By James Kwak
David Brooks, perhaps realizing that it was a bad idea to swallow a politician’s PR bullet points whole, is now backpedaling. The Ryan Plan, which he originally hailed as “the most comprehensive and most courageous budget reform proposal any of us have seen in our lifetimes,” now has the principal virtue of existing: “Because he had the courage to take the initiative, Paul Ryan’s budget plan will be the starting point for future discussions.”
As I’ve discussed before, the Ryan Plan is just one bad idea dressed up with the false precision of lots of numbers: changing Medicare from a health insurance program to a cash redistribution program that gives up on managing health care costs. Here’s the key chart from the CBO report:
Here’s how to read that chart. In 2030, under current law, a 65-year-old Medicare beneficiary’s health care will cost $60. (Obviously, this is using an index, not real dollars.) Medicare will pay $35 and the beneficiary will pay $25 in Part B premiums and cost sharing. Under the CBO’s more likely “alternative fiscal scenario,” her health care will cost $71, of which Medicare will pay $41. Under the Ryan plan, the same health care purchased in the private market will cost $100; “Medicare” will give her a $32 voucher, and she’ll pay the last $68 on her own.
The bottom line is that the Ryan Plan increases beneficiary costs more than it reduces government costs. In a weird sense, it’s a bizarrely pro-government plan: it helps the government’s bottom line at the expense of ordinary people.
So what should we do? Most importantly, we have to recognize that there are two separate problems, and they are not equal. The primary problem is health care inflation. The secondary problem is the long-term Medicare deficit. That’s a secondary problem because it’s largely a result of the primary problem.
Of these two, the Medicare deficit is the easier problem to solve: index the payroll tax to actual health care costs. This should automatically solve the Medicare deficit because as Medicare’s costs go up, its funding will go up at the same rate.*
This may sound like just raising taxes whenever the government wants to spend more. But the key is that the more taxes you pay, the more you get back. To see this, assume for now that Medicare is a pure price taker: it has no impact on health care costs but just has to pay what the market charges. Then, if health care costs go up by 5 percent, your taxes go up by 5 percent, but the expected value of your future Medicare benefits also goes up by 5 percent. You get all the insurance benefits of traditional Medicare, but now that insurance is worth 5 percent more, so you should be willing to pay 5 percent more.**
Raising taxes can have macroeconomic effects, but anything that solves the Medicare deficit problem will have macroeconomic effects: any solution involves either higher revenues or lower spending. Furthermore, increasing payroll taxes in line with health care costs is no different in substance than increasing premiums for employer-sponsored plans in line with health care costs, which has been going on every year for decades.
As commenter JD Johnson said previously, the assumption that Medicare is a price taker isn’t quite right because Medicare itself, as the largest insurance program in the country, has an impact on health care costs. So at the same time we should use Medicare to try to bring down system costs. But the question of bringing down overall system costs should be separated from the question of Medicare funding. And when it comes to Medicare funding, indexing the payroll tax to health care costs not only fills the budgetary gap, but it’s also fair: it maintains balance between the amount you pay and the value of your benefits. And most importantly, it balances the Medicare budget without eliminating the insurance benefits of Medicare, which are crucial to its long-term political support.
The primary problem — system costs — is harder, and I don’t have a better answer for that than the many health economists who have studied the problem. The first thing to point out, though, is that using Medicare to bring down system costs is exactly the approach of the Affordable Care Act — see Ezra Klein for all the details.
Robert Pear in the Times lists the following as some additional proposals in the air:
- Increase the age of eligibility for Medicare to 67, from 65.
- Charge co-payments for home health care services and laboratory tests.
- Require beneficiaries to pay higher premiums.
- Pay a lump sum to doctors and hospitals for all services in a course of treatment or an episode of care. The new health care law establishes a pilot program to test such “bundled payments,” starting in 2013.
- Reduce Medicare payments to health care providers in parts of the country where spending per beneficiary is much higher than the national average. (Payments could be adjusted to reflect local prices and the “health status” of beneficiaries.)
- Require drug companies to provide additional discounts, or rebates, to Medicare for brand-name drugs bought by low-income beneficiaries.
- Reduce Medicare payments to teaching hospitals for the cost of training doctors.
I think those are all reasonable ideas except for #1. The problem with raising the eligibility age is that it makes the primary problem worse by shifting 65- and 66-year-olds from Medicare back onto their employers or into the individual market. I think #4 and #5 are the best, but the others should be on the table.
At the end of the day, we’re not sure how to bring down system costs, although lots of people have good ideas. The rate of cost growth will come down someday, one way or another; it’s not possible to have an economy that is 100 percent health care. My point is that while we’re trying to slow down health care inflation, as health care becomes more expensive, it makes sense for people to pay more for benefits that are becoming more valuable at the same time. It doesn’t make sense to eliminate the insurance component of Medicare because 2.9 percent is some magical ceiling dictated by the Founding Fathers.
