| Old CBO Score Of Baucus Bill | New CBO Score Of Baucus Bill | |
| Costs | Reduce deficits: $49B/10yrs Net Cost: $500B/10yrs Gross cost: $774B/10yrs Spends on subsidies: $463B/10yrs |
Reduce deficits: $81B/10yrs Net Cost: $518B/10yrs Gross cost: $829B/10yrs Spends on subsidies: $461B/10yrs |
| Insured | Uninsured reduced by: 29M Uninsured in 2019: 25M In Exchanges: 25M In Medicaid: 11M |
Uninsured reduced by: 29M Uninsured in 2019: 25M In Exchanges: 25M In Medicaid: 14M |
| Revenue | Tax high cost plans: $215B/10yrs Mandate penalty: $20B/10yrs Free rider penalty: $27B/10yrs Indirect offsets: $12B/10yrs |
Tax high cost plans: $210B/10yrs Mandate penalty: $4B/10yrs Free rider penalty: $23B/10yrs Indirect offsets: $83B/10yrs |
| Medicare and Medicaid |
Total savings: 409B/10yrs Payment updates: $182B/10yrs Medicare Advantage: $123B/10yrs DISH Payments: $48B/10yrs Medicare Commission: $23B/10yrs |
Total savings: 404B/10yrs Payment updates: $162B/10yrs Medicare Advantage: $117B/10yrs DISH Payments: $45B/10yrs Medicare Commission: $22B/10yrs |
I find the new score deeply puzzling. You've weakened the individual mandate, yet you're still covering exactly the same number of uninsured people. You can explain that by saying the subsidies have gotten more generous, but then why is it decreasing the deficit by even more? Here's the CBO's summary of what they did:
On September 16, 2009, CBO transmitted a preliminary analysis of specifications for the Chairman's mark as provided by staff of the Finance Committee. Those earlier estimates differ from the estimates provided here for two primary reasons:
First, the proposal has been changed in a number of significant ways. For example, the subsidies that would be provided through the insurance exchanges were made larger, the penalties for not having insurance were reduced, and more people would be exempt from those penalties. Furthermore, the provisions of the excise tax on high-premium insurance
plans were changed in ways that would reduce the amount of revenues collected. In addition, states would now be required to maintain current coverage levels for children under Medicaid and CHIP through 2019. Although CBO and JCT were able to provide estimates for many amendments, the agencies are not in a position to assess the impact of individual policy changes now that they have been combined in the amended mark.
Second, CBO and JCT have made some technical refinements in their estimating procedures, including a revised assessment of the impact of the proposed changes on premiums for employer-sponsored health insurance and the resulting effects on tax revenues.
So most of the major components of the program are scheduled to either cost more, or raise less revenue . . . but overall, it's generating a bigger surplus. It's the healthcare economist's version of "We're losing money on every unit, but we'll make it up in volume!"
Going by the fairly sketchy description, virtually all of the extra benefit appears to come from estimating that employers will see their health care costs fall, mostly because they put those workers into federally subsidized programs, pass the resulting savings along to their workers in the form of higher wages and salaries, and that the Treasury will thereby gain, at a rough guess, about $12-15 billion a year in tax revenues.
This is somewhat confusing to me. The CBO seems to be assuming it will get just about 20% of the amount spent on subsidies back in the form of tax revenues. But the effective income tax rate on the quintiles covered by the subsidies, according to the CBO, is less than 5%. Perhaps the savings comes from the payroll tax, but even including the payroll tax, it's less than 15%. And the tax rates are directly proportional to the size of the income, while the subsidies are inversely proportional. I'm sure I'm missing something that would make the math work, but I can't figure out what.
But there you are: Baucus got his favorable score, which means this has a good chance of passing--at least, unless the unions get the House to kill the excise tax, or the various medical lobbies get their payment cuts reversed. Developing . . .
The problem here is that you are trying to do back-of-the-envelope analysis on what is a very complicated and intricate model -- one that likely contains positive feedback effects. Once a model features positive feedback, our ability to understand it intuitively decreases sharply.
Indeed. Just like the financial models to estimate risk. Worked just fine.
Derek
"technical refinements in their estimating procedures" = Baucus and Rahm Emmanuel taking CBO to the woodshed until a more favorable number is produced.
They either ignored the dynamic picture or made some weird assumptions. $49B from "Cadillac" plan taxes in 2019? Why do they figure more and people will have these plans even as they're taxed?
The mandate/insured math makes even less sense, as Megan points out. Why are people going to pay premiums for non-insurance? You can save a ton by just signing up if/when you need expensive medical treatment -- which they now have to cover you for.
The employer penalties will reduce the dumpage to some extent (at least until premiums go through the roof) but rational actors will attempt to get around this by becoming contractors.
The incentive created here is to avoid insurance until you need it. The logical end result is fewer insured and sky-high premiums because healthy people have no reason to buy insurance, which negates risk-sharing.
For instance, say you're an employee making $50K. Your company now has to provide you insurance which costs them $12K. They tell you "hey, we can give you $60K as a contractor, and if you get sick -- no problem, just buy insurance, they have to cover PECs." You both come out ahead, and everyone's premiums go up whenever someone does this.
(I'm ignoring other compensation, etc here.)
