limited income stream... even if all government benefits are delivered as promised (a huge "if"). The rich can afford income allocation errors... but lower end workers can't . Also, Social Security Administration data shows that workers in the top-half of American earnings distribution live over 6 years longer (collecting benefits) than workers in the bottom half.

People likely to die relatively young, minority males for example, pay into a system that they get little or nothing from. Those who start families at young ages also lose out because by the time their mortality rates start getting high, when they are in their fifties, their children are already too old to collect any survivorship benefits.

Because lower wage workers pay so much of their income into payroll taxes they rarely have estates of any size to pass on to their children (be they minors or adults). And that is a recipe for perpetuating poverty. So, at best, Social Security merely privileges the aged poor over other equally poor groups.

(SS Trustees forecast SS to be bankrupt by 2034. The only way to sustain it is big cuts in benefits or big SS tax increases)

Legally, Social Security is a tax wedded to a handout. Economically, however, it's a pension plan with some counterparty risk and a strong redistributive component.

SS will not be bankrupt by 2034. That is a serious misreading of the SS Trustees' report. It will be taking in less money than it pays out, but it has recourse to both the assets and the general revenues of the U.S. government, so payments will not stop. Moreover, if it is taking in just a little less than it is paying out, then by cutting benefits or raising taxes a little it can be brought into balance. On an actuarial basis SS is about 75% funded at current tax rates.

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This is a stretch. Yes, it's an obvious lie that social security is any form of insurance or savings scheme.

On the other hand, we don't want old people eating cat food.

Change the payroll tax to a carbon tax, and phase out receiving social security based on median household income averaged out over X years.

Even if global warming is bullshit, with one stroke you've made social security into an actual means tested program for poor seniors and axed the most regressive/harmful tax that we have.

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@Larry Siegel
When the Social Security Trust Fund runs out (which it will eventually, unless congress acts) benefits will be cut to match the income from SS taxes. This will be a large cut for all beneficiaries.

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"Yes, it’s an obvious lie that social security is any form of insurance or savings scheme."

No, SS clearly has an insurance component. It serves an important insurance function for the disabled, widows and orphans, and also functions as an inflation-adjusted annuity for retired couples. If you cut SS for people who happened to earn lots of money 15 or 20 years ago, some fraction of those people are going to run out of money sooner and wind up depending on other government programs like food stamps, Section 8 or Medicaid [a large and growing proportion of Medicaid's expenses already relate to nursing home expenses].

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I wouldn't exactly call SS regressive when you consider thee returns on dollar input. The % returns increase as the poorer you are.

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Social security is a welfare program disguised as a Ponzi scheme to make it palatable to voters.

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People dislike taxes.

They dislike walking 5 miles to school instead of catching the bus even more.

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I think that over time it will become apparent to more people that the only way forward long term is with more central subsidies. Our national debt will necessarily rise as more of our people get the care they need. Inflation? Hoo knows?

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NYTimes, Sunday

The House Health Care Disaster Is Really About Taxes




President Trump and House Republicans celebrating in the Rose Garden after the passage of the health care bill. Credit Stephen Crowley/The New York Times

I have been a critic of Obamacare since it became law, but the Republican alternative is worse in nearly every way.

The American Health Care Act, which was narrowly passed in the House last week, would worsen Obamacare’s problems rather than fix them. Coverage would be disrupted for millions almost immediately, according to a Congressional Budget Office analysis of a previous iteration of the legislation.

The bill would end Obamacare’s individual mandate, already too weak as a policy mechanism, and impose a fee on those who go without coverage and want to re-enter the insurance market — creating an incentive for relatively healthy people to remain uncovered. As a result, the instability that already exists in Obamacare’s exchanges as insurers scale back around the country would only be increased.

It’s unclear what health policy problem this bill would solve. Even for an opponent of Obamacare, it is difficult to understand why House Republicans chose this path to revamping the nation’s health care system.

It’s difficult to understand, that is, if you think they were passing a health care bill. It makes more sense when you realize that isn’t what they were doing at all. They were passing a tax cut — one intended to pave the way for more tax cuts.

The flaws of the bill, then, can be understood as a symptom of the flaws of the Republican Party, which has for decades maintained a myopic focus on tax cuts at the expense of nearly all else. Too often, it is a party of people who seem to confuse governing with cutting taxes.

The health care bill is a policy mess, but as politics, it’s even worse. A poll published in March showed the bill with an approval rating below 20 percent. It’s likely to be heavily rewritten in the Senate. It wouldn’t fulfill President Trump’s campaign promises to provide coverage for everyone or to reduce premiums and deductibles. It doesn’t even fulfill the Republican Party’s goal of fully repealing Obamacare: It leaves many key insurance regulations in place at the federal level. (States would have the option to apply for a waiver of these rules.)

Republicans have consistently had difficulty making the case for the bill on health policy merits. It’s not even clear that most House Republican lawmakers know what’s in the legislation. “I don’t think any individual has read the whole bill,” Representative Tom Garrett of Virginia said. Why then did House Republicans push so hard to pass this health care bill?

Because it cuts taxes — especially for the top 20 percent of earners — and so sets up the broader tax reform legislation Republicans hope to pass later in the year.