My post earlier this week on the equivalence of tax increases and spending cuts received a large amount of criticism from the left because the example I used for illustrative purposes was increasing the Social Security payroll tax rate instead of eliminating the cap on wages subject to the tax. And there I was just trying to illustrate a principle. So this time I’m sure many people will object to the idea of raising the Medicare payroll tax, preferring to raise taxes on the rich instead.
In some abstract sense, I would prefer to raise taxes on the rich instead. But I think we should look other places rather than Medicare to make the tax system more progressive. Medicare, like Social Security, is a progressive system even though its taxes on their own are not. Because everyone gets the same benefit, there’s already a large amount of redistribution going on; in addition, that benefit is worth more to poor people, because they are less likely to have other sources of insurance. A flat percentage tax seems like a fair way to pay for it, but more importantly it’s the way we’ve paid for it for forty-six years, so for political reasons it doesn’t seem to me worth changing. Making the payroll tax itself progressive would also reduce political support for Medicare. If we want to “tax the rich,” we should do things like converting major tax deductions like the mortgage interest deduction into refundable credits or raising the tax rates on capital gains and dividends.
* There’s also the problem of Part B, which is funded by beneficiary premiums and general revenues. In principle, I think the answer is to increase the payroll tax to cover the contribution from general revenues and use the money freed up from general revenues to reduce some other tax in a progressive way (maybe extending the EITC phase-outs to reduce the super-high marginal tax rates that hit you as your earnings increase through the phase-out range). That has the benefit of strengthening the link between Medicare’s funding and costs, which is important for indexing.
** There is a demand elasticity issue, which is that as the price of health care increases the amount of it you want to buy may go down. I don’t have a perfect solution for this because Medicare is a one-size-fits-all program. But I think it’s mainly just a theoretical problem, for two reasons. First, the price elasticity of health care is very low, so the effect is small. Second, the fact is that when shopping today for an insurance plan that will cover you when you retire in the future, there is no other alternative that has a lower P and a lower Q. So given the alternatives that are actually available, forcing people to pay 5 percent more for a health care plan that’s worth 5 percent more does not deprive them of some other product they could buy that better suits their preferences.
The Baseline Scenario 
Reduce costs by
– increasing the supply of doctors. Expand medical schools and immigration
– increasing the group the can supply medical services – more power to nurses, for example
– increasing the bargaining power of payers. Medicare has lots of leverage
– reducing patent monopolies and moving to a better research funding system.
We’re paying twice as much as any other country for healthcare with results that are not impressive compared to others.
Robert Reich explains at http://robertreich.org/post/4559031328 why Medicare is not the problem. Medicare for All is the SOLUTION.
foosion, you are so right. Others do it for half the cost. That fact is where we must start. I am not interested in reading any proposals except those which are modelled on successful healthcare systems in other countries. Especially not proposals which include profits for insurance companies. Unrealistic? Slaves are always counselled to be realistic– until they go egyptian.
“The rate of cost growth will come down someday, one way or another; it’s not possible to have an economy that is 100 percent health care.”
The second clause is true, but the first really isn’t necessarily – or at least there’s a distinction between “system costs” and “health care costs”, which terms you seem to use interchangeably.
Total spending on healthcare in the world obviously can’t be bigger than the whole global economy. But that’s not what inflation practically means – it’s very possible that the cost of “comprehensive health care” can continue to grow faster than the economy forever, and indeed without bound; this just means that some people will be unable to afford medically effective procedures and won’t get comprehensive care. Indeed, given existing technological progress I suspect this is more likely than not to happen fairly soon. Eventually Medicare will have to really address the issue of how to tell people that a certain procedure, which is highly medically effective, is not cost effective.
I think the chart is misleading because it assumes that the beneficiary is not cost-conscious at all:
– in 2030 under the Ryan plan, a beneficiary can choose to pay $68…or not. What if he wants to pay less?
– And what is this about beneficiaries sharing cost? Is there a Medicare premium I’ve never heard of?
Dr. Kwak —
I am trying to evaluate your proposal in light of Tyler Cowen’s excellent General principles for evaluating Medicare reforms. But I am having trouble.
Could you help me out?
Like foosion and mundo, I am not interested in anything other than the European schemes, which are obviously much better than anything anybody in the US is pushing.
We had a system that did somewhat control costs in the early 90s the HMO model where the primary care physician had to recommend that a specialist be brought in. This was rejected by the public, (recall the AARP add that says you don’t need permission to see a specialist). Require approval for non emergency surgeries and the like. (which many private plans already do). In fact for some non emergency surgeries consider offshoring the proceedure, such as joint replacements and the like.
