by von
I have to disagree with my co-blogger, Publius, regarding the various (and varied) tax provisions in HR 3200 -- that is, the House Democrats' take on Health Care reform. It's not that the proposed surtax on high earners is ipso facto wrong; it's that the surtax is a red herring.
Indeed, if you listen to the debate over HR 3200, you would think that a proposed surtax on high earners is the only revenue-generating component of the bill. That's a mistake. Here's a description of the revenue-generating bits of HR 3200. I count at least 11 changes to various aspects of law. Only one of those changes involve a surtax on high earners. Many of the other changes are pretty esoteric, black-belt tax law stuff.
The most troubling change to me has nothing to do with a surtax on high earners, but concerns HR 3200's treatment of small businesses. Businesses that have a payroll of $250,000 or more will either be forced to provide health insurance to a particular level or pay a tax penalty. The penalty is variable, and tops out at 8% when the small business has a payroll of $400,000. It then stays at 8%, no matter how large the company is. There is also a penalty of $100 per day per worker if an employer offers a health care plan that the Government determines isn't up to par.
This provision is largely being ignored by HR 3200's proponents. It strikes me as highly problematic on three levels. First, this provision is going to have a huge impact on small businesses, who are most likely to lack the sophistication or resources to comply with the law. A $250,000 payroll is not huge: a number of family-owned restaurants, shops, and other establishments are going to be captured and subject to HR 3200's various penalty provisions.
Second, a primary (valid) criticism of the US health care system is that we make health insurance dependent on employment. Almost no other developed country does this. I may lose some conservative cred for this, but it is utterly crazy that we make a person's access to health care dependent on that person having a job. I don't have a problem with some disparities in the system, but the current "all-or-nothing" approach is stupid and immoral. Moreover, making business pay for health care makes those business less competitive in the world market, because businesses in other countries don't pay the same costs. Rather than try to solve these problems, HR 3200 goes in the opposite direction.
Third, while the 8% penalty may be onerous for some businesses, other businesses who have health-care costs greater than 8% may use HR 3200 as an excuse to dump their health care coverage and force their employees onto the public system. Since HR 3200 makes no pretense that the 8% penalty actually pays for the public coverage that's being provided, this consequence of HR 3200 may very well increase the $1 trillion cost of the bill.
[UPDATE: There was a little confusion in comments regarding my "first .... second .... third ....." For clarity, not every criticism will be applicable to every business; different businesses will react in different ways, generating different harmful effects. It's also possible that some businesses that fall within the "third" category will be advantaged, albeit at the expense of the taxpayers. END UPDATE.]
HR 3200 adds yet another level of complexity to an already complex tax system and further burdens small businesses. Worse, adding these taxes and complexity does not come close to paying the $1 trillion-plus price tag of HR 3200: HR 3200 will still add an estimated $239 billion over ten years to an already unprecedented (and growing) Federal deficit.
We can do better than this.*
*For instance, we could tax health care benefits, but provide every person a tax credit to pay for a particular level of care -- a feature of, e.g., Sen Wyden's (D-Ore.) alternative plan.
Since HR 3200 makes no pretense that the 8% penalty actually pays for the public coverage that's being provided, this consequence of HR 3200 may very well increase the $1 trillion cost of the bill.
Presumably that's what the other revenue raisers are for, no?
Posted by: Ugh | July 21, 2009 at 12:10 PM
I must confess, I still don't understand the argument that 1) requiring business to offer health insurance and 2) offering a public plan will somehow result in business that currently offer health benefits to dump their coverage so their employees can go on the public plan.
The bizarre assumption appears to be that these businesses are offering health coverage currently because they are worried that by not doing so, their employees would be uncovered.
Seriously?
You're telling me they are accepting a hit on their payroll greater than 8% out of the goodness of their hearts?
Maybe I'm missing something here. Maybe someone has sorted this out, but this kind of argument just seems to defy common sense. They companies offer these benefits to be competitive. It's a form of compensation. Aside from that, they could just dump the plans altogether. In fact, some are doing so because of high costs, even without a public plan.
So, I'm asking this in all sincerity, to anyone. What is the technical argument here that makes companies dumping plans to save money more likely in this case. (More likely than now, when there's no obligation to cover employees as it is.)
As for the second point, I think it's a perfectly fair criticism. I agree, the employer system is terrible and we'd be much better off ditching it entirely. But the only free market version of this (like McCain's) relies upon a model that would largely make our health problems worse in this country (by trying medical decisions to an individual's ability or willingness to pay) rather than by the necessity of the procedure. Would you support, then, something like Massachusetts' movement away from fee-for-service to cut down on the over prescribing of medical procedures? Do you support a self-sustaining public insurance option that will force private companies to compete by lowering profits? Or is Wyden's plan your only preferred solution?
Posted by: Paulk | July 21, 2009 at 12:15 PM
We can do better than this.
"The collective principle asserts that the resources of medical skill and the apparatus of healing shall be placed at the disposal of the patient, without charge, when he or she needs them; that medical treatment and care should be a communal responsibility that they should be made available to rich and poor alike in accordance with medical need and by no other criteria. It claims that financial anxiety in time of sickness is a serious hindrance to recovery, apart from its unnecessary cruelty. It insists that no society can legitimately call itself civilized if a sick person is denied medical aid because of lack of means.
