OP-ED

The Wrong Way to Save Money on Health Care

Employer outlays for workers’ health insurance slowed from a 9 percent jump last year to less than half that — 4 percent — this year, according to a new survey from the Kaiser Foundation. Good news?

Our political class believes it is. The Obama administration attributes the drop to the new Affordable Care Act, which, among other things, gives states funding to review insurance rate increases.

Republicans agree it’s good news but blame Obamacare for the fact that employer health-care costs continue to rise faster than inflation. “The new mandates contained in the health care law are significantly increasing the cost of insurance” says Wyoming senator Mike Enzi, top Republican on the Senate health committee.

But both sides ignore one big reason for the drop: Employers are shifting healthcare costs to their workers. (The survey shows workers contributing an average of $4,316 toward the cost of family health plans this year, up from $4,129 last year. Many are receiving little or no employer-provided coverage at all.)

Score another win for American corporations — whose profits continue to be robust despite the anemic recovery — and another loss for American workers.

Those profits aren’t due to a surge in sales. Exports are down (Europeans, Japanese, and Chinese are all pulling in their belts) and American consumers don’t have the dough to buy more.

The profits are largely due to lower corporate costs, especially when it comes to their payrolls. Employer-provided health and pension contributions are shrinking, and the real median wage continues to drop.

High unemployment has given companies more bargaining leverage over their workers, who have to accept lower real pay and benefits or risk losing their jobs.

When it comes to health insurance, employees increasingly have to choose between health-insurance policies with sky-high premiums or with sky-high co-payments and deductibles. And since they can’t afford the former they’re opting for the big co-payments and deductibles – or no insurance at all.

The result is fewer visits to the doctor and less use of other medical services.

This is a new trend, and it comes despite the Affordable Care Act (which hasn’t been fully phased in). And it wouldn’t be worrisome if we were seeing too much of doctors before, and using up medical resources we didn’t need.

But it’s worrisome if it means less preventive care, or health problems going untreated until they become chronic illnesses or crises.

Healthcare costs do have to be better controlled. They now claim 18 percent of our entire economy. But the best way to control them isn’t by cutting back care. It’s by wringing inefficiencies out of the system.

Our healthcare system wastes 30 cents of every dollar spent on health care, according to new calculations by the well-respected Institute of Medicine. Much of it is wasted on repeated tests, and a huge portion wasted on paperwork – between doctors and hospitals and specialists and insurers, to justify expenditures by one group to be paid by another.

A single-payer system would be far more efficient.

So back to my original question. Is the dramatic slowdown in employer health-care costs good news? It all depends. If we and our families are in good health, or we’re high earners who can afford good health coverage without big co-payments and deductibles, or if we own lots of shares in companies showing higher profits because they’re trimming pay and benefits – or we’re in all three categories – it’s probably good.

But if we’re none of these, it might not be good news – especially if it means we’re getting less care than would otherwise keep ourselves and our families healthy.

At the least, if we’re concerned about the health and well-being of all Americans, we need to find out much more before we celebrate.

Robert Reich served as the 22nd United States Secretary of Labor under President William Jefferson Clinton from 1992 to 1997. He shares many of his thoughts and columns at Robert Reich, where this post first appeared.

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  1. A motivating discussion is worth comment. I believe that you ought to write more on this topic, it may
    not be a taboo subject but typically folks don’t discuss these
    issues. To the next! All the best!!

  2. Good points about Germany.

    All that I would add is that the American states which are closest to Canada are not too far behind Germany in most measures of security.. (Mass, NH, VT, MI, MN, WI, ND, MT, WA)

    America gets its reputation for stinginess from the South, and from the border states near Mexico.

    (see Michael Lind’s piece, “Uninsured LIke Me.”)

    Some of Germany’s social protections go all the way back to Bismarck.

    Biut other protections were installed by American occupiers, a fair number of whom were Jewish women admirers of FDR, All I can say is, quite the irony.

  3. John Lynch & Bob

    Very interesting about he ICU study at Mass General. Could you tell me where you found the study?

    As a doctor who speicalizes in intensive care once told me . . .”If people only knew . . . If they heard the patients groaning, saw them trying to jump out of their beds . . (which is why many have to be tied to their beds . . . ” There is such a thing as “ICU” dementia. I’m told that people usually get over it after they are released from the ICU (if they are.) But the ICU is definitely the least desirable place to die.

    Intensivists (both doctors and nurses) also do great work.And of course, many lives of saved. But many other people shouldn’t be there. They should be at home, getting palliative care, or in a hospice.