"an employee making $50K. Your company now has to provide you insurance which costs them $12K. They tell you "hey, we can give you $60K as a contractor, and if you get sick" And on what planet do you spend most of your time? If you imagine that employers are going to give that extra money to employees you certainly don't live here.
And Megan, no one on your side of the argument seems willing to answer two simple questions. If every other country (don't split hairs, you know what I mean) can cover ALL of their citizens for LESS than the US does, with better outcomes, why can't we do that?
Is Health care rationing OK as long as it's based on one's personal wealth ?
If every other country (don't split hairs, you know what I mean) can cover ALL of their citizens for LESS than the US does, with better outcomes, why can't we do that?
As far as I can tell, it must be because libertarians believe Americans are especially dumb and just don't have the necessities to figure out what the Germans, Japanese, the French, and the Singaporeans have accomplished years ago. Either that or libertarians just don't believe the those countries have figured out UHI -which is like some impossible physics problems to libertarians- like building a warp drive or a time machine.
Is Health care rationing OK as long as it's based on one's personal wealth ?
Got it in one.
Or maybe it's because the Germans, Japanese, French, etc. don't have 50 strong political units regulating medical insurance and medical practice like the US. Or the same stringent requirements for medical education. Or the same tort environment. Or the same genetic diversity. Or the same attitudinal issues*.
Why is it that every other liberal thinks that the only reason we spend twice as much for lesser outcomes is only related to who pays the bills? The worst case estimate on additional overhead from private insurance is the BS 27% that Woolhandler et al came up with. Chop that out and we're still paying much much more than anyone else.
*The two big ones are "Silver Bullet Syndrome" and "If some is good, more is better, and too much is just right." But we also have no problem with spending hundreds of thousands of dollars to extend the life of someone in a persistent vegetative state or some senior with extremely advanced dementia.
Is Health care rationing OK as long as it's based on one's personal wealth ?
Yes. Other questions?
Ummm, Yeah there are, You skipped a question Max.
I don't know what your planet is, but here on planet San Diego, earlier this decade, the large publishing firm I worked for decided that they didn't need in-house copy editing any longer. They outsourced most of it to the overseas typesetting firms they dealt with. But they also encouraged me to become a subcontractor for them, taking home weekly assignments. My hourly rate was about 25% higher than my salary had reached after nearly 15 years of employment.
1) A lot of their cost savings come from free riding on US spending on things like drugs. Obviously, the US can't do that, at least not long-term.
2) A lot of their cost savings come from paying doctors half of what Americans do. Even aside from the political issues of doling out a pay cut that big to a group that well-liked, there's a reason every other country faces chronic doctor shortages and the US doesn't. That's certainly something the US can change, but do you really want them to?
3) The "better outcomes" bit is debatable. Life expectancy is a blunt instrument for measuring health outcomes - how much has to do with US medical coverage, how much has to do with historical US smoking rates, and how much has to do with car accidents and gang murders? Infant mortality is measured differently by the US than by most other countries, higher US treatment ratios can be explained by more aggressive screening, and similar arguments can be made by one side or the other to explain away just about any stat. There's no real data both sides will accept on which systems have better outcomes.
Best form of rationing anyone has come up with so far. It's important to make sure poor people have access to a decent minimum standard of care, of course, but wealth-based rationing is a better system than fiat-based rationing.
A lot of their cost savings come from free riding on US spending on things like drugs. Obviously, the US can't do that, at least not long-term.
Actually we can, if we're willing to accept a drastically lower level of new development. Sounds like an awful deal to me, but some on the left support it on the grounds that we won't miss treatments that are never invented.
Hence the "at least not long-term" bit. The future US can free-ride off the past US for a while, but that comes to an end quickly enough.
You're right, of course, that we can voluntarily spend less if we want to get worse outcomes. That said, I don't think that's really what anyone wants, on the left or the right.
If you imagine that employers are going to give that extra money to employees you certainly don't live here.
I haven't read the entire Internet, so I don't know for sure, but that might be the single dumbest comment in Internet history.
If you imagine that employers are going to give that extra money to employees you certainly don't live here.
They don't "give" you money for working, they compensate you for providing a service. I live in a strange world where people are paid in terms of total compensation.
BTW, have you ever made that transition? I have. It really does work that way.
As for the example: they keep $2K, you keep $10K. Everyone wins.
And Megan, no one on your side of the argument seems willing to answer two simple questions. If every other country (don't split hairs, you know what I mean) can cover ALL of their citizens for LESS than the US does, with better outcomes,
Oh FFS. The answer, which we've been screaming for months, is that THEY DON'T. They have much worse outcomes. Like this guy.
The U.S. does twice as many transplants, has much shorter wait times for specialists, gets new drugs a year earlier, has the best cancer survival rates, does most of the medical research... I could go on.
Employers typically are the rich people who have taken out loans to start or grow their business. They are also the people making over $250,000 a year, and they will be seeing their taxes go up.
If they receive the ability to decrease their compensation package expense by 12%, they will jump at the chance and not increase anyone's pay. The employers have to pay off their debt because it is becoming more difficult to find loans, and many of them are watching their line of credit shrink.
If this bill passes without dramatic increases in employment, I would expect a significant number of companies to drop their coverage, so the employers can use the money to stay in business.