Lyle –
On off-shoring surgeries, Western Doctors can perform the surgery in Costa Rica, with two weeks of recovery on the beach, for less than it’s done in the united states.
If Americans start flying to Costa Rica for elective surgery, what’s the big deal?
@Nemo: Cowen seems to focus on the second question of how to bring down the system costs. JK’s proposal is really only addressing the first question of Medicare funding. As such, Cowen’s General Principles don’t really apply.
Regarding the system costs, JK echoes a comment I made on his other post when he writes, “The rate of cost growth will come down someday, one way or another; it’s not possible to have an economy that is 100 percent health care.” Neither of us says we shouldn’t attempt to get better outcomes for what we spend — we just know that drawing a straight line angling upward for medical spending is unrealistic, and shouldn’t be used to put people into a panic about deficits.
What is going to keep seniors under Ryan’s plan from just using the emergency room for care, instead of paying insurance premiums? Wouldn’t most seniors, once they found that 40% of their retirement income goes to insurance premiums just rely on emergency room treatment?
First off, the notion that the US is spending more and getting less for their health care dollars is misleading, primarily because we use longevity and infant mortality as the measures. Both measures are severly flawed and useless for comparisons among countries. Most of the longevity contributions come from lifestyle behaviors which have little to do with medical care: think smoking or lack of exercise. In addition, if you remove violent and accidental deaths (trauma) from country statistics, then the US is nearly at the top of the list. Infant mortality is also flawed because in the first place different countries use different methodolgies for counting and in the second, infant mortality is most influenced by the age of the mother: a different age distribution for births will give you different infant mortality for the same health care.
Here’s the real problem for the US: we spend limitless money and resources at the end of life for little to no benefit. Medicare just agreed to pay for Provenge, a prostrate cancer treatment that adds 4 months of life at a cost of $93,000. That expenditure will do little to improve overall health or longevity, but will drive up Medicare costs astronomically.
Here’s the direction we need to be heading in: frame medical care (as opposed to sick care that we have today) as three broad categories: prevention (like a vaccine or some non-medical intervention), a cure, or a treatment. Right now we focus only on treatment because that’s where everyone in the health care (actually sick care) delivery industry derive their income. If we had a government system that paid for preventions and cures and left treatments to individuals, we could move away from expensive, lifelong treatments (bend the curve) taht result in minimal benefit.
A flu vaccine is a prevention. Giving someone an antibiotic for pneumonia is a cure. Lowering your cholesterol with a drug is a treatment beacuse it doesn’t “prevent” high cholesterol nor “cure” it, it only “treats” it. I know it’s suppose to “prevent” other things, but in reality we really don’t know whether it truly “prevents” those consequences over a person’s lifetime or merely delays things that will stil occur long after the studies are completed. At the same time there is real, high cost of side effects from the treatment, that ususally requires additional treatment.
Currently, all we are doing is producing a society where everyone is being “treated” for a least something (50% right now), extending life with the attendant requirements for more and more sick care to maintain the system. Increasing taxes for Medicare is not sustainable: costs will continue to escalate as long as the market will bear it and the market will bear it until there is too little disposable income is left for any growth in GDP. At that point, all that society is doing is paying to keep people alive.
And I’m with Carla, too. Medicare for all may be the best solution — then work on paring down costs. No insurance companies. Ration expensive procedures and control bloated salaries.
Create, along the lines of Peace Corps, a Medical Corps to serve Medicare. Offer young people free medical training if they serve 20 years afterwards for a decent salary. They can opt out but cannot take their medical credentials with them if they go. They would be assigned to practice in a certain location, but could seek to serve in a preferred location by putting their names in a lottery. After 20 years they could retire with pensions like in the army, or move into private practice with their licence. A Medical Corps could include nurses and technicians as well as doctors, and could also include people to create and run simple inexpensive hospitals. Open the training up to the many immigrants with medical expertise who are being shut out of the medical establishment — many could be fast-tracked to graduation.
Maybe we would find this would attract a better class of people, those who genuinely want to be healers, and not those who go for the money.
I would guess Medicare costs could be cut in half this way. The wealthy could go on using the established medical system with all its bloated costs and unnecessary procedures and unwashed hands and insurance company leeches — and they’re welcome to it.
Your post’s on Medicare/ (Medicaid [?]) the past couple days have been enlightening, and extremely factual. Thankyou Mr. James Kwak! (I don’t know how you juggle a family, work, and BaselineScenario, but, Bravo:-))
“Ryan’s Medicare Plan, and Brook’s (hoof and mouth decease) endorsement championing this charade is a direct insult to the American Public’s Intelligence, period! You called a spade a spade, and rightly so, when few voiced their opinion. This, “Ryan (Brook’s Good Housekeeping Endorsement”) Plan” is a pure unadulterated abomination!