    I entirely agree about the need to educate patients to the dangers of over-treatment.

    But our newspapers and news media are not going to do that. Hospitals are Big Advertisers. A paper in North Carolina recently did an excellent inviestigative series on North Carolina’s brand-name hospitals over-charging (see http://www.healthbeatblog.com/2012/09/the-third-rail-of-payment-reform-tackling-wide-variations-in-how-much-providers-charge/) and the lead reporter said the paper expected to be sued–but decided to do it anyways. (A brave editor and publisher. So far as I know they haven’t been sued.)

    But in general you find that even papers like the New York Times don’t want to
    anger hospital/advertisers.See this piece by the Deputy Managing Editor at the Dallas Morning News http://www.healthbeatblog.com/2011/01/when-a-local-newspaper-investigates-local-hospitals/

    Bob-

    My step-son and his wife lived in Germany for a number of years.
    Higher taxes are well worth it: Excellent heatlh care, good schools, excellent materntiy leave (we’re about the only developed country in the world that doesn’t provide maternity leave or make it mandatory that empolers provide it) good social securitiy.

    Here, we tolerate much higher levels of poverty. So we pay lower taxes–while abandoning our unemployed after a relatively short period of time (this is one reason why so many American children go to bed hungry) and failing to provide a decent public school education for our poor. (Visit schools in Germany– no cockroaches, no mice, no rats, they’re clean, well maintained and air-conditioned as needed. Their teachers are respected– and well paid.).

    Although Barry suggests that only the wealthiest 20% of Germans travel, the truth is that the vast majority of Germans are middle-class and comfortable. They have enough discretionary income to travel to other countries. (As Barry indicates travel is much cheaper because distances are not so great– they can easily drive to France, Italy, Austria–and they do.)

    Germans have solved the housing problem by regulating rents–something we used to do in NYC, but too many wealthy people took advantage of the system.

    In the small cities I’ve visited in Germany, homes are well-maintained. Public spaces are very clean.

    Most Europeans in western Europe consider their quality of life better than ours. As Barry suggests, we’re talking about different values. Traditionally,
    Europeans don’t believe “bigger is better” or that “more is bettter.” A French
    woman would rather have 5 or 6 very well made dresses, suits, whatever in her closet than to have a closet packed with junk.

    The price of gasoline is much higher and long ago they learned to drive fuel-
    efficient cars while Detroit sold us gas-guzzlers. (Most recently SUVs)

    Paying higher taxes but having greater security, greater equality, and a better life style is worth.. At least to Europeans.

  4. It’s all well and good to focus on the insurance nuances of the ACA – and Maggie makes some compelling arguments in favor of regulated private insurance over single payer – but this debate completely omits the central roles of doctors and patients. The only allusions to doctors refer to their near universal insistence on defensive medical practices to protect themselves from lawsuits.

    This, of course, is a problem. But so is our stubborn refusal to recognize it as the unethical practice it inherently is – subjecting patients to medical interventions, including dangerous hospitalizations, they don’t need explicitly violates medical codes of ethics.

    It also happens to be quite profitable, which explains why so-called malpractice reform in states that have adopted caps on patient damages has failed to stem the growth in medical spending. Curtailing the growth in medical spending – which is projected to roughly double over the next decade or so even with the ACA – will require many physicians, especially specialists, to accept lesser incomes. It will also mean less growth in healthcare employment, and maybe even select reductions in employment.

    These will be bitter pills to swallow – and no one spends more on lobbying to prevent such things than our doctors. Not even “Big Pharma” and the device companies come close.

    Finally – and this is crucial to overcoming the predictable resistance from doctors’ groups – patients desperately need to be educated to be smarter medical consumers. The “do everything” mindset will be tempered by the increasing cost to patients and their families, but much greater “demand side” leverage is achievable if patients learn to fear their treatment interventions as much as they do their medical conditions.

    This means confronting the fear-drivers behind so much of our poor medical decisions – aggressive treatments that often cause more harm than good – by aggressively educating patients about the often substantial and largely unrecognized risks of these aggressive treatments. A study at Mass General Hospital of end-of-life-care patients found that – after dying patients were shown videos of what end-of-life care in an ICU actually entailed – they UNANIMOUSLY rejected it.

    This experience can be extrapolated more broadly to suggest that such an all-out patient education push may be our best hope to avoid financial ruin. It may also be our best hope for reducing avoidable deaths from medical errors that continue to receive short shrift despite killing more Americans every year than every cancer save possibly lung cancer.