Seconding KennyBoy on at least one point here. Having a hard time tracking the ins and outs of the various bills, and I think it's important that we separate health insurance from employment. But I do get a chuckle every time somebody claims that employers will pass on those savings to employees in higher wages.
Certainly some small percentage of it, but seriously? As has been pointed out ad naseum, the average employer-based health consumer has no idea how much the employer pays. Have you ever tried to find out? Good luck. So they won't even be able to negotiate for it, except based on what they will be paying in a new market arrangement, which is probably as it should be.
Actually, that point wasn't a good one. The employer in that hypothetical didn't return all the money to the employee. One can quibble whether or not the division would be 10,000 to 2,000, but cutting such a deal would require the employee to receive a portion of the previous premium amount, otherwise there is no benefit to the employer.
I'm also going to argue that the employer would offer this arrangement. I question whether it would happen in today's job market, but in a market of 5-7% unemployment, I think they would.
Furthermore, the benefit goes beyond netting a few thousand dollars and having a happy employee. The reduction in adminstrative expenses behind having a health care plan, or the number of employees under it, of revising the health care plan every year, of managing the health care plan budgeting....these are all very tangible gains.
I think employers would leap at the opportunity to have a green light to take a $12,000 benefit and take it off their books by retaining $2000 and increasing employee compensation by the remaining $10000.
That being said, the scaling effect would be very difficult. Would everyone's salary go up by $10000? I don't know how the employment market forces would deal with that.
Joe
My previous employer could have offered me such a deal at any time during the last 15 years, and I would have taken it without having guaranteed issue. I think this plan, if it passes (I think there little chance it will), will raise premiums enough, and with the newly perverted incentives, that you will see a move to create more independent contractor relationships. My guess is this would lead to a crackdown on such working relationships in the form of a punitive tax on both the employer and employee.
If only because the long term political effects of turning millions of employees (who may be unionized) into effectively small business owners is not likely to appeal to the Democrats.
That's for sure! And don't forget the effect of large numbers of people now having to calculate and pay estimated taxes instead of the out of sight out of mind payroll withholding. That would be great for our country, but bad for the tax and spend politicians.
With all the discussions, heated or otherwise, I keep getting left wondering about a couple of points:
1) Can anybody point out a 10 year period which left the economy and/or Federal budget where gov't agencies had previously predicted?
IIRC, the Clinton Administration in 1996 was predicting deficits ad infinitum. By 1999, they were predicting budget surpluses. A few years ago the Bush Administration was predicting Social Security bankruptcy (2017?) and the Democrats were denying it. Now the SSA is predicting going "negative" in 2011.
2) The latest gross cost given above is $829B/10-yrs. I'm not sure why even the supporters don't point out that the current Fed. budget is $3,000B+ per year. In 10 years, even if the Fed. budget doesn't increase in any other category, the Fed. gov't will be spending $30,000B+. Assuming things went as planned (see point 1 above), what's the big deal raising that spending by app. 2.7%?
Considering the Fed. track record on large social projects (and they're not great on relatively small technical/civic projects either), I consider the probability of "reform" failure to be close to 1.0. I'm wondering more about how people are choosing their debate tactics.
I don't think anyone expects the data to be perfect. We do the best we can, and muddle along. CBO scores are more about using the same yardstick to measure everyone's bills as they are about writing the 2019 budget anyways.
So what's this "free rider penalty"? It seems to be different from the "mandate penalty," and after the reduction in the mandate penalty, it's no longer comparable, but several times as large. Is this another levy on the uninsured that hasn't been talked about? Or is it going to be collected from somewhere else in the flow of funds?
I believe that's the employer mandate. What's labeled "mandate" is only the individual mandate.
Great Question. I'd like to know myself
Megan, we get it. Your opposed to health care reform.
No Jeff,
She has shown she is opposed to THIS reform. The general case is unproved.
And indeed I can't think of anyone who is opposed to "reform" providing they get to define what is meant by "reform".
Jesus Christ! Could you be any more obtuse? Is it deliberate?
Well, I thought the smiting of the fig tree (Mark 11:12-14) was pretty inexplicable.
Is this saying the bill merely will move the uninsured from ~30mil to 25mil over ten years? How is that satisfactory to anyone who cares about the issue of covering more people?
That was my first thought too. But remember, the U.S. population will be higher 10 years from now. See below for more details.
This post from Ezra Klein is pretty informative. Highlights:
Unless you're uninsured, or on the individual market, this bill is not expected to affect you. CBO estimates that 29 million Americans who would've otherwise been uninsured will be covered...
...That leaves 245 million non-elderly Americans who will pretty much be in the exact place they would've been otherwise. As for the elderly, the CBO doesn't include them because they're on Medicare. They, too, will be where they otherwise would've been(...)That's a big step in the right direction. But most people will never notice it.
So nobody will be terribly happy with the bill: it covers 29 million Americans, but leaves another 25 million uninsured (6% of the 2019 population). It doesn't have a public option. And the greatest Medicare cost cuts are projected beyond the 10-year window.
Of course, this is far from being the final version of the Bill. But in a parallel Universe where this was the final bill, 80% of Americans wouldn't be affected by it at all. For all the noise it generated over the last 6 months, it's actually quite tepid.
It's pretty expensive for something so tepid.
