So who is paying the costs today for the insured and uninsured?
- Fed Gov't / Taxpayers: Medicare, Medicaid, VA, etc
- State Gov't / Taxpayers: State Health Services, etc
- Insurance, Employer, Customers: Benefits, etc
- Hospitals / Insurance: Pro Bono work, Cross subsidy, etc
- Citizens: Premiums, Copays, Deductible, Direct Payments, etc
- Charities: Funding in cases of need
- Everyone: Lawyers, Court costs, Ambulance chaser ads, etc
- Banks / Shareholders: Bankruptcy settlements, etc
Where do you think we will see the savings appear to offset these increases?
Or are the additional coverages and customers costing more than the program is saving?
Other?
Hill Medicaid Exception Clarified
Healthcare Town Hall
Human Arc ACA Shifting
WSJ Cost Shifting
NYT Detroit to Shift Costs
Fox News States Blind Sided by Shifts
59 comments:
I forgot to ask... Any other
"Payers" that I forgot?
I'm still laughing hysterically at the presumption that Obamacare can provide more people with better care for less money. It's just not possible and, if it were, government would not be the way to do it.
The ONLY way this works at all is with the federal government commanding everyone in society-- employers, individuals, health care providers-- to pay the government to limit their free choices, and by pulling trillions of "new" money off the government money tree.
The simple answer to your question is that all citizens pay, either in poorer care, higher costs, or both, since as you say government has no money.
Absolutes are usually incorrect. (ie "all citizens")
The reality I think after what I have read so far is that a lot of people are going to get some real low priced health insurance. And insurance companies are going to get a lot more premiums. (ie revenues/profit) And health care institutions will have fewer bad debts and more paying customers...
As for who is going to be pay for it... Likely those who pay income taxes and have good insurance policies today. I mean it is the same painful reality as usual, someone has to have money before the government can take some of it via taxes.
I do fear that you are partially correct though. One of the cost drivers that we identified previously was that Americans are willing to pay much more than other countries to keep people alive. And remember Obama in his Dem Convention speech praising ACA in that it would ensure that "little girl" would receive the $1+ million treatment she needed... Not like those cruel insurance companies that aligned their limits to the premium that was actually paid.
Just imagine the health care cost increase if limits don't exist... It would be a repeat of the pending Social Security and Medicare disasters, where the premiums were/are way too low for the benefits to be paid out. Therefore outflows will exceed revenues sooner than later...
Back to the point though.
Sean is correct that if Medicaid expansion and the personal mandate are successful, most Americans should have health insurance.
Therefore the cost to ill uninsured individuals, banks, hospitals and charities should be reduced since the insurance companies will be paying for their client's preventive and reactive medical care.
So how would us tax payers who are paying a chunk of the premiums get any of our tax dollars back?
I am thinking the young healthy uninsured folks with good incomes will be the big losers. I mean they will be legally bound to pay for something while having a low likelihood of needing it.
I refer everyone to Jon Tevlin's column this morning in the Star Tribune this morning. All this goes to a basic point I have often made and a basic question I have often asked. The point is that health care in America is getting more expensive for reasons that have little to do with government. We are developing more treatment options, each with it's own price tag attached, and as the population ages, an increasing percentage of the population will need more and more expensive care. Obamacare isn't responsible for any of that.
--Hiram
Critics of Obamacare, have been given to complaining that it imposes to great a burden on employers. What I found so astounding about this criticism is that those who make it don't seem to understand the incredible power of it. The fact is, it doesn't make sense, no sense at all, to make employers of any size, assume the burden of health care costs. The problem critics have here, is that while the critics have, in a very limited way, identified on of the central problems of health care policy in America, they aren't interested in pursuing any alternative. And as we used to say back in the day, if you aren't part of the solution, you are part of the problem.
--Hiram
"Not like those cruel insurance companies that aligned their limits to the premium that was actually paid."
And not like Medicare and Medicaid, which ALSO have lifetime limits, and they would not let me pay for anything my father needed to live above it! Also, it's not like the Obamacare limits, which limit how much doctors can be paid or how much you must pay (the first lowered by O'care, the second actually raised). These Democrats and other fools think that government can pass laws that obviate the Law of Supply and Demand, or the Law of Constant Dollars. That is, every dollar that goes one place cannot go another. The only way to get more of something is to either give up something else, or to make the delivery of both more cost-efficient. Obamacare goes the opposite direction.
