Healthtopia
Politics is the art of the possible. But it’s also the art of possibly making things better! So I do think it’s worth spending at least some time thinking about unrealistic and utopian plans. But this is rarely done. I do, however, find myself drawn to Brad DeLong’s Unrealistic, Impractical, Utopian Plan. To summarize its key elements:
— 1. Taxes on public health hazards (booze, sweeteners, etc.)
— 2. An army of publicly employed doctors and nurses working in clinics and vans and such roaming the country dispensing preventive care and lifestyle advice to all and sundry.
— 3. 15 percent of your income is automatically plunked into a Health Savings Account.
— 4. When you want health care services that aren’t covered by the clinics, you pay out of your HSA.
— 5. If there’s money left in your HSA at the end of the year, it gets plunked into your IRA unless you specifically fill in an opt-out form.
— 6. If you run out of money in your HSA and need more health care, the government pays for it.
— 7. On top of the 15 percent HSA deduction, there’s a 5 percent tax to pay for 6.
Because the cost-sharing is all tied to shares of income, the overall impact of this would be strongly progressive. Better-off Americans will in effect be paying for a lot of their care out of pocket (via their HSA) while poor Americans will mostly be on the dole. But nobody will ever have any financial reason to forego the basics of preventive medicine, and nobody will ever need to worry about going bankrupt over medical expenses.
69 Responses to “Healthtopia”
Register
RSSLogin
Topic Cloud
ArchivesBlog RollAbout Matt YglesiasContact Me
Donate
July 16th, 2009 at 12:19 pm
Am I losing it, or did MY just advocate a 100 percent copay, up to 15 percent of one’s income. Let me say that again: 100 percent. Did I stumble on the Weekly Standard Web site by mistake?
July 16th, 2009 at 12:21 pm
But nobody will ever have any financial reason to forego the basics of preventive medicine
I don’t see how that follows. If all medical expenses come out of your HSA until your HSA for the year is bone dry, that’s definitely a disincentive for doctor visits and preventive care. Any money you spend on care up to 15% of your income is essentially money out of your pocket.
This is why the right thinks HSAs are such a great idea. They think the problem is too much medical care. And this is why the left (myself included) thinks HSAs are dumb because the real problem isn’t too much care, but not enough. Why give people a financial disincentive like this?
If we’re going to fantasize, why not just take the 5% tax and create a universal single-payer system that covers everything.
July 16th, 2009 at 12:23 pm
I don’t see what’s progressive or utopian about this plan.
A fully socialized health care system, covering all care including medical, mental, dental — no need for HSAs. Government-guaranteed, defined benefit pensions for all retirees — no need for IRAs. Everything funded through steeply progressive taxation. Now _that’s_ progressive. I don’t consider it utopian though. We could do it tomorrow if we had a real democracy.
July 16th, 2009 at 12:28 pm
Which is not surprising since it comes from neoliberal faux-progressive Brad DeLong. That this is his utopian ideal tells you everything you need to know about him. And Matt liking it tells you all you need to know about him.
July 16th, 2009 at 12:31 pm
Reducing people’s income by 15% is progressive? People who make less money are less able to afford any reduction in income. Personally, if I could afford a 15% reduction in my income, I would be able to purchase health care under our current system.
July 16th, 2009 at 12:32 pm
$50,000 income. Family of 4.
15% HSA = $7500 vs. Private insurance of $600/mo ($7200)
If you don’t use your insurance, it goes to an IRA.
Sounds good to me. At that level. Since $600/mo is bare bones insurance.
But if you’ve more income than that and you’re going to squawk like a nun in a barber shop.
July 16th, 2009 at 12:35 pm
“I don’t see how that follows. If all medical expenses come out of your HSA until your HSA for the year is bone dry, that’s definitely a disincentive for doctor visits and preventive care. Any money you spend on care up to 15% of your income is essentially money out of your pocket.”
That’s what the public health clinics are for. I believe the idea is that all preventative care, chronic disease management, low level acute care stuff, etc is completely paid for and provided by these public services. The HSA is for surgeries, imaging, and other “extra” care.
This idea has a lot going for it. However, I think it underestimates the difficulty (both medical and political) of deciding exactly what is provided free of charge and what you would pay out of pocket.
July 16th, 2009 at 12:35 pm
Re comments #1, 2, 3, and 4, it does actually sound a lot like some of the more reasonable & creative plans you see from some libertarians. As far as I am concerned, that is a good thing. But it is, at the same time, enormously progressive and would likely reign in costs substantially over time.