But cheaper than an unnecessary war in Iraq, say. And if it cuts down on 18,000 uninsured Americans dying every year because of lack of access to health care, well, its a pretty good deal. Kind of depends on how you value human life.
If you come home and found that your spouse put down a non-refundable $10000 deposit on a beachfront vacation condo in Arizona, the proper response is not to run out and drop another $10K on a home theater system. The proper response is to prevent the situation from happening again.
Comparing the cost of the war in Iraq to health care^H^H^H^Hinsurance reform is comparing apples to bicycles.
Hey stonetools, answer a question for me: Why is Barack Obama murdering innocent women and children in Pakistan using missiles fired from robot drones? How much is that costing every day, vis-a-vis uninsured who could have gotten health care instead?
Better question: Isn't killing innocent women and children in a country we are not at war with a crime?
Best question: Why are we all trying to make a healthcare debate into yet another argument about foreign policy?
:D
It's supposed to save money in the long run. From page 11 of the report:
Unfortunately, the next sentence is:It doesn't save money on net; it levies new taxes. These taxes don't come from magical fairies. They represent money that those people have to give up. Without the hefty taxes, it's not even close to deficit neutral.
It would be have been necessary to increase taxes to maintain the status quo on Medicare anyway. If the percentage of GDP that is spent on health care 10 to 20 years from now is lowered and more people are covered, it's an improvement.
The CBO scoring says that net government cash flow will be reduced, not that gross government spending will be reduced. As Megan pointed out, given that the plan includes a significant dallop of new taxes, the statement about the net does not imply Nimed's statement about the gross. Given that the bill does almost nothing to control the costs of existing programs, and creates a big new entitlement, it would be very hard to argue that it decreases government spending.
I will happily make a 10-year bet with Nimed. 10 years after the 2010 reforms, health care will consume a larger fraction of U.S. GDP than it does now. U.S. per capita spending on health care will continue to be higher than Switzerland and U.S. mean lifespan will continue to be lower than Switzerland. (Switzerland does not have a single payer system.)
David
Under the constraint of budget neutrality, I have very little concern about the proportion of health care costs covered by public vs. private spending. All other things equal, virtually everybody would prefer private spending. But, needless to say, "all other things equal" isn't very realistic in the present healthcare situation.
To recap, the big problems with the system we have now are:
1) total spending as %GDP is high and growing.
2) 10% of Americans are uninsured and up to 10% more (this varies with the criteria used) are underinsured.
3) The currend trend is for 1) and 2) to get worse.
I won't make the bet with you because I'm sure you would win. The only way I would have a chance of winning would be with the government negotiating the price of medical goods, preferably with a single player system, and that's not going to happen.
But it would at least be desirable for the number of insured people to increase, and spending as a %GDP to, huh, increase slower.
Is the modified Baucus bill better than doing nothing? The answer is yes if the %GDP spent in healthcare in 2019 and beyond is less than the projected %GDP for those years if the status quo were to be maintained. This is the relevant comparison, not Switzerland or present spending. And the bill introduces a number of recommendations designed to achieve exactly that, mainly by limiting the growth rate in Medicare and Medicaid spending.
The bill is nothing special, and it certainly won't satisfy the majority of liberals, myself included. But it's better than what we have now, and it seems impossible to do much more under the current political constraints (we'll see what comes out of the other commitees).
About Switzerland - costs are lower and UHC is achieved because:
- treatment are cheaper, since the government negotiates prices with healthcare providers.
- premiums are subsidized if they exceed 8% of household income.
- beyond a low deductible, patients pay only 10% of treatment costs.
So it's not like we're adopting the Swiss system via the Baucus bill.
But this doesn't close the massive medicare deficit. Any savings in Medicare go to new spending on this program.
Hi Nimed,
I agree that comparing health spending as a fraction of GDP under this bill to what it would have been without the bill would be better than comparing it to its current value. Unfortunately, we can't measure that number, so we have to speculate.
I am confused, though, why you would speculate that the bill lowers that number. Looking at this bill, I see a big new entitelment and essentially no cost controls. So I would speculate that we will spend more. Of course, we will get something for that extra spending (another 30M insured), but that wasn't the question at hand.
I am also confused by your comments on Switzerland. The parts of the Swiss system that you highlight (insurance reform and subsidies) are precisely what we are getting under this bill, at least for the individual insurance market. The parts we aren't getting are: (1) health insurance benefits are taxed, making employees face the full trade-off between insurance and wages, and effectively unifying the employer and individual insurance markets, (2) the eliminate of medicare, so old people are also in the individual insurance market, (3) competition across Cantons, as individual participate in a unified national market. In a nutshell, the parts of the Swiss system we are getting are the expensive parts that liberals like, and the parts we aren't getting are the cost-controlling parts that conservatives like.
Megan, there's a simple explanation for this:
"The CBO seems to be assuming it will get just about 20% of the amount spent on subsidies back in the form of tax revenues. But the effective income tax rate on the quintiles covered by the subsidies, according to the CBO, is less than 5%."
The CBO is working off of marginal tax rates on increased income, not effective tax rates on all income, as they should. 20% is far less than the marginal income tax rate, if you include payroll taxes. Of course effective tax rates are low; that's what the EITC, standard deduction, and the rest of the tax code are for.