" if Medicaid expansion and the personal mandate are successful, most Americans should have health insurance."
Actually, estimates are that 30 million of the 48 million currently uninsured will remain without it, under Obamacare. Furthermore, as I have stated previously, a little back-of-the-napkin work says that, of the 48 million, 54 million did not need it. Not only that, but they are currently receiving health CARE, whether they have insurance or not. Which is more important?
There is a basic problem with many critics of Obamacare who claim it doesn't do enough, when they think it shouldn't do anything at all.
--Hiram
"...they aren't interested in pursuing any alternative [to the employer mandate]." -- hiram
Au Contraire, mon frere. John McCain, during his presidential campaign, was a strong proponent of moving the tax exemption for health insurance from the employer to the employee, making health insurance truly portable and adding greatly to competition. That has remained a part of alternative proposals ever since.
"Au Contraire, mon frere. John McCain, during his presidential campaign, was a strong proponent of moving the tax exemption for health insurance from the employer to the employee,"
What he wasn't an advocate of was eliminating the role of employers in health care altogether. I am not sure what McCain was proposing. In general, expenses of employment are deductible to businesses. That includes wages, and would include the cost of benefits like health insurance. Those kinds of fringe benefits sometimes are taxable to employees, sometimes not. Health care insurance originally became an employment benefit during WW II and it's aftermath as a way around wage restrictions that were imposed at the time in an effort to fight inflation caused by the overheating wartime economy. The wartime rationale is gone but the policy remains.
--Hiram
, making health insurance truly portable and adding greatly to competition.
Making health care taxable to employees, seems to me, something that addresses tax policy, not health care policy. It wouldn't make health care portable, because the change would be across the board, affecting all employment equally. It would increase the incentive for employees to get cheaper insurance, but not necessarily the ability since health insurance would still be provided by the employer. And the employer has no particular incentive to reduce the tax burdens on it's employees.
--Hiram
You are looking at the proposal to move the tax exemption for health insurance from employer to employee in a vacuum, which is the way liberals view policy. The fact is that this law has consequences, and in this case they are the desirable ones. It removes the incentive for companies to provide health insurance as compensation, in favor of real, direct (and taxable) compensation to the employee. That would generally move everybody into the private market with the funds to buy their own insurance, making the policy portable-- not tied to their employer. This in turn would vastly increase competition in the private insurance market and bring prices down.
At the risk of confounding the original question, is it reasonable to wonder NOT to whom the costs will be shifted, but whether the TOTAL cost of health care goes up or down, for the amount of care delivered? And shouldn't we be including the costs of lost jobs and lost wages and lost lives that will inevitably result from the rationing that will certainly follow the "single payer" system that is Obamacare's natural outcome?
Health care is already rationed in this country -- by the ability to pay. So what we should be discussing is not whether or not rationing should occur, but on what basis we should do so.
It removes the incentive for companies to provide health insurance as compensation, in favor of real, direct (and taxable) compensation to the employee.
How so? Presumably the value of health insurance to the employee will be made up by an increase in wages, equally deductible to the business and from a business perspective, a wash. The employers, on the other hand will see their taxes go up, and so right out of the gate, they are losers on the deal. Can these savings be made up by cutting better deals with the health insurance companies? Bear in mind the corporate plans benefit from economies of scale making them cheaper on a per capita basis. Our employee, now loses his tax benefit, and becomes a higher risk and more expensive client to insure to the health insurance company. So when do any savings at all start to kick in?
--Hiram
"It removes the incentive for companies to provide health insurance as compensation, in favor of real, direct (and taxable) compensation to the employee."
Since companies get the same tax benefit whether they provide compensation in the form of health insurance premiums, or wages in the same amount directly to the employee, that doesn't change the incentives for business. But because companies can pool coverage, they can offer economies of scale, and risk benefits to employees making the insurance they offer cheaper, giving them a competitive advantage in seeking employees in the market place. So in that regard, employers do have an incentive to provide health benefits. The loser here is the employee who will now have to pay taxes on benefits he formerly received tax free. That's unless the employer also increases wages to make up for the tax loss to the employee.