To understand how this might work, it helps to understand a little bit about Senate procedure.

The Senate effectively requires 60 votes to pass most legislation, but Republicans hold only 52 seats. However, Senate rules allow for the passage of certain types of legislation using a process known as reconciliation, which requires only a simple majority. Republicans planned to use the reconciliation process to go it alone on both health care and tax reform.

But that process comes with conditions. There’s a ticking clock; the reconciliation instructions that allow for the passage of the health care bill expire as soon as the next budget resolution is introduced. And the process does not allow for the passage of legislation that raises the deficit outside the 10-year budget window via a simple majority.

This, for example, is why the tax cuts passed under President George W. Bush in 2001 were set to expire after a decade. For tax cuts to be permanent, they must be deemed “revenue neutral.”

That is where the American Health Care Act comes in: It would eliminate roughly $1 trillion in taxes used to pay for the additional spending in Obamacare. As a result, it would significantly lower the federal government’s tax revenue baseline. The baseline is an important figure in congressional budgeting, because it sets expectations for how much the government is projected, on paper, to spend and raise if current law remains the same.

The trick, then, is to make the health care bill’s tax cuts part of that baseline by passing them into law before a tax-reform package. This would provide Republicans with far more room to permanently cut taxes later in the year. In short, Republicans would be able to devise a tax bill that collects about $1 trillion less in revenue but that would still qualify as revenue-neutral under Senate procedure.

This is why Republicans put health care reform at the top of their agenda. Without the bill to reset the federal government’s baseline tax revenue, Republicans would be much more constrained when it came time to overhaul the tax code.

Republicans have often struggled to recommend their health care plan on its own terms. Representative Dave Brat of Virginia, a member of the conservative House Freedom Caucus, called the initial version of the bill “dead on arrival” and the current version “not the repeal bill we all wanted.” On Thursday, he voted to pass it anyway.

But Republicans have consistently promoted their health care bill’s advantages as a tax cut and a setup for tax reform. After the House’s passage of the bill, President Trump said it “really helps” to get the biggest tax cut in the nation’s history.

In March, for the earlier version of the bill, Speaker of the House Paul Ryan explained the need to move quickly. “The schedule that we have here is very aggressive, and we can’t get to tax reform until we do this,” Mr. Ryan said.

The desire to set up tax reform is not the only reason Republicans pushed forward on the bill. Many were motivated by a desire to make good on a promise to repeal a law that they had spent years opposing.

But the focus on tax cuts explains why they were so eager to move on an unpopular bill that they had not read and struggled to defend or even describe. And it explains why the bill is so poorly conceived as health policy.

The Senate may rewrite the bill, but it’s difficult to imagine a version in which most of Obamacare’s taxes are left in place. Remember the primary debate moment in 2011 when all of the Republican presidential contenders said they wouldn’t trade $1 in taxes for $10 in spending cuts? The principle applies in 2017: Tax cuts are the one thing every Republican agrees on.

To be clear, I believe there are good reasons to support both cutting taxes and reforming the tax code. But I also think Republicans often do themselves a disservice by prioritizing those goals above all else.

It is not too hard to imagine, for example, that if the Republican bill becomes law in something like its current form, and the exchanges melt down, disrupting coverage for millions in the process, that the result will be calls for further government intervention — for bailouts and, if the system collapses into complete chaos, movement toward a government-run public option, or single payer.

Those options would require tax increases of a size that might otherwise make even many Democrats think twice — and would make the higher taxes included in Obamacare seem paltry by comparison.
That’s why tax-focused supporters of the American Health Care Act should be wary: It is not only flawed as a health care bill. In the long run, it is flawed as a tax policy plan, too.

Peter Suderman is the features editor at Reason magazine.

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Why would the wealthier have to give up those advantages? As if there wouldn't still be better private insurance available to purchase even with single payer? It may cost more, sure, but that's the whole crux of the debate anyway.

That is not necessarily a given. Until recently it was illegal to get certain services in Canada beyond the government-mandated price. One way cost controls are effective is that they stop doctors from getting a better deal from the private market.

How would you credibly signal that you weren't trying to make private insurance legal? Would you have the President say "if you like your insurance, I promise you get to keep it"?

I think it's very unlikely that any health care reform will get rid of the professional class's nice access, but the professional class is going to get extremely nervous if you get even within 100 meters of that.

Why point to a Canadian example from the past? Because it's the only one that supports that portion of your argument.

Because the Canadian example happened for a reason.

If you allow a two tier system, particularly with the current limits on physician training, you will end up with the same set of problems we have now: the rich buy up a limited supply of provider-time and the poor have limited access, the public system is forced to pay more to keep the share of provider-time devoted to the poor higher, or you have to coerce the providers into providing time. The Canadians were not idiots; limiting the rich's ability to bid up provider-time keeps down the escalating bidding on provider-time. Removing that check means you have to deal with scarcity, unlike prohibiting bid-up (which basically socks it to the generic wealthy), all those other restraints offend some very powerful constituency (wait-lists create masses of angry voters, provider coercion will lead to changes in provider migration rates which can be really bad, higher spending upsets bond traders and more diffusely taxpayers).

