Across the Curve

By Name on Feb 25, 2009 | Reply

And it’s high time, too. Those of us to whom the country has been so kind should not begrudge a sliver of our six- or seven-figure incomes for the rest. It is very cheap insurance for the stability that provides for our well-being.

By anon on Feb 25, 2009 | Reply

It would seem that people (let’s say “families” since that’s always the best distraction from reason) in the US’ 25th income percentile are somewhat less likely than those in the 75th+ to have access to healthcare under the current system, much less healthcare of quality or coverage nearing that of the latter group.

As a member of said latter group, I am all for increasing my taxes (though doing so via limiting deductions seems likely to distort the things we try to encourage/subsidize via deductions).

Somewhat tangentially, despite working as labor rather than management at a small company, the ever increasing toll of healthcare premiums puts a crimp on hiring. I would be happy to have less take home and/or see our firm’s net fall in the short/medium term if it meant we had more to allocate towards adding talent.

Relatedly, it would be interesting to see the effects of universal healthcare on hiring decisions (from the supply of labor side), as the gain (or loss) of excellent health insurance coverage can otherwise be a significant factor in potential (existing) employees’ decision to come aboard (stay). Perhaps the labor market would be more fluid if such healthcare related decisions leave the equation.

By Karl on Feb 25, 2009 | Reply

It’s also perfectly inline with his campaign platform. Remember the whole redistribution of wealth hulabaloo? He was serious. At least he’s sticking to his word.

By RN on Feb 26, 2009 | Reply

Damn right, Name.

By Eric on Feb 26, 2009 | Reply

Well, whoop de doo. At least the subject of paying for all of this is actually coming up. And, raising taxes beats capping salaries.

By BL on Feb 26, 2009 | Reply

The high burden of health care coverage on employers also makes offshoring more attractive. People without coverage show up at the ER, and drive up health care costs for the employed. It’s a vicious cycle.

By Sean on Feb 26, 2009 | Reply

Why would you want to limit tax deductions on charitable giving? Wouldn’t that limit private redistribution of wealth? I guess Obama only wants the government in charge of that.

By self on Feb 26, 2009 | Reply

In the real world the tax system is regressive.

By JD on Feb 26, 2009 | Reply

My two cents:

First, insure all children and pregnant mothers under a federal program. There should be no child in this country that is uninsured because a parent cannot afford or won’t pay for coverage. The idea that we cannot afford or will not cover our children should shock us to the core. Aside from the clear benefit for businesses and wealth effect for struggling families, it is simply the moral thing to do. And, it would seem an easy program to get through congress (however difficult to implement and costly).

Second, set up a program where the government pays for yearly doctor visits and catastrophic medical coverage. The theory, address the problem early and protect the insurer from outliers.

By Joe on Feb 26, 2009 | Reply

Some of the above postings are so over the top I’m assuming they are tongue in cheek. However, on the chance they are serious, let me take a moment to pull back from opinion and sprinkle in some facts.

Our local paper went to one of the local hospitals and determined that private insurers were reimbursing the hospital 80% of what was billed. Medicare was reimbursing only 35% and Medi-Cal (California’s insurance for the poor) was reimbursing only 16%. How does the hospital make up for low govt. reimbursements?

Our local tv station ran a report showing that 70% of births at the public hospital (the county’s general hospital) were born to illegal immigrant mothers, which the hospital is required to serve. (Surprised at 70%? Remember, this is California.) How does the hospital make up those fees?

The hospitals raise rates to make up for the underpayment from the govt. Plus, the article JJ linked (above) showed Pres. Obama enacting billions more in cuts to providers.

Factually, unaffordable health insurance has been caused by our government, not by rich people.

By Anon on Feb 26, 2009 | Reply

I’m moving to Singapore. Have fun with Atlas shrugging America!

By Jenn on Feb 26, 2009 | Reply

I am shocked that commenters on a financial blog would exhibit such a complete lack of business sense

First, it is complete stupidity to suggest that we have an insurance problem in the US. The fact is that anyone who wants insurance can get it — but many can not afford it. It is a cost problem, not an access problem.

Anyone who has ever read a government budget, visited the DMV or Passport office, or noticed that Uncle Sam regularly pays $1 BILLION dollars for a single airplane cannot credibly suggest the government is capable of controlling costs.