"Preventable pain is a blot on any society. Much sickness and often permanent disability arise from failure to take early action, and this in its turn is due to high costs and the fear of the effects of heavy bills on the family. The records show that it is the mother in the average family who suffers most from the absence of a free health service. In trying to balance her domestic budget she puts her own needs last.
"Society becomes more wholesome, more serene, and spiritually healthier, if it knows that its citizens have at the back of their consciousness the knowledge that not only themselves, but all their fellows, have access, when ill, to the best that medical skill can provide. But private charity and endowment, although inescapably essential at one time, cannot meet the cost of all this. If the job is to be done, the state must accept financial responsibility."
In Place of Fear, Aneurin Bevan, 1952.
Sure your country could do better, Von: that wouldn't be difficult, given how bad your system now is.
But do you really want it to?
Posted by: Jesurgislac | July 21, 2009 at 12:16 PM
"A $250,000 payroll is not huge: a number of family-owned restaurants, shops, and other establishments are going to be captured and subject to HR 3200's various penalty provisions."
"Moreover, making business pay for health care makes those business less competitive in the world market, because businesses in other countries don't pay the same costs."
Without touching on the truth or accuracy, or lack of it, in either of these two statements, I'll simply point out that they're in contradiction to each other, or, at best, simply apply to entirely different sets of busineses. "[Family-owned restaurants [and] shops" and service establishments are not in competition with "the world market."
People aren't going to fly to Japan, or Europe, to pick up their Big Macs, or their local burger/coffee/haircut/manicure.
Typepad is once again greying out the option of posting or previewing in Firefox for me, by the way.
Posted by: Gary Farber | July 21, 2009 at 01:03 PM
So, I'm asking this in all sincerity, to anyone. What is the technical argument here that makes companies dumping plans to save money more likely in this case.
Well, I can see that a viable public plan would make this a more attractive option for employees, but only if they were compensated. Let's say I consider my corporate health plan to be worth 12% of my pay, and the public health plan a little less (say, 10%). My employer cuts my plan, puts me on the public plan, takes their 8% hit, gives me a 2% raise, and banks the other 2%.
von, I am confused by points 2 and 3, insofar as they seem to run contrary to each other. It seems very much like "what if we have to keep our crappy system of employment-based healthcare? Or worse, what if we don't get to keep it?"
Of course, if this became the law Id actually love to see a good-enough public system that most employees didnt mind getting shifted to it (with maybe supplemental coverage to entice the high-end workers). And if the 8% has to be bumped up to 10% to make ends meet, so be it.
Im much less worried about whether the numbers here will balance on day one than I am about the creation of a viable healthcare system. If we get that, we'll pay for it (if we can shout down the death-before-taxes-except-for-stuff-I-like crowd). If we don't, it won't matter if the budget balances on day one, we"ll still be screwed.
Posted by: Carleton Wu | July 21, 2009 at 01:03 PM
PaulK, I think Carleton's right.
Without touching on the truth or accuracy, or lack of it, in either of these two statements, I'll simply point out that they're in contradiction to each other, or, at best, simply apply to entirely different sets of busineses.
The latter Gary: These two statements are not contradictory because, in the vast majority of cases, they apply to different sets of businesses. I think that this also answer Carleton's confusion regarding point #2 and #3.
Posted by: von | July 21, 2009 at 01:18 PM
I put in an update to try to clarify the points that Gary and Carleton found confusing.
Posted by: von | July 21, 2009 at 01:39 PM
i'm tied up for rest of day, but i'll try to respond tonight
Posted by: publius | July 21, 2009 at 01:47 PM
In major metropolitan areas a good [insert here whichever euphemism for "secretary" you use] can easily earn over $50,000 per year, sometimes twice that amount. Trained medical personnel of any sort can earn more. It's likely that any doctor, lawyer, accountant, etc., in practice with one or more colleagues is likely to have a quarter-million dollar payroll just with support staff. If they practice in corporate form and pay themselves salaries, even the sole practitioners will get caught.
Does it really make sense to force a professional whose entire office comprises him/her-self, one secretary and one nurse purchase a health plan or pay a tax of eight percent? Maybe so, but in that case let's not be hearing any more assertions that small businesses are exempt. TINY businesses are exempt -- Grandma peddling her hand-woven comforters at the local street fair doesn't have to pay.
How about a million dollars for a small-business threshold? Or abolish the threshold and make Grandma buy a plan or pay a tax? Hit everyone.
Posted by: Bob L. | July 21, 2009 at 01:49 PM
"(if we can shout down the death-before-taxes-except-for-stuff-I-like crowd)."
To be honest, this is everyone.
Posted by: Marty | July 21, 2009 at 01:58 PM
But the only free market version of this (like McCain's) relies upon a model that would largely make our health problems worse in this country (by trying medical decisions to an individual's ability or willingness to pay) rather than by the necessity of the procedure.
Why do you say this, PaulK? I'm not committed to McCain's model by any stretch. But it doesn't strike me as completely crazy to:
1. Get rid of the employer exclusion, and instead provide an individual tax credit for health insurance.
2. Allow insurance companies to compete for individual consumers across state lines.
3. Allow states to provide insurance programs usable with the tax credit. (This is, by the bye, a version of a "public option").
4. Require a person to either use the tax credit for health insurance, or forego the
credit entirely.
Sen. Wyden's plan does a lot of the foregoing as well.
Maybe HR 3200's complicated mix of tax increases and coverage options is superior to the other options, but consider me unconvinced.