And it’s because of comments like those that I despair about the future of our nation. Movement conservatism is one of the most poisonous political movements in the history of the world – and I am a bit of a history buff, so I know very well the implications of that statement – yet the alternative is pretty horrendous as well.
July 16th, 2009 at 12:38 pm
The system you’re describing exists. It’s the Singaporean system.
July 16th, 2009 at 12:40 pm
Taxing rich and poor alike at the same rate, coupled with regressive consumption taxes, now that’s progressivetopia!
July 16th, 2009 at 12:42 pm
There is nothing even remotely progressive about this plan. Everyone at all income levels will scream bloody murder about being forced to hand over 15% of their income. The well-to-do will end up profiting handsomely as long as they stay healthy, but they will resent having the decisions taken out of their hands. The chronically ill and the genuinely poor won’t get any retirement savings out of the bargain.
Alternatively, we could restructure the income tax to make it more progressive and then pay for health care with a VAT. Like pretty much every other developed country.
July 16th, 2009 at 12:46 pm
A 15% congenital disorder tax?? Yikes!
July 16th, 2009 at 12:48 pm
Reducing people’s income by 15% is progressive?
It wouldn’t reduce income. Rather, it would be forced savings.
— 3. 15 percent of your income is automatically plunked into a Health Savings Account.
The general gist of the idea ain’t bad, but, to echo others, 15% reduced take home would be awfully difficult for millions of households. As you move up the income scale, the effect wouldn’t be so drastic because paychecks would be increasing as a result of the end of private health insurance, and the concomitant end of payroll deductions and downward salary pressure.
Also, wouldn’t one have a strong incentive to have all medical procedures that are covered by the clinics done at the beginning of the years? After all, if one’s HSA’s balance were transferred into an IRA on December 31st, one would then have a zero HSA balance come January 1st. Far better to let the government pick up the tab than to get a procedure done in November, by which time a fat HSA balance will have again built up. Maybe I’m missing something obvious…
July 16th, 2009 at 12:48 pm
Most people are already being paid 15% more than they think, because their employers are paying that for their health benefits. Assuming that employers raise salaries to compensate for getting that expense off of their books, the net result in take home pay should on average be negligible.
If you have a high income as I do, the percentage spent on health care by your employer will be much lower today, thus your take home pay will be much less. My premiums amount to about 1% of my compensation, so I would lose a lot of income through this scheme. But given that I typically use $0 a year of health care, I’d be getting $80k or $100k deposited into an IRA every year, which I’d be just fine with since I could reduce my other savings to compensate and wind up with about the same amount of disposable income.
July 16th, 2009 at 12:49 pm
No thanks, I’d rather have higher taxes and just never get a medical bill of any kind. Because taxes pay for services!
Then, if it didn’t cost me even $5 out-of-pocket, I might actually try getting help with my white-coat phobia so I could USE my medical coverage.
July 16th, 2009 at 12:55 pm
As others have said, this is both not very utopian and not very progressive. People should not be paying 20% of their income (15% plus 5% tax) for health care – this is dystopian.
You want to talk about utopian, let’s talk about the NHS. Free at the point of service is an idea that stems from a genuine utopian vision, the idea that you could walk into a hospital, be seen and treated and never be asked about anything other than your health.
July 16th, 2009 at 1:03 pm
“Most people are already being paid 15% more than they think, because their employers are paying that for their health benefits. Assuming that employers raise salaries to compensate for getting that expense off of their books, the net result in take home pay should on average be negligible.”
Exactly, this is why it is progressive.
The fact of the matter is that the kind of plan that most non-reflective progressives (i.e., most of the commenters here) want really would bankrupt the nation. Serious progressives – and there are plenty of them – realize that any kind of health plan that will signficantly increase coverage will also need to contain cost controls. But those cost controls don’t happen to be very popular and are probably not politically realizable.
Everyone wants a free lunch.
July 16th, 2009 at 1:04 pm
Single payer for all health matters — medical, dental, vision — sounds a whole lot simpler. Step one: mandate single payer. Step two: pay for it. Tax the rich, cut way back on “Defense” (read: war and imperialism) expenditures; tax soda pop, artificial sweeteners, junk food, tobacco, guns and ammo — not necessarily in that order. Keep it simple, get it done. What’s so hard about that?
July 16th, 2009 at 1:10 pm
Everyone wants a free lunch.
No, plenty of “serious” progressives want to soak the rich a little and massively reduce military spending. A flat 5% tax is by definition NOT a progressive tax, sorry.