Voucher’s to no where…back to the USSR,…?
@Nick Bradley: “If Americans start flying to Costa Rica for elective surgery, what’s the big deal?”
If they start dying down there (and yes, people do die during elective surgery, right in the U.S. as well as elsewhere), it’s a very big deal. Do you have any idea the expense and red tape of bringing a body home from foreign shores?
Seriously, it makes more sense for those of us who were looking forward to Medicare to MOVE to Costa Rica, where the cost of living, although not dirt cheap, is ceratinly less than here.
That country’s citizens are covered with universal healthcare from cradle to grave. If they live in or near a city, the care is excellent. In remote areas, the problem is lack of physical access.
Now, Costa Rica is not wealthy enough to provide comprehensive medical care to every rich gringo who wishes to enjoy their climate and rather pleasant lifestyle. And Medicare does not cover American retirees living abroad (which I understand some people think is very unfair.)
So American ex-pats have to purchase private health insurance. There, a monthly policy that covers everything: doctors’ visits, prescription drugs, hospitalization, medically indicated surgery, intensive care, ETC., costs $35 a month — for two. That’s for a couple over the age of 65.
Maybe Paul can get The Donald to help tow the line. Plenty of money, political ambition, stamina, I could go on forever about the benifits, or can I?
The answer is simple: Competition, competition, competition.
Health care providers (doctors, hospitals, etc), Big Pharma and health care “insurers” are all PROTECTED CLASSES!
Got it?
Health care providers and patients are all HOSTAGES.
Got it?
James, I am not sure that the absolute simplification of your idea occurred to you, but here it is:
Make medicare apply to all people. Paying for it with taxes, simply adjust tax payment to reflect the health care cost growth. The government, though, since it is the ultimate payer of all medical care, can control the curve by prescribing what it will pay (much like insurance companies do now, and outlaw the payment of any amount above what it’s baseline payment is. It already does this broadly through the existing program, so having it be a Medicare single payer plan would make it that much easier for it to control costs, as well as pay for the training of additional medical workers, provide for research, etc. So long as most of health care is privatized and uncontrolled, costs will keep rising ad infinitum until, no matter what we do about anything, we won’t be able to afford to get adequate care. There’s just no real efficiency incentive in the system we have no matter how it is sttuctured.
Everyone who is interested in having a serious conversation about healthcare needs to read the first paragraph of the comment by MGK above. The rest of you can continue to blather about how terrible healthcare is in the US as compared to Japan or Sweden or wherever.
And I’m quite interested JK’s proposal to automatically increase taxes as healthcare costs rise. What incentives would providers have to limit costs in such an environment where revenue automatically increases as prices rise? Isn’t this a recipe for an uncontrollable cost spiral?
Don’t get me wrong–as a health care worker I love JK’s proposal. It’s basically an unlimited river of money flowing directly out of the goverment till and into my bank account.
Cost containment for large Congressional contributors from insurance, pharma, and hospital chains is not the goal of the recipients of the contributions. The only costs they care about are labor costs, hence the protection of off shoring American jobs. They get richer, pay little to no tax and we get poorer. It does not matter what business we are taking about.
I’m afraid James left me way behind in his treatise. For example, I don’t understand the 5% system. Why would I be willing to accept a system where health care costs go up 5%, my taxes go up 5%, and then I receive a 5% increase in benefits? First of all, I don’t see any value added to that system. Normally, as homo economicus, I spend $5 to receive what I value as something more than $5; spending $5 to receive $5 is a zero sum game that doesn’t interest me. Moreover, on a time value of money basis, isn’t that arrangement a loser? Perhaps I misunderstood, but I don’t see it.
I recommend to readers the ideas of Regina Herzlinger on rationalizing American health care. A comprehensive view is in the link below:
http://whatmatters.mckinseydigital.com/health_care/can-the-united-states-provide-health-care-for-all
I also recommend a search for her on YouTube; her oral presentations are both informative and entertaining.
@Carla:
A few thousand Americans die abroad every year, and the LA Times states that it costs $300 – $1,700 to bring them home. You’re exaggerating.
– I’m not talking about moving to Costa Rica, I’m talking about the fast-growing medical tourism industry.
– And those Americans that go down there for medical care are treated in private facilities ran by Americans, NOT in Costa Rican public hospitals.
– If Medicare was voucherized, Americans WOULD be covered overseas. My whole point is that Insurance Companies are moving towards incentivizing beneficiaries to get cheaper, better care overseas.
http://www.latimes.com/travel/la-tr-insider15jan15,1,6628266.column
Once again Democrats (James) are negotiating with themselves. We foolishly believe that our opponents are rational, and that if we argue forcefully and consistently that there is no difference between taxes paid in cash and government outlays received in cash, the Republicans might change their minds. That it’s better to pay less for the same goods, regardless of who provides them.