    Exposing this hidden scandal of patient endangerment is something the media could do to actually contribute to both our healthcare cost and safety crises. But stoking fears and false hopes that stimulate demand and more of the “do everything” mindset sells more advertising, so expect more hopping on the bandwagon of every supposed medical “breakthrough” without regard to its costs or complications.

    Insurance coverage is important to our health as a nation, but more conservative use of our profit-driven medical system – and non-profits can be as obsessed with profits as their for-profit counterparts – may be even more important to both our physical and fiscal health.

  5. Don’t give up on single payer, it is the only thing that will work (well). Proof is the $125 million in campaign bribes given by the insurance industry to keep it off the table and give us instead ObamaCare mandates. And that’s its problem… it WORKS, and the least profitable (to politicians) is a system that works.

    Aren’t our esteemed politicians great?

  6. It is very informative to know how many of you believe the numbers will work out. Others even have formulas to calculate that out of pocket expenses. Reducing costs related to health is imperative with our current system. However, what role does quality of care play into all of this. Are the individuals really going to obtain more for their money? or are they going to be short changed because of fear from providers of penalties. At least with the ACO payments and rewards for hospitals will be based not on how much their providers do but instead how well they do. They hope to accomplish this by monitoring 33 quality measures. With this plan they are hoping that costs will fall and quality will improve. This will force physicians to be more careful when ordering only necessary tests that are directly linked to the patient’s needs which will be reflected on outcomes which will be contrary to the current fragment care they receive.
    At this rate, I am not sure a single payer system is the best solution.

  7. Bob –

    While I don’t have a complete answer for you about Germans going on vacation all over the place while paying high taxes, I can make the following points:

    1. When my wife and I go on organized tours either abroad or in the U.S. or on a cruise, it seems like everyone has plenty of money to travel. However, we’re just meeting the 20% of the people that do 80% of the traveling. Lots of people either don’t go anywhere or visit a nearby beach or their relatives.

    2. The German economy is more export driven than most others. It has benefited tremendously from the formation of the euro in the late 1990’s. I’ve heard economists suggest that if the eurozone were to break up and Germany had to go back to the DM as its currency, it would be worth 40% more vs. the current euro. That would make its exports much more expensive on world markets and thus less competitive but make travel outside of Germany even more of a bargain.

    3. Home ownership rates in Germany are among the lowest in the developed world at about 40%-45% vs. 64% or so in the U.S. People prefer to rent and I’m told that once you rent an apartment, you are entitled to stay in it indefinitely while there are strict limits on how much your rent can increase – probably in line with inflation at most which is very low in Germany.

    4. People throughout Western Europe live in much smaller houses than Americans do on average, they drive smaller cars, and they don’t eat out as much. Many ride bikes or mopeds to work. Since even the largest European countries are no bigger than some of our larger states, distances within the country are shorter as well. It’s a different lifestyle choice. I think people in Western Europe prefer or at least don’t mind paying high taxes for a strong safety net and they’re not as interested in the material things, especially a large, expensive to buy, furnish and maintain home, as Americans are.

    5. Finally, while it’s well known that all European countries spend a significantly smaller percentage of their GDP on healthcare than the U.S. does, it’s not as well known that they spend a much higher percentage of GDP on unemployment benefits. If you add those two together the gap narrows considerably but doesn’t disappear completely.

  8. Barry I agree with you 100% that the Exchanges and subsidies will be wildly and (from a budget point of view) dangerously popular.

    In the absence of unions, most employers who stop offering health insurance will not raise wages very much. And once those employers get a taste of ‘freedom’ from benefits, it will be very hard to get them back in a generous mode ever again. I have seen this first hand in the construction trades and in trucking.

    Your comments on Germany are valuable. Still, writers like Steven Hill and Tom Geoghegan point out the “dissonance” …..whereby Germans do pay much higher taxes, but they are the ones going on vacations all over the world and having secure retirements —-while so many Americans are bankrupt, travel nowhere on no time off, and line up to apply for jobs as greeters at Walmart.

    Something does not compute here. I have never traveled to Europe so I am not sure why our lower taxes do not pay off in greater well-being.