Assuming that employers raise salaries to compensate for getting that expense off of their books, …
We should assume that will always happen because …??? Free market forces will compel employers to do this?
July 16th, 2009 at 1:10 pm
I’m not sure what’s so utopian about everyone dropping 20% of their income (I’m not messing with pre-post-tax dollars) on health care.
July 16th, 2009 at 1:18 pm
We shouldn’t assume it would happen unprompted, we’d need to prompt in framing this plan. Political leaders would need to frame communications about the scheme to emphasize the necessity of this, and advocate for employees to demand it less we really just give businesses one more break (eliminating their costs for insurance entirely, which would just drop straight to their bottom line) on top of everything they’ve just gotten.
Then workers would need to negotiate this with their employers. No said it would be easy or automatic, but is it possible to argue for this and get it.
July 16th, 2009 at 1:22 pm
I’m not sure what’s so utopian about everyone dropping 20% of their income (I’m not messing with pre-post-tax dollars) on health care.
It’s much worse than that. The only people who’d actually pay the full 20% of their income for health care would be the poorest and the sickest. In fact, these people would pay more than 20% if they chose to consume sweets or alcohol. The richer and healthier you are, the lower the percentage of your income you’ll pay for health care.
July 16th, 2009 at 1:22 pm
What if instead of the 15% number, companies that currently provide health insurance just place those premium dollars into the HSA/IRA hybrid for the employee?
All companies above X employees would be required to fund this system. Smaller companies would be exempt, and anyone who works for a company like this would be eligible for all services to be paid by the gov’t?
For those workers who don’t use their emergency HSA dollars in a given year, this is like getting deferred compensation for their retirement- maybe not as satisfying as having that money go into your pocket, but more Americans with more retirement savings couldn’t be a bad thing.
July 16th, 2009 at 1:23 pm
“No, plenty of “serious” progressives want to soak the rich a little and massively reduce military spending.”
That wouldn’t begin to get it done (in the long run) without massive and unpopular cost controls (which would mean massive and unpopular controls on the kind of care provided). Well, unless we cut out almost all of our “defense” spending (and maybe not even then), which would make non-interventionists like me very, very happy – but which would be more than even most “progressives” would support, not to mention about as politically likely as … actually, I can’t think of a good analogy, there is probably nothing less politically likely in the United States currently.
Soaking the rich, as anyone of any political stripe has concluded after looking at the numbers, provides surprisingly little revenue.
Really, it’s threads like this that make me weep. You guys are as ignorant as the most god-ridden, Darwin denying cracker.
July 16th, 2009 at 1:24 pm
I don’t see what’s at all attractive about this. It devotes 20% of one’s income to health expenses by fiat, before other taxes. What the hell.
July 16th, 2009 at 1:28 pm
Assuming that employers raise salaries to compensate for getting that expense off of their books, the net result in take home pay should on average be negligible.
In what world does anyone expect employers to raise salaries? Especially when you have 10% unemployment, greater in some areas, employers have the leverage and will roll most of the savings back into the bottom line.
July 16th, 2009 at 1:28 pm
There are no copays on the clinic care, which is evidently free. This would include preventive testing like basic bloodwork, blood pressure etc and presumably emergency care, although that isn’t clear. Copays come into play for non-clinic care.
But the 20% tax seems pretty steep. Does it replace the Medicare tax?
I do like the clinic idea a lot, though.
July 16th, 2009 at 1:32 pm
People should not be paying 20% of their income (15% plus 5% tax) for health care
They wouldn’t be. They would have 15% of their income placed in an MSA; whatever they didn’t spend (and almost no one would spend all of it) would be saved for their retirement. Mainly it’s a forced-savings scheme in the manner of Social Security, except it forces people to save for medical emergencies. No doubt lefties raised the same objections in the 1930s to Social Security, as it was a worse-than-flat tax enacted just when working people had been really pushed to the wall. But obviously it’s been a godsend for nearly all elderly people except the wealthy ones.
Conservatives should like the part about the MSAs not being socialized in any way: it’s your money, with none of the murkiness about how one’s Social Security benefit is calculated. The whole thing is, indeed, very neo-liberal, as it doesn’t soak the rich (though they rightly would pay more in than they would get out), and people of modest means don’t get the benefit for free. But neo-liberal isn’t the automatic deal-killer for me that it is for a lot of people.
July 16th, 2009 at 1:35 pm
I like DeLong’s plan. Presumably the 15% would replace existing taxes to support Medicare, since everyone (including the elderly) would be on the same system.