All such arguments are pointless. Republicans know that defense spending is the only legitimate function of government. Government is a cancer that must be excised. The argument was settled long ago (at the Boston tea party).
As tyler cowen pointed out this morning, the easiest way to control health costs is to give seniors medicare dollars in the form of cash, and when they spend anything less than 100% of that amount on medical care, costs are controlled.
Matt Yglesias agreed
what foosion said!
I have never read anything from the pen of David Brooks that was not smarmy, ignorant, deceitful, pompous and absurd. You might as well analyze a pile of dog poop for clues to solving social problems.
You are missing the point
healthcare costs are related to technology, which is hard to grasp cause in most areas of life (TVs, computers, airfare) technology makes stuff cheaper.
But in healthcare technology makes stuff more $$
NOne of your solutions will have the slightest impact without a handle on technology (the much vaunted paying only for evidence based treatmemts is to silly to take seriously )
@nick bradley
yes surgery is cheaper in the third world (medical tourism) but there are real cases where “medical tourists” came home with, for example, antibiotic-resistent bacterial infections
Obamacare wants to force all adults to buy health insurance in the next year or so, which some of the Republicans say is unconstitutional Ryancare would have all of us presently under the age of 55 to expect to purchase senior health insurance when we retire (which will probably be when we are 68-70 years old).
In both cases it appears that the taxpayer will provide generous subsidies to help cover the cost of the health insurance to low income groups. It appears that both parties are expanding the already existing “means testing” for access to the “social safety net”.
To Ezra Abrams:
In the United States, health care costs are being driven predoominantly by profit. An excellent McKinsey report from 2007 outlined these observations:
1) In the U.S., doctors are paid by procedures, not by the hour. Specialists (who charge more) can better delineate procedures, so perform more procedures, driving up the pay of the doctor.
2) Drug companies make 60 to 70% more money on “branded” non-generic prescriptions than generic prescriptions. Drug companies engage in actions that prevent the “genericizing” of their products, and allow them to legally extend the life of their drug patents. This issue has also been discussed by Dean Baker.
3) Although McKinsey identified health insurance profit as a driver, it was not as big as the compensation to doctors and to drug companies.
So Mr Kwak is correct, to control Medicare costs requires addressing the componetns driving up health care costs in general.
@itsthejourney
I wonder if health care costs are any more “driven by profit” than iphone costs, hybrid vehicle costs or facebook costs? Just alleging it doesn’t make it so.
Naturally, we should all remember that the accountant’s concepts of cost and profit may not track very closely to the economist’s concepts of costs and profit.
Makes me wonder if perhaps James should have reread his “Basics” econ text before writing his note. I guess a lot of us fell for for the mistake.
@Anonymous on 4/15 at 10 am
I wonder if this story about a new drug named “Makena” would change your mind about the influence of profit on the cost of health care, here is the link to a story that aired on NPR two days ago:” http://www.npr.org/2011/04/13/135369915/price-of-premature-birth-drug-criticized “
If you believe that the country would be better off if Americans had universal access to reasonable care then the Ryan plan completely fails. Not only does it fail to address costs in any way, but it envisions passing the majority of costs to patients. Because health care is not strictly a private good, patient care-seeking behavior is not always optimal from an individual or a societal standpoint. Patients underconsume preventive care, for example, including vaccinations. This not only makes them worse off, but also makes the rest of us worse off by contributing to disease transmission or burdening the economy with reduced productivity.
Assuming that health care issues can be solved exclusively with private competition is dishonest.
That said, neither side has been completely honest about cost containment. While Ryan pretty much completely ignores the issue, the PPACA only gets at containment indirectly. The ACO provision provides authority to move towards bundled payments, but the draft rule doesn’t go that far. Unless we acknowledge that payment reform is necessary — effectively moving from paying for services and procedures to paying for outcomes — ain’t nothin’ gonna change.
This is flawed because it doesn’t let people choose how they spend their money. It doesn’t reward people for limiting their own medical spending since it charges you on taxes based on your income. You’ve already paid the bill for your medicare when you decide to consume medical services. What if I prefer less medical services and more vacations during my lifetime. The structure of your plan to just hike the wages has a tragedy of the commons problem. Everyone will consume more because others are consuming a lot and driving up their taxes so you better also maximize your consumption of health care.
I’m generally with the Medicare for all group, but why should it be financed with a payroll tax? Why not a progressive VAT? That would spread the cost of the social safety net over a broader population and reduce the cost of employment.
Health care costs associated with technology which is considerable are not subject to the same laws as for most consumer technology. There’s a regulatory component that drives costs up over time for the simple reason that we demand greater safety as time goes on and that requires more testing, not less to demonstrate.
