Friday, November 9, 2012

Future of health care?

Now that Obama's been reelected it looks like Obamacare (or ACA) will be here to stay. And who knows? This legislation (and his presidency) may well end up marking a watershed moment in US history, similar to FDR's New Deal (which gave us Social Security and the SEC) and Lyndon Johnson's Great Society (which gave us Medicaid, Medicare, and federal education funding). A lot of people are up in arms about the ACA, presumably because everyone is required to buy health insurance or pay a fine, BUT, it isn't a government takeover of healthcare. Doctors will still make boatloads of money (partly because of restricted supply) and Obama isn't going to be running any hospitals.

The figure below (taken from this good article) shows which countries actually do provide universal medical coverage (i.e., you typically don't have to worry about getting insured). Now, not only do you see Europe on there (pretty much all of it, apparently), but also Brazil, Australia, Japan, Argentina, Chile, Korea, New Zealand, and others (pretty much every other rich country but us). Interestingly enough, despite these countries' willingness to cover every citizen, almost all of them spend less per citizen on health care than does the US.

So what's our problem?


  1. If by watershed moment, you mean that this is the moment when we watched more of our prosperity go down the drain, you may be right.

    I can't speak for all, but most parents that I know that have multiple dependents are upset because of the additional taxation contained within the bill. Beginning January 1 2013, my health care benefits from my employer (not even the portion I pay) will be taxed as income. For me personally, that's an extra $2000-$5000 per year (depending on if I add my wife to my policy.) If I choose not to add my wife, I have to insure my wife separately, using taxed income, or (yes) pay a fine. My employer will be taxed on my benefits too, not to mention the thousands of dollars in additional accounting fees as a consequence of the new bill. Guess what that means? Slashed benefits, so that the company can make the bottom line after Obama takes his cut.

    IMO, the ACA will do NOTHING to keep individuals out of the ER. The entitled ones will continue to go to the ER just like they always did, wasting resources, money, and time (this is a good first-hand account of this group .) Additionally, I foresee fewer insured individuals actually seeking preventative care early when symptoms arise. More and more underinsured individuals will delay until their diseases have reached a terminal level and contribute to the rise of chronic disease in this country. The result will be a per-capita increase in spending per person in the USA with diminished general health. Does that sound like a good investment?

    Now, I'm not a heartless bastard. I genuinely care for the needs of others. I just think that this is a terrible solution to the issue of health care in our society. It's an additional drain on the wealth of this nation that it cannot afford right now. If this is the plan that you endorse, I think it's time to change the name of your blog.

  2. First off, Kai, I'm no ACA apologist. I'd much prefer a system where govt was the main insurer instead of our weird hybrid system, which the ACA preserves. But, seeing as how (politically) we're not ready for universal health care, there are a few things _any_ govt plan would have to do to get make sure the sick and poor can both get insurance (and this is what Romney and Obama both did). First, as insurance companies don't want to insure sick people because they cost so damn much, there has to be a way to make the healthy/young get in the pool with them (and bring premiums down). So, that's why there's a mandate (it prevents adverse selection). Add on the fact that poor people can't afford insurance, and you get subsidies from the govt so they can buy insurance and get in the pool too. You probably know this, but I thought it might help others.

    As for your specifics, I just want to point out that health benefits won't be count as taxable income (as far as I can tell), so that $2-5k/yr increase won't happen. This is the most recent thing I found: But there are other fact-check sites that confirm this.

    In terms of your employer being taxed for providing health benefits, I'm not sure what ACA provision you're referring to. You might be referring to the excise tax on high-value health insurance plans, which begins in 2018. What this does is levy a tax on so-called "Cadillac" insurance plans to encourage individuals and employers to choose cheaper plans. This arises because lately employers have been adding health benefits instead of raising wages (cause of the deductibility of the former). "This is actually an attempt to address a core Republican concern: The tax break for employer-provided health insurance, which Republicans believe encourages employers to spend too much on health care while also making it impossible for a health-care system not based on employers to emerge." See for details.

    You said: "I foresee fewer insured individuals actually seeking preventative care early when symptoms arise. More and more underinsured individuals will delay until their diseases have reached a terminal level", but the ACA actually reduces the cost of preventative care (to zero in a lot of cases). And I'm not sure what future uninsured you're talking about, as poor people will be given help by the govt to get insurance (and everyone will be fined if they don't have it).

    Also, see here again for a chart showing the size of this tax increase in comparison with those of the last 20 years (and it's not that big).

    Sure, as in the ER article you mentioned, there are deadbeats that feel entitled. That's unfortunate, of course, but no reason to not help tens of millions obtain medical coverage.

    Let me know where I slipped up here.

  3. Okay, so if you're compensation includes a cadillac, you have until 2018 to pare back until you're under the cap. But what if health care costs continue to rise for employers, and by 2018 those aren't cadillacs anymore, they're toyotas?

    My employer will not see additional taxes FOR providing health benefits, but WILL see additional taxes to pay for ACA. Additionally, it will cost them thousands in additional accounting fees because there is a lot more paperwork involved under the new system.

    Imagine that companies with with less then 50 employees which is a huge portion of the work force decides its cheaper to simply not provide health care and all of those people are now on the govt "plan." Let alone the avg company spends 11k on healthcare per employee (when you average families vs individuals) is only penalized $2000 for not having it. For those business owners who don't currently pay for health insurance, don't you think they're going to be a lot more likely to lay people off if they're faced with paying a $800 penalty per employee every year than they are to expand? What does that do for the job outlook?

    The net result is going to be a lot more people under-insured by their employers, or uninsured and on the government plan. Taxes or deficit will continue to increase to cover the cost of all of these additional uninsured.

    I guess all we can do is wait and see what is going to happen.

  4. i wrote a response and the blog lost it. I don't have time to write another one.

    Suffice it to say that this is the real business world we're talking about. I don't think the government outlook is accurate, because they're not taking into account future slashed benefits. What if all companies with less than 50 employees (a huge chunk of the workforce) decide to cut health benefits because it's cheaper to pay a $2000 fine than $5000 per individual or $15000 per family? Or companies that currently don't provide health insurance simply layoff or refuse to expand rather than face a fine of $800 per employee? All of those people are in the pool now. Add that to the government subsidies. The net result will be more taxes.

  5. This article explains why small business won't be over-burdened. For example:

    "The bill in fact contains substantial benefits (some might even say giveaways) for small businesses. That starts with a program already under way to offer special subsidies to firms with fewer than 25 employees that want to offer health benefits. As long as your employees earn less than $50,000 on average (law firms, medical practices, and other elite professional partnership are thus ineligible), you can get a tax credit to defray 35 percent of the cost of the insurance if you’re a for-profit firm, and 25 percent if you’re a nonprofit. When the law really gets rolling in 2014, those subsidies rise to 50 percent for for-profits and 35 percent for nonprofits."

    Also, what extra taxes will your employer have to pay to fund the ACA? Instead of employers specifically, from what I read, "the largest tax increase in the law is on high earners, who will see their Medicare payroll taxes increase by 0.9 percentage point and who will also pay a slightly higher rate on investment income."