  9. Bob –

    While the German approach to financing health insurance has some conceptual appeal, it’s not as simple and straightforward as it sounds. If you’re unemployed in Germany, your health insurance premium is paid by the unemployment fund. If you’re retired, it’s paid by the pension fund – equivalent to our social security fund. To pay for all this, however, as I noted yesterday, workers pay slightly over 20% of wages for health insurance, long term care insurance, unemployment insurance and pension fund contributions combined up to certain limits that I alluded to previously. The employer pays a comparable sum. So, a worker earning €40,000 will pay roughly €8,000 into these four funds and his employer will pay a similar amount. If you include the employer share as both income to the employee and a social insurance contribution effectively paid by the employee, €16,000 is going into the four funds out of a total compensation of €48,000 or 33% of the total and that’s before income taxes and value added taxes. So, while it’s a generous safety net, it doesn’t come cheap. Moreover, Germany and numerous other European countries have a significantly higher percentage of their population age 65 and older than the U.S. does. As a result, governments are straining to provide these benefits and they’re starting to look for ways to cut back. On the plus side, Germany only spends about 10%-11% of GDP on healthcare vs. 17%-18% in the U.S. The difference relates mainly to higher prices per service, test procedure and drug in the U.S. and a do everything culture driven by a combination of patient expectations, both real and perceived, and doctors’ determination to avoid lawsuits at all costs.

    On the issue of the exchanges, while most companies with more than 500 employees are likely to continue to offer health insurance and employers with fewer than 50 employees will be exempt from any penalties for not offering insurance, it could be a different story for even large employers in low wage and high turnover industries like restaurants and bars, retail trade and hospitality and tourism. If the essential benefits package is deemed too expensive, many medium size employers may also opt to pay the penalty, raise wages somewhat, and let their workers and families find subsidized insurance on the exchanges.

    Anyone who gets significant income from cash tips or is otherwise paid in cash will have lots of opportunity to underreport their income to the IRS and thus qualify for a larger subsidy than their actual income would entitle them to. It will be interesting to see how it all plays out. While I would like to see as many people as possible get health insurance and subsidies will be necessary to make that happen for many of them, the cost of those subsidies could far exceed what the experts estimate when federal finances are already way out of balance. This is the health reform issue that I worry about the most.

  10. Maggie, I think that the employer penalty for dropping all health insurance is only $2,000-$3000 per employee. If the employer has been paying $4000 to $12,000 for employee’s health insurance, (depending on single or family coverage), they will accept the penalty in a heartbeat.

    But let’s not debate the above scenario too much.

    The sentence in your excellent response that i want to review is the statement that “employers who move their employees into the exchanges must contribute what they are paying now into the pools.”

    This hits on an issue that has troubled me for a while. The American health insurance system is sustained to a large degree by the more generous employers, whether big corp’s, union plans, government employee plans etc.

    These employers might pay over 20% of payroll, and they usually cover families. This enables the spouse and under-26 children of the covered employee to go off and work at a restaurant or in real estate or cosmetology, or at a church or non-profit, and not have to demand health insurance from that employer.

    Too much of the single payer rhetoric leaves the impression that if we can get to a 10% payroll tax, employers will applaud this and back single payer.

    The General Motors and state governments will in fact say. “great.” But a huge swath of businesses in retail and light assembly and food service will go nuts over a 10% payroll tax.

    My prediction is that the large employers will NOT pay in taxes what they are paying now in insurance premiums and self-funded assessments.

    I would not count on “maintenance of effort’. We really have to move toward the German model where all employers, large and small, pay the same rate of payroll.

  11. People are putting off dealing with health issues that wouldn’t be a big deal if addressed in a timely way. And skipping doses to stretch a rx. And docs have no time to address the numerous issues ppl have in 15 mins or to talk about preventive behavior change. So much unnecessary cost, of all kinds – much of it impossible to measure, but that has an insidious impact on QOL in America, today and into the future.

  12. Bob & Barry & every commenting on Single Payer:

    Bob:
    There is no way for large employers to “slide their employees” into the Exchanges where they will receive subsidies.

    A large employer would wind up paying large penalties if he doen’t offer affordable insurance. (If necessary, those penalties coudl be raised, but I don’t anticipate many large employers dropping heatlh benefits. They have been asking employees to pay higher co-pays or deductibles, but there is a limit to what they will be able to do under the ACA–if out of pocket expenses are too high, the insurance will not be considered “affordable.”

    . (Eventually, when reformers decide to open the Exchanges to employers they will have to take the dollars they are now spending on their own employees and contribute that money to the pool that funds health care reform. The good news for large employers is that, if we’re successful in “breaking the curve” of healht care inflation (and I’m convinced we will be because we have no choice) ,their health care expenses will not continue to rise the way they have in the past, but should only rise in tandem with GDP growth.

    Barry-

    First, yes, in some states where older peoplel now pay 5 times as much as a 25year old for the same policy, younger people will have to pay more because insurers will only be able to charge a 60-year-old 3 times as much.