However, the biggest factor is the simple reason that medical technology is subsidized by third party payers. If Medicare gave every Medicare patient an iPad with medical apps to assist them and that was the dominant sales component for iPad, you can bet iPad would not get cheaper. In addition, they would jigger the regualtory side to prevent iPad knockoffs from entering the market by creatng expensive processes that must be passed. All of this would serve to keep iPad prices high.
Defense is the major area where 3rd pary payers allows the warfighter to demand and receive very high priced gadgets (useful, but still very expensive).
On the other hand, if the USG had to opine on the Betamax versus VHS decision for consumers, I expect we would just around now be seeing a 4th generation, $1000 Betamax hitting the stores.
i serious doubt that there is real doubt on whether IPHONE cost are not driven by profit? if they weren’t it wouldn’t be a business then would it? The same is true for all of these. and maybe you fell for an assumption that they weren’t profit driven??
that said i still don’t see any for profit (or even non profit ) insurance companies ever wanting to get involved again with health care for the elderly. its not profitable, and even for non profits, will end up with their collapse. if we must make some changes to Medicare, then maybe we could make the premiums based on incomes of those on Medicare? and I suppose we could raise the taxes that pay for it, which is no different than an insurance company raising premiums. and i don’t see why we aren’t using its leverage to control costs, that just leads to higher costs to the tax payer (and those on Medicare). what ever happened to those politicians who wanted to run the government as a business????
How are the proposed lump sum payments to doctors (bundling) to be tied to good medical outcomes, and high quality coordinated care like the Mayo Clinic model? Without these, some doctors would take the money and try to return as little care as possible.
I am completely opposed to raising the age for either Medicare or Social Security. As far as SS is concerned, the absolute first order of business is to eliminate or greatly increase the cap.
I agree that Medicare taxes should be flat for all incomes.
Want to know how to solve health care inflation? Get rid of health care insurance. Private insurance, government insurance, its all about spending somebody else’s money. What would your cart at the grocery store look like if you had food insurance? Lots of prime rib, lobster and expensive wine I bet. Now what if each time you consulted with the owner of the grocery store to determine what to purchase?
Insurance is a way to protect one’s self from large, unexpected expenses. Why do we use it to pay for routine care? Why does our system segregate the consumer from the cost of nearly all medical care? How come we are never informed about how much a procedure or test will cost? Ever receive a menu at a restaurant with no prices?
Wouldn’t most people choose the generic drug if they were paying with their own money? Wouldn’t most people think twice about heading to the family doctor for that sore throat and instead head to a less expensive clinic designed to serve minor illnesses?
We should be paying for routine medical care out of our own pockets (yes, you could give cash vouchers to the less fortunate to be used for medical care). We should be saving for the end of life care that nearly all of us will need. Then we should purchase a catastrophic policy with strict government regulations to protect the consumer.
If we adopted this plan, not only would every individual work to drive down their own personal medical costs, but hospitals and doctor’s offices everywhere would be subjected to the laws of the free market and the cost of nearly every medical procedure would magically fall.
Just my 2 cents. :)
And what is this about beneficiaries sharing cost? Is there a Medicare premium I’ve never heard of?
Oh boy. Medicare Part A covers hospital costs, that’s paid for by the 2.9% Medicare FICA. Medicare Part B covers doctor and other provider costs, its paid 25% by beneficiary premiums (invariably deducted from Social Security check) and 75% from general revenue. Part D covers drug costs and is, to simplify a bit, also a 25/75 premium/general revenue split. Part C is where private insurers take A, B, D revenue (so premiums are still paid to Medicare) to offer a Medicare Advantage HMO or PPO.
There are separate deductibles and 20% copayments for A, B and D and there isn’t a catastrophic cap. The most basic reform of Medicare should be a single annual deductible with a single catastrophic cap. The Pentagon’s Tricare system sets a $100 deductible / $1000 catastrophic cap.
During the Nixon Administration, HEW Secretary Eliot Richardson “Mega proposal” would have created a universal single payer system with a catastrophic cap based on income, 1% for people at poverty level to 15% for the very wealthy. The Mega proposal also included a negative income tax, public jobs for the unemployed, simplified state/local revenue sharing and since Education was still part of HEW at the time, student loans that were repaid as a % of income. Its a very good proposal even today if the numbers were adjusted for subsequent increase in GDP.
