Friday, July 17, 2009

Health Care Friday

I am happy with my current health insurance through WV PEIA. They cover minor expenses (minus deductibles) without problem. But I, and my family (so far), has never had more than minor medical expenses (largest was a colonoscopy). I have absolutely no idea if our health insurance will perform as I need it to perform if we have an expensive, protracted treatment or extended hospital stay or need for long term expensive prescriptions. Which means my attitude toward my insurance coverage is utterly irrelevant to the current discussion. What is relevant are the experiences of people who are insured and have tested their insurance against need. Like John Aravosis . . .
John Aravosis: "The reality is if you get real sick, no matter if you're insured or not, you're probably financially f**ked."
That headline was posted by Sardine over at Eschaton. And they're right. It's a point I've been trying to make for a while. Health care reform isn't just about poor people, and we should stop trying to sell it to the rest of America by using that argument. I think most Americans feel a sense of empathy with those in need, but when the economy, their job, and their family's livelihood is hanging by a thread, I think that most Americans become less generous and more selfish. And I propose that we play to their selfishness when pitching health care reform.

No matter how good you think your health insurance, answer me these questions off the top of your head:

1. What's the annual limit on prescription benefits under your plan? Do you have a limit? I didn't think I did until last year when Blue Cross cut me off and I had to pay for my $250 a month asthma medicine, and more, out of my own pocket.

2. What's the lifetime limit on our major medical plan? What do I mean? Lots of health care plans only cover your major medical up until a certain point, then if you cost them too much, they cut you off. What's your cut off, and would getting cancer push you beyond that cut off?

3. How much does an appendectomy cost? We know from Joe that is costs $19,000 in Washington, DC. How much does your insurance cover? Joe has good insurance, and his still required him to pay $1,500 of that. What would yours require? You don't know? Then how do you know your insurance is so good?

4. Would your insurance pay for an MRI? For radiation and chemotherapy treatments? For a liver transplants? What if your mom or dad has cataracts? Or a detached retina? What about diabetes?

I don't think most people have a clue what their insurance really covers. I know I didn't. I simply told Blue Cross 12 years ago to give me the most expensive PPO they had, because I assumed that a PPO, and the most expensive one, was the "good" coverage.

Silly me.

I didn't know what my good plan covered until I got asthma as a result of my allergies. Now I know that my asthma drugs cost a whopping $471 a month. That's $5,652 a year. After Blue Cross' paltry share, that leaves me with $4,152 a year in asthma drugs (not counting any other prescriptions I may have to take for other unrelated problems that may arise). My insurance costs me nearly $420 a month. That's another $5,040 a year. And the premium goes up around 25% a year. Imagine how much it's going to be in ten years when I'm 55. And the joke, Blue Cross will still only give me $1500 in prescription drug coverage ten years from now - that's the way their policy works. I got $1500 when I started 12 years ago with them, and I'll have $1500 in ten years.

I have no idea what I would do if I came down with something really serious (as though my asthma isn't - I was told that things won't be pretty in 20 years if we don't get it under control now). This is how a lot of Americans live, but I think most have no idea just how precarious things are. We all love to think that our health insurance will protect us, as if Blue Cross actually gave a damn. They don't. They're a company out to make money. And helping you live doesn't help them make money - in fact, if you think about it, if you get sick, your insurance company is better off financially if you die. That's one hell of a crazy incentive to base a nation's health on.

PS And before anyone tells me - aha, you want more in drugs than you paid for your health care! - health insurance like all insurance is a gamble. For the past 45 years of my life, Blue Cross and all the rest have done pretty damn well having me on their policies. It's about time we played a little catch up.
Ezra Klein: The Idea That Could Save Health-Care Reform

I don't want to overstate my case. I am not suggesting that Sen. Ron Wyden's Free Choice Act is the difference between a health-care reform bill passing the Senate and dying in committee. But I am arguing that it might be the difference between a bill that delivers on its promise of reforming the health-care system and a bill that merely expands health insurance coverage.

There are two major problems with the proposals being considered in Congress. The first is that they do not do enough to cut costs, because they do not do enough to change the fundamental nature of the employer-based health-care system. Earlier this morning, Congressional Budget Office Director Doug Elmendorf told the Senate Finance Committee that health-care reform will not save us money. If the problem is that our health-care system is too expensive, and reform does not change the structure of our health-care system, then it is unlikely to mitigate the expense. The flip side of trying to avoid changing what people have is that you don't change what's not working.

