Remaking health care with ideas from the left and right
Congressional Democrats have seen the future of American health care. It looks a lot like Massachusetts, and a little like John McCain, George W. Bush and Barack Obama.
House Democratic leaders spelled out their prescriptions for reform this week. Their colleagues in the Senate are circulating draft legislation with similar ideas. The plans would:
• Provide universal coverage. Every American would have health insurance.
• Share responsibility for getting and paying for coverage between individuals and their employers. Everyone would be required to obtain insurance, either through their job or by buying it. Companies would be obligated to provide insurance for workers or pay part of the cost of coverage they get elsewhere. All are key elements of the 2006 Massachusetts health reforms, approved by a Democratic-controlled Legislature and signed by Republican Gov. Mitt Romney.
• Create a so-called public insurance option, which would compete directly with private insurance companies. It could function as a kind of insurance co-op, or it might operate more like Medicare. This public option was a key component of health reforms Mr. Obama proposed during the presidential campaign.
The challenge for Democrats is how to pay for those reforms. Some advocate taking a cue from their political opponents by taxing the value of health insurance provided by employers.
That idea has been championed by Republican leaders for years. Arizona Sen. John McCain, the GOP presidential candidate in 2008, and former President George W. Bush both have proposed it. But it remains controversial even among many Republicans.
Workers currently pay income, Social Security and Medicare taxes on their wages but not on the cost of benefits like health insurance. Insurance costs are considerable; average premiums for family coverage provided by an employer in 2008 were $12,680.
Benefits have been tax exempt since World War II, when wage controls were put in place to prevent inflation.
Last year, the exemption cost an estimated $225 billion, an amount that grows every year as premiums rise. Over the next decade, it will cost a projected $3.2 trillion.
Removing the exemption means workers would pay higher taxes. The sharpest increase would be felt by those with the highest incomes.
The nonpartisan Kaiser Family Foundation calculates that a family earning about $50,000 a year would pay about $1,800 more in income taxes, a 15 percent increase, if health benefits were fully taxed. A family earning $200,000 would pay about $3,360 more, a 28 percent increase.
In theory, covering the uninsured would help slow rising health costs and keep premiums from rising as quickly as they otherwise would. But that’s only a theory.
Some proposals for taxing health benefits — Mr. Bush’s, for example — would have capped the health care exemption instead of removing it entirely. That would lessen the impact on taxpayers and reduce the amount of revenue it would raise.
It’s still not certain that Democrats will propose ending the tax exemption. That change would be a big risk.
Most Americans now get health insurance through their jobs. Taxing health benefits could discourage companies from providing them. That would raise the cost of health reform and disrupt coverage for many families.
A better way, in the long run, would be to remove financial incentives for doctors to provide more care regardless of its value and pay them instead for better outcomes.
Some experts estimate health spending could be cut by 30 percent simply by eliminating care that provides no real benefits to patients. But most of those savings would be realized years in the future; many doctors, hospitals and health providers can be expected to oppose such reforms.
For now, Congress is wise to find a middle ground on health reform. That means adopting ideas that have been shown to work,
OMG, you all are killing me. Washington is run by Democrats who want healthcare reform and all you did was talk about Republicans. Another joke of an editorial. I thought this was going to be serious. Mitt Romney, George Bush, John McCain. Two aren’t even in DC. Where are the Democrat names such as Rahm Emmanual who wants a European style VAT tax to pay for healthcare - oh wait - the left are getting their hats handed to them in Europe. Where is one Democrat name besides Barack Obama? Remember, PD - you didn’t endorse Romney, you endorsed that loser McCain - so don’t even bring him up.
I also heard that only the amount of benefits that are greater than what Congress people receive will be taxed. You know why - they don’t want to pay more taxes.
John, go back to the drawing board. Act like an intelligent adult and come up with a real editorial with some real facts in it. This was done by a middle schooler who spent five minutes on Google.
“Everyone would be required to obtain insurance, either through their job or by buying it”
“Companies would be obligated to provide insurance for workers or pay part of the cost of coverage they get elsewhere.”
I can’t decide which of these statements is more laughable.
Do you really expect us to believe that unemployed or low-wage workers are are going to be “required” to pay several hundred dollars per month to insure themselves and their children? Or that the employers of minimum wage workers are going to accept a potential $12,000 annual increase in the cost of employing a person that currently makes $16,000 per year?
What a load! The same people who are not buying health insurance now will be the same people who will not be buying it then, but there will be more of them as more and more employers look elsewhere for affordable unskilled labor. Meanwhile, the rest of us will get higher taxes, longer waits and lower quality, rationed care provided by a diminishing number of competent doctors.