Report and CBO study can be linked through here.
http://yglesias.thinkprogress.org/2011/03/means-testing-social-security/#comment-166272749
Focusing just on Medicare, Bob Reich is right, Medicare isn’t the problem, its the solution. The CBO scored a couple of different single payer bills in the early 90s, nothing and I mean nothing comes close in providing universal healthcare and controlling costs.
http://www.pnhp.org/facts//single_payer_system_cost.php
Even Richardson’s income-rated catastrophic cap is a red herring, its benefit isn’t cost control but that its a de facto progressive Medicare tax. But the Medicare FICA’s tax base will broaden in 2013 by imposing a 3.8% unearned income for family incomes above $250k. That could be dropped to dollar one (as w/ wage FICA) or expanded at any income level between one and $250k to the full 15.3% FICA rate or if you really want to tap into a gusher of untapped revenue, impose it on unrealized capital gains. Right now, only futures contracts are taxed mark to market and passive foreign investment company shares are taxed Bill Vickrey-style, retrospectively. Tax liquid and illiquid assets like those are now, respectively. Oh and please remind Simon for me, deficits don’t matter. :o)
The IRS can begin charging people a fine for not buying a for-profit health insurance policy in 2013 – how did that little fact fall off all the wiz-kid’s radar…?
New York magazine’s cover is “We won” – how Wall Street is moving on now that the threat of pitchforks from the masses is over…what WS is turning their attention to now is the next “bubble” – the next place they can herd everyone’s $$$ into so that the hose can suck it all up…
There’s your TRUE motive behind dismantling “medicare” – and the LIE about Social Security being broke is getting louder and more detail-math oriented – the sickest golberg rube yet…
Since homosapien is a *species*, why not provide scientific proof for “personalized medicine” by proving how it works in another *species* that has a lot less genetic variability among its members than homosapiens? Certainly are more than enough rats underneath WS to test the case….hmmmm, is that the problem?….the Street is neither bull nor bear, but subconsciously are all imitating the NYC rat?
I can see I need to connect the dots for the “F” students (Facebook)…
There appears to no longer be any argument that the “government” works for Wall Street…
So now what kind of *data mining* was Homeland Insecurity doing to fund “security” in the Middle East? Does anyone have any proof, whatsoever, that without the Patriot Act, it would have taken a lot longer that a couple of months during the *PRETEND* regime change (presidential election) to suck up 40 million foreclosure properties and 20 million jobs?
I can list 30 years worth of mercy credits being extended to all those “type As” who are genetically incapable of having anything other than a Nihilistic approach to every culture they set up shop in – but it seems like all they did with the Patriot Act goons supplying Wall Street, er, the “government” the target archetypes was to rig up derivatives in electronic trading at nanosecond speed.
There is absolutely no moral obligation to continue to be merciful – not when the Sophie’s choice – Grandma or foreclosure – is what they have planned next.
People wince when I get all sailor mouth – but the revolution song could very well be a cowboy, barely musical, twangy tune that will certainly contain my favorite phrase when I put on the war paint – “…f–k you and the horse you rode in on….”
Whores (MALE and female – male do more business in DC) and drug dealors and chefs – what happens when they decide to go into another “business” where they don’t have to cater to the needs of the self-proclaimed “winners”….?
Mercy me….
To repeat the *truth*
There is no way they could have done it without the data from Homeland Insecurity, ala the Patriot Act.
No way.
The citizen’s right to secure their own well-being from *PREDATORS* was de-regulated in concert with the de-regulation of the “banks” (Black Hole Math in devout service to Predators – quite the New Age Nihilism – ain’t technology grand?).
I need PROOF that what I am “suggesting” is not the god-awful truth – so back off with the medication slurs and the psychobabble…
Annie, with just a bit more faith in the folks responsible for the day of reckoning, you could be all that and silent too. I know longer waste my time on those issues.
FYATHURIO, says it.
How dare you tell me to be silent, Wetherby?!
What ethical and especially *religious* tradition
tells people to remain *SILENT* when injustice and depravity runs roughshod over the lives of those who CREATED the “wealth” others set out to steal!?
By what authority do you dare to tell me to be *silent*?
MY culture sees staying *silent* as the greatest of all iniquity.
And as for the rest of your imaginary cavalry in charge of the “day of reckoning”…?
I come from the “God helps those who help themselves” tradition – and even more important – the *experience* of that being always true
so I have *faith* that “folks” won’t hold it against me on the “day of reckoning” if I am already in the JUST WAR against predators and all other sundry degenerates.
It’s hard to tell with the internet and my sly comments sometimes – but I am in all seriousness *truly* appalled that you would tell me to commit the greatest act of cowardice and faithlessness in staying “silent*. How dare you suggest I lose my soul to your imaginary “folks” in charge of a “day of reckoning”?
You need help, Wetherby. Hope you get it before you find trouble that “faith” in “folks” won’t get you out of…
This is some of the fallout from the hose, from one of countless millions here having been HOSED:
http://www.roguegovernment.com/35_Statistics_That_Show_The_Average_American_Family_Has_Been_Broke_Down%2C_Tore_Down%2C_Beat_Down%2C_Busted_And_Disgusted_By_This_Economy/25479/0/8/8/Y/M.html
No Annie, it is you that is confused, I simply said you “could” remain silent if you only HAD the faith (that obviously you don’t have). Instead you open your trap and insert a foot by putting words in my mouth. Complain all you want but it won’t do you any good to be dependant upon anothers creation to pick you up from the island you were on. Time waits for no one, and once its gone you can’t get it back. And suddenly you wonder just where it all went, and how you would do it differently if only there was a next time. But there is not another time for angry confused people such as yourself, just the same message as before and probably the same results too.