I don't think that works; the biggest subsidies go to the workers with the lowest incomes, and their effective tax rate is not 20%. The subsidies on the people with the 25% marginal rate are pretty small.
To put it another way, there are about 4-5 million uninsured in that tax bracket, which is roughly equivalent to the 300-400% FPL band. Even if they were receiving a full 20% of the subsidies--they're not--, the math doesn't work.
Heh, is Megan really challenging the math wizards at CBO to a spreadsheet shootout?
Very well, let the death match begin! ( buys peanuts, heads for the gallery).
No, I'm just saying I don't understand how they got these results.
The bottom half of the income distribution pay zero income tax. The vast majority of those receiving subsidies will be in the bottom quintile, so an increase in salary will result in an increase in income taxes if and only if the increase is large enough to move them up from the bottom quintile into the the 2nd. Think that'll happen? No? I don't, either. That means the only increase in taxes will come from the payroll tax -- which creates two problems. 1st, the total payroll tax rate is less than 20%, which, as Megan points out means it's hard to understand how the numbers add up. 2nd, the payroll taxes are, in theory, dedicated to other purposes. How can the CBO pretend the payroll tax monies will be available to help pay for the costs of the healthcare plan?
Is Health care rationing OK as long as it's based on one's personal wealth ?
Of course it is.
This is AMERICA! and in AMERICA! you lead or you get left behind.
We pull ourselves up by our bootstraps doncha' know and screw those of you without bootstraps.
Only commies want to make sure you have insurance so you can afford to access health care.
"the math wizards at CBO": are they like the math wizards of Wall Street?
"Without the hefty taxes, it's not even close to deficit neutral."
Exactly, Megan. But Democrats don't look at it that way.
This is a massive tax increase on young people who make less than $250,000 a year. The very people Barack Obama promised he would not tax.
On the other hand, Obama handed out $4,500 welfare checks to millionaires to buy new cars.
Change!
So you obviously didn't take the time to actually find out how the bill proposes to finance the expanded coverage. So why do you bother to write stuff like this?
Actually, Nimed, the bill finances a large portion of its spending with a tax on cadillac plans, many of which are in high cost states, or to union workers who make, conservative ranting notwithstanding, a lot less than $250K
Actually, Nimed, the bill finances a large portion of its spending with a tax on cadillac plans, many of which are in high cost states, or to union workers who make, conservative ranting notwithstanding, a lot less than $250K
Which means this has been an useless exercise because Baucuscare will never fly in the House. In fact, approximately 150 members have, in the past two days, told Mad Max to take his Tax and stick it.
Yes, you are dealing with eeeval people here.
We've been here before. Single-payer works only if you negotiate prices with health-care providers and/or put limits on governmental coverage, with additional coverage in the hands of private insurers or paid out-of-pocket. Otherwise, prices get of hand. Medicare, a single-payer system for the elderly, does none of the above. Prices got out of hand. But interestingly, not as much as private insurers:
Since 1970 Medicare costs per beneficiary have risen at an annual rate of 8.8% — but insurance premiums have risen at an annual rate of 9.9%. The rise in Medicare costs is just part of the overall rise in health care spending. And in fact Medicare spending has lagged private spending: if insurance premiums had risen “only” as much as Medicare spending, they’d be 1/3 lower than they are.
This would be more persuasive if Medicare and MEdicaid didn't systematically underpay providers, who then shift costs to the private sector.
Medicare and Medicaid both pay hospitals below average cost of procedures. Yet because they are a very high fixed cost business, hospitals accept these patients to help offset overhead. According to 2007 data from Blue Cross Blue Shield Association, Medicare pays at 91% of cost and private sector at more than 120% of cost.
There's another element to consider also. While it's certainly true that Medicare pays less per procedure than private insurance, they tend to pay easier. That is, it's much easier for health providers to get Medicare to pay in the first place. Private insurers pay more once they do, but providers have to work harder to get them to do so in the first place.
The fact that Medicare does pay so easily is a problem in and of itself as it is a cost driver.
We currently have a shortage of doctors and nurses. Do you think having the government "negotiate" (a/k/a "dictate") prices will help attract more people into the medical profession? I don't. I think telling students that doctors can expect to make as much as a mid-level government bureaucrat will increase the number of students pursuing careers outside of medicine.
Megan is right. The CBO is hiding there political concession there, and Megan is gently saying we may contravert the obvious so as not to be too harsh. The question is why would the CBO do that? Daniel Drezner has a recent blogpost on how to view the Iranian nuclear concession in which he says that he 'wouldn't expect his readers to stray to far from their ideologic comfort zones - that would be crazy talk' as he gives different perspectives that might be made/chosen. This gives an insight into a common American organizational problem. In this case, the CBO is charged with and expected to give a truthful answer. They are given credit and respect for that. The president and the Democratic power brokers want this. OTOH, the CBO as it rises with this quiet audience knows that it is not to give 'crazy talk.'
What does this conversation matter?
It will pass, cost 3 times as much as they are estimating, be half as efficient, and there's not a thing you can do about it. Taxes will go up for everybody. We will wait longer for an appointment. Illegals will get free care. Our current $1.4 trillion deficit will balloon.
We are doomed. Have a nice day.
