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The Government and health care - 2 stories
Posted by: McQ on Tuesday, July 24, 2007

First we travel to Wisconsin where the progressives have finally had their way on state-run single payer health insurance:
Democrats who run the Wisconsin Senate have dropped the Washington pretense of incremental health-care reform and moved directly to passing a plan to insure every resident under the age of 65 in the state. And, wow, is "free" health care expensive. The plan would cost an estimated $15.2 billion, or $3 billion more than the state currently collects in all income, sales and corporate income taxes. It represents an average of $510 a month in higher taxes for every Wisconsin worker.

Employees and businesses would pay for the plan by sharing the cost of a new 14.5% employment tax on wages. Wisconsin businesses would have to compete with out-of-state businesses and foreign rivals while shouldering a 29.8% combined federal-state payroll tax, nearly double the 15.3% payroll tax paid by non-Wisconsin firms for Social Security and Medicare combined.

This employment tax is on top of the $1 billion grab bag of other levies that Democratic Governor Jim Doyle proposed and the tax-happy Senate has also approved, including a $1.25 a pack increase in the cigarette tax, a 10% hike in the corporate tax, and new fees on cars, trucks, hospitals, real estate transactions, oil companies and dry cleaners. In all, the tax burden in the Badger State could rise to 20% of family income, which is slightly more than the average federal tax burden. "At least federal taxes pay for an Army and Navy," quips R.J. Pirlot of the Wisconsin Manufacturers and Commerce business lobby.

As if that's not enough, the health plan includes a tax escalator clause allowing an additional 1.5 percentage point payroll tax to finance higher outlays in the future. This could bring the payroll tax to 16%. One reason to expect costs to soar is that the state may become a mecca for the unemployed, uninsured and sick from all over North America. The legislation doesn't require that you have a job in Wisconsin to qualify, merely that you live in the state for at least 12 months. Cheesehead nation could expect to attract health-care free-riders while losing productive workers who leave for less-taxing climes.
As we point out so many times, the only entity which ends up paying taxes, corporate or otherwise, are individuals. And they do so by a variety of means, to include higher prices on goods, lower wages and various "fees". Residents of Wisconsin will also see themselves become, as the article points out, "a mecca for the unemployed, uninsured and sick from all over North America." Those most likely to come are those with chronic illnesses which require expensive treatment, the expenses of which, up until Wisconsin made it 'free', they paid a portion. So look for that $510 a month cost per worker to climb even higher. And note that designation (worker) carefully because, as the article points out, you don't have to be employed to receive care, but you darn sure have to be employed to pay the freight.

Of course that worker now has no alternative to which to turn (and even if he did, he'd still have to pay for the state's scheme anyway) and the state has no competition to force it to keep its expenses down. As we'll see next, price fixing will only exacerbate the situation.

Story two comes from NY city and again points out the problems of government intervention in the health care realm:
Mammography centers in New York City are closing at an "alarming" rate, causing a 171 percent increase in wait times for the cancer-detecting procedure, according to a study by Rep. Anthony Weiner.

Since 1999, 67 mammography sites, more than a quarter of the city's supply, have closed, the Brooklyn Democrat found.
The problem? Price fixing at a lower level than cost:
The problem is that Medicare pays only $83 for a procedure that costs $125 to provide, said Weiner, who will introduce legislation to increase payments.
And insisting that providers take payment that is less than cost removes any incentive to provide the service. And thus, more than 25% of those providing such services no longer do. That, as one might expect, has required rationing by wait times. The demand remains the same but the supply of the services is less. So you see a 171% increase in wait times:
Most women wait at least five weeks for a routine mammography appointment, the survey found, with waits in Brooklyn and The Bronx averaging two months.
Steven Warshawsky of the American Thinker makes a point that most single payer advocates seem to avoid:
The actual cost of a good or service cannot be determined by legislative fiat. Who believes, for example, that Congress can mandate that a Corvette sell for $5,000, without the manufacturer closing shop? Or that a state legislature can mandate the maximum price per square foot for new home sales, without the housing market collapsing? Well, the principle is no different when it comes to health care.
Yet champions of that sort of system seem to think the laws of economics somehow don't apply in that realm. See Ezra Klein's recent claim about rationing.

Warshawsky continues:
Note the irony: A policy — low reimbursement rates for mammograms — that presumably was intended to "make health care more affordable" and expand access to preventative treatment (on the "logic" that if something is cheaper, we can afford more of it), in fact resulted in just the opposite: fewer mammograms, longer wait times, and poorer patient care. This is the face of socialized medicine throughout the world.
And it isn't going to be different or change just because we decide to do it. They call them economic laws for a reason and we need to remember that when we see these pie-in-the-sky schemes which promise "everyone will live happily ever after" if government runs something. We need to put them in the context of those governing economic laws and analyze the claims sans the "for the children" emotional baggage advocates like to attach to them. There are better solutions to be had. Much better.
 