All in all, what this amounts to is a de facto increase in the cost of health care which is already to expensive in this country. It's also further evidence that politicians, even Republican politicians don't have any understanding how business and the economy works.
--Hiram
"is it reasonable to wonder NOT to whom the costs will be shifted, but whether the TOTAL cost of health care goes up or down, for the amount of care delivered?"
Costs will go up. They were going up before Obamacare, and they will continue to go up once Obamacare is in place. Personally, I would have loved to take a look at ways to limit the increase in costs, but any attempt to do that is immediately attacked as death panelism and rationing (as Sam suggests). That's a fight not worth fighting, at least not right now.
Here is where a lot of politicians go wrong. They think that health care premiums are distinct from wages and that only wages are compensation. From an economic (and business) perspective this is simply wrong. To an employer, and employee is going to cost a certain amount of money. It doesn't really matter to employer how this cost is divided up. From the employer's perspective, it doesn't matter whether or not the cost of health insurance premiums is included in wages or kept separately. The total cost is just the same and so are the tax consequences. That's why for example, when someone like the governor of Wisconsin complains that WI public employees get health insurance for free, he is talking nonsense from a business perspective. The cost to the employer of an employee includes both wages and premiums; how one arbitrarily divides that up, makes no difference either to the employer, or assuming that health insurance premiums aren't taxable income, to the employee.
--Hiram
"And shouldn't we be including the costs of lost jobs and lost wages and lost lives that will inevitably result from the rationing that will certainly follow the "single payer" system that is Obamacare's natural outcome?"
I think imposing the cost of health care on business is a bad idea generally. The reasons why we did it that way, having to do with inflation in heavy industries due to WW II wage pressures, are no longer applicable. But there seems to be no political will to change that, indeed our political system right now seems incapable of changing anything. But even if we were able to shift the burden of health care away from employers, it wouldn't disappear, it would fall on someone, and wherever it falls, it will serve as a drag on the economy.
--Hiram
One of the things I find most striking about the proposal to make health benefit premiums taxable to employees is that it finds support among many Republicans who generally oppose any tax increase. And this change, however consistent it might be in theoretical terms with some sort of idealized tax policy, in practical terms would hit ordinary tax payers really hard. We are talking about a significant chunk of change here paid by people to whom, such chunks really matter. Why are comfortable with this tax increase, and not tax increases on the wealthy which are too small to have any impact at all on their lives?
--Hiram
Hiram, you're simply not understanding the proposal. By removing the tax exemption from employers who provide health insurance, there IS an incentive for them to cease to do so, and to give that compensation to the employee, which WOULD be tax deductible to the employer. The employee would now have more money, after taxes, and could be expected to buy a portable policy that suited their individual needs.
Reducing health care costs is easy. Get excess government regulation out of the industry, and costs could drop by as much as 50%.
"...not whether or not rationing should occur, but on what basis we should do so."
Is there some reason why health care should be "rationed" on some basis other than the way we ration food, housing, clothing, haircuts or Super Bowl tickets? Free market competition always produces the greatest good for the greatest number, so the solution to the "problem" of health care access is to get government OUT of it, not further in.
"By removing the tax exemption from employers who provide health insurance, there IS an incentive for them to cease to do so, and to give that compensation to the employee, which WOULD be tax deductible to the employer."
Health insurance premiums are already tax deductible to employers as an ordinary and necessary business expense. It's compensation, just like a paycheck. The tax anomaly is that the health benefits they receive are not taxable to employees. That's the relic that goes back to WW II, when health insurance benefits were used to get around wage limits.
--Hiram
s there some reason why health care should be "rationed" on some basis other than the way we ration food, housing, clothing, haircuts or Super Bowl tickets?
Yes, health care should not be distributed on an ability to pay basis. That's why we don't allow people to die untended, at hospital doors. Do you want to be a member of a death panel whose job it is to decide who has the ability to pay for health care and who does not?
--Hiram
I should note that because of economies of scale, corporations which are able to offer group coverage to large numbers of employees will always be able to provide health insurance with more coverage at less cost than most individuals will be able to obtain on their own. The proposal here is to shift the tax deduction from employers to employees, but even with the tax disfavored treatment, employees would probably do better with a pay cut if their employers are providing health insurance benefits.