At the end of the day, Americans will need to use less healthcare if you want it to cost less. There are no rationing schemes that will not make one or more constituencies irate. The Canadian dodge to keep down competing bids is one of the more politically palatable ways to limit provider pay, so good luck with things the Canadians find more difficult to implement.


Once there is major space for the market, you end up where you are now.

Single payer or not. Or, specify specific areas where there will be private markets.

Cosmetic surgery is an obvious one to exclude from single payer medical procedures. Any others?

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Keep in mind that the present approach in the USA has the result of costing an additional trillion dollars a year ($1.000,000,000,000) than it should when looking at system-level outcomes and comparing to any other wealthy country.

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A single payer system would make health care much cheaper. The funds that employers now devote to health insurance--I realize it is untaxed--could, at least in part, go into employees' pockets. What a country!

It could be much cheaper, if we had the will to cram down payments to providers. But if we had that will, insurance companies would have already done it.

A simple but initially painful remedy. Give the Federal Government a monopsony.

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When you say "immediately painful" you mean "a huge constituency will gather against this, so huge that it makes the coalition against the 1933 Clinton proposal look like a kindergarten class."

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As a doc and patient I still would support a public option and let the private sector exist to satisfy those with the desire and means. Docs and patients should not be forced to participate in a single payer system.

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Employer sponsored health coverage was created to bypass wage controls and continues to exist because of flawed tax policy, HR acting for their own benefit at the expense of employees, cost shifting from wasteful employees who like to complain, and media brainwashing. Obama lied because he didn't have the votes otherwise.

We know US single payer would not cut reimbursements and would be more expensive because Medicare own its own pays more than single payer systems that cover their whole populations. Insurance companies want to administer single payer for HHS and would love it.

Tyler should know a savings-based approach is the right solution, but won't even address it in his column. Why not?

It's not the "right solution" if you don't make enough money to save meaningfully for health care. HSAs are great if you make six figures but for people making half of that or less, it's pipe dream that you can ever save enough to take care of catastrophic conditions or expensive chronic conditions.

And ...

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Pat Rooney, the former president of The Golden Rule (no pun intended) Insurance Company, was an original driver for HSAs. As a healthcare funding mechanism, the only work by causing HSA owners to forego care or to give one more tax deferred source of savings to higher income people.

What Rooney, a Republican influence peddler saw, was that HSAs were a great way to favorably select customers in the individual insurance market. Individual policies seller face brutal adverse selection problems. (Hence the common exclusion of pre-x's.) But pair a high deductible individual policy with an HSA and you are cherry picking people that anticipate no health issues but want a form of catastrophic coverage.

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>Why not?

Because he is a partisan hack who wants to keep his partisan job cranking out text for Bloomberg.

It's ok though -- I hear he "leans libertarian."

Hahahahaha. The Other Jim --> definitely not a partisan, nor a coward, nor an unprincipled hack

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Dude, it's Singapore. Why won't conservatives embrace it?

This is why the long run equilibrium point is hyperinflation/collapse. I would trade for the Singapore system in a heartbeat. Can you imagine the advertising democrats would do?

Little Timmy was refused x, now he might die!

Thanks to republicans poor people are treated like cattle! Many to a room, no cable, mothers have to go home after childbirth, etc etc.

Gov refuses x treatment for y group! Oppression olympics.

Ad infinitum.

Selling to the American people that they have to pay 1/6th of their income to pay for healthcare is not going to fly. Whoever tries to hide the cost the most wins.

The proof of this is obvious. There are plenty of hardcore blue states. Where is the single payer?

"I would trade for the Singapore system in a heartbeat. Can you imagine the advertising democrats would do?"

Conservatives and libertarians have been saying this for years and, yet, when the Republicans gain control of Congress and have someone who is at least an ally in the Presidency, these people mostly fall silent. The reason is that Singaporean health care involves things that are simply taboo in modern conservatism such as mandatory state-run universal insurance that largely relegates the private market to providing supplemental insurance, income-based redistribution, and a large role for state-run hospitals. Indeed, Singapore recently changed its system so that participation is now mandatory and deductibles are lower.

I live in Singapore. You thinkConservatives are going to give over a huge chunk of their wages into a government managed account which severely limits what they can spend it on....and medical price controls...if you don't think so, you might not have a complete understanding of the Singapore system.

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"We know US single payer would not cut reimbursements and would be more expensive because..."

There are so many reasons that the statement is not necessarily true, or even probably untrue, that I don't even know where to start.

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There's a misunderstanding here. Socialized safety net medical insurance does not have to be "single-payer".

In Australia a market sits on top of the basic care. If you go to a physician who only charges the Medicare (Australian version) rate you are done. If you want more choice, the best specialist out there, you use the Medicare rate to cover the first part then private insurance covers as much as it wants - the private insurer is not constrained by the Medicare rate. I.e. balance billing (illegal under the US Medicare system).

So a US employer can still continue to provide exactly the same coverage except now it covers the balance of the bill.