I suppose you could argue that it creates an incentive to retire early (since you would then have no income – aside from Social Security – and your required contribution would end up amounting to little in absolute terms), but that’s about it. Other than that, it’s a good way to spread the system around.
July 16th, 2009 at 1:41 pm
KTH:
Forcing people to save 20% of their income is not a good idea. Social Security was reasonable, because you were asking people to forcibly save 1-3% of their income. But 20% is above what people can afford to save without dramatic reductions in their standard of living.
And I think that’s what pisses me off the most about this idea is the regressivity, the lack of understanding that poor and working class people, hell even middle class people can’t absorb the same kinds of burdens of everyone else, that they need 100% (and more recently 100%+) of their income to spend just on the basics of life.
July 16th, 2009 at 1:44 pm
Once again, what do you think the ‘M’ in HMO really means?
Other than the forced retirement savings thing, which as others mentioned would create a conflict between getting treatment and saving for retirement, I don’t really see any plus side to this plan. Points one and two are good, but you could do those without the suck that is included in points three through seven.
July 16th, 2009 at 1:59 pm
Steven, I agree about the price tag, though it would be hoped that there would be some offset for Medicaid, Medicare, and even Social Security (by virtue of the forced savings not used for health care).
This is strictly an academic exercise; the sticker shock alone means this is a total non-starter politically. But it has a lot of transparency to it, in terms of the average citizen understanding at once his own contribution, and the macro-economic scale of it, and the presence of those qualities would make a plan that does get adopted politically more robust (the way Social Security is currently untouchable).
July 16th, 2009 at 2:00 pm
They wouldn’t be [paying 20% of their income for health care]. They would have 15% of their income placed in an MSA; whatever they didn’t spend (and almost no one would spend all of it) would be saved for their retirement.
Lisa makes $20,000/yr. Lisa has $3,000/yr. in health care expenses. Lisa pays 5% of her income into a health care tax and 15% of her health savings plan.
Question 1: How much does Lisa spend on health care annually?
Question 2: Are Lisa’s circumstances like those of “almost no one”?
July 16th, 2009 at 2:09 pm
tsg,
Add about $15k/year to the salary, divide the health care costs by a factor of at least 2 and that describes my situation as a post-doc. And no, I wouldn’t have gotten more money in my salary if my employer didn’t have to pay health insurance, as I already was not insured via my work. And living on your own, even in a place like Tallahassee, FL, involves having about $35k/year to live comfortably (I was barely making ends meet living in a cheapo appt.).
True, the extra money I didn’t spend from the HSA would have been “saved” in my IRA, but who says I had the money to save?
It’s one thing to expect the young and healthy to pitch in something (money, volunteer hours, whatever) to help the older and infirm. But when the young and healthy are not making enough money to pay for their own needs, how do you tax them to pay for the needs of others?
Anyway, even if the plan is economically sound, it’s political hay for the GOP and the forces opposed to progressive change … it allows them to say “look at what liberals want to do — they want to force you to spend money on health care that you can’t afford to spend”.
July 16th, 2009 at 2:12 pm
The MSAs would not flow into a forced savings program. The money would flow into an “opt-out” account. You can take the money out, paying taxes on it, anytime you want. It’s just an opt-out plan rather than the normal opt-in plan.
If you use none of your MSA, you can pay taxes on the money and put it in your pocket.
July 16th, 2009 at 2:19 pm
Actually I would venture that the percentage of $20000-earners with more than $3000/yr of medical expenses is probably small (though “almost no one” is admittedly hyperbolic). I definitely don’t want Lisa to get a worse deal than she’s getting now with Medicaid, so I suppose I wouldn’t be against bracketing this (again, strictly academic) health-care tax, so that Lisa doesn’t have to pay quite as much (especially if she has dependents).
July 16th, 2009 at 2:19 pm
If you use none of your MSA, you can pay taxes on the money and put it in your pocket.
Which is why someone might decide to forgo getting important care in order to pay for rent, car repairs, shoes for the kids, etc.
July 16th, 2009 at 2:22 pm
On the face of it, this looks like Lisa is out $1000. She’s not. It would be a pretty wild set of circumstances if none of Lisa’s medical expenses were of the type offered for free at clinics. If more than 1/3 of Lisa’s medical expenses are offered free, she comes out ahead.