--Hiram
"Health insurance premiums are already tax deductible to employers as an ordinary and necessary business expense."
That's the trouble with facts, is that they don't always apply to the situation. In this case, the proposal before us is to REMOVE the tax deduction for the employer and transfer that tax deduction to the employee. Since the principal reason for employers to offer healthcare to their employees is that they can give the employees higher compensation and deduct part the cost, the natural outcome of the McCain proposal would be higher compensation for the employee, with no tax consequences for either, and to free the employee to buy healthcare on the open market, where competition would drive down prices.
"Yes, health care should not be distributed on an ability to pay basis."
Why not? Surely food, clothing and shelter are equally if not more necessary to survival, yet we are not talking about a vast federal bureaucracy to "insure" that everyone has some government-defined deluxe version of these things.
We don't have people dying in the streets because we still have a few charitable hospitals around, because many hospitals are run as nonprofits and by churches, and because federal law mandates that people can get health care at an emergency room whether they can afford to pay or not. It is simply not a problem requiring a government solution. Besides, if government would get out of the way, the costs of these things would drop rather precipitously so more people could afford them.
"I should note that because of economies of scale, corporations which are able to offer group coverage to large numbers of employees will always be able to provide health insurance with more coverage at less cost than most individuals will be able to obtain on their own."
That is undoubtedly true, at least for the time being, and I would expect many corporations would continue to offer some sort of group policy (or range of policies) as an option that employees could purchase with their new health care dollars. It would be just like corporations that now offer a range of retirement plans that their employees can put their own money into. The employee OWNS the retirement or healthcare plan and it is portable from job to job.
"In this case, the proposal before us is to REMOVE the tax deduction for the employer and transfer that tax deduction to the employee."
Currently, employees don't get a tax deduction for health insurance because they don't pay for health insurance. I guess what is proposed here is that employers no longer get a deduction. The theory is that they pass the money they would have paid for health insurance to employees in the form of a wage increase. If the employees chose to buy health insurance with that wage increase, then they would get a deduction leaving them in roughly the same position they were in before the tax law change. I say roughly, because something has changed. Because the employer can get better health insurance more cheaply than in an individual because of economies of scale, the employee will be worse off because while he is in the same position he was before tax wise, his health insurance is worse.
Now I think you might be correct. Employers might still want to offer group plans in order to compete more effectively in the market for employees. They don't get a tax advantage, but they can offer insurance more cheaply. So in exchange for the cheaper insurance, employees would give up some of the income increase they received in lieu of the health insurance their employers formerly did not provide.
So it's confusing. But my question is, what is the benefit derived from all this messing around with the tax code. It doesn't get employers out of the business of providing health care to employees. Since the insurance pool will be smaller since fewer employees will take advantage of group plan and some employees will have to secure expensive individual plans, costs will go up. The government will come out ahead in tax terms, but will be stuck with the bill for more uninsured individuals. How are we not worse off than we were before?
--Hiram
"The employee OWNS the retirement or healthcare plan and it is portable from job to job."
You might own your insurance plan, but portability is irrelevant, because your plan is worthless when the contract expires. You buy health insurance for a year, and when the year is up, your insurance is used up. There is nothing to transport to a new job. Now if you purchase insurance individually, employment doesn't matter, but then you are back to the situation that insurance purchased individually will be more expensive because of lack of economies of scale.
"It is simply not a problem requiring a government solution. Besides, if government would get out of the way, the costs of these things would drop rather precipitously so more people could afford them."
I want to buy a Mercedes but I can't afford their current prices. So last time I was in one of their dealerships, I came with easels and charts which showed rather conclusively I thought that they would sell more cars if they lowered their prices. My presentation was convincing and the sales guy was convinced. He congratulated me on my research, but for some reason he refused to lower the price of the car, and I left the dealership driving the same Beetle in which I arrived.
I wonder where I went wrong...
--Hiram
The problem is that you don't NEED a Mercedes, and shouldn't have to pay for one. But if government now commands that you buy a Mercedes, then the freedom to buy a Beetle would look pretty good by comparison. Your free choice of "a car" would be much cheaper than what was forced on you by government fiat. (and of course you could buy a Fiat, if you wanted.)