Johar, Mu, Gool and Wong (2017)

"In Australia, the tax-financed universal public health insurance, Medicare, provides a government determined fixed rebate for each type of medical service. These rebates set a floor price for a given service, but there are no controls over the maximum fees that doctors can charge to their patients. The patient pays the gap between the doctor’ s fee and the Medicare rebate as an out-of-pocket (OOP) cost. OOP costs are equal to zero when the doctor’ s fee is equal to the rebate. No private health insurance can be purchased for out-of-hospital services that are covered by Medicare."

Well, Australia's system has been endorsed by President Trump - and we all know what that means when it comes to DC policy debates.

Every other nations health care system has been deemed much better than US health care system.

He did not explain that the DRC or Somalia or Libera health care systems are better because they cost less than $15 a month per person.

But, I never see Heritage, Cato, et al point to the cheap private fee market health care in Africa with the poor getting their health care by charity as the model for the US. Perhaps they don't believe Bono will give free concerts and lobby EU governments to provide charity care in the US.

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Agreed. The Netherlands is not single payer.

Taiwan and Canada are the only two countries that really meet a good definition of single payer.

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The Netherlands have two main insurers, but they operate more like nationwide ASAs than indemnity insurers.

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By the way there are plenty of doctors who take the Medicare rate because of all the paperwork savings.

Also, medical insurance is not tied to employment, it's something people sign up for when they are young and the policy is portable.

No, doctors who do not like paperwork work for the VA or go to a cash only practice. Medicare has more than enough pointless paperwork that I doubt there are any obvious time savings per patient. Further, many "Medicare" patients actually have multiple insurance sources, so you are not even dealing with one-stop billing all the time.

What Medicare does offer is a source of high volume patients who you can, with enough office support, rest assured will be able to pay in full. Medicare is also what many of your patients will naturally age into so tossing them out has a certain emotional cost.

What is vastly more obvious though is Medicaid. Medicaid rates are vastly lower and good luck finding a physician taking new Medicaid patients who can see you in timely fashion without some other hideous issue (e.g. distance).

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Interesting hypothesis. Do you think it might also hold for other government-provided goods?

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Cowen's column wasn't really about economics. I work mostly in health care and have for many years. The cost savings that have been identified in the past ten to fifteen years are in large part the result of shifting care to outpatient facilities, most of which are independent (of hospitals). The outpatient facilities are much more efficient and, hence, cost less. Third party payers loved us (the "us" because they were my clients) and rewarded us with good rates. That's over, over for a couple of reasons. One, hospitals have gobbled up outpatient facilities as fast as you can say pac-man (my term for hospitals). Two, third party payers have exacerbated this, by dropping (bu a significant amount) reimbursement rates for "independent" outpatient facilities - payers are rewarding providers not for efficiency but size. If you wish to learn about medical economics, read Austin Frakt.

It's not just that but also all the overhead that is built into the US system. Look at all the games that get played with coding to inflate bills as well.

Ie, if insurers simply paid doctors $1000 for non-itemized or explained $1000 bills, instead of paying, according to a list of codes and contract prices, only $478 for 17 items billed at a total of $1370, doctor list price, health care would be much cheaper.

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Outpatient facilities can and are now more efficient. But in the days of self-referrals they were a cash chute.

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Yes, healthcare is a huge part of the economy but is hugely bloated. There is no transparency in pricing of virtually anything in the system other than what one can purchase over the counter in drug stores. One should read a couple of very good books to get an idea of what's wrong and what can be done: TR Reid's, "The Healing of America" gives a good perspective of six or so foreign healthcare systems and how they do things much better than the US. Elisabeth Rosenthal's, "An American Sickness: How Healthcare Became Big Business and How You Can Take It Back," will make you nauseous with all the overbilling and other tricks that are carried out throughout the system.

The whole system is rotten and needs to be cut out. The only realistic way is a federally run system. Even Charlie Munger said the same thing over the weekend at the Berkshire annual meeting.

You cite a major problem in lack of price transparency, you cite one efficient area with transparent pricing is over the counter drugs which is where there is a mostly free market at work, and you conclude that the solution is complete federal takeover? That sounds terrible. I like the model of universal coverage safety net for the very financially desperate, and move to a more free market model for everyone else.

Read the two books I cited and you will change your mind. I've been following this issue since the first Jackson Hole meetings in the early 1990s. The problems and solutions are all well known. Unfortunately, there is no political will to change things. Lots of examples about bloat in the system and a "free market" approach won't solve anything.

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You can pull up "chargemasters" for, I believe, every hospital in the state of California here:

What this gets you, I'm not sure. In an emergency, you are not going to be in much of a position to haggle over which supplies or procedures are necessary and to request an itemized estimate in advance of treatment. The one entity that can and actually does haggle on your behalf after the fact is your insurance company (or the government, if you are covered by Medicare or Medicaid).

My wife is still recovering from our 1/1/17 highway head on crash. Her hospital charges were around $1.2M. Guess what Obamacare paid?

Well, Obamacare pays nothing because it included no public option insurance, and deferred to the States which are better able to provide the health care system you want.

So either you have a private, most likely for profit, insurance policy approved by your State government with certain Federal mandated provisions to qualify for Federal tax deductibles, credits, etc, but with 98% of the terms defined by State law, just like in 2009,

OR you have Medicaid, defined by your State government,

OR Medicare which pays only 80% more or less, with a State regulated private supplemental insurance policy as an option.