Posted by: von | July 21, 2009 at 02:41 PM
von: Because throwing individuals out to try and figure out complicated insurance plans on their own is a Bad Idea? A single lump sum tax credit at tax time isn't a very good way to try and pay for insurance. It doesn't address pre-existing conditions, recission, or any of the other tactics the companies have admitted to using to deny insurance claims. The companies have entire departments dedicated to creating confusing paperwork and denying claims. Individuals who are busy and doing this alone, in their copious spare time between their two or more part time jobs (many of the uninsured) are not going to be able to bargain for better deals than large organized groups. And it does nothing to ensure that health care would be universal, which you yourself said was one of the goals you supported.
And no, HR 3200's complicated mix of stuff is not the best option, but since Obama decided to negotiate with himself and the self-described "moderates", so single payer wasn't even an option, and the Republicans have nothing to offer but obstruction, it looks like it's the best we're going to do now. Or we're going to end up waiting another 25 years, plus whatever other disasters get created by the sequel to the Bush administration before we get a chance to do anything about it.
Posted by: Nate | July 21, 2009 at 02:56 PM
I'm not opposed to a state public option, though they have greater limitations than a federal one would. Plus, making public insurance national would help with poorer states and states with greater concentrations of unhealthy populations.
I agree with Nate about the general problem with putting these kinds of decisions into the hands of consumers, as if health care functioned like other kinds of commodities (as in the recently discussed supermarket analogy), which it clearly does not.
The big problem with McCain's plan is that it assumed these market forces would solve the fundamental problem of over-treatment by making people assume the full burden of those costs. Over-treatment IS a problem, but it's the doctors who should be controlling those costs, not the patients trying to save money. And the incentives for doctors to over-treat are significant. On the other end, for-profit insurance companies would compete for "good" clients. As Nate notes, however, this plan does nothing to solve the problem of denying claims after-the fact or, worse, getting people covered with pre-existing conditions. A state public option, like you mention, could address this, but it seems strange to hear you arguing that 50 (not-so) little bureaucracies would be better than one large one. The state-run Medicaid is far more wasteful than the federally run Medicare.
I think you're putting forward some fair ideas, but some of your assumptions about what would appear to make necessarily better systems don't strike me as especially compelling. And I LIKE Wyden's plan, essentially.
Posted by: Paulk | July 21, 2009 at 03:32 PM
I agree with Nate about the general problem with putting these kinds of decisions into the hands of consumers, as if health care functioned like other kinds of commodities (as in the recently discussed supermarket analogy), which it clearly does not.
I disagree that health insurance is so complicated that consumers are paralyzed and cannot make meaningful choices. Consumers buy mutual funds, cars, car insurance, life insurance, houses, etc. These are all very complicated purchases; yet, given appropriate regulations and disclosures, consumers do fine. Indeed, it seems very strange to argue that health insurance is unique: Despite the recent explosions in the housing market, no one is arguing that a decision to buy a home is so incredibly complicated that it can't be left in the hands of a consumer. Instead, the response is that consumers can do just fine, so long as the regulations are sensible.
I agree that a McCain-like plan (as simplified by me, above) is not going to solve the overtreatment of patients (your second point).
Posted by: von | July 21, 2009 at 03:45 PM
von: I would think the recent housing and credit and finance bubbles/crash/giant theft are evidence that either a) they ARE too complicated for the average person, b) the disclosures and regulations aren't clear enough, c) outright fraud, or d) some mix of all of the above.
But the fundamental problem I have is I don't really see that a tax credit for health insurance would address the major problems in health insurance, which are a) uninsured people, and b) health insurance denials/recissions/etc. Overtreatment is of somewhat less concern to me than the complete LACK of treatment for a large percentage of the population. One I've been included in fairly often, even while employed. Fortunately usually while young and healthy. Making people pay for health care isn't a good way to manage overtreatment, either, even if you do feel it's a huge problem. People are not medical experts, so even if they do research on things, if their doctor suggests something, they'll often listen to that.
Besides, health care's not something (most) people do for kicks. People go for checkups, or go if there's a problem. And if someone has a medical problem, they're not going to often be doing rigorous cost-benefit analysis of different treatments. That's what doctors are supposed to be for.
Posted by: Nate | July 21, 2009 at 04:03 PM
I guess I should note, then, that I'm not suggesting that consumers are too ignorant to make choices (though certainly if you have to make medical decisions under duress, which isn't uncommon, you're likely to make bad choices).
The argument is that the health insurance market doesn't function like markets in other things, like cars or food or even houses. It's a market where the incentives are toward not providing a service. Most business would love to get money for nothing, but with insurance, it's when people need it most and when the stakes are highest that the company tries to keep from paying. It's unclear to me (still) how adding more people or companies into the market will alter this equation. Perhaps if there's an insurance company that was doing this much, much less, people would flock to it because it could offer lower prices at the same quality.
But then again, that's what the public option is designed to be (and why it needs to be self-sustaining). People will still be denied claims, some treatments will not be covered—the only difference is that with a different profit motive, this will be less (and for more justifiable reasons).
All of this explains the bizarre arguments made by opponents of the public plan that it will be a problem because people will flock to it. If this kills the insurance industry as we know it, I don't think that's in any way a bad thing. Private insurance will still exist and people will always be able to pay to get the "platinum policies" (as they do in France, for example).