The second is that the bill does not offer obvious benefits to an insured worker. You can argue that it changes the system around them: There are subsidies if they lose their job and regulations to protect them from the excesses of private insurers. But though the health-care system might be different, it will not, for most people, feel different. And that has made it hard to explain to people why this is something they should pay for. You can tell the insured worker what he gets if his circumstances change. You cannot tell him what he gets if his circumstances do not change.

Enter Wyden. The Free Choice Act is not a health-care-reform bill. It is best understood as a reform of the health-care-reform bill. In particular, it reforms the nature of the Health Insurance Exchange. Under the bills being considered right now, the exchange will be limited to the uninsured, the self-employed and small businesses. Maybe it will be expanded over time. Maybe not. In addition, it is barricaded by what's called a "firewall." The firewall essentially bars individuals from entering the exchange so long as their employers offer them a basic level of health-care coverage.

The Free Choice Act starts by setting the rules for the exchange: Within five years the exchange is open to all employers. More importantly, it's open to all people. The firewall is extinguished. But as the late, great, Billy Mays would say, that's not all!

The key component of the Free Choice Act is called "cash-out." Under the Free Choice Act, if I decide that I don't like any of the health-care coverage options being offered by my employer and would prefer to choose from the many options being offered on the Health Insurance Exchange, my employer has to give me a voucher that covers 65 to 70 percent of the cost of the lowest level of exchange plan. (That is the average portion that an employer pays of his employee's health insurance premiums.) I can take that voucher and, along with whatever money I want to throw in, choose a plan on the exchange.

This does a couple of things. First, it changes the health-care system for the currently insured. It doesn't take what they have. But it gives them a choice. If the political yin of health-care reform is that you can keep what you have if you like it, the policy yang should be that you can choose something different if you don't. The Free Choice Act gives the insured something concrete: autonomy. If they don't like what they have, they are assured options. In 1994, Bill Clinton's plan was defeated because people believed it would restrict choice. Given the apparent power of the objection, it makes some sense to try to sell health-care reform atop the concrete promise that it will increase choice.

Second, it gives people an incentive to choose cost-effective plans. If your employer is paying 70 percent of your $10,000 health insurance premium, and you find a $9,000 plan on the Exchange -- maybe it's an HMO rather than a PPO -- you pocket $1,000. Currently, since I pay only 30 percent of my health-care premiums, making the same choice within the HMO and PPO offerings that The Washington Post gives me would only net me $333 dollars. Wyden's plan would put 300 percent as much money in my pocket. That changes behavior. And even the CBO thinks so. This is one of the main reasons the Congressional Budget Office scored Wyden's Healthy Americans Act -- which had a similar provision -- as saving, rather than costing, money.

Third, it begins to build a viable alternative to the employer-based health-care system. Experts think that the exchange will need at least 20 million participants to really start seeing advantages of scale. This will ensure it has much more than that. And if the exchange works? If direct competition between insurers lowers costs and increases quality, if standardized billing and administrative efficiencies save money, if the massive pool of customers helps insurers bargain for discounts with providers, then the exchange will become a progressively better deal, and more people will choose -- there's that word again -- to enter it. And if more people choose to enter it, then that cycle happens again, more people enter, and so forth. Soon, you've built the system we want rather than the one we have.

That is not to say there are no problems with this idea. The primary one is adverse selection: What's to stop all of a company's young employees from buying their way out and leaving their employer with bad health risks and high premiums? According to Wyden's office, risk adjustment. And they say they'll risk adjust back to the employer level, potentially. It's hard for me to imagine how that would work. But it's also hard for me to imagine a flood of young people who don't care much about having good health insurance going through the process of contacting HR, attaining the voucher, going to the exchange, comparing plans, and so forth.

And the potential upside of this idea is huge: It gives the currently insured a bevy of new choices, creates real incentives for cost control, and begins the hard, and necessary, work of building a better health-care system. Wyden's Free Choice Act will not decide whether a bill called "health-care reform" passes the United States Congress. But it might decide whether that bill actually is health-care reform.

For more: Read Jon Cohn's write-up of the Free Choice Act, or my interview with Ron Wyden.

Think Progress: Tracking the influence of Frank Luntz’s obstructionist health care memo.

In early May, conservative word guru Frank Luntz authored a messaging memo defining the Republican rhetoric on health care reform. In order to obstruct reform, Luntz offered a set of poll-tested words that he said “should be used by everyone.” Some of those words were “rationing,” “doctor-patient,” “takeover” and “bureaucrats.” Using the Capitol Words search engine, the Sunlight Foundation’s Paul Blumenthal has found that Republicans are following Luntz’s advice:

Over the past month, as the health care debate has really gotten off the ground, the use of these words in the Congressional Record has skyrocketed. See the numbers below:

“Rationing” goes from 18 uses in May to 90 uses in June. This marks the highest level of use for the word “rationing” in the Capitol Words database.