"The problem is that you don't NEED a Mercedes, and shouldn't have to pay for one."
It's true that I don't need a Mercedes in the same way I need health care.
--Hiram
Anyone who thinks that the plans on the exchange are "deluxe" hasn't looked into them very closely. The bronze-level plans are far, far, far from "deluxe".
"It's true that I don't need a Mercedes in the same way I need health care."
That's not true. What is true is that you don't need a CAR in the same way that you [may someday] need health care. But the comparison here is about what KIND of health care you want to buy. If the government dictates that you have a certain kind of care, whether Mercedes or Chevrolet, you are denied the right to choose a used Beetle that much better suits your needs. And what is being dictated is not that you buy a car (or health CARE) but that you buy auto INSURANCE, and it's not the same thing at all. We're comparing heated leather seats with flu shots.
"If the government dictates that you have a certain kind of care, whether Mercedes or Chevrolet,"
The government doesn't dictate what kind of care I need to drive, or the the kind of health care I need. The fact is, while I don't necessarily need an expensive car, I may need at some point, expensive health care. The kind of car one drives can be related to ability to pay. That isn't the case with respect to health care.
--Hiram
An interesting point, for me at least, is that is that a party which rejects relativism and subscribes to absolutism makes relativist arguments while failing recognize an absolute when it sees one. To make my point consider how fundamentally different the question, "Dad, can I have the car on Saturday night?" is different from the question "Dad, can I have a bone marrow transplant to save my life?"
--Hiram
Not different at all, if "Dad" is the government. They are going to decide what or when you may drive, or whether you live or die, on the same cold, unreasoning basis. Do you really want your health care managed by the IRS?
"The government doesn't dictate what kind of care I need to drive, or the the kind of health care I need. "
That's an odd sort of statement, when that is EXACTLY what is happening today, and has been for many years. I would like to buy a car without all the whiz-bang "safety" and "environmental" features, but government prohibits that choice, making my car more expensive. Government tells insurance companies what "minimum" things they must cover-- often including drug treatment and mental health that I don't need, and maternity coverage that old bachelor farmers don't need. Most of us aren't allowed to buy HSA's, and we can't even buy insurance across state lines. Obamacare just makes that worse.
"Not different at all, if "Dad" is the government. They are going to decide what or when you may drive, or whether you live or die, on the same cold, unreasoning basis."
You mean, like an insurance company does?
"we can't even buy insurance across state lines"
Since when do conservatives favor federal short-circuiting of states' rights?
"You mean like an insurance company does?"
No, I mean like government does. If you were completely free to buy an insurance policy for yourself, or even to the degree you are now, it is a contract between you and the company as to what is covered, what is not, and to what degree. You supposedly pay for what you want and you get that. When government dictates, it dictates. Under Obamacare you are required to buy insurance, it is required to cover x, y and z plus a lot of other things. If that doesn't cover what you actually have, tough, or if it costs more money than some plutocrat thinks you're worth (say you're 75 years old or belong to the Tea Party) then you don't get your life saved. You won't even be allowed to pay for it yourself. NOT a system I care to live (or die) under.
"Since when do conservatives favor federal short-circuiting of states' rights?"
I guess since we got so hung up on that provision of the Constitution that says the federal government regulates interstate commerce. And it's maybe a free market thing?
"You won't even be allowed to pay for it yourself."
Where in the bill does it say that, exactly?
"it is a contract between you and the company as to what is covered, what is not, and to what degree. You supposedly pay for what you want and you get that."
Sorry to burst your bubble, but those dictates already exist. Every single state regulates what is covered in a health insurance policy (to varying extents).
Sorry, I'm not going to wade through that bill. My personal experience is with my father, with scant days to live, being told that he had to leave the hospital because Medicare would no longer cover his stay. I offered to pay and was told that was not allowed under Medicare rules. Also, that is the rule under Canada's socialized medicine system and I have no reason to believe that Obama's is any different. Like Medicare and Medicaid, if they do not pay, the doctor may not accept private payment.
"I guess since we got so hung up on that provision of the Constitution that says the federal government regulates interstate commerce. And it's maybe a free market thing?"