According to the GAO, fraud in Medicare is 3.5 times more prevalent than with private sector insurance companies. National healthcare is bankrupting the British government and straining Canada’s government — in spite of the fact that both those countries get subsidies from oil exports (UK maybe not going forward).

As bad as the system is now, it defies all common sense and all evidence to say the government can control costs on any spending.

Second, its rather fraudulent to try to spin this as a “moral” issue. If I go out and smoke 10 packs of cigarettes a day and eat myself into a gluttonous blob — how is that someone else’s responsibilty? I didn’t just go have octuplets to add to add to the six kids I already couldn’t afford to raise — how is this my fault?

Anyone with business sense knows money doesn’t grow on trees. You cannot give extra money to person A unless you take it from person B. It is a refreshing change that Obama is actually bothering to mention the other side of the balance sheet — who has to pay — but like every President before him, Obama is mathematically illiterate

If GDP is growing 4-5% (over long periods), medical spending cannot grow 10-12% annually. Dividing the country into “rich” and “poor” is great politics, but fails to address that the sum of the parts cannot exceed the total. Medical spending is growing twice as fast as the economy now — and will only accelerate as the baby boomers reach peak medical spending years.

Rather than babbling pie in the sky idealism and nonsense, I really expect a finance oriented blog to at least mention the practicality of any proposal.

Expanding coverage when we cannot afford existing coverage is stupid — no matter what populist spin anyone tries to put on it.

By Andrew on Feb 26, 2009 | Reply

wow, yes lets let the government run our healthcare system! I am flabbergasted at the comments on this subject. Healthcare is a privledge not a right. Please try to be more objective on all issues, don’t let emotions play into your decisions. You don’t think they will still ship jobs overseas if they have universal healthcare? don’t be naive. You think they will magically hire more people if the burden of “healthcare” coverage is taken off their books? Let me ask you, do the european companies who have no healthcare costs at all hire more people? answer is no, the unemployment levels in Europe are 10% plus and among 25 and younger 15% plus and immigrant pop 20% plus…

By Bman on Feb 26, 2009 | Reply

sure – let’s go for it – and start drinking Labatt’s, eating back-bacon, adopt Curling as a sport,…..

By JD on Feb 26, 2009 | Reply

Joe:

Children born in the US are citizens, regardless of the nationality of their parents.

Jenn:

My primary consideration is the moral issue of covering US children. I believe the we, as a society, have the obligation to ensure that our children have access to health coverage. Certainly, there is room in a $3 TRILLION budget for the ‘pie in the sky idealism and nonsense’ of protecting our children.

By Jenn on Feb 26, 2009 | Reply

JD — What do you mean *OUR* children?

What a load of nonsense. My children do not belong to you, and your children do not belong to me. There are no “community” children.

If I carry your insane logic forward, I suppose you want to eliminate all spousal child support? you can’t tell someone they must support “their” child if you are going to say its “our” collective child

What a completely offensive and un-American viewpoint you have. Try taking responsibility for your actions and stop pretending we are all comrades.

My children do not belong to the state, and f&ck you for suggesting otherwise

By jonathan on Feb 26, 2009 | Reply

These comments reflect several different points. First, regarding tax rates, when I was young, the highest marginal rates were 90%, then 70% and they’d been that way since WWII. My family prospered and so did the country. Low marginal rates did not generate more taxes through growth; they generated larger deficits, but that politically may actually have been a purpose because that meant government size could be attacked.

Second, the issues relating to health are beyond complex, but I have to say the concept that lack of access is solely a cost issue is a gross over-simplification. For many people, insurance is not available at a cost below a gazillion dollars. That makes cost and availability a political issue.

Third, reimbursement rates a piffling. I grew up in a medical family and can remember when doctors spoke about cases and interesting medical issues. When Medicare/Medicaid became major players, the conversations became about revenue because a doctor is incentivized by the system to think about how to maximize the revenue available from reimbursements. The process accelerated as CAT, MRI, etc. became available because those reimbursements drove doctor incomes much higher. (And add to that the insane medical malpractice costs and the incentives those create for belt & suspenders medicine. And add to that a host of other factors, such as the amazing, stupendous cost of hospital construction and operation, the vast amount of paperwork required to get paid, changing demography, etc.)

By Jenn on Feb 26, 2009 | Reply

jonathan – thank you for presenting a different viewpoint from mine without resorting to offensive communist bullsh!t. People like JD are not voicing an informed opinion — they are immature children pretending to be adults. America has no future if those niave and stupid views are allowed to flourish. They are an offense to every value America used to stand for.