All that said, though, I do agree with Nate (again) that consumers are somehow good evaluators of what they need. They are excellent evaluators of what they think they want. Until it turns out it's not what they want. Or they just settle. Consumer desire hasn't brought us a utopia of the best options—merely the most popular, even if often for the worst possible reasons.
Posted by: Paulk | July 21, 2009 at 04:25 PM
Should have read: "All that said, though, I do agree with Nate (again) that consumers are not necessarily good evaluators of what they need."
Posted by: Paulk | July 21, 2009 at 04:28 PM
Von -- Suppose I get taken to the ER with a severe chest pain. Some doctor on duty takes a look at me and orders several tests -- make up your own list. Do I, at that point, start bargaining over which ones I can afford?
Suppose I need a kidney transplant. Dr. A charges $18,000 for the procedure and has a 98 percent success rate (however you define "success"). Dr. B charges $5,000 and has a 95 percent success rate. Are those three percentage points worth $13,000? How am I to decide? What do my kids say to each other when I choose the cheaper guy and die on the table: "Thank goodness there's that extra $13,000 in Pop's estate"?
In what way is health care a "marketplace" when no one other than a doctor is qualified to determine which tests and procedures I do or do not need? (Yes, doctors are now trained to share the decisions with the patient whenever possible, but the input to those decisions still comes mostly from the doctor.) All the information in the world on costs and outcomes does not equip one to make that kind of choice for his or her own individual self.
Let's assume that I am a very sophisticated investor. When I buy a given stock or mutual fund, I bring to bear all my experience and knowledge; add in whatever information I can get about the potential investment, the economy, and my own monetary needs; then weigh the risks and make a decision. Even I, this hypothetical sophisticated investor, am thoroughly incapable of applying the same process to most of the medical decisions I face. And these decisions aren't about money -- they're about life and death.
I pray for you, Von, that you enjoy perfect health for your entire life and die in your sleep at a ripe old age. That is about the only way you'll able to cling to your notion that people can make reasoned cost-benefit decisions about health care.
Posted by: Bob L. | July 21, 2009 at 04:33 PM
I disagree that health insurance is so complicated that consumers are paralyzed and cannot make meaningful choices. Consumers buy mutual funds, cars, car insurance, life insurance, houses, etc. These are all very complicated purchases; yet, given appropriate regulations and disclosures, consumers do fine.
One thing we know is that lots of consumers make poor choices about mortgages, which probably don't seem all that complicated to lawyers and such.
Many consumers make poor choices in mutual funds, which are really simple to compare (start by looking at the line that says "expense ratio") relative to health insurance.
Lots of people struggled hard with Medicare D. I have a friend who is one of the brightest people I know, with 99+ percentile analytical skills. It took him a while to pick out the best option for his mother.
These things are complex. Health insurance is worse. Part of this, I think, is that lots of the highlighted differences are essentially meaningless. Should I pay a few dollars more a month to get a slightly smaller copay? Who knows? It's totally a random decision. What's important - things like the financial health of the company, rescission and renewal policies, difficulty of approvals - is hard to get at.
Posted by: Bernard Yomtov | July 21, 2009 at 04:48 PM
I don't think either homeowner's insurance or car insurance is nearly as complicated as health insurance. And mutual funds are investments people make somewhat blindly based on their diversification, usually through limited options available through a 401k or the like offered by their employer, who has already hired someone to sufficiently dumb it down for them. These things also don't have the life-and-death implications OR the level of frequent mundane hassle that health insurance does. Health insurance is the worst of both worlds - a frequent minor pain in the ass and a potential major source of crisis. The others, not so much.
Posted by: hairshirthedonist | July 21, 2009 at 04:56 PM
no one is arguing that a decision to buy a home is so incredibly complicated that it can't be left in the hands of a consumer. Instead, the response is that consumers can do just fine, so long as the regulations are sensible.
Actually, on this very site, I've argued in the past that no one should be allowed to sign a mortgage without hiring their own independent certified consultant who can make sure they understand the terms of the deal. For some people this will be totally unnecessary -- too bad. But for lots of people, this will be the only expert in the room that's on their side and whose interest lines up with theirs. If nothing else, this probably would've cut down on the number of people who qualified for reasonable prime mortgages but got conned into buying subprime loans.
I've cited the National Adult Literacy Survey's Quantitative Literacy results and they're pretty unambiguous: the vast majority of adults who can read and do simple math become totally helpless when faced with numbers embedded in blocks of text.
Posted by: Turbulence | July 21, 2009 at 05:04 PM
I agree that the small business provisions are dubious, certainly where there is a reasonable public option available. Operating a health insurance program for employees isn't the biggest deal in the world, but it can be a hassle, especially when we're talking about very small companies.
The whole small business scheme just seems poorly thought out (though not, I hasten to add, for "competitiveness" reasons, which looks like a bogus argument to me).
Posted by: Bernard Yomtov | July 21, 2009 at 05:28 PM
The argument that consumers are too ill-informed or stupid or whatever is always brought out when anyone suggests the basic model be shifted from the employer, a third party with primarily their own financial interests at stake, to the insured employee who has an interest in balancing the financial and healthcare issues involved. Let's see, all the smart people at this blog site can tell all of what is needed without reservation but the rest of us are too stupid to make these decisions ourselves. The system in place for federal employees already does some of the things that are being denied are possible here. Many different plan options are available that offer many variations of coverage and benefits, but all must meet an extensive set of basic requirements set forth by the federal employer. Employees have individually evaluated these offerings and made selections that most closely met their coverage requirements and ability to pay for decades. There is a wealth of experience already in the marketplace to aid individuals in making these decisions. If it became the norm, that ability would get better. The offerings of coverage would also get better. A set of basic coverage offerings like that already in the federal employee system could be a requirement in order for an individual to take advantage of any federal income tax benefit. This could include coverage for pre-existing conditions, for example.