I think this is a key phrase in understanding the new CBO score: "Second, CBO and JCT have made some technical refinements in their estimating procedures, including a revised assessment of the impact of the proposed changes on premiums for employer-sponsored health insurance and the resulting effects on tax revenues."
The CBO document is unclear on the impact of the technical changes. However the original score included $12 B in revenues from the shift in compensation from health insurance to wages (wgaes would be subject to payroll tax whereas health insurance wouldn't be). THe new score assumes $83 billion in revenue from this shift. Not sure why the estimates are so different.
More broadly speaking, the CBO scores what is put in front of them. They don't pass judgement on whether the legislation is unrealistic. I find it entirely unrealistic that Congress will cut physician payments in Medicare by 25% in 2011, as scheduled. Yet the CBO assumes that this cut will occur even though it's been reversed 100% of the time.
I also find it unrealistic that Congress will allow more and more high cost health plans to be taxed every year. The threshold for the tax will grow at CPI + 1% while heath care costs have grown at double that rate -- meaning more and more plans will be taxed every year.
"I find it entirely unrealistic that Congress will cut physician payments in Medicare by 25% in 2011, as scheduled. Yet the CBO assumes that this cut will occur even though it's been reversed 100% of the time."
I agree. Without those cuts the cost goes up approximately $200 billion over ten years. With those cuts... good luck finding a physician to take Medicare. It is already an uphill battle and getting worse.
Quibbling over a hypothetical 30B$ over 10 years seems pretty ridiculous to me. There are two MUCH bigger questions, in terms of dollars churning around.
1)Will this reduce our Medicare costs? That was one of the major goals of all of this. If it reduces medicare by even 0.5% that will save us a LOT of money.
2)Will it reduce private insurance costs? Well, without the public option, the pressure on private healthcare will be less. But, again, if it slows the growth of health care costs (currently in DOUBLE digits) by even half a percent a year, that will be a huge savings over ten years.
I have no doubt the libertarians and deep red repubs will argue that it will not achieve either of things, and will cause halitosis and incontinence to boot.
But what we were doing before was NOT sustainable.
Quix0te,
But we already have conclusive evidence of the success, or lack thereof, on cuts in Medicare/Medicaid. Basically, the Baucus plan promises to do a better job in the future than Congress has done in the past (and note that Congress was controlled for 14 years by the party most likely and willing to cut these programs). That is all.
As for cuts in private spending, the Baucus plan doesn't promise any cuts at all- it actually promises more spending through its mandates, subsidies, and the fact that Medigap type insurance will make a comeback if Congress actually follows through on gutting Medicare Advantage.
I think its highly probable that they will re-institute lavish medicare benefits. And pay for them with taxes on younger workers. Either payroll taxes or some other revenue source. The elderly are too good at gaming the system. But for now, this will reduce the cost of medicare. Without either cuts to medicare or additional revenue, medicare was going to go bankrupt. Apparently the party most likely to cut medicare isn't who you thought it was.
LMAO,
They won't reinstitute lavish medicare benefits, they will simply not make the cuts they are promising. We have seen this repeatedly- when the cut comes to the point of being actual cuts, they are immediately repealed. The savings won't show up on even a temporary basis. This entire charade was being performed in order for Democrats to get a plan passed without having to raise taxes to pay for it all up front- something that had zero chance of passing. So, they came up with the brilliant idea (and it is brilliant since it has fooled so many people) of "paying" for their expansion by promising to cut somewhere else. The CBO knows this is a charade (the director even said so in this analysis), but they can only analyze based on what Congress
"what we were doing before was NOT sustainable"
So we can keep doing what we were doing before, only add more expense to it, and it will be sustainable?
When I was a kid (in the '60s), my parents never used the term "health insurance"; it was "hospitalization". One of the biggest problems with all of this is the desire to eliminate the consumer as the payer for everyday health issues. If people see the benefit of spending money on their health (versus their cell phone, gas plasma TV, etc.), they will. If the government provides "health care" instead, the cost will be almost incalcuably higher, no matter whether you're ultimately able to account for it or not. What is truly ridiculous is arguing about this without recognizing that the real argument is whether we stay with a free market approach, where most of the problems have been caused by STRAYING from the free market, or whether we switch to a socialistic approach, made attractive by having handicapped the system so greatly already. It's like we've hobbled our horse, and now we're going to get off and walk because the horse doesn't run fast enough.
If people see the benefit of spending money on their health (versus their cell phone, gas plasma TV, etc.), they will.
Actually, scrooge, the problem is that there are a lot of people that won't. Well, not their money anyway.
Yes, TakeFlight, that's the way it works in a free society. That's why I've been able to put myself through college & graduate school, work for employers for many years, and finally have enough money to start a business where I employ 25 people: because I could choose how to spend my money. If someone else would rather buy cigarettes than a flu shot, that's their choice. We can make this move towards (more of) a nanny state, but not without bringing the entrepreneurs and hard workers down to the level of those that are uninsured, unemployed, uninspired and don't care. In a free society you'll always have those that either can't or won't work or take care of themselves, but by using government force to make the rest of us take care of them, you reduce our ability to produce, create, innovate, and take care of the weak by OUR choice.
"If people see the benefit of spending money on their health (versus their cell phone, gas plasma TV, etc.), they will."
