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"Health Reform Can Pay for Itself"


http://www.slate.com/id/2223213/
I think he's right that the misinformation/lies by the GOP, along with the usual MSM horse-race stuff (ie. these issues don't matter, it's all about scoring points) and alarmism on the left (TPM being a good example -- the entirety of last weekend had a huge headline "Is Obama wavering on deadline?") -- they all miss the point that the numbers do, or at least can, easily add up:

The health insurance exclusion is regressive, since people making more money tend to receive the most generous health benefits. On the other hand, eliminating the exclusion entirely would increase the tax liability of people earning less than $50,000, as a percentage of income, much more than it would people earning more than $200,000, assuming both groups received health insurance through their employers. A reasonable compromise, therefore, would be to maintain the exclusion for people earning below a certain amount (say, $50,000) and reduce it for people earning more. In the March 17 New Republic ("Tax My Health Benefits, Please"), Cohn noted that a tax scheme along these lines, proposed by Jonathan Gruber of the Massachusetts Institute of Technology, would raise "more than $700 billion over ten years." If included in health reform, such a plan would net the feds a $100 billion surplus during the next decade. As a side benefit, it would exert some pressure on health insurers to lower premiums.

The House bill, as passed last week by the ways and means and education and labor committees, would cost about $1 trillion, according to the Congressional Budget Office's most recent calculation. But this doesn't take into account the bill's sliding surtax on incomes above $350,000, which (according to the joint committee on taxation) would raise an offsetting $544 billion during the same period. (As liberal think tank Citizens for Tax Justice points out, $544 billion is a lot less than what this crowd got during the last 10 years from George W. Bush's tax cuts.) Other taxes in the bill and projected savings in Medicare and Medicaid further reduce the House bill's cost to $239 billion over 10 years. Congressional Quarterly gasps that this is "larger than the [deficit] run by the government for all of fiscal 2007."

But it comes to about $24 billion annually, a manageable amount that could be eliminated by adding in a much more modest scale-back of the health insurance exclusion than the one envisioned by Gruber. Further savings could be achieved if Congress were to adopt the Obama administration's proposal to create a Fed-like Medicare Advisory Council that could set rates for Medicare providers while being somewhat shielded from congressional meddling.


One last thing, on the public option. Why can't any of the pundits point out that the opponents of the public option are contradicting themselves?

  • If the plan is "too expensive", we should control costs, right?
  • But the GOP/Blue Dogs don't actually want to do that because that would hurt health/insurance industry profits.

So which is it? Too expensive, or not expensive enough??

And as for the budget hawk argument about deficits, I would jsut say that they are ignoring the fact that health care cots left unchecked will bankrupt this country in short order.

If any of these fake "budget hawks" actually cared about reducing tax payer burden, we would institute cost controls on drugs and service for the public plan. Problem solved. That is, if you actually intended to solve the problem.

Lack of regulation is the core problem with health care in America.

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This study by two highly respected economists places the eventual SAVINGS from allowing the public option to pay Medicaire rates, as well as some other reforms to be $1.2 Trillion by 2035.

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Exactly. Reforming health care cost up front but saves in the longterm.

Now why exactly is that message not getting out there?

Instead we have this:

http://mediamatters.org/research/200907220012

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Thanks for the post AnswerFrog. You've provided some useful information.

Lack of regulation is the core problem with health care in America.

I totally agree. Since private insurers are essentially a monopoly, one aspect of regulation could be to put a cap on their rate of return similar to electric utilities. The cap in my state for electricity providers is 9.5%. My electric company just petitioned for a rate increase such that they will be guaranteed a rate of return of 12.5%. Perhaps they are unaware we are in a recession. (Note to self: Send letter to enlighten them.)

When we hear about huge overhead costs for health insurers, 15%, 20%, 30% and compare those with Medicare ~4% (the numbers vary), what isn't talked about is that private insurer administrative costs are, in some cases, competitive with Medicare's. The difference is profit.

The shift toward electronic medical records, will significantly lower overhead costs. Additional measures, like those mentioned in Miguel's link, will lower them even more. With lower administrative costs, it seems private insurers should be able to get by with a cap similar to those of the electric utilities -- at least until we achieve a single-payer, not-for-profit health care system!

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Since private insurers are essentially a monopoly, one aspect of regulation could be to put a cap on their rate of return

Capping insurance rates by regulation would be an option, but probably a better option is for rates to be maintained at tolerable levels via the competition offered by a public plan. This would reward insurers not only for eschewing exorbitant profits, but also for increasing their efficiency, and reducing their marketing and advertising costs. A public plan should also enjoy sufficient economic leverage to negotiate more favorable drug prices with the pharmaceutical industry, although that industry would undoubtedly resist legislation giving that power to the public.

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Fred, while you were writing your comment, I was watching the segment about Switzerland's health care system at the link below. It sounds like theirs is very much like what you are talking about.

You're way more knowledgeable than I am about most of what's discussed here at TPM. I would be curious to know what your take is on this. The Switzerland segment lasts about 10 minutes. (I posted this link at Clearthinker's blog earlier.)

http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/

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I very much agree. But either path would be better than the status quo. The thing is, it is in no way undoable or impossible to bring down costs.

Yet the MSM debate acts like this is irrevocably "expensive", despite the fact that the alternative -- doing nothing -- is far more expensive.

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Ending subsidies for the private insurers (on reducing ER visits) and payment reform and so on could be enough to meet the goal of deficit-neutral. The Times in a July 7 editorial argued “As much as 30 percent of all health-care spending in this country—some $700 billion a year—may be wasted on tests and treatments that do not improve the health of the recipients,” .

According to a national study conducted by Weill Cornell Medical College, the cost of interaction between physician practices and health plans is roughly $31 billion annually, making up 6.9 percent of the total costs for physician and clinical services.
Medical IT SYSTEM and to create national administrative standards for billing forms and codes, as well as procedures for the approval of treatments could save time and money.

And the FBI estimates that each year financial losses due to health care fraud range from $60 billion to $226 billion.

THANK YOU !

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