So, what did your State define as the amount that insurers pay of the $1.2M based on the policy YOU chose, (possibly by choosing to be poor enough to be on Medicaid or not insured).

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Were you balanced billed?

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Insurers haggle before the fact to obtain lower prices, but that is the biggest criticism of Obamacare which promotes insurers controlling costs by restricting allowed providers to the ones charging the lowest prices. Patients want low premiums bybut the ability to force insurers to pay the high prices that patient chose by picking high priced providers because quality is equal value is equal to price.

After all, since circa 1980, cost is defined by price, and value is defined by price, because TANSTAAFL economics from the past are all wrong.

Costs of labor to produce something is never the price. The cost of labor is never the value. It's the price that the capital controller, monopolists, sets that determines cost and value.

If the monopolist sets the price of two aspirin at $500, that is the cost, and the value. If the monopolists sets the price of a worker at $2 per day, that is the value of the work, and the cost of a worker existing for a day in terms of housing, food, clothing, showering, is $2 per day.

Those are the foundations of free lunch economics, what HW called voodoo economics. Popularized as Reaganomics.

Ironically, Reaganomics which preaches "government is not the solution, government is the problem", is used to call for lots of government action to fix every problem.

The economy is suffering from slow growth, so government must:
1. Cut taxes
2. Cut spending
3. Increase spending
4. Prohibit bailouts by unelected Federal technocrats
5. Force more creative destruction in Federal bankruptcy courts run by unelected technocrats
6. Make building housing cheaper by not requiring developers build and maintain roads, water, sewer
7. Cut taxes by not wastefully spending to build roads, water, sewer which should paid privately
8. End regulation and let issues be resolved in common law court torts
9. Enact tort reform to eliminate the high costs of private torts

And of course

10. government should promote high deductible restricted provider network insyrancee to cut health care costs
11. Government should prohibit high deductible restricted provider network insurance to cut patient out of pocket costs and give them more choices

And of course, Obamacare is horrible because it's not based on skin in the game high deductible insurance policies but instead has high deductible insurance policies that requires too much out of pocket costs to get any insurer payment.


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My wife is on Obamacare

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Nobody wants to pay for anything. That's the biggest challenge facing society today in general and it impacts everything from government to business to the environment.

I was looking for someone to make this obvious, true, retort. No one wants to pay for anything: education, retirement, housing, food, transportation, etc.

Conversely, no one minds spending other people's money, and half of all healthcare dollars are spent by the Federal government via Medicare, Medicaid and the VA. Bringing health care costs in line with our OECD peers would solve the federal deficit problem and allow universal care in one fell swoop. Some of it is mismanagement, but most of it is the corruption of entrenched special interests like the AMA, Big Pharma and so on.

One problem is that every dollar saved reducing health care costs is a dollar not earned by someone in the health care or health insurance industry. That's one of the few robust job creating industries left.

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Noh, the majority of the problem comes from the FIRE sector, all the rents extracted from debt, interest, collections, finance, monopoly rents, partially by patents, but mostly by costly debt to buy up competition in high rent M&A to create single sources, which then set prices based on the most costly substitute.

The pattern in a number of areas is to argue that drug A is cheaper than a hospital or clinical service which was once in high volume and thus cheaper due to economy of scale. Eg, mental health handled by confinement on farms, for example. With drug treatments available, the farms are shutdown as cost cutting to compete with drugs make them hell holes, so now the smaller number of people requiring confinement become very costly per patient. Now the drug to treat a mental illness, even if temporary, gets a price hike because it's substitute is costly confinement.

FIRE has turn microeconomics on its head with price defining costs, instead of costs defining price.

Instead of the cost of the factory plus labor defining the price equal to cost per unit, the maximum feasible price sets the price of the factory independent of its cost. A factory that cost $10 million to build gets priced at $1 billion once FIRE has worked it's magic to eliminate competing factories. Once competing factories are shutdown, the barrier to entry is the threat of under bidding the new entrant at any price point, with FIRE mastering the bribe to not compete.

Government policy has thwarted FIRE on occasion, with clinics competing with hospitals, but the FIRE took over hospitals and bought up the clinics if that was cheaper than building their own that charged less than competition. The "value" of the once public hospital was not it's cost, but the price derived from the prices charged from privatizing the public hospital and gaining monopoly power to hike prices charged without regard to costs.

Of course, free lunch economists argue that competition will cut prices below costs.

Ie, worker prices can be cut to 50% of the cost of living by the public policy that forces workers to work below their cost of existing. Ie, the homeless man with health problems must work to get Medicaid, even if the work requires being clean and well dressed and traveling ten miles at any time of day no matter the weather. After all, make the price of a worker low enough and a business will hire him. Costs of existance are irrelevant.

In the US, the best health care services are not paid for, so problems follow that costs far more that must be provided for free to the patient when free market creative destruction is prohibited. Free market health care requires euthanasia and sale of body parts to handle the worthless property that flow into ERs that can generate a return equal to cost of repair. That is the criteria used for cars which is the analogy used by those economists using the framework used by FIRE to justify prices and value and actions. Creative destruction is the basic tool of FIRE to create wealth.