“Doctor-patient” goes from 6 uses in May to 20 in June. This marks the highest level of use for the word “doctor-patient” in the Capitol Words database.

“Takeover” goes from 13 uses in May to 106 in June. This marks the highest level of use for the word “takeover” in the Capitol Words database.

“Bureaucrats” goes from 53 uses in May to 78 uses in June. This marks the highest level of use for the word “bureaucrats” in the Capitol Words database.

Watch a compilation put of GOP lawmakers mimicking Luntz’ “doctor-patient” rhetoric:

Think Progress: Bachmann Misreads House Health Bill To Claim ‘Whatever Health Care You Have Now’ Will Be Gone In 5 Years
On Tuesday, three separate House committees — Ways and Means Committee, Energy and Commerce Committee, Education and Labor Committee — released a single health care reform bill, the American Affordable Healthy Choices Act. An analysis by the non-partisan Congressional Budget Office found that the legislation would cost $1 trillion over 10 years and cover 94 percent of Americans (97% if you don’t count undocumented immigrants).

On Dennis Miller’s radio show today, Rep. Michele Bachmann (R-MN) attacked the bill, claiming that it plainly stated that Americans would be forced out of their current health care plans “within five years”:

BACHMANN: Well, what does that mean? That means that politicians are going to substitute their choice for your doctor’s choice for you. That’s exactly what this bill does. Here’s the other thing about that bill. It’s a monstrosity. I have the bill printed out on my desk, it’s over 1,000 pages long. On the 16th page, it says whatever health care you have now, it’s going to be gone within five years. So your current health care plan, you’re not going to have in five years. What you’re going to have is a government plan and a federal bureau is going to decide what you get or if you get anything at all.

Listen here:

Bachmann either misread the bill or is willfully misrepresenting it. In fact, page 16 is the beginning of the section on “Protecting The Choice To Keep Current Coverage.” The section that refers to five years is on page 17, but it’s not about pushing Americans off their current health plans. As the summary on Rep. Pete Stark’s (D-CA) website notes, it simply “provides for a five year grace period for current group health plans to meet specified standards.”

In fact, as the Wonk Room’s Igor Volsky points out, the CBO’s coverage tables “undermine the conservative claim that a public option would eliminate private insurance and erode employer-sponsored coverage”:

The House bill actually increases the number of people who receive coverage through their employer by 2 million (in 2019) and shifts most of the uninsured into private coverage. By 2019, 30 million individuals would also purchase coverage from the Exchange, but only 9-10 million Americans (or approximately 1/3) would enroll in the public option, the rest would enroll in private coverage.

So, in Bachmann’s world, increased private insurance is a government takeover of health care.

Think Progress: Blue Dogs threatening to quash health bill over surtax voted for Bush tax cuts.

Rep. Mike Ross (D-AR) — along with six other members of the Blue Dog coalition on the House Energy and Commerce Committee — are threatening to vote down the House’s health care legislation in committee. Ross reportedly objects to the surtax included in the bill, saying “I don’t like the idea of raising taxes in the worst economic crisis since World War II.” However, the Blue Dogs concerned about the surtax voted for some of the budget busting Bush tax cuts in 2001 and 2003 that constituted a huge gift to the very wealthiest Americans. Of the seven Blue Dogs on from Energy and Commerce who are complaining, four were around to vote on Bush’s tax cuts. Here’s how they voted:

Member 2001 2003
Rep. Mike Ross (AR) Yes No
Rep. Bart Gordon (TN) Yes No
Rep. Jim Matheson (UT) Yes Yes
Rep. Baron Hill (IN) No No

Over the ten year window from 2001-2010, the Bush tax cuts gave the richest one percent of Americans about $715 billion in tax breaks. This comes out to about $518,000 per household over ten years or about $51,800 per year. The proposed surtax, meanwhile, would raise $544 billion from households making more than $350,000 per year. The Wonk Room has more.