PS, and I am the only one who cannot get caught up in others troubles, its fun being on the winning side once and a while.
You are a STALKER, Wetherby, which means you are guilty as sin in some way with the Homeland Insecurity data mining…
I DO NOT CARE one iota what you believe in – especially *folks who are responsible for the day of reckoning*…who would that be? Mitt?
You DID tell me to be *silent* – and now are worming your way out of being such an ethical freak show as claiming the higher moral ground when you wanted to lead someone to commit a crime against their own best interest – stay SILENT in the face of grave injustice.
Here’s my favorite line from JC – you remember JC, right? You should be celebrating torturing the innocent for your sins right about now…
“If you have faith, then keep it to yourself”.
You are an ethical knuckle dragger compared to the culture that stood my people up thousands of years ago.
We are at war, Wetherby. I’m giving you fair warning.
No Annie we have been at for some time now, Why don’t we play in the sewer, where I will still recieve your kiss. Or play ring around the rosy with 59 others who feel the same as we do. I see your pain in the neck is getting the best of you, normally not the early riser you wake with gusto, I get stoned on you. You want to financial games? Game on, in a moment, I am busy right now farming my back 40.
Herbert W, there is a good possibility Annie is confined to an institution somewhere — she is clearly unwell and consumed by rage. ( She keeps repeating the term “psycobabble” in her comments.) I think it is rather futile to engage with her, and she may be more fragile than we know so there is even the possibility of doing her harm. Best to skip over all her stuff.
Annie, all true wisdom begins with forgiveness. We cannot make the world better without compassion.
@ Mondo: Perhaps like a good mother, she will always be there.
And that’s why I earned the knickname “The Closer”.
I can flush out the crazies better than anyone.
Especially the Predators.
@ Herbert: I have been thinking about your comments. Your approach is far more loving than mine.
sorry — ’twas I –forgot to write my name
@ Woop
I always consider the Tuskagee Experiment when I think about how low can they go…
Constitutional Convention and Burn the Patriot Act (Patriot Act AKA the “hose”)
Look at just this blog – two men who are complete strangers to me – I guess I could hire someone to find out who they really are
One employing the social stress of “religion”, and the other chiming in with psycho-logic
I must have slipped out and under from some net they have in place – and then it dawned on me that that net would have to be an EMF of some kind – and, as a scientist, I have to consider the possibility that an EMF suppressing some brain wave, en masse as crowd control, could definitely damage the developing mind of an infant by cutting off the natural and normal ignition of brain cells along their intended paths…
Perhaps they believe that *rage* is what has allowed me to slip through the net…I *know* it is not rage, but they don’t know of what I speak, and no point in educating them, is there?
At any rate, the discussion is forever settled among men who know me for real – not as a CIA file – they agree 100% with me that I am superior in every way imaginable to conduct my life by my own personal rules – and they finally are willing to stress that FACT to the creeps like Mondo and Wetherby et al…The Patriots pawing through your financial records to establish a global kleptocracy…
Here’s the competing two math formulas:
More misery for others = More $$$$ for ME ME ME
versus
Greatest good for the greatest number…
Unfortunately, we don’t really know what that greatest number is, but it is real in the real world and exceeding it will swamp even the “more for ME ME ME” formula, as well.
It’s already a mathematical fact that war costs more than the booty it brings home to the victors – hence all that delusional *derivatives* crap the monkey brains concocted to pretend it ain’t so…
The discussion about role of government is going to take a way different turn…
Admittedly, my knowledge of economics is limited, but I am a physician. I am an advocate of single-payer Medicare-for-all based upon my valuing basic health care as a human right and my own experience of seeing patients forego treatment because of cost. So here is something I have not seen discussed (perhaps I missed it):
If Medicare were expanded to our entire population, would we not be expanding its risk pool from the current elderly high-risk demographic sector to our entire population including young, healthy very low risk participants? And if the actuarial work were done carefully and conservatively, could we not price part B premiums for lower-risk participants in a way that would make Medicare solvent for many years. Essentially, I am saying that premiums for low-risk participants would be a bit higher than they would be if considered alone, but, given the size of the non-elderly population, they would be only a little higher. Also, no one would have any comparison on which to complain, other than comparing B premiums to private insurance where the comparison ought to be very favorable.
I would be interested in hearing any feedback from those of you who are more knowledgable about economics.