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If I lived in one of the states bordering WI, I’d be very happy. Our sick, unskilled free-riders will be leaving, and we could expect an influx of productive, skilled people and/or businesses looking to relocate to a more nurturing climate.




 
Written By: shark
URL: http://
It’s funny watching the light bulb go on when talking about this. I’ve seen it come on when I’ve asked, "How would you like the DMV to be in charge of your body?"
Another time was when I was talking to a friend, he’s very liberal but very intelligent. He was talking about how the gov’t should fix prices. Since he lived in Boston at the time, I asked him how price-fixing was working for rentals. He got all worked up about how much harm it was causing. I asked him why it would be any different for health care.
I keep working on him, he’s already against affirmative action and now, he’s leaning on gov’t run health care. Sooner or later he’s going to become a conservative, and since he’s a gay New Englander, that’ll make him persona non grata to all of his former friends.
 
Written By: Veeshir
URL: http://
I, Ectomorph adds a Canadian perspective to a NYT piece on intolerable wait times the uninsured are forced to endure in the wake of Hurricane Katrina.
 
Written By: Paul Dubuc
URL: http://
The thinking about public health on this blog remains utterly bizarre.

1. Even if the tax laws were changed, employees would negotiate hard for their employers to buy group policies. Groups can command discounts, group policies can prevent an insurer from denying coverage for pre-existing conditions, group policies spread the administrative burden. (how many people use HSAs? administrative costs are a huge issue in the delivery of health care.) So unless you plan to ban employers from offering health care coverage (not exactly a libertarian solution) you are going to still have the problem of having lots of different risk pools, and the loss of the mobility of labor as people remain in jobs due to the need to stay on insurance.

2. One of the biggest problems for large employers like the automobile companies is that they massively underestimated the health care costs committed as part of negotiated-for pensions. oops. now what? Go bk and wipe out billions and billions in shareholder equity?

3. You have never addressed the free-rider problem. People won’t buy health coverage until they have assets worth protecting. The notion that emergency rooms will deny care based on inability to pay is ridiculous; we are not that kind of country. So ERs will continue to be a huge financial drain.

4. There is relatively little evidence that Americans over-consume health care except towards the end of life. But these people are all in Medicare already. Everyone we bring into the federal government’s insurance policy lowers the per person cost.

5. Millions of people cannot afford insurance. They will continue to use ERs as their first point of contact with the health care system. This is incredibly inefficient.

note: no one seems to complain much about the home mortgage market. Freddie Mac and Fannie Mae have paved the way for millions of Americans to buy their own homes. These are quasi-governmental agencies that work extremely well. Why can’t the federal government charter a similar agency to provide health care insurance?
 
Written By: Francis
URL: http://
no one seems to complain much about the home mortgage market.
You must not get out much if you are unaware of the housing bubble.
 
Written By: Jody
URL: http://
People also seem to forget, that if the goverment fixes prices on treatments like pharmaceuticals and other forms of therapies, companies that do the research will go under, because the high price of medicines is due to re-cooping the cost of the research, not the manufacturing.

Not only will the government have to pay for administering health care to the public with taxes, it will now have to pay for the research into new drugs and treatment technologies.

Consider that the U.S. is one of the last remaining industrialized nations where health care operates on market principles, i.e. a drug company can earn profits by researching and then selling medicines here. A single-payer socialist system could mean an end to all private pharmaceutical research.

Every human being with a yet un-treatable disease would have to rely on a sclerotic university system to research new cures with tax payer money managed by partisan beurocrats and politicians looking to win the next election.

Read my lips, No New Cures.
 
Written By: Jimmy the Dhimmi
URL: http://www.warning1938alert.ytmnd.com
*sigh*

The thinking regarding healthcare on this blog is so blindered. Can’t you see the solution here?

If there are not enough mammogram providers because they cannot recover their costs, we simply make them give mammograms. We tell them, "Here. Here’s your mammograph. You will stand here and operate it at a loss until we tell you you can go home."

And hey, with all this free healthcare flying around I’m quitting my job. Why would I want to pay for all this stuff for others when I can drop out and get mine free? Do I look stupid?

It sounds to me like the progressive single-payer advocates have this thing cinched. What could possibly go wrong?

 
Written By: spongeworthy
URL: http://
There is relatively little evidence that Americans over-consume health care except towards the end of life. But these people are all in Medicare already.
Has it occurred to you that this not be a coincidence? That perhaps correlation might indicate some causation here?
 