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>No one wants to pay for anything: education, retirement, housing, food, transportation, etc.

Note that these are all things the Government will provide for "free" for those people who don't feel like working (God bless 'em).

These very same people will gladly pay for cable TV, scratch tickets, liquor and Playstations. I wonder why?

Regardless, your assertion is false.

Soo.. let them die? And I don't see the homeless people I pass on the street buying TV's, cable, playstations etc. I'm sure they buy liquor and perhaps even lotto tickets too, but I'm not going to hold that against them since they probably can't get banked, and will become a target of muggings if they end up holding more then a few dollars. A lotto ticket may actually be their best savings vehicle

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"Nobody wants to pay for anything. That’s the biggest challenge facing society today in general and it impacts everything from government to business to the environment."

Since Reagan, that has been the promise of the free lunch economists out of the Cato, Heritage, AEI, et al propaganda machines.

HW Bush called it voodoo because he was a tax and spend Republican, a product of TANSTAAFL economics. He believed that the issue was only how much were We the People willing to pay to get what we needed and wanted, with where the line was drawn being the political issues.

But nothing came for free, especially well paid consumers. He just didn't quite think of it in those terms.

Conservatives were selling voters on the idea that some workers, never you the worker voter, are a great burden on society because they are paid too much. Like the construction workers building roads. The union factory workers. The Air Traffic Controllers. The police and prison guards with pensions.

Here in NH, prisons are so understaffed workers are required to work overtime far beyond what they want to work. Competent prison guards, those who manage prisoners well, quit because they can earn more working less managing workers in the private sector. So, what do Republicans use to sell working as a prison guard? Great benefits and pensions. But what do Republican want to to cut? The pensions and benefits of public sector workers. And conservatives keep arguing that public sector pay and benefits are too high.

Of course, conservatives argue that building a prison in a remote areas will be a boon because the money injected from the pay and benefits of prison staff. But conservatives argue those costs are too high and need to be cut to eliminate the burden of public workers.

The "high cost" of Obamacare has paid to create a couple million jobs. In other works, cutting unemployment cost too much.

In other words, the high cost of creating millions of health care jobs with Obamacare has killed jobs.

If the cost of all those jobs were zero, then more jobs would be created by the consumer spending of the unpaid, zero income, health care workers.

Paid too much doesn't mean not paid at all, decent masturbatory post though.

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I wonder if the traditional American pastime of trying to hide costs as much as possible will include inflating away debts caused by increased healthcare spending.

I don't wonder!

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President Trump mentioned in his interview with The Economist that health insurance should cost $15 a month.


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Cut out 3-4 Starbucks Café Ventis per month, and healthcare albatross of the U.S.A. is dealt with. .

That was easy.

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Have to hand it to the oblivious orange one.

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"Even a relatively progressive state such as Vermont could not make a single-payer system happen."

Trumped by Federal law: Medicare, VA, ERISA, which removes at least 60% of health care dollars from any State government control.

A State can't charge Medicare a fixed price for each Medicare beneficiary even when conservatives have promoted private single payer funded by Medicare (Part C), which is always optional. Nor can a State charge an interstate corporation a fee for health care per person, or mandate it provide a health benefit, as Maryland tried to do, and Walmart blocked in Federal court based on ERISA's preemption provisions. New Hampshire has fought the battle with taxing Medicare payments to hospitals to fund uncompensated care without without the State matching Federal money with local tax revenue.

Imagine if Social Security were State run, or entirely private. The economy of Florida would not be possible. Many residents in the South would be forced to live in the North where they worked the majority of their life because without Social Security transferring "wealth" from the North to the South, they would be homeless and hungry. (Florida economy has developed from the pump priming of SS and Medicare into a more robust and sustainable self sufficient economy over the past 50 years, as have other Sunbelt regions. Old people with "income" to spend creates more jobs than the virtual tax cut of low taxes and letting the private sector pay for all the services employers expect to be available to employees, water, sewer, roads, schools, medical providers, etc.)

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Isn't there an onus on Americans to be healthier? Drink less, eat less fat, eat your vegetables more regularly, amuse oneself reading Tyler's Complacent class on winter evenings rather than go skiing and get a fracture.

If Americans do all of this, we can get the healthcare expenditure as well as premiums down!

Also I think what's missing in this country is the right of patients to opt for second-grade healthcare. Not all of us have the same degree of risk appetite. It varies from person to person. As a patient I should have the right to tell my doctor in the ER room - "Hey...just do an EKG. Don't do an Angiogram. Do a blood test, but not a CT scan. I am willing to risk that"

That's sadly missing. The place where I grew up (India) - I could do that!

Sure but in the US fee-for-service model, every thing you choose not to get means less money for the doctor/hospital. So their incentives are to tell you it's all necessary.

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You can decline CT scans at most hospitals and ER rooms. I took my 18 month old daughter to an ER after a fall down the stairs. In the end she was completely fine, but when she fell we were panicked, took her to the ER, the doctors wanted to do a CT, and I declined because of the long term risks of ionizing radiation. The doctor said an MRI wasn't an option with a small child, and she seemed completely fine, so I declined the CT, and they backed off. We still had to pay several thousand dollars out of pocket beyond my employer provided health coverage for an ER visit that was ultimately just a simple consultation with absolutely no treatment of any kind administered. It was just a wildly expensive consultation. Quick service clinics will do those kinds of emergency consultations for far, far less money. Like $100, as opposed to $2500. And if more serious treatments are appropriate, you can still do that.