There are lots of steps that could be taken to improve things without what Obama is trying to force through at huge costs and promises of cuts and offsets that may never happen.
Posted by: GoodOleBoy | July 21, 2009 at 05:43 PM
If I accept the premise that every person is entitled to the same healthcare unrelated to ability to pay, may I ask if there are any national borders associated with this new right? I'm just wondering at what point I do have to begin worrying that there will be a serious effort to establish a world government. Please explain for me how this right works.
Posted by: GoodOleBoy | July 21, 2009 at 05:51 PM
If I accept the premise that every person is entitled to the same healthcare unrelated to ability to pay, may I ask if there are any national borders associated with this new right? I'm just wondering at what point I do have to begin worrying that there will be a serious effort to establish a world government. Please explain for me how this right works.
Well, it could work similar to other rights. Take, for example, the right to vote. The US granted (certain) citizens the right to vote at the nation's inception. While that right has changed, and expanded, throughout the past 200+ years, never has any political party/significant elected leader suggested granting citizens of other nations the right to vote in US elections.
Similarly, one would imagine that the right to US healthcare would be reserved for US taxpayers and other categories of US citizens/residents.
Not that tricky really.
Posted by: Eric Martin | July 21, 2009 at 05:59 PM
That being said, no plan that Obama or the Congress has put forward would make it that every person is entitled to the same healthcare unrelated to ability to pay.
Not even close. The Obama/Dem plans provide a baseline of insurance - not healthcare.
Further, each allows for individuals with means to purchase additional health insurance and/or health care. So, not sure what you're getting at.
Posted by: Eric Martin | July 21, 2009 at 06:01 PM
GOB: If I can ask one question?
If this bill fails, do you think that any kind of meaningful reform, your ideas above or any others, will happen for at least ten years?
Posted by: Nate | July 21, 2009 at 06:08 PM
'Similarly, one would imagine that the right to US healthcare would be reserved for US taxpayers and other categories of US citizens/residents.'
Would that be legal residents and/or taxpayers?
Posted by: GoodOleBoy | July 21, 2009 at 06:09 PM
Would that be legal residents and/or taxpayers?
That would depend on the wording of the bill in question. But I don't see the right extending to, say, Pakistanis or Somalis. That just seems entirely infeasible, and is not even in the universe of what's in discussion at this moment.
Posted by: Eric Martin | July 21, 2009 at 06:12 PM
"Similarly, one would imagine that the right to US healthcare would be reserved for US taxpayers and other categories of US citizens/residents.
Not that tricky really."
That is a possible solution. But it doesn't seem like a likely one, especially from a Democratic administration considering the position of the Democratic Party on say the 1994 California Proposition 187. That position was that denying health care to illegal immigrants is unconstitutional. See for example here
Posted by: Sebastian | July 21, 2009 at 06:13 PM
Isn't this really red herrings all the way down? The objection here is not to some set of taxes on small business but to the entire concept of employer based health insurance. That's fine, but in order to blow that up, we need to argue about blowing that up and not about taxes.
The taxes on small business in this plan look silly as taxes because they are not designed to be taxes. Unless you can get 50 or 60 Senate votes to blow up the employer insurance system, (I think this could have been done, if conservatives were willing to engage, which of course, they aren't), we'll have such a system at the end of this. Given that, there are a bunch of provisions in the plan to mandate coverage. It's odd, but there actually is data that suggests that a small nudge of a penalty will change behavior and cause more companies to offer insurance. The employer mandate also lessens disparity among companies, e.g. it lessens the incentive to drop insurance to be competitive. Of course, dropping insurance moves employees with serious health issues onto our tab.
Sure, we can argue about what is a small business, but again, that's a different argument than whether there should be an employer mandate and how exactly does this get mandated.
Posted by: windshouter | July 21, 2009 at 06:15 PM
'That would depend on the wording of the bill in question. But I don't see the right extending to, say, Pakistanis or Somalis. That just seems entirely infeasible, and is not even in the universe of what's in discussion at this moment.'
I worded that wrong. I'm asking for what you think, so I should have asked, 'should that be only legal residents and taxpayers?', who have this new US right or do illegals also gain this new right?
Posted by: GoodOleBoy | July 21, 2009 at 06:18 PM
'should that be only legal residents and taxpayers?', who have this new US right or do illegals also gain this new right
The right to what? Healthcare or health insurance or both? I mean, if an illegal alien is working in the fields picking fruit for a pittance, or toiling for sub-minimum wage in the kitchen of a restaurant, and that worker injures himself massively, should our hospitals turn them away?
Now, I'd be all for charging the employer in question the cost of the medical treatment in question, but I think it would be pretty cruel to just let the person bleed to death.
Posted by: Eric Martin | July 21, 2009 at 06:21 PM
Sebastian, can you draw me a Venn diagram which includes the categories "illegal aliens," "US taxpayers" and "US residents" but somehow doesn't include any intersections between the first group and either of the other two? Thanks muchly.