Written By: Jeff the Baptist
URL: http://jeffthebaptist.blogspot.com
Francis - Here’s s’more utterly bizarre thinking for you.
1. Even if the tax laws were changed, employees would negotiate hard for their employers to buy group policies. Groups can command discounts, group policies can prevent an insurer from denying coverage for pre-existing conditions, group policies spread the administrative burden. (how many people use HSAs? administrative costs are a huge issue in the delivery of health care.)
Maybe, maybe not. I’ve never received car insurance through my employer, particularly not any that covers pre-existing conditions, even though you say I and my old fellow employees could save money that way. I know you’re not psychic, but why do you suppose that is?
So unless you plan to ban employers from offering health care coverage (not exactly a libertarian solution) you are going to still have the problem of having lots of different risk pools, and the loss of the mobility of labor as people remain in jobs due to the need to stay on insurance.
I don’t recall if or where Dale said specifically how he’d like to get employers out of the business of providing health care, but I think that just evening the playing field between employer-provided and individual health insurance, which is currently tilted by a tax break, would be a great start, so that if someone values portability and smaller risk pools, they can go for it without having to work uphill against an effective government subsidy.
2. One of the biggest problems for large employers like the automobile companies is that they massively underestimated the health care costs committed as part of negotiated-for pensions. oops. now what? Go bk and wipe out billions and billions in shareholder equity?
They suffer the consequences of making promises they couldn’t keep, which may include the costs of negotiating a new contract. Just like anyone else.
3. You have never addressed the free-rider problem. People won’t buy health coverage until they have assets worth protecting. The notion that emergency rooms will deny care based on inability to pay is ridiculous; we are not that kind of country. So ERs will continue to be a huge financial drain.
So what you’re saying is, hospitals will decide to provide services that they have no expectation will be paid-for, because they’re not "that kind of country," no matter whether the government forces other people to pick up the bill or not?

Without government payments, ERs won’t continue to be a financial drain on anyone who doesn’t voluntarily invest in them, and people won’t invest in ERs that lavish too many services on free riders.
4. There is relatively little evidence that Americans over-consume health care except towards the end of life. But these people are all in Medicare already. Everyone we bring into the federal government’s insurance policy lowers the per person cost.
Jeff the Baptist already covered one aspect of this. Another is this: what does it mean to "over-consume" health care? Answer carefully.
5. Millions of people cannot afford insurance. They will continue to use ERs as their first point of contact with the health care system. This is incredibly inefficient.
Y’know, maybe you’re right and all those people simply cannot afford insurance, even after they’ve sacrificed restaurant food and nice sneakers and drugs and cable TV and all the other creature comforts that have an upper-story suite on the hierarchy of needs.
Seems to me that whoever bears the cost would be well-advised to look into ways to lower these costs.
 
Written By: Bryan Pick
URL: http://www.qando.net
I’m no health care specialist, but it seems pretty clear to me that there are economic goods to having a healthy society that are difficult to capture in a diffuse system of paying for health care. For example:

1. limitation of easily transmissable diseases. TB oddly enough is on the rebound, and due to poor regulation of antibiotics the recent strains are resistant to many common antibiotics. Unless you’re planning on never having contact with anyone, having a healthcare system that prevents easily transmissable diseases from getting a foothold in our society is a benefit that inures to you individually even though you don’t pay for it out of your health care insurance.

2. Healthy workforce. Absenteeism is a significant problem for lower-wage employers. People close to or on the far side of the poverty line don’t get group rates because their employers don’t offer them, can’t afford individual policies, and end up getting sicker and staying out longer than those with access to preventive care. Absenteeism raises costs of labor in a way that is hard to capture through individual insurance policies.

3. Availability of emergency services. Non-government owned hospitals are closing their ERs because they cost too much money. What happens when you are in a car accident many miles from the County facility, and there’s a long line of sick poor people ahead of you? There’s a reason that liberals use the term safety net — the net is there to catch you when you need it. Even if you can afford care, if there’s no one to provide it your dollars won’t do much good.

As a land use / water lawyer, I spend most of my time dealing with laws designed to capture externalities historically dumped onto society as a whole. There is such a competitive advantage to not complying with environmental laws that the regulatory framework is very strict. While the analogy is far from perfect, there are comparisons to the healthcare system. In a universal system, no one is ducking the responsiblity of paying for the economic benefits which accrue from everyone having some access to the system. In the system we have now, for-profit health care insurers are dumping their externalities onto the taxpayer. That’s got to change, but individual policies are precisely the wrong direction to go.

 
Written By: Francis
URL: http://
"3. Availability of emergency services. Non-government owned hospitals are closing their ERs because they cost too much money. What happens when you are in a car accident many miles from the County facility, and there’s a long line of sick poor people ahead of you?"

Well, if I’m sicker than they are, and don’t get seen first, my lawyer will get a nice contingency fee. Look up the word triage.
 
Written By: SDN
URL: http://
If I lived in one of the states bordering WI, I’d be very happy. Our sick, unskilled free-riders will be leaving, and we could expect an influx of productive, skilled people and/or businesses looking to relocate to a more nurturing climate.
Well, not Illinois... Especially if our Idiot Govenor get’s his Gross Revenue Tax passed.

"How to Ruin Your State’s Economy" - by Rod R. Blagojevich
 
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URL: http://
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URL: http://sdating.net

 
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