As to your comments… I think the marginal tax rates you site are a bit deceptive. Marginal rates were higher, but deductions were also higher. I think it would be far more useful to compare effective tax rates over time — but I don’t know of a reliable data source.

Regardless of effective tax rates, there is no getting around the fact that official government spending has grown more than twice as fast as GDP over the last 50 or so years. This is simply not sustainable.

Long before Enron made it popular, government has used off balance sheet financing to conceal even more growth in government spending. Every state has a turnpike authority — highway spending used to be included in the state budget when marginal rates were 70%. Now they are financed “off balance sheet”

FNMA, FHLMC, TVA and others are nothing more than off balance sheet government spending.

Inexplicably, entitlement programs are considered off balance sheet. Even worse, politicians have awarded unfunded benefit increases based on cashflow surpluses — which only “exist” because the same politicians ignore the increased liabilities of people living longer.

Our country cannot afford all the so-called entitlements that we have already promised. Even by government accounting (which is optimistic to be nice) — entitlements are already $45 trillion in the red, or roughly four times GDP.

“Our” children cannot afford to pay for “our” stupidity. The United States has no future unless we get our spending under control

When you say insurance is not available at a cost below a gazillion dollars — you are saying it is a cost issue. People with existing health conditions are not a “risk” (which is what insurance is supposed to protect against) — they are a known and certain high cost. Transferring that cost to the taxpayers does not make it any cheaper. Calling this an “insurance” issue betrays a lack of understanding what insurance is: risk control.

I have to agree with you 100% about the medical reimbursements issue — but I must point out that the examples you site all boil down to government bureaucrats deciding how much to pay. This is just rationing by another name, and it will only be worse under nationalized healthcare system. Ask any doctor who works (or used to work) at a community hospital… government cannot keep up with the costs, so they resort to rationing before shutting the hospital down altogether. All that paperwork you complain about sounds a lot like the DMV or passport office — or any other government office. It is irrational to figure this would be any better if healthcare becomes nationalized

The baby boomers are soon to retire — meaning we had better get a handle on healthcare costs in a hurry. We simply don’t have time to go off on yet another socialism experiment. Bush was an idiot — but so is Obama

By Bman on Feb 26, 2009 | Reply

The “American” Model ended Nov. 4, 2008.

By Eric on Feb 26, 2009 | Reply

Anon #2, have fun in Singapore. It’s harder to do there than you might think.

And, don’t let the door hit you on the way out.

By JD on Feb 26, 2009 | Reply

Jenn:

Please do not resort to personal attacks.

I am merely suggesting that the children in the USA, with a $3 trillion budget, can be protected from health risks using government funded insurance. There is already widespread agreement that public education is a worthwhile endeavor. I think universal health coverage for American children is also worth the investment. Please disagree with me respectfully.

As to the entitlements and the oft cited $45 T unfunded liability, please see Bruce Webb’s Social Security Series on the Angry Bear blog. There is plenty of information that you might find useful.

By JD on Feb 26, 2009 | Reply

Jenn:

your vitriolic language is offensive and does nothing to support your arguments.

I made no qualitative assessment as to the state of public education. I simply asserted that many in this country believe in a public education system paid for by federal tax revenues. Also, the existence of Medicare suggests that many Americans also believe in some form of socialized medicine. We can discuss success and failures of the programs at length, but I continue to assert that US citizens under a certain age should be provided universal health care coverage.

The internet is a wonderful tool, but I am concerned that someone would react so violently to this premise. I will not be checking this comment section any further, so please address future comments to a broader audience.

By Andrew on Feb 26, 2009 | Reply

This is getting to be quite the entertainment!!! keep it up! see what obama brings out in the people? haha

By Robert in Perth, Australia on Feb 26, 2009 | Reply

A big thank you to John Jensen (and those who have taken the time to comment).

It is only through informed debate on the real issues, even if it is rancourous (Australian English), that possible solutions can be arrived at.

The United States CANNOT sustain the plague of blood-sucking parasites draining its lifeblood.

By Matt on Feb 27, 2009 | Reply

I really enjoyed this, extra points to “Jenn” for including ” every value America used to stand for” and “un-american”. I guess un-american simply means anything you want it to, depending on the situation. And those values, those Orwellian illusions,…everyone knows them but no one can name them, they continue to exist outside of reality.