Posted by: Phil | July 21, 2009 at 06:36 PM
"I worded that wrong. I'm asking for what you think, so I should have asked, 'should that be only legal residents and taxpayers?', who have this new US right or do illegals also gain this new right?"
Common human decency surely demands that if someone is standing in front of you, suffering, you help them. Period.
Surely every system of ethics, whether secular or religious, demands this?
It's one thing to argue that we can't afford to invade other countries and revamp and fund their health care systems at gunpoint, and another to tell someone standing in front of you in your own country who is having a heart attack that, sorry, I'm just going to let you drop dead until you can show me your papers.
I seem to recall when show me your papers was something we mocked the Communists and Nazis for demanding all the time. I didn't think I'd see Americans advocating it as a necessity before setting a broken limb, or treating a stroke.
So, yes, everyone in this country should have a right to basic health care; what sort of indecency would someone have to have to want to deny that?
Arguing about what one thinks immigration policy should be, and how it should be enforced, is an entirely different question than "do we let people suffer and die in front of us because we need them to show us the Right Papers first?"
Posted by: Gary Farber | July 21, 2009 at 07:04 PM
The argument that consumers are too ill-informed or stupid or whatever is always brought out when anyone suggests the basic model be shifted from the employer, a third party with primarily their own financial interests at stake, to the insured employee who has an interest in balancing the financial and healthcare issues involved.
Hey, I'd love it if we could disband the employer based health insurance in a reasonable way. But I'm against doing so in a stupid way. I'm against just throwing everyone to the wolves of the private insurance market with no community rating. And much as I would love to disband it, I don't think doing so is politically feasible. Do you? If so, why? If not, why are we even talking about this?
I worded that wrong. I'm asking for what you think, so I should have asked, 'should that be only legal residents and taxpayers?', who have this new US right or do illegals also gain this new right?
I would prefer we give everyone access. For starters, undocumented workers pay a lot of taxes so I don't see why they shouldn't get the benefits. Plus there's the fact that infectious diseases are very willing to jump from undocumented workers to citizens clutching their birth certificate. Keeping everyone requires that we not scrimp on care. Beyond that,
Finally, there's simple human decency.
Posted by: Turbulence | July 21, 2009 at 08:06 PM
I'm looking at recent census statistics broken down by number of employees here,
http://www.census.gov/epcd/www/smallbus.html
and although there doesn't seem to be any easily available data broken out by dollar value of annual payroll, there is data on the number of employers in various categories and the total annual payroll of the whole group.
First interesting point: about 75% of businesses don't have payroll.
Second interesting point:
There were 2,777,680 firms with 1 to 4 employees, with a total payroll of $165,904,564,000. Divide the payroll amount by the number of firms and you get $59,727. The number may not be all that meaningful because distribution matters, but if total payroll for all businesses in the 1 to 4 employee category worked out to an average of $50K per business, doesn't that mean that most businesses with 1 to 4 employees would be entirely exempt?
Third interesting fact:
There were 1,043,448 firms with 5 to 9 employees, with a total payroll of $195,519,100,000. Do the same math, you get an average of $187,377 annual payroll per firm. Rinse and repeat analysis from above.
Fourth interesting fact:
It's not until you get to the next category that the numbers from HR3200 kick in. And the categories include more employees per step. So there are 632,682 firms with 10-19 employees, with an annual payroll of $257,802,789,000. The average is $407,476. Again, distribution matters. But even with that size firm, barring a weird distribution, it looks like a lot won't pay the full 8%.
There are only 5.8 employer firms in the US, and the numbers above cover about 4.4 million of them.
Obviously if I've made any errors above, my apologies, and please correct me. But if my math and assumptions are right, small businesses as a group do not have a lot to fear from the bill.
Posted by: brettmarston | July 21, 2009 at 08:43 PM
' another to tell someone standing in front of you in your own country who is having a heart attack that, sorry, I'm just going to let you drop dead until you can show me your papers.
I seem to recall when show me your papers was something we mocked the Communists and Nazis for demanding all the time. I didn't think I'd see Americans advocating it as a necessity before setting a broken limb, or treating a stroke.
So, yes, everyone in this country should have a right to basic health care; what sort of indecency would someone have to have to want to deny that?'
The examples set forth in the first two paragraphs are clearly emergencies. Basic health care certainly goes well beyond that. Diabetes may not be classed an emergency but at some point requires attention or it will become an emergency requiring attention. So how much healthcare is one entitled to without or before taking some personal responsibility for the costs of providing that service. I don't need to connect this issue to immigration policy. We have millions of people (many probable illegals), some of whom pay federal and state income taxes and many who do not, who receive the kinds of emergency medical services needed for conditions described above. Many of those also get routine care through the same emergency facilities. Many of these patients are long term residents of this country and many remit large sums of money to their former homes in other nations. Most have no insurance and do not pay the costs of the medical services used, emergency or otherwise. Immigration issues aside, I just don't understand how things can work this way. I mean, its almost like a high privilege life not to pay taxes and to avoid paying bills the rest of us must pay and its not clear to me what the consequences are except to hit the rest of us in the pocketbook. And the band plays on.
Posted by: GoodOleBoy | July 21, 2009 at 09:05 PM
GOB, please read this.
Note: "[Social Security taxes paid in by illegal immigrants and never paid out[ shores up the Social Security system to the tune of around $13 billion per year."