In addition, people don’t have $3000 per year health care costs. Assume Lisa has 9 years at $1000 and one year at $21,000. In 9 of those years, Lisa is putting $2000 into an IRA, which isn’t touched in year 10. In the other, she’s getting $18,000 in health care free.
On the otherhand, someone with the same expenses making $150,000 puts $21500 into an IRA in 9 years, but pays all of their health care costs in year 10.
July 16th, 2009 at 2:22 pm
He is still to much of an economist for the no brainer: Automatic tax financed public healthcare for everyone that includes every reasonable health spending, and forget about hsa stuff. Same with iras, to handle them apropiate is to much for at least 90% of the population. Just add a capital base financed social security component.
July 16th, 2009 at 2:23 pm
That is true. People on both sides are not fully digesting the implications of this idea.
July 16th, 2009 at 2:28 pm
It would be a pretty wild set of circumstances if none of Lisa’s medical expenses were of the type offered for free at clinics.
I don’t buy this for a second. But if I did, what you’re essentially saying is, “have a wild set of bad health circumstances? Sorry to hear that, ’cause it’s gonna cost ya!”
July 16th, 2009 at 2:35 pm
Yeah. The opt-out means that the MSA money is … still your money, same as before. But this just means that the plan is stupid; the MSA element is either nugatory window-dressing or possibly a nice bonus for the healthcare industry, depending on how much control healthcare consumers have over its disposition. Specifically here I’m thinking of poor families and emergency healthcare. Currently, someone in a low income bracket who breaks a leg (or w/e) can go to the ER and get patched up, and it’ll be covered by Medicaid or possibly just eaten by the hospital. Under this plan, the person will have some few thousand dollars in the MSA – money we can assume they were looking forward to getting their hands on at the end of the year, but which will now get spent on their medical emergency.
There’s nothing hugely unjust about that – hospitals need to get paid too – but it sure as hell isn’t progressive.
July 16th, 2009 at 2:44 pm
@33: $3,000 a year in health care expenses that aren’t covered by the free routine and preventative measures described in DeLong’s point 2?
Probably we need some kind of measure for chronically ill people so they don’t pay in 15% and reliably not get anything to spill over into the IRA, but $3k/year in *acute* non-preventative care, year after year, does seem like a lot.
Also, the taxes described here probably replace most if not all of existing FICA, which Lisa is already paying (and which are already not progressive).
I’m not a big fan of point 7, though. I think there’s plenty of money in 1 (potentially) and/or other existing means-tested taxes and since pretty much by definition no health hazard is a necessity of life, 1 is purely a voluntary-behavior tax which doesn’t have the same “regressiveness” implications as 7, regardless of who ends up paying it.
@34: The point of describing the plan as impractical and utopian is to not have to consider what you can and can’t get through Congress. Instead, you can look at how much better you could make health care if you *didn’t* have to deal with Congress’s bias toward protecting entrenched interests to the detriment of the American people.
July 16th, 2009 at 2:47 pm
Interesting, especially the front-end socialized medicine part.
I was just reading how in Alaska, health care in remote villages is provided by community health aides with several months medical training (comparable, I’d imagine, to a Navy Corpsman A-school).
http://www.akchap.org/GeneralInfo.cfm
The Aides are government employees who run public clinics to provide the village routine medical treatment for minor cases cases, schedule physician appointments for when a doctor is due in by seaplane and stabilize emergency patients until they get a MEDEVAC to a hospital. The Aides can consult a doctor by phone but routinely just follow the algorithms in their tricked out Community Health Aide Manual. Following the Manual authorizes them to diagnosis and treat minor conditions and dispense prescription drugs.
http://uaf-db.uaf.edu/jukebox/cha/htm/history.htm
As for the rest of the country; since we pay firefighters to mostly sit around and wait for a call, we should set up Alaska style clinics at firehouses (or send a firetruck out to public spaces like schools or churches). Anyone could drop in without an appointment, a firefighter w/ community health training could treat minor conditions, monitor chronic conditions and immediately refer the problem cases to a physician or ER.
If the fire departments start getting too busy with patients, its easier and cheaper for the taxpayers to train and hire new firefighters (paid or volunteer) than to train and hire new doctors and nurses.
July 16th, 2009 at 2:59 pm
Under this plan, the person will have some few thousand dollars in the MSA – money we can assume they were looking forward to getting their hands on at the end of the year, but which will now get spent on their medical emergency.