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Nothing wrong with fat; lots wrong with sugar.

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First time I've seen that idea of US health care costs being so high due to poor diet choices that was not obviously motivated by a desire to negatively portray African Americans as a group or to negatively portray poor white Americans as a group.

For which reason, I am finally able to see that there is some sense in this position.

So .. .maybe the government should do a little more to promote healthy lifestyles? (With a preference for evidence that is NOT funded by corporate sponsors in their specific area of profit-making activity.)

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>partially incorrect

Jesus Lord.

How sweet of you to refer to The Lie Of The Year, repeated at least 35 times, as "partially incorrect."

At least Trump, who won the Historic Election of 2016, always tells the truth. But you won't hear Tyler talk about that here.

Sweet! I have a Doppleganger!

OK whoever this idiot is pretending to be me needs to knock it off.

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"No one wants to pay for health care"

Counter-example being our long history of charity hospitals and clinics.

I think the more accurate answer is nobody wants to fund 'no expense sparred' treatment for people they don't really care about at all.

But what we get is "Death Panels" and "Don't touch my Medicare."

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Most people get their health care paid for by the taxpayers. I think it is 55% with non-Medicaid expansion exchange plans being only like 7 or 8% of the total. And uninsured/undocumented aliens being maybe another 10%. Is this going to change? I think it just gets more and more difficult to reverse. Ask Tom Cotton if he wants to eliminate the Medicaid expansion January 1st?

Federal/state/local employees
Children's health plans

At some point we are going to have to cut costs.

I say Medicaid for all, then try to figure out where the money is being spent and move to cut costs. Then allow the private market to do whatever on top of it. If you are on Medicaid and have a catastrophic accident we try to patch you up, but no multi million dollar Tier 1 trauma center expenses unless your mom comes and posts a bond.

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Why subsidize healthcare? Why take money from people who earned it and give it to people who refuse to earn it? Of course I know the answer. Because politicians can buy votes by giving voters other people's money. Shakespeare was right; ''The first thing we do, let's kill all the lawyers,'' But then we kill all the politicians.

Or we subsidize healthcare because we do not wish to deny medically necessary treatment to everyone.

Have the hospitals and clinics give the medically necessary healthcare and get the individuals personal information and allow the government to use the power of the IRS to collect the money. Or even better; Give the patient (or their relatives or friends) the option to work for minimum wage at some job for the public good to pay off the debt. But don't slip your hand in my pocket and make me pay for it.

Gotta love people who value their third flat screen TV more highly than the life of another person in their community.

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Health care reform is vital to our interests as a nation. Consider Kentucky, where we just received recognition as the state with 8 of the 10 counties with the biggest decline in lifespan (on par with Indian reservations). According to politicians, we can approach this problem in one of two ways. Either shove health care down their throats with a nanny state mentality or paternally lecture them on how their choices are impacting their health leaving them to their own demise. What no one realizes is that both paths lead to a similar outcome, the taxpayer ends up subsidizing their choices either directly or indirectly. In turn, healthcare providers raise prices to negate poorer customers. Hospitals and insurers seek to insulate their losses through mergers which reduce competition. Medicaid continues to grow eating up more of the state’s budget due to job and wage stagnation. Not to mention serious mental health issues that lead to opioid addiction, crime, and incarceration. It seems that one person’s failure to be responsible is ultimately shouldered by the taxpayer whether we embrace Socialism or not.

Special interest groups have no incentive to make the system work better when profit is their driving force. As a result, I find myself moving towards a hybrid free market/single payer system (Krauthammer is prescient to a point). Remove employers from the equation. Require every citizen to have at least catastrophic coverage. Open a multi-tiered model that allows choice of plan and clearly informs purchasers of the direct costs.

The system we have lacks bargaining power, does not make us healthier, is riddled with fraudulent practices, is unsustainable, and encourages complacency. I envision a market where a parent can decide to move jobs or start a business without fear that her coverage will lapse for her family. Where a business has an incentive to raise wages. Where choice really means something.

Indian reservations have a decline in lifespans mostly due to alcohol and drugs and partly due to violent crime but in general that too is due to alcohol and drugs. The problem is NOT healthcare. The Indian reservations get free healthcare and have doctors and clinics readily available paid for by we taxpayers.
Kentucky and much of Appalachia has a decline in lifespans mostly due to alcohol and drugs and partly due to violent crime but in general that too is due to alcohol and drugs. The problem is NOT healthcare. (Sounds familiar!)

If you want to see government health care in action look at the VA. Is that really what you want?

Quality of Care in VA Health System Compares Well to Other Health Settings

July 18, 2016

The Veterans Affairs health care system generally performs better than or similar to other health care systems on providing safe and effective care to patients, according to a new RAND Corporation study.