And (links in previous cite):
HTH.Posted by: Gary Farber | July 21, 2009 at 09:18 PM
"There were 1,043,448 firms with 5 to 9 employees, with a total payroll of $195,519,100,000. Do the same math, you get an average of $187,377 annual payroll per firm. Rinse and repeat analysis from above.
Fourth interesting fact:
It's not until you get to the next category that the numbers from HR3200 kick in. And the categories include more employees per step. So there are 632,682 firms with 10-19 employees, with an annual payroll of $257,802,789,000. The average is $407,476. Again, distribution matters. But even with that size firm, barring a weird distribution, it looks like a lot won't pay the full 8%. "
So some number of 1.7M businesses would be effected by growing 10-20 percent. Almost all would pay the tax because the cost of insuring a pool of 10 workers would be astronomically higher. I don't see how that would dispute the basic point.
Posted by: Marty | July 21, 2009 at 09:35 PM
I mean, its almost like a high privilege life not to pay taxes and to avoid paying bills the rest of us must pay and its not clear to me what the consequences are except to hit the rest of us in the pocketbook.
Yeah, boy, not having any medical insurance, having to get constantly treated at the emergency room -- where, unless you are bleeding or crashing, you are going to get triaged way the hell to the back of the line -- then getting a $10,000 bill in the mail and getting phone calls from debt collectors umpteen times a week is a real privilege. Why, it's practically like being Donald Trump or Warren Buffett.
Do you even know an actual poor person? I mean like, dirt-poor?
Posted by: Phil | July 21, 2009 at 09:50 PM
"unless you are bleeding or crashing, you are going to get triaged way the hell to the back of the line"
No, in fact, I can personally testify that you can be pushed down a flight of concrete subway stairs (in Manhattan, 1988), taken to the Bellevue ER late at night (approximately 1 a.m. or not long after), bleeding so profusely from a scalp wound that your whole body is drenched in blood, with a broken arm, and a concussion, and still have to wait over eight hours to be seen by any medical personnel beyond the initial momentary triage.
That was, by the way, when I had health insurance through HIP.
I later was officially ruled (by Workman's Compensation; I was traveling from a work-related event) 20% permanently disabled in my left wrist from that event, btw.
That's merely what the fun of going to an ER can be like in a big city.
I didn't previously mention the various people screaming in pain, or the people waiting to be seen who were in handcuffs.
Hey, just go to the ER! You get all the health care you need there! Everyone in America is adequately covered!
Oh, and let's not forget ambulance charges.
Incidentally, anyone who ever needs to have a broken bone yanked on to be set, and they decide they can't give you pain killer for some reason or another, I don't really recommend the experience.
Posted by: Gary Farber | July 21, 2009 at 10:11 PM
Von's first basic point seemed to be that there would be that there would be a "huge impact" on small businesses because of compliance costs. Depends on how you define small business. Are companies with 10 or more employees so unsophisticated that they never employ either an accountant or a lawyer? I doubt it. Plus, there's going to be a lot of fair warning before anything gets implemented, since regs won't go into effect for some time.
Bob L. said that only "TINY" businesses would be exempt and he gives a business without payroll as an example. He appears to think that three-person offices are likely to be covered. He's probably wrong.
Posted by: brettmarston | July 21, 2009 at 10:38 PM
Von the poster says:
First, this provision is going to have a huge impact on small businesses, who are most likely to lack the sophistication or resources to comply with the law.
Von the commenter says:
I disagree that health insurance is so complicated that consumers are paralyzed and cannot make meaningful choices. Consumers buy mutual funds, cars, car insurance, life insurance, houses, etc. These are all very complicated purchases; yet, given appropriate regulations and disclosures, consumers do fine.
Maybe the second thing was not written by von the poster, but by a mere commenter with the same handle. Otherwise, the idea that "consumers" are savvy, but "small businesses" unsophisticated, is artistic genius. An artist, someone said, is one who can hold two contradictory views and still function.
--TP
Posted by: Tony P. | July 22, 2009 at 12:49 AM
"I seem to recall when show me your papers was something we mocked the Communists and Nazis for demanding all the time. I didn't think I'd see Americans advocating it as a necessity before setting a broken limb, or treating a stroke.
So, yes, everyone in this country should have a right to basic health care; what sort of indecency would someone have to have to want to deny that?"
So I take it that Eric's proposal isn't going over well?
Posted by: Sebastian | July 22, 2009 at 01:05 AM
"Show me your papers". Does an insurance card count as "papers"?
I have not, in my entire life, walked into an American health care facility of any sort where the first question was not "show me your papers". JFTR.
--TP
Posted by: Tony P. | July 22, 2009 at 01:26 AM
It's just barely worth a response, but I don't see how brettmarston could say I gave an example with no payroll.
Let's invent a doctor; we'll call him Dr. Marston. He organizes a corporation: "Brett Marston, MD, LLC." The corporation hires him, one secretary, and one nurse. All three are paid salaries by the corporation. They then go forth and practice the healing arts. I do believe that salaries are included in the definition of "payroll." If Dr. Marston takes out a salary of $150,000 a year (which ain't a lot of money for a doctor) and pays his nurse $60,000 and his secretary $50,000, he's over $250,000.
Perhaps brettmarston has never heard of a professional corporation. Believe me, there are such things. Mrs. BobL is a half-owner of one such. It has six employees (two of whom are the owners) and a payroll well over half a million.