That would occur, no doubt. But at least people wouldn’t be going to the emergency room because an abscessed tooth ruptured–DeLong’s plan provides more-or-less free or nominally-priced primary care. So, though this catastrophe would be borne by the consumer rather than the hospital, it would be far rarer system-wide; i.e., it isn’t like all the poor people who go to emergency rooms now would be stuck with the bill. Fewer poor people would face medical emergencies, basically.
July 16th, 2009 at 3:06 pm
DeLong is on the right track, but not quite there. The essential elements of health reform, which first of all and above all means universal protection against catastrophic financial loss, are (i) universal catastrophic insurance; (2) no pre-existing conditions cost or coverage discrimination; (3) assistance for many to cover the pre-catastrophic costs. Forced savings is not the answer, and any program must be kept far, far, far from the IRS
For administrative and political simplicity, instead of 20% of income, just a flat 20% of median household income for everyone as a catastrophic cap — i.e., today, with $50 K median, a Federal umbrella that is simply universal that starts at $10,000 per year. Since it is universal, the term “mandatory” has no real meaning, since only the taxes to pay for it are mandatory. You are covered, period. The certainty of catastrophic coverage to pay the providers will drive down medical costs immensely — some portion of the provider fees covering delinquency and delayed payment, and much of the collection infrastructure with so much less at stake for the provider — and will further cut premiums for remaining coverage (possibly by more than 50%) because exposure of the insurer to catastrophic costs is eliminated. Moreover, the aggregate tax revenue needed for a Federal umbrella will be a lot less than the aggregate premiums of existing private insurers to cover catastrophic risks and earn a profit on top of it. Net: huge reduction of the national cost of comprehensive health insurance, even with universal coverage.
Private insurers (or healthcare savings accounts, which should be optional) and a public option can operate in the space underneath the catastrophic umbrella, just as Medicare Supplement insurance does now. Of course, no pre-existing conditions, but insurers may need an equalization pool to account for differences in aggregate risks assumed because of such a rule. To keep competition “fair,” the public option is offered by a Federally-chartered independent corporation that must use only premiums for funding, and may not undercut private insurers in the pre-catastrophic space using tax revenues — only on account of efficiencies.
Assistance to perhaps 4X poverty level ($88 K for family of four?), mostly in the way of declining tax credits. Cover at least part of cost by shifting all Medicaid and SCHIP funds to this purpose. Eventually, perhaps, move Medicare under it, but simply with much lower “deductibles” for those who qualify for “old-age insurance,” like, perhaps, $500 or $1000, with the deductible level possibly again depending on income just as the Medicare Part B premium is now.
A Federal umbrella is simplicity itself, and everyone can figure out the favorable implications for himself. Who can oppose without political danger an umbrella policy protecting everyone from complete financial catastrophe?
July 16th, 2009 at 3:13 pm
Steven Attawell is right, 15% of income is way too high especially since its really 20% once you add the new tax rate.
Besides if you monkey with payroll taxes, it gives the GOP an opening to privatize Social Security once the public (and it always does) forgets how risky the stock market is.
July 16th, 2009 at 3:14 pm
“— 3. 15 percent of your income is automatically plunked into a Health Savings Account.”
Um…no. Most people can’t afford to put 15% in a 401K. (Hell, your housing is supposed to be what, 30% of your income?)
I’ll take the Maserati and trophy wife away from every surgeon before I’d support this one.
July 16th, 2009 at 3:23 pm
All those are junk ideas.
There is no need to re-invent the wheel here. Look at any major industrialized nation with UHC. There’s solutions out there in a variety of whatever mix you’d prefer (public, private, public/private) to get the job done more effectively, more inexpensively, and with better results.
Any thing less than that, including all these kludgy ideas, are a waste.
July 16th, 2009 at 3:51 pm
2. An army of publicly employed doctors and nurses working in clinics and vans and such roaming the country dispensing preventive care and lifestyle advice to all and sundry.
— 3. 15 percent of your income is automatically plunked into a Health Savings Account.
— 4. When you want health care services that aren’t covered by the clinics, you pay out of your HSA.
For this system to be progressive, these government clinics would have to provide A LOT of services at a good level of care. If they did so, I think the plan would be fine.
July 16th, 2009 at 3:57 pm
15% of income in an HSA??!!! Are you kidding me? HSAs are evil and have no place in the future in my strong opinion. If you ever get really sick, no amount of HSA savings will help you and if you never do then they are not what you should be doing with your money.
15?!!!!
This is utopian?
I’ll take the European style single-payer system ANY DAY over this allegedly “utopian” “solution” and, indeed, over anything being proposed currently.