America is a consumer oriented society. If people have money, they will buy a HDTV, a house. People don't wait however to have money before they buy a heart attack. In China people save a lot of money in part because health insurance doesn't exist. People might pool together to buy an old dialysis machine. In America, we look on ourselves as making it when we get a job with good benefits. This entire debate is about 'you should be so lucky.' What really isn't thought of is that those benefits, yes, are present instantly through the pooling of risk, but you are participating in a savings program that makes it possible that the pool has the money to 'buy you a heart attack' if you should, as my infectious disease professor used to say, 'enjoy' one.
Considering that the private option has already been tried, and failed I'll see your 'consideration' and raise. 'Nuff said about debate tactics from you.
How has the private option failed? Most people have good health insurance in the private market.
Are you serious? Do you still get raises? Do you know anyone who has lost their insurance recently? Do you know anyone that has been denied perfectly legitimate claims? Or that has been bankrupted by medical costs?
Do you still get raises?
Irrelevant to the question at hand.
Do you know anyone who has lost their insurance recently?
Nothing in this bill will change anything regarding this, except after 3-5 years people will lose their insurance at a rate faster than now.
Do you know anyone that has been denied perfectly legitimate claims?
Can you point me to the claim denial mitigation language in the bill?
Or that has been bankrupted by medical costs?
Can you point me to the medical bankruptcy mitigation language in the bill? Cause I don't see where that is now impossible.
None of your the questions you ask really have anything to do with the problems of the "private option," to the extent it exists.
Most people get their raises in the form of higher contributions to medical "insurance." Doesn't seem like a good trade off to me, but apparently people really want to feel like other people are paying for their healthcare and to have comprehensive, low deductible coverage, so that's what we get.
The only people I know that have lost their insurance have lost it as a result of losing their jobs. Sounds like a good reason to decouple insurance from employment, but again, then it might feel like you're actually paying for you own health care.
Unlawful denial of coverage? Seems like a lack a failure to regulate/enforce contracts. Maybe we should devote resources to this instead of spending all our regulatory resources on decreasing competition and manipulating markets.
Bankrupted by medical costs? Again, seems like that's a good place to have real insurance, rather than what we have. If we as a society wanted to cover catastrophic care, that would probably be a reasonable service for a government to provide, but again, we're more worried about being able to get our z-packs for "free"
now that the CBO scoring has been out for a while -- the analysis is beginning to roll in--
file this under the "law of unintended consequences":
A 70-percent Marginal Tax Rate
Jim Capretta looks at the Baucus healthcare bill and concludes that, because the subsidies phase out as income rises, it imposes an effective marginal tax rate on income of about 30 percent for many families. Add that figure to the income tax, the payroll tax, and the phase-out of the EITC and "the effective, implicit tax rate for workers between 100 and 200 percent of the federal poverty line would quickly approach 70 percent — not even counting food stamps and housing vouchers."
http://www.thenewatlantis.com/blog/diagnosis/a-70-percent-tax-on-work
Whoa: Way too much clarity from CBO;
No way to hide the tax increase.
I was too clear in one of my presentations,
and was barred from attending subsequent
meetings: Their minds were made up, and
they did not want to be confused by facts.
So how does this equate to Medicare and Medicaid underpaying providers?
When the government dictates (not negotiates) rates below the cost of production, like Medicare and Medicaid do, then it is underpaying and forcing providers to shift costs.
Underpay is probably not the technically right term here, but it is close. The cost shifting is the key element, and this arises because Medicare and Medicaid both have a captive patient base. Hospitals, doctors, and Medicare/Medicaid patients are not free to negotiate payments above the reimbursements from the government. When faced with a take it or leave it proposition, the hospitals and doctors will often take what they can get since they do have a lot of sunk costs that are invariant with their patient load.
I know you have a match background, so you clearly see that 91% is less than 100% of the COST of performing procedures. You can't lose money on each procedure and make it up in volume.
From the WHO on healthcare: "The U.S. health system spends a higher portion of its gross domestic product than any other country but ranks 37 out of 191 countries according to its performance, the report finds. The United Kingdom, which spends just six percent of GDP on health services, ranks 18 th . Several small countries – San Marino, Andorra, Malta and Singapore are rated close behind second- placed Italy."
So TD, the things you have been "sreaming for months" are flat out wrong. read the report.
http://www.who.int/whr/2000/media_centre/press_release/en/index.html
FYI that study ranks us #1 in actual health outcomes and #3 in distribution of care. So we pay the most, get the best care and distribute it basically as well as everyone else.
The 37 ranking is because of extraneous factors like LE and payment.
The US is also ranked #1 in responsiveness, which means if you are sick you can see a doctor quickly and if you are diagnosed with a major ailment you can see a specialist and access specialized care without having to wait an unreasonable amount of time.
I think the point went right past you, so let's try again: how do you know these rates are 'below the cost of production'? This isn't a difficult question, and rephrasing the original statement is not an answer.
I answered you above, we'll assume you missed it and aren't simply ignoring the answer to your query.
Cost of production in health care services is based on three major factors: physician effort -- including factors such as time the procedure takes, effort the procedure involves, expertise the procedure requires and the amount of education required to master the procedure; practice management -- including factors such as both direct expenses (surgical staples,) and indirect expenses (cleaning up the treatment room), administrative costs, and even allowance for equipment usages; and malpractice exposure.