A better way, in the long run, would be to remove financial incentives for doctors to provide more care regardless of its value and pay them instead for better outcomes.
Some experts estimate health spending could be cut by 30 percent simply by eliminating care that provides no real benefits to patients. But most of those savings would be realized years in the future; many doctors, hospitals and health providers can be expected to oppose such reforms.
Is this a fancy way of describing rationed care? I believe that universal care is rationed care.
OMG!
I make $9.00 an hour. Big come down from the $30K I was making until 2001. If my employer didn’t make insurance affordable for me & child, I could NOT afford it.
Can’t make me pay it if it means no house or no insurance. I’ll try and keep my home. Thank you.
Ever notice the correlation between government regulations, inefficiencies, waste and – endless – need for further government regulations? Banks, insurance, auto-standards, medical coverage / drugs / services / facilities, are near the top of that list. Medical is likely at the very top, and probably doomed to a worse fate than others because of the swiftness of death it’s capable of bringing in the name of compassion.
Lets just have all people with jobs send all their money to the federal government. Uncle Sam can take all he needs to cover all the wonderful vote-getting programs he can come up with and then the remainder can be sent back to individuals.
$1800 bucks for that $50K family probably more than pays the heating and cooling bill for the year. They can do without that so others can have…ummmm….”Healthcare”.
……..I don’t like the idea of a law requiring Americans to purchase health care insurance. I don’t like the fact that my families health insurance premiums have increased by over 20% anually for several years now. I don’t like Doctors who refuse to write a prescription for generic versions of medication. I don’t like the fact that the bloated and out-of-control health care industry has an army of lobbyists influencing legislators. I don’t understand why drug companies have to advertise their prescription medicines on TV. I don’t understand why I cannot buy my prescription medicine through the mail from Mexico for pennies on the dollar.
The health care system as it exsists is a black-hole for money run by greedy pigs. The government is broke and legislators allow their votes to be influenced by heath care lobbyists.
Frankly, I really hope the entire U.S health-care system implodes and crashes under its own weight, and I hope it happens soon. Perhaps from the ashes a non-corrupt, streamlined, cost-effective system that makes sense will rise.
The idea of taxing employer sponsored benefits would hit older workers harder as their premiums are higher. this is also the group that is discriminated against the most in hiring.
As someone who used to buy health coverage for about 900 people, I can tell you that any program that does not involve some personal responsibility will go bankrupt quickly. When it is “free” people abuse it, especially when a trip to the doctor also involves taking time off from work. I saw people running to a doctor for paper cuts. If people perceive this as “free” a certain percentage will innundate the system. There should be a co-pay that makes people think twice before running to the doctor for every little thing that has always been treated at home.
Reform should include the ability to buy coverage for those with conditions that currently deny them coverage. No one should go bankrupt because they get sick.
This may add a little more balanced perspective regarding the players in Congress:
http://www.politico.com/news/stories/0609/23616.html
This is all a ploy to slowly edge America to socialized medicine. Here is how it goes down: The gov taxes union members on the healthcare benefits. They balk, so unions drop the benefit and put them all on the gov-sponsored plan so that the American people end up paying for their healthcare. How easy is that? Once that shoe drops, next go the small businesses who can’t keep up with the Jones and drop their healthcare benefit. Finally the large non-unions companies will be forced to cave. They will be unable to pay the rising premiums needed to pay for gov care because the gov pays unrealistically low fees for care which will burden private insurers.
Final result: The ultimate goal of the left: we are all on gov single-payer healthcare. Hospitals will cease to be non-profits and will be forced to pay taxes to pay for socialized medicine (agree with) and then a VAT tax will be instituted to pay for the balance. Welcome to the Democrats Utopia as they now have complete control over your healthcare choices. Better learn to stop smoking and maintain a healthy weight guys!
Bob S.,
Health care is currently rationed in the U.S. on the basis of price. Rationing is any system for allocating scarce goods.
Safer,
I’ve previously written in detail about how the Massachusetts reforms work. The items you mention — the employer and individual mandates — are modeled after those reforms Here’s a brief fact sheet that explains them: http://www.kff.org/uninsured/upload/7777.pdf
Low income and uninsured people receive subsidized coverage in Massachusetts. In the Obama plan (and likely in the Democratic plans), there would be some expansion of Medicaid to cover the unemployed and other groups that haven’t previously been eligible (childless adults, for example).
Companies that employ minimum wage workers would likely provide them with individual coverage instead of family coverage. The fine for not covering workers is fairly low in Massachusetts (a few hundred dollars per worker); it should probably be set higher than that at the national level.