July 16th, 2009 at 4:14 pm
I wanted to add that discouraging people from seeking routine medical care has been a serious problem in both human terms and in driving up the end costs of deferred care. It’s a fallacy to think that’s the same thing as not getting health advice or something called “preventative care” from a van. Would you have to prove something to the clinic before they don’t count it toward your HSA? And where exactly are these fans, and would roaming doctors have the important doctor-patient relationship characteristic of good primary care?
I already eat and exercise just fine, thank you. I just don’t want to be penalized for seeking routine care when I’m ill or the fairly serious testing (treadmill, colonoscopy, PSA test, and tests for my longstanding seizure condition) that are appropriate for my age and medical history. Of what if I have an other seizure and need stitches from the fall? Is the idea that the best cost savings is my keeping home?
July 16th, 2009 at 4:41 pm
Mark
I don’t see what’s progressive or utopian about this plan.
Me too, especially with the “soda tax” that Matt is so in love with. It may be may anti-authoritarian streak, but I find it creepy that Matt is so keen on micro managing people’s dietary habits through a repressive tax that will hit the poor the hardest (and I’m probably much more left than Matt could ever imagine). There is neither anything “progressive” or moral about that.
July 16th, 2009 at 4:43 pm
Ah crap, on #53 the second paragraph is all me, I messed up on the tags.
July 16th, 2009 at 4:43 pm
I’m kind of astonished that almost everyone here has missed the key implication of this plan: those with a low income would receive most of their catastrophic or elective medical care for free, while those with a high income would pay for most of it themselves.
The 15% flat tax to pay for it is pretty much bad, and this plan is missing a key element (further health subsidy to those < ~300% of poverty) but you can fix both at the same time quite easily: replace the flat 15% with a progressively-graded withholding that starts at some relatively acceptable figure (3%?) and caps out at 10% (or something) at some relatively median figure. That produces a sharply progressive system where rich people pay for most of their own non-maintenance care while poor people are primarily subsidized by the government.
(At that point your big problem isn’t progressivity, it’s the fact that the system effectively operates as an “always sick” tax — people with chronic conditions would be losing a significant portion of their income to pay for their medical care.)
July 16th, 2009 at 4:50 pm
Which is not to say that I actually think the plan is a good idea compared to a single-payer system, mind, but I think it’s worth cooking up progressive health schemes that aren’t single payer in order to expand the window of possible solutions.
It may be may anti-authoritarian streak, but I find it creepy that Matt is so keen on micro managing people’s dietary habits through a repressive tax that will hit the poor the hardest
I kind of have to back Matt on this one, for basically the reason he mentions: moderate soda and alcohol taxes don’t actually reduce consumption that much but they do raise a pretty decent amount of revenue, and an extra $.10 a bottle tax is a pretty good trade for, say, government-subsidized healthcare.
The real problem with soda specifically here is that it’s already government-subsidized because companies use cheap-as-free corn to sweeten it so it’s artificially cheaper than other things that aren’t quite as bad for you. Fix that problem and soda will stop being disproportionately consumed by the poor, which makes taxing it that much less problematic.
July 16th, 2009 at 5:19 pm
charlequin –
I think you hit the nail on the head here. Progressivity isn’t just something that starts at the extremes of society, it’s something you care about all the way up.
However, the flatness is still a problem, even with “If you run out of money in your HSA and need more health care, the government pays for it.” Even if that 15% is very little money because you’re low income, you probably need that money to pay the electricity bills or buy food or renew your bus pass.
Your suggestion is better, but I would warn about just using the median without thinking of distribution of income. The U.S has a pretty low median income ($50k) because most of the money is really highly concentrated at the top. Hence, a 10% tax on people making $50k a year is still going to hit them too hard.
July 16th, 2009 at 5:42 pm
I kind of have to back Matt on this one, for basically the reason he mentions: moderate soda and alcohol taxes don’t actually reduce consumption that much but they do raise a pretty decent amount of revenue, and an extra $.10 a bottle tax is a pretty good trade for, say, government-subsidized healthcare.
The real problem with soda specifically here is that it’s already government-subsidized because companies use cheap-as-free corn to sweeten it so it’s artificially cheaper than other things that aren’t quite as bad for you. Fix that problem and soda will stop being disproportionately consumed by the poor, which makes taxing it that much less problematic.
Good argument, especially about the government subsidizing of corn part. You’ve convinced me. But I would my foot down on the additional Alcohol taxes that Matt has supported in the past.
