Tuesday, July 21, 2009

"Don't tax him. Don't tax me. Tax that man behind the tree!"

This quote, famously attributed to the late Senator Russell Long of Louisiana, pretty much sums up reaction to the various ideas being put forward to pay for health care reform.

Both the New York Times and the Wall Street Journal report that Speaker of the House Nancy Pelosi hopes to scale back or even eliminate the tax surcharge proposed on "higher income" households, which will require that the House go back and revise its bill, H.R. 3200, to find more savings or "offsets." The Senate, for its part, has signaled that it is disinclined to pay for health care through an income tax surcharge, and reportedly is looking at taxing high cost insurance plans, limiting the amount of employer-sponsored health insurance that is treated as tax free income, and raising taxes on sugary and alcoholic beverages and other "health-related" taxes, among other options. Each of these options, though, will surely be opposed by those whose oxen will be gored.

The reality, of course, is that no one likes seeing their taxes go up, especially for something that that they think they are getting tax free. But are they really?

No, because each and every one of us already pays for the uninsured. We just don't see it as a line item on our IRS 1040s. In 2004, the ACP published a white paper that cited studies on the estimated costs associated with lack of health insurance. One respected peer-reviewed study found that total medical care received by the uninsured in 2001, including both the full-year and part-year uninsured, was $98.9 billion. This is almost exactly the same as the little over $100 billion per year that the CBO estimates would be the cost to provide coverage to just about everyone under the House bill.

Another study co-funded by ACP Foundation and the New York Academy of Medicine, found that over two-thirds of internists treat uninsured patients who are unable to pay the physician's usual fee, charging them a reduced or no fee and/or creating a payment plan. Approximately 60 percent of internists who provided any charity care provided between a quarter of an hour and five hours per month, while another 15 percent provided six to 10 hours monthly. The Institute of Medicine found that for the entire uninsured population of roughly 41 million Americans in 2002, the aggregate, annualized cost of diminished health and shorter life span was estimated to be between $65 billion and $130 billion for each year of health insurance forgone.

In other words, we all pay for the uninsured: through higher health insurance premiums and higher Medicare payroll taxes associated with cost-shifting, from the lost productivity and lower earnings that result when people don't have health insurance, from higher federal, state and local taxes to pay for safety net programs, and from the uncompensated care provided each and every day by physicians.

The debate today shouldn't be over raising taxes to cover the uninsured. Instead, it should be over whether it is better to continue to hide the $98 billion we already spend on the uninsured, or to make it explicit by having the federal government collect the taxes and find the savings needed to cover everyone. The price tag is about the same - just about $100 billion per year plus or minus. But one would continue a "hidden tax" that still leaves 47 million without health insurance, while the other would help fund coverage for 97 percent of Americans.

Factoring in the enormous human and economic costs of being uninsured, it seems to me that it would be cheaper to increase taxes and find the savings needed to cover everyone. We should debate who should be taxed and how, but let's not pretend we aren't already paying.

Today's questions: Do you think it is more effective for the government to collect taxes to pay for universal coverage - or to maintain the current system of paying for the uninsured through cost-shifting to others? If taxes need to be raised, who would you tax?


Unknown said...


Perhaps that's the wrong question. The question should be "Since the US already spends more than 17% of its GDP on healthcare, how can we cover the uninsured without increasing the percentage even higher?"

Arvind said...

Again the same Obama line, but coming from Bob, the so-called physician-friendly Advocate.

Please don't mistake "uninsured" with "uncared for". We all know that at least 50% of currently uninsured are voluntarily uninsured, not simply financially distressed.

If physicians want to provide charity care, they can decide how, where and how much they want to provide. We don't need the govt telling us or forcing us to provide charity care by sucking our taxes even more. At least this way 100% of charity goes towards "care" rather than getting filtered through govt bureaucracy. Let's see if we can find a 100 billion in efficiency cuts in the Federal and State governments, so we can pay for this program.

Let's not tax the most productive members of our society so that we can provide "insurance" to the least productive members. Don't kill the goose that lays your golden egg, Bob.

Jay Larson MD said...

Universal coverage or 43 million uninsured. Public option or no public option. Single payer or the status quo. Tax or no tax. No matter what the decision, someone will be peeved. This is why I am not a politician.

Steve Lucas said...

I tend to be in David's camp on this one. When you pick up the WSJ and see the July 20 banner headline Drug Makers Criticized for Co-Pay Subsidies, and you know the UK's NICE would hopefully prevent an issues such as this you have to ask: Why do we allow our system to be gamed in this manner?

We have enough money in the system, but as you put it, who's ox is going to be gored to get this type of waste removed.

Steve Lucas

PCP said...

People are all very different. I am certain there are those amongst the 46 million uninsured, that are truly unable to get insurance, that are in need and that we probably ought to help.
I am equally sure that there are a significant number amongst them that are of a massive entitlement mindset. That is the cohort that I believe the American public fear the Democrats policies enable/encourage/appease etc. Every practicing Physician knows under the current payer systems esp. Medicare/Medicaid and to some extent even Private Insurance, Patients today have massive "rights" but without the reciprocal "responsibilities". We know it because we see it every day. Ever since the "doctor knows best days" went away, we have totally lost control of costs since it has become a totally DTC marketing driven system of health care, if you can "sell it" to the patient then do it and make money, to some extent even Doctors especially Specialists ave gone that route. That is a system which is bound to fail in controlling/containing costs. The amount of marginally more useful equipment/medications/services etc that are built into the system at inflated prices, and which are demanded by beneficiaries is astounding. It cannot continue and we are grappling with how to address that reality. Additionally any effort to modify this will engender bitter opposition. That is why health care is so hard. Because to do it right, it involves taking away certain things that have come to be felt are "god given rights". Mr Obama does not appear ready or willing to make those hard choices.
We need to rebuild our system on value and the current reform is patchy at best in this direction.
Where is the attention being paid to Tort reform, the DME explosion, the DTC advertising(with purchasing on 3rd party payers), the home health fiasco, where are the insurance company givebacks/reigning in, and there are countless other issues which when/if addressed collectively can and will "bend the curve". Absent this, we will just be expanding entitlement programs which are already lurching toward fiscal disaster. That is why Middle America is losing heart.

Mark Rasnake said...

The current estimates for the cost of this healthcare plan are delusional underestimates. As an example, the Medicare part D plan was projected to cost $400 billion in the first decade. True. However, the rate of growth is such that the second decade cost will be well over $1 trillion (data compiled by the Heritage foundation from CBO estimates). Similarly, the true growth in costs of this proposed reform will occur in years beyond the current CBO estimates. Any estimates of needed tax increases must include preparation for these future years. Ignoring this with Medicare forcasting has led to the impending insolvency of this program.

We currently have federal and state healthcare plans with unsustainable growth rates(Medicare A/B/D and Medicaid). Massive increases in taxation on all of us will be required just to fund these plans. Add on the taxes required from states to fund the additional Medicaid burdens mandated by the House plan. Then you can start to add the federal taxes needed for the "public option." Additionally, several organizations see the "8 or 9 million" on the public option as a gross underestimate by neglecting possibility of employers shrugging the costs of healthcare onto the public debt.

This will be a fiscal disaster. The best way to ensure the health of a population is through economic growth. Regardless of who pays, the taxes needed for this plan will reduce our economic growth to such an anemic pace that rationing will be an inevitable outcome. Lets see some fiscal responsibility with our current unsustainable government healthcare plans before we take our country on another risky public entitlemnet spending spree.