Analyzing a decade of research that examined the VA health care system across a variety of quality dimensions, researchers found that the VA generally delivered care that was better or equal in quality to other health care systems, although there were some exceptions.

I favor a system with more freedom and rights. Consistent with that would be to allow people to choose their insurance and health care. So perhaps we could create a system that allowed people to choose to come under the VA health umbrella if they wanted to, after all it is just another federal health care system that today is limited to only military veterans. I could still choose to use doctors and hospitals of my choice.

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Native Americans also have serious health insurance and social problems because with 200 or so years their hunter-gather culture was ripped from them.

Ripped from them!!! Seriously? We were all hunter gathers 200 years ago would you insist we all go back to that. Like it or not progress and change is inevitable. No one "ripped" anything.

Are you seriously stating the "we were all hunter-gathers 200 years ago.?" And did you not hear about the Indian Wars that systematically destroyed entire First Nations?


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What is often missing from the discussion is that US healthcare is more expensive than other developed countries' because we have a much higher wage premium for highly skilled or educated and successful people, such as doctors.

Our doctors are paid more relative to the average than in other countries; however this disparity vanishes when you account for level of education. That US doctors are not paid higher relative to other advance degree than
professionals than those of other countries.

Per the Bureau of Economic Analysis, gross output in the sector "Health Care and Social Assistance" is $2,357 bn per annum. Per the Bureau of Labor Statistics, cash compensation for medical professionals who require post-baccalaureate training is currently $256 bn, or 11% of gross output. Every little bit hurts, but I don't think physician compensation is really driving this.

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look, she said in that neural voice that hurt me so, give me some dimes and nickels. I want to call mother in that hospital, what's the number.

Get in I said, you can't call that number

Why, she asked
Because, I answered, your mother is dead.

SpotX has promoted Sean Buckley to the newly created position ... sharing expertise across platforms. Buckley will be speaking at Festival of Media Global in Rome – book your tickets here

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I am actually told that American healthcare, as it is now, is good and American life expentancy is lower than other rich countries' because Americans keep killing one another. If it is true, shouldn't the first business be stopping American from killing one another.

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I have no problem with certain health Care subsidies IF prices for services were much more transparent. Don't the Swiss do this?
That said, libertarians need to start branding Single Payer truthfully; a Canadian friend calls their system Choice Crime.
You (and your doctor) can be fined and jailed if you contract outside their system. Choice is a Crime.

Wouldn't enforcing a Transparent Medical Price system be a better use of state power?

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Here is an idea.
Lower the entry age for Medicare by 1 year per year for the next 65 years.
Increase Medicare taxes by a small amount each year necessary for sensible payment.
Revisit in 10 years and see how we are doing.

Oh, and let Medicare negotiate prices with ALL providers.

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Medicare will be insolvent in about 10 years. And letting the mafia, err, I mean the other guys with the guns negotiate with all providers is an extortion racket.

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Just a simple test of the commenting state of play.

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This never ending healthcare debate is yet another example of why markets work and political solutions don't. Far more is spent each year on my health insurance than I spend on my TV entertainment, yet I spend far more effort studying my TV bills and options than I do my healthcare. The power of choice is in my hands for entertainment. In healthcare it is all up to politicians and my employer: I have little say in the matter.

As a result, my TV bill is low, I have many options, and I'm happy with the results. On the other hand, I pay way too much for health insurance and I'm never happy with what my employer and elected goons have chosen for me.

I see zero chance that the US will move towards market-oriented medicine, so the best advice is to just figure out how to navigate the system and ignore the endless political debate.

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Great article.

"It turns out we value health care for others more in rhetoric than in reality."
Isn't this the case for every area where people ask the government to intervein?
At least it sems so for many areas here in Brazil, includind Healthcare, Education, and even infra sctrutcture.

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So once again President Trump proves to the be smartest person in Washington. The Australian model of a universal Medicare alongside a private insurance system is not only a yuge improvement over the current US farrago, but not at all a difficult lift. First off, currently the US Medicare tax 1.45% for the employer and 1.45% for the employee, or 2.9% total. Pretty much the same as in Australia, except, that Australia has introduced an element of progressivity.

In Australia, taxpayers pay a Medicare levy of 2% of taxable income.

Your Medicare levy is reduced if your taxable income is below a certain threshold. In some cases you may not have to pay the levy at all.

If you don’t have private hospital health insurance, you may have to pay the Medicare levy surcharge (MLS) in addition to the Medicare levy. This depends on your income for MLS purposes.

If you do have an appropriate level of private hospital health insurance, you won't have to pay the MLS, and depending on your income you may be eligible for the private health insurance rebate. This rebate is an amount the government contributes towards the cost of your private hospital health insurance premiums.

The Medicare levy and MLS and any reductions are calculated from information provided in your tax return.

The true beauty of the Australia Medicare system is that it actually is a universal "Medicare for All" system and does not have all kinds of add on systems for special interest groups like veterans, federal employees, Native Americans, military retirees, etc. Eliminating these duplicative systems would free up enormous amounts of additional revenues. VA, DOD, and IHS federally owned hospital infrastructure could be consolidated into one system.

President Trump is a genius compared to the usual spewers of the usual US blah blah blah. It is time to act on his wisdom.

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