July 16th, 2009 at 6:05 pm
[...] Health Care Dreams Via Yglesias, Brad DeLong thinks the unrealistic: To summarize its key elements: — 1. Taxes on public health [...]
July 16th, 2009 at 9:18 pm
– Frugalchariot
Why artificial sweeteners?
July 17th, 2009 at 8:14 am
LarryM, unless you think that the resources needed for a quality health care system literally do not exist in this country, your insults make no sense. The government has the right and the responsibility to appropriate whatever resources are necessary to achieve a fair society. If merely taxing the wealthy doesn’t do the job, then radical redistribution is necessary. If that means having no rich people at all, then that is what should happen. The problem with people like you is that you assume that if something can’t be accomplished within the existing power structure, then it can’t be accomplished at all.
July 17th, 2009 at 9:27 am
Mark,
Belated comment here,
The resources do not exist (or, perhaps more accurately, will not exist given current trends which I do not think that the plans on offer would do enough to change) for providing every possible type of medical care to every person. Now, unlike some people, I think the government could in theory do a decent job of rationing care, and even a “better” job than the free market in the sense of making those decisions on some kind of cost/benefit basis, as opposed to a market driven “the poor get screwed” basis. In theory, that is. Unfortunately I have serious doubts about the political viability of a national health care system that would ration care.
We need some mechanism to constrain health care costs. I’m certainly very leary of leaving this function entirely to the market for obvious reasons, but unfortunately politically realizable national health care plans don’t leave me any more optimisitic.
The least bad option may be to just keep the current flawed system till it begins to break down, at which time some better alternative (a variation of the Delong plan, or even a single payer plan with meaningful rationing and cost control) becomes politically viable.
July 17th, 2009 at 9:33 am
I would add that, as much as I like the structure of the DeLong plan, 15% is a little too high given current health care spending (though even if cost trends level out a little, we will almost certainly get to the point where 20% of income devoted to health care is a bargain for most people.
A plan where the deduction (15%+5% = 20% under the Delong plan) roughly equals the portion of GNP devoted to health care seems reasonable, and would be highly progressive in that everyone would be given the same level of care, whereas the contribution (in dollars) would be far lower for people with lower incomes.
July 17th, 2009 at 9:59 am
One change concerning plunking leftover HSA money into an IRA at the end of each year: NO F*CKING WAY!
I’m done with IRAs, 401ks, etc. It’s a racket and theft.
The only people that make out on that crap are Goldman-Sachs execs. NO MORE.
I am done throwing money down the crapper (in my former IRA). I will be plunking it into CDs (which have outperformed the market for the last 10 years straight) or just my savings account. Only idiots and suckers would throw money into the totally corrupt and compromised (by the government and Goldman-Sachs with all their frontrunning trades and other manipulations).
Just roll over the HSA money or give it to me in a check so I can put it under my mattress or into a savings account or convert it to gold coin or put it into CDs.
July 17th, 2009 at 11:56 am
This plan addresses a lot of issues at once
1) Since people won’t pay for preventative care, the tendency will be to use more preventative care – which will reduce the need and costs of other treatments.
2) The 15% HSA insures (okay that was a poor choice of words) that everyone has some skin in the game – you will see the bills coming out of the HAS when you have more expensive care, which will help address the issue of over care. Unlike a tax, people will have the money placed in an IRA. The costs should be balanced for the average American since they will no longer pay for their private health care, neither will their employer.
3) It will provide a safety net. Run out of your 15% then you are on the public plan – if you don’t have income because you can’t work – well your 15% would be zero.
I will quote Charlequin, who put it better than I ever could “Those with a low income would receive most of their catastrophic or elective medical care for free, while those with a high income would pay for most of it themselves.”
Impossible to enact and execute but this would be a good plan.
July 17th, 2009 at 7:13 pm
Praedor Atrebates, in your hysterical ranting, you do realize you can buy CDs with your IRA, don’t you? And that if you buy CDs with money in your IRA instead of outside of your IRA, you get the interest you earn tax free, right? What does that have to do with Goldman Sachs execs?
July 18th, 2009 at 5:22 am
Such interesting read and information, thanks for sharing this post. I will check back to read your other new posts. Please come visit my site Lobby Hobby Directory when you got time.
July 18th, 2009 at 12:56 pm
[...] brief post from Thursday trying to explicate some of Brad DeLong’s synthesis of the best ideas in health care economics detached from political reality prompted some [...]
July 22nd, 2009 at 9:19 am
Salut not sure about your posts really interesting! checkout my about missouri payroll tax deductions