I think the point went right over his head - anybody can say "considering that ..." and going from there can come up with any conclusion that they want. We also get the - hilarious in this instance - usual hypocrisy from one of the usual suspects, who has no problem challenging the "considering ..." when somebody not on the team does this (and btw, he's right to do so, generally speaking, if someone tries to slip in one of their pet suppositions as a 'fact'), but is conspicuously silent when one of the homies goes for it.
I'll correct your 'misconception' - we both know it isn't - and pop this near the top of the queue: haven't I already specified what you will have to do before I bother treating you like a serious poster? Something about admitting mistakes, apologies, that sort of thing? Or were you hoping that I'd forgotten and that you were going to slide under the radar? Until you're willing to take some of that 'personal responsibility' for your past behaviour that you're so fond of prescribing for others, I see no reason to legitimize anything you have to say with an on-point reply.
Until you're willing to take some of that 'personal responsibility' for your past behaviour that you're so fond of prescribing for others, I see no reason to legitimize anything you have to say with an on-point reply.
Elaborate please....
You know, that's not what I asked you:
Could you answer the question? If I'm being billed $20 for a paper hospital gown, Medicare will only agree to $10, and I know damn well it doesn't cost more than $5, how do you equate the $10 charge with 'below production'?
I don't know if Medicare/Medicaid rates are below the cost of production, but you seem to be thinking of cost of production as the actual dollar costs, without including the amount it takes to compensate physicians/health care providers for their time.
To the extent medicare/medicaid "underpays", some healthcare providers will leave the field. Lots will stay in the field b/c they've already gone through the educational process and don't have any clear alternatives, but the real shortage will come when people stop entering the field b/c they see it doesn't pay well and requires a ton of school.
I don't whether Medicare/Medicaid underpays, but anecdotally, I have two siblings that are physical therapists, and their practice would not be able to keep its doors open with medicaid rates; with medicare rates only they could survive but nobody there would be happy and very few people would go the extra three years of school for that lifestyle. They take those patients to the extent they are idle, but want as little as possible to do with them.
I also know several doctors that won't take medicare/medicaid b/c they say it's not worth their time. It's just anecdotal, but this makes me think medicare/medicaid reimbursement rates are already pushing the limit on how little they can pay.
I guess the simplest way to answer your question is to tell you that I have been a medical practice management consultant for almost 30 years. When I add together the cost of running a practice, the premiums for malpractice and a reasonable base salary for a physician and divide that sum by the number of available appointment slots I can come up with a reasonable "cost of production." Obviously, that cost varies by specialty and by region, but what I have found consistently is that if I filled every single one of those slots with Medicare or Medicaid patients, my clients would go out of business very quickly.
When I come in the door of a struggling practice, I almost never find an empty waiting room or a blank appointment sheet. What I invariably find is a practice that was once thriving, but has now become dominated by Medicare patients, whom the doctor has been taking care of "for years" and does not have the heart to dismiss.
I don't know what that means either, hence the tics. If you recall, here is the original post:
And here is my original question:
So far, all I've gotten is a lot of runaround.
"So far, all I've gotten is a lot of runaround."
No, you have gotten answers that even a high school Junior Achievement student could understand. So typical. Here's my advice: Go to four years of medical school, pick up $100,000 in debt and spend six years in a residency making less than the hospital's maintenance staff while the interest on your debt accrues and capitalizes to the loan. When you are finished, give your services away for free... or for cost, if you can figure out what it is.
Sigh. On the faint chance that I missed one of your posts, could you quote the bit where you've shown that private providers aren't overcharging? You know, like in the example I gave of paying only $10 for a $5 paper gown instead of $20?
I posted the original comment about Medicare and MEdicaid underpaying hospitals. And in hindsight perhaps "underpaying" is too subjective a term. Some people may regard payment that is below average cost to be adequate. What i meant was that many (most in fact) hospitals lose money on Medicare and Medicaid. And because of this, the private payers cross-subsidize the government payers.
The evidence for this is strong. Not only the BCBSA study i cited, but also:
This study from MedPac and AHRG: http://waysandmeans.house.gov/media/pdf/111/medpac.pdf
I'd point people to page 7 where it is calculated that the Median Medicare margin for hospitals is negative.
Also several articles in the journal HEalth Affairs discuss Medicare cost-shifting. I quote. "If private payers’ acceptance of the cost-shifting burden were to erode, our system of health care financing could become unstable"
http://content.healthaffairs.org/cgi/reprint/25/1/22?maxtoshow=&HITS=10&hits=10&RESULTFORMAT=&fulltext=Medicare+cost+shift&andorexactfulltext=and&searchid=1&FIRSTINDEX=0&resourcetype=HWCIT
Megan,
Do you honestly think that you've somehow come up with a plain English proof that impugns the results of people who have gone through and meticulously done the math?
You didn't have gripes with CBO when it was giving bad scores to health care reform, but now, all of the sudden, you take your amateur hunch as more believable than a detailed professional examination.
At least wait, like, a few days or a week before you flip flop your reasoning to maintain support for a constant policy outcome.
How can they do it? It's the Medicaid and CHIP-- with reimbursement so low that it amounts to nearly free care.