Monday, November 30, 2009

There's Good and Bad in Health Care Reform Bill

As summarized in an article in the Salt Lake Tribune, the Senate version of the health care reform bill offers some signs of hope and some unacknowledged blunders.

It was inevitable that any bill would require all Americans to buy health insurance. In a true national system, taxpayers would be buying coverage through their taxes. In that way, premium increases would be buried in the huge, complex mass of all government spending. Personally, I would find that easier to take than a blatant, in-your-face bill from a private corporation completely unapologetic about taking your money and doing its best to provide nothing in return. But that's just me. Since the Senate bill appears to include a viable public option at this time, it means that we are not just being driven into the livestock pens of the present private insurance barons.

The penalty for failure to either buy insurance or establish a legitimate exemption is a very reasonable $95 a year for the first year, rising eventually to $750 by 2016. The good news is that I could pay $750 a year and still be saving vast sums compared to the premiums for my former do-nothing policy. Double that to $1500 for myself and my wife and it still adds up to roughly a quarter of our former annual premium. And that does not include the 20 percent annual premium increase we were getting slammed with just for managing to live to be a year older. So bring it on.

The Senate will allow states to opt out of the public option if they don't like it. What's not to like? And what Federal carrots and sticks would be used to promote the choice the national government would prefer to see the states make? All that remains to be seen. Any state politician pushing to keep health insurance in the robber-baron era would have a tough campaign.

The Senate plan actually dances around the abortion issue more creatively and responsively than the House version.

Then we get to funding. How do we pay for this system? Here is the summary from the Salt Lake Tribune. My comments follow in italics.

House » Leaders in the House plan to cover the cost of reform with a tax on medical devices and a 5.4 percent surtax on wealthy Americans (individuals making more than $500,000 or families making more than $1 million a year). They would also raise about $400 billion through Medicare, by reducing projected spending and trimming government subsidies to privately offered Medicare Advantage plans.

Reducing subsidies for Medicare Advantage shifts costs elsewhere, so taxpayers receiving the benefit of those subsidies will see an increase, not a decrease, in expenses. Reducing Medicare spending also potentially stresses the health care system by forcing it to replace those revenues with economies of its own. Maybe it trims fat. Maybe it has to digest an organ or its own muscle tissue instead.

Senate » Senate Democrats take a different route, funding reform with a series of taxes and fees, among them are:

» A 40 percent tax on "Cadillac" insurance plans in which premiums for an individual top $8,500 in a year, and run more than $23,000 per year for a family.

Oh yeah, grand idea. Do the revenue projections take into account that such a tax seems designed to drive customers away from those plans, drying up the tax revenue to be derived there? I also wonder how sick you would have to believe yourself to be to make a policy that expensive look like a good investment.

» A 1.95 percent increase in the Medicare payroll tax for people making more than $250,000 a year.


» A 5 percent tax on elective cosmetic surgeries.

Here's where you want a 40 percent or greater tax. Not only would it turn vanity into a public asset, it might also serve to delay the extinction of the natural breast.

» Fees on insurance companies, medical device makers and drug manufacturers.

And then we pretend to raise funds while actually increasing expenses: Put a fee on an insurance company, medical device maker or a drug manufacturer this morning and it has been added to the price of said items with a little extra by this afternoon.

Like the House bill, the Senate also squeezes future Medicare payments and slices subsidies to Medicare Advantage, raising more than $400 billion."

See notes above regarding cuts in Medicare spending and reduced subsidies.

To fund health care and create incentives for healthier behavior, tax junk food, cigarettes, booze, gasoline and luxury cars, video games, giant televisions and extraordinarily comfortable living room furniture. Provide tax incentives to employers who provide facilities and corporate philosophies that support bike commuting. Provide similar incentives to employers that provide exercise time for employees. This includes workers who would typically get no such opportunities, like delivery drivers.

Based on the principle that freedom isn't free, anyone who decides to go their own way and retain an unhealthy lifestyle would renounce coverage, too. If they wanted to pay the huge premiums a private insurer would charge to cover a high-risk customer, that's their business. If they go uninsured, the fine they pay should reflect what their care will cost. That money would go into the health care funding channel. Most other funding should come from as far from medical care as possible so that it does not run the risk of making the problem of medical expenses worse.

My brilliant wife also proposes "medical testing clubs." Based on the model of fitness clubs, members could pay to join a facility that has all your popular testing equipment: MRI machines, X-ray, mammography, colonoscopy, lab work, you name it. As with fitness clubs, members could buy in at different levels to get access to more test or the option of more frequent tests. They can then take their results to the appropriate doctors for actual treatment if required. A medical testing club could run for profit at a reasonable margin without gouging the customer, because it is merely an information-gathering facility. Each test is a discrete financial event. It's not a potential financial sinkhole the way health insurance is. Since results are reviewed by physicians the customer consults after testing, liability for interpretation is spread over at least two entities' malpractice insurance.

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