State regulations that go above and beyond federal standards have long been deemed acceptable. Besides, I would argue that allowing states' rights to be short-circuited in such a way has often proved not to be helpful to consumers. For instance, having America's credit card industry run under the laws of Delaware and South Dakota (where they were literally written by the industry) has not worked in the interests of the public.
"Sorry to burst your bubble, but those dictates already exist. Every single state regulates what is covered in a health insurance policy (to varying extents)."
No argument on that, and it is worse because most employees are covered under a group plan of some sort, the terms of which are pretty well fixed. I was referring to the ideal, the "anti-Obamacare" or "free market solution." Obamacare simply goes further in what is already the wrong direction.
"State regulations that go above and beyond federal standards have long been deemed acceptable."
Acceptable in the law, perhaps, but are they reasonable? Should a state have the authority to forbid purchase of products not made locally?
Not different at all, if "Dad" is the government
Is it different if Dad is the Dad?
--Hiram
Reasonable is in the eye of the beholder, one imagines. However, it seems to me that if governments are going to be required (at least in part) to pick up the tab for the costs of medical care, they should have some say in regulating how health care is provided. And if we're going to dictate that everyone gets emergency care no matter what, their interest as the final guarantor of a minimum level of health care is only enhanced.
The reality is that today, in the individual market, insurance companies don't provide "a la carte" pricing for health insurance and probably wouldn't under your utopian free market arrangement, because it would increase their complexity and overhead. (Not unlike why we don't have such pricing for cable or satellite TV)
I actually just read through the whole thing... Any preference what is next? I'll give it some thought.
"However, it seems to me that if governments are going to be required (at least in part) to pick up the tab for the costs of medical care, they should have some say in regulating how health care is provided."
And there is the crux of the problem, right there. The only person who should be deciding how much health care I need is I. The person deciding how much of the anticipated expense I want covered by insurance, and what I am willing to pay for that insurance, is I. The person deciding what health care I need, and what they must be paid for it, is the doctor I choose, and the amount I pay for insurance should be set by the insurance company and coverage I choose on the competitive market, NOT by the government,
Government currently pays, directly or indirectly, for about 1/2 of the health care delivered in this country, and that influence causes our costs to be about twice what they would be without this influence. Obamacare would simply shift costs further, and UP, for everybody. At some point rationing, either of quality or availability, will set in or the whole system will become unaffordable. "Affordable Care Act" -- HA! it is to laugh, except this is life or death we're talking about.
"The only person who should be deciding how much health care I need is I. The person deciding how much of the anticipated expense I want covered by insurance, and what I am willing to pay for that insurance, is I. The person deciding what health care I need, and what they must be paid for it, is the doctor I choose, and the amount I pay for insurance should be set by the insurance company and coverage I choose on the competitive market, NOT by the government,"
That's all well and good, except for the fact that we have laws that require hospitals to provide emergency care, even to the indigent. Somebody's got to pay for that. The "logical" response would be -- no insurance and no way to pay, you bleed out on the corner. But we don't do that, so there's got to be a way to ensure everyone chips in to the system.
The only person who should be deciding how much health care I need is I
Not even I would propose anything as radical or revolutionary as that. But if you are serious about giving patients total autonomy over health care decision, I say go for it.
--Hiram
"That's all well and good, except for the fact that we have laws that require hospitals to provide emergency care, even to the indigent."
All you are pointing out is that the government has already made matters worse by passing laws against common sense and the free market. There is nothing wrong with the law as far as compassion goes, but it assumes that hospitals, many of whom are charitable organizations, would not be compassionate of their own volition. It then ignores the reality that "free" stuff will be used by "freeloaders" on the system. The solution is simple. Rescind the law and permit hospitals to claim a tax credit for unpaid care, and to bill everybody for the care they receive in the ER. If the freeloaders get a bill, they will stop coming, while those truly needy still get care and the rest of us "pay" through taxes for them. I know, it's "welfare," but at least it's "get-well fair."
Whether the government is paying for it or charity is providing it, the cost of the care is the same.
Besides, under what nonsensical scenario are you talking about where hospitals don't attempt to collect for such care? You better believe they're trying to collect from everyone who walks into their ER.
You should read up on what the law actually says on this point.
http://en.wikipedia.org/wiki/Emergency_Medical_Treatment_and_Active_Labor_Act
Post a Comment