There may be some fine print in the bills that excludes the salaries of owners of such corporations from "payroll." I haven't read much from the various bills and could have gotten some pretty important details wrong. But what I do know is that the term "small business" as used in those bills appears to be wildly different from "small business" as used in other governmental contexts such as the federal Small Business Act (yes, there is such a thing). In some industries, a company with hundreds of employees can be a small business. For health care purposes, some companies with three employees may get snagged.
And having been a federal employee in my time, I can tell you that most pick Blue Cross - Blue Shield because it's easier than thinking and gets the job done. I switched to another plan for one year and regretted it for the next five. Eventually people do learn at least the major points of importance about the various plans. But I predict that what happened with the Medicare drug reimbursement is going to recur multiplied by a factor of ten if everyone has to pick their own plan. (Not to mention the opportunities for fraud. Bernie Madoff -- call your congressman.)
I still think single payer is the way to go. You say you don't like the government running things? I say that the government is ultimately just people like you and me. (Especially me, since I was one of them for many years.) Life has been a lot simpler for me since I qualified for Medicare. The slogan isn't original with me, but the right answer -- especially with cost controls included -- is "Medicare for everyone." I know I won't live to see it. I doubt anyone reading this post will live to see it.
Posted by: Bob L. | July 22, 2009 at 08:15 AM
'So how much healthcare is one entitled to without or before taking some personal responsibility for the costs of providing that service'
Gary,
You responded to several points in my earlier posts and I won't quarrel with you over those, but the above was probably the point that I was most interested in and I did not find where you said anything about it.
As an additional point, one thing I sense with some commentators at this site is that rather than respond to a central or important part of someone's comment, the commentator's response will focus on less important parts of the original context , maybe because they are more familiar or more interested in that part. This is one time where I would appreciate if someone tells me this is just my imagination.
Posted by: GoodOleBoy | July 22, 2009 at 09:26 AM
Perhaps I wasn't clear. You said:
Grandma probably doesn't have a payroll.
Sure, some three-person offices have a payroll of $250K and will be subject to the 2% charge. But how many, as a proportion of all 3-person offices? Not many. And if they're paying that much in salary, shouldn't they already be providing health care?
Posted by: brettmarston | July 22, 2009 at 09:31 AM
Finally, there's simple human decency.
Posted by: Turbulence | July 21, 2009 at 08:06 PM
What kind of radical are you, Turb?
Posted by: hairshirthedonist | July 22, 2009 at 09:50 AM
This is one time where I would appreciate if someone tells me this is just my imagination.
nope. you are entirely correct.
i believe this happens on all blogs, but the people here might be a little more aggressive about it. i blame the fact that half of 'em are lawyers.
:)
Posted by: cleek | July 22, 2009 at 10:13 AM
'i believe this happens on all blogs, but the people here might be a little more aggressive about it. i blame the fact that half of 'em are lawyers.'
Well, it's understandable for the lawyers since I guess they get in the advocate/adversary mode for which they are compensated where they only choose to discuss points where they think their arguments are strong and avoid discussion of any where they might be weak. This also makes sense to 'win' a debate where winning the debate is the objective. But is this also the approach to seeking the truth and possible solutions to real life problems of gigantic proportions?
Posted by: GoodOleBoy | July 22, 2009 at 02:38 PM
I didn't think so. Neither would subjective terms like "some and some."
Give me a question I can answer in intelligible terms, and I'll try to answer it. What are the metrics for "amounts of personal responsibility" and "amounts of health care"?
Posted by: Gary Farber | July 22, 2009 at 05:36 PM
Otherwise I'm down to answers I don't regard as very helpful, such as "I think people should take a reasonable amount of personal responsibility for the amount of personal health care that they can reasonably afford." How much does that help you?
Also, the answer simply differs for people in different circumstances: if you can reasonably afford to take a lot of personal responsibility because you have that ability, you should; if you can't, you can't. Etc.
Posted by: Gary Farber | July 22, 2009 at 05:38 PM
Just curious why a consumption tax would not work? If you eat garbage (red meat...and fatty foods) you should pay for your future health care needs...if you smoke you should also pay...if you are addicted to high fructose corn syrup...you should also pay...
If you join the gym and work out every day as evidenced by a reduction in your weight and blood pressure...you should get a tax credit on your federal taxes...
Where is personal responsibility in all this health care reform talk?
THIS SORT OF CONSUMPTION TAX AND BEHAVIOUR MODIFICATION ATTEMPTS MAKE THE MOST SENSE TO ME!!!
Posted by: Doctor Doctor | July 26, 2009 at 08:05 PM
Many of us find that NOT USING ALL CAPS AND MULTIPLE EXCLAMATION MARKS makes the most sense to us!!!
Unless you want to sound somewhat mentally disabled.
I'd also recommend using periods, commas, colons, and semi-colons, as appropriate, rather than ellipses that seem to serve the purpose of simply not bothering to choose to figure out how to punctuate, but that's more one of my own bugaboos than something most people care about.
A consumption tax has certain virtues, but has the flaws of being extremely regressive, and taxing the poor the worst. If there were some counter-rebate or way to counter the regressivity, I think it might be a reasonable proposal.
I like to imagine, by the way, that "Doctor Doctor" are your first and last names, so if you get the right degree, you can be Doctor Doctor Doctor.
Posted by: Gary Farber | July 26, 2009 at 08:26 PM