Ezra Klein: An Interview With Bruce Bartlett

Bruce Bartlett's conservative credentials are impeccable: He's worked for Ronald Reagan and George H.W. Bush, Jude Wanniski and Gary Bauer, Ron Paul and Jack Kemp. But he's also an economic realist: Government spending is growing, he says, and taxes are going to have to grow with it. The question for his party is whether it wants to get to work crafting those tax increases in a responsible way, or whether it wants to let Democrats levy inefficient hits on the rich and strange changes to the tax code. The health-care debate is a perfect example: A VAT could pay for this efficiently. But without Republican support, a surtax on the rich is likely to pay for this inefficiently. We spoke yesterday.

Start at the beginning. Why do we even need taxes? Why pay for anything?

We have a stream of revenue we'll continue to get in the future from the policies in place. But spending is projected to rise much more rapidly. So the question becomes what is the politically and economically tolerable level of the deficit? The Republican position seems to be, as Dick Cheney once said, that "deficits don't matter."

I don't know when we reach that threshold. But I think we were getting close even before the current problems. And federal spending is supposed to rise by about 50 percent over the next 25 years or so, and that was before any of the recent events. I think long before we'd reach the year 2030 we'd have a deficit large enough to create massive economic and political problems. Since the deficit has gotten so much larger so much faster, we're starting to see those problems on the horizon: Weakness of the dollar, increased efforts of foreign countries to diversify, unwillingness of other countries to hold the dollar. Eventually, we'll have a lot more trouble selling our bonds because our foreigners won't want them any longer.

What do you think a compromise between sensible members of both parties would look like?

I think the administration made a mistake approaching the funding of health-care reform how it did and I think Republicans made a mistake refusing to seriously debate the issue or its funding.

The value-added tax would be a very appropriate tax to use for this purpose. One reason is I am disturbed that we have a large percentage of the population that pay no income taxes. And I know many of those people pay payroll taxes. But income taxes fund the general government. According to a study by the Tax Policy Center, 47 percent pay no income tax, or have negative liability. And I think it's bad for democracy when people get into the position when a majority can vote benefits for themselves but not pay for it. And that should disturb liberals as much as conservatives.

The VAT would necessarily be a broad-based tax. It would be a way of getting people to pay for the benefits they themselves receive. People like Len Burman and Rahm Emmanuel's brother [Ezekiel Emmanuel, a health care adviser to Peter Orszag] have supported this for some time. Len argues that if people knew the VAT was dedicated to health-care reform, and the rate rose and fell automatically with the spending of the system, they would have an incentive to hold down taxes. They would have some positive reinforcement we do not now have with Medicare. I hope that's right. You know, every other major developed country has a VAT: The parties of the left in Europe made a deal a long time ago: If conservatives will let us have a welfare state, we'll fund it conservatively. And I think that's still a good deal.

So why aren't we seeing anything like that?

I think there's a couple of reasons for that. Both sides are pathologically afraid of advocating any kind of tax that would be paid by the average person. Republicans are opposed in particular to the VAT precisely because it's such a good tax. They fear it would become a money machine and it would help the government grow. I agreed with that for a long time. But the problem now is that we need a money machine! We have all this spending in the pipeline. It's not a question of whether we'll create new programs. It's whether we'll fund the ones that are already there.

What about a financial transactions tax?

I think that's pretty well dead. I don't support that myself. I think it's too easy for trading to shift to London or Tokyo or some other such place. It is interesting though that it hasn't come up. It could have something to do with the fact that guys like Chuck Schumer and Chris Dodd are in leadership positions and they're going to protect Wall Street.

Are there any other options you think particularly interesting?

One reason I've been more sympathetic to a carbon tax than other conservatives is that if you did it right it would be pretty close to a VAT. One of the objections a lot of us have to cap-and-trade is that it's too easily manipulated. It sounds good in theory, but once in the political meat-grinder, its failures become overwhelming.

Also, the corporate tax is no longer a viable source of revenue because of international capital flows and international trade. It's hard to pinpoint the source of a company's revenue. And this means we really need to shift more toward consumption-based taxation. You know where people consume. I think that's important.

And thinking about this from another perspective, suppose we had a VAT right now and we wanted to stimulated consumption. Reducing the VAT rate temporarily would be a wonderful way to stimulate consumption. Suppose you had a 10 percent VAT and we said we weren't going to collect it for the next 10 months. People would buy like crazy. They'd buy toilet paper, they'd buy anything they could get their hands on that they knew they'd need in the future. We're depriving ourselves of a great stimulant tool by ignoring this.

This gets back to the areas where there's no debate and there should be. I'd like to see some overall tax reform that lets us raise revenue at a lower deadweight cost to GDP. If you just did a tax reform that reduced that deadweight you could reduce the burden even as you kept the revenue. I'd love to see ways to do that discussed.

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