    This of course also means that some older people will pay Less than they do now.

    In general some people will find insurance more expensive, some will find it less expensive. If you already have comprehensive insurance that covers
    all essential benefits, you are likely to find that insurance costs about the same–or less–because many more young, healthy people will be in the pool with you, also paying for comprehensive insurance.

    Meanwhile if you now have bare-bones insurance, your premium will be higher than it is now–but you will be much more secure. If your child develops cancer, you won’t suddenly discover that the amount that your insurer pays has been “capped” on an annual or lifetime basis, and thus she
    will not longer receive treatment and will die. This actually happens in this country. ,Surgeons and oncologists don’t take IOUs.
    (Gawande has written about this in the New Yorker, not long ago.)

    With comprehenisve insurance, you won’t run the risk of discovering that while your insurance covers surgery, it doesn’t cover rehab after surgery.
    I could go on. The essential benefits are essential. “Garbage insurance” is filled with holes that most people don’t know about until they become ill.

    Since insurers will no longer be able to shun the sick or sell Swiss cheese policies few for-profit insurers will survive. (Aetna’s CEO has said the same thing: the old business model for healthcare insurance is “dead”.)
    They will no longer be able to make the profits they aimed for in the past.

    Aetna’s CEO believes that Aetna will partner with providers to create
    Kaiser-like Accountable Care Organizations It will make money only if it can lift the Quality of care while lowering costs through better co–ordination, less over-payment etc.

    But the profit margin for an insurer that is part of an ACO will be slim and may not be accepted by Wall Street. In that case, investors will sell the stock, and, for-profit health insurers could disappear entirely. (Some will
    continue in other parts of the business– long-term coverage, very expensive concierge coverage, but not general health insurance.)

    Pehaps two or three large for-profit insurers will succeed, as Aetna hopes to succeed, by following the Kaiser model. We’ll see. Everything depends on whether they can make enough money to satisfy shareholders . . .

    Meanwhile,non-profits that are much like Kaiser, Geisinger, Peugot Sound,etc., will flourish because lifting the quality of care, emphasizing preventive care, offering free smoking cesesation programs, etc. is how they succeed today. As you know in Northern California, Kaiser has done so well in managing heart disease that it is no longer the leading cause of death itn that part of the country..

    Geisinger is even able to offer a money-back guarantee on heart surgery!

    Some large non-profits will offer insurance for services provided by doctors and hospitals who are NOT part of an ACO, but because the insurers will be large, they will have market clout and will refuse to overpay. Larger insurers will also enjoy economies of scale and have lower administrativev costs. These are reasons why consolidation in the insurance industry is good for patients.
    In addition, these large non-profits will no doubt follow Medicare’s lead in negotiating for discounts from drug makers and device-makers. We need to refuse to overpay for pricey drugs and devices that are no better than much less expensive products. (Exceptions can be made for patients who actually need the more expensive product–just as exceptions are made at the VA and Kaiser when a doctor needs to go outside the formulary.)
    Doctors will no longer be allowed to choose whatever device they want to use –a hosptial will have a formuarly of perhaps three knee implants that are chosen based on quality & price.

    Increasingly, major procedures will only be done at “centers of excellence (employers are already paying to fly their employees to these centers, paying all of their travel expenses –See Gawande’s Cheesecake Factory) At these centeres of excellence, experienced, well-coordinated medical teams will be able to do these procedures much more efficiently. Today, too many medium-sized suburban hospitals are doing organ transplants–maybe a dozen a year. That’s not enough practice.

    Single-payer– First, as I mentioned above, only the UK and Canada have single-payer, and these are not the best health care systems in the developed world.
    Secondly, the U.S. is a huge country – trying to put the entire population into a single “single-payer system” would create chaos. Dr. Atul Gawande has written about this in the New Yorker. As he put it “patients would die”. (Please Google “Gawande, New Yorker, and single-payer” to find the article-maybe 3-5 years ago.) Also see Ezekiel Emanuel’s book, Healthcare Guaranteed on this subject.
    In addition if we have just one govt-run system we run the risk that a
    it would be badly run by a bad government (I’m sure that everyone agrees that from time to time we elect bad governments) and in even 4 years, much
    damage could be done. That’s why we need other options.

    this

  13. Oh, and if the Massachusetts health care model is so wonderful and effective, why is it NO state has bothered to try to initiate their own model while fighting the federal legislation, to my knowledge as of now? I haven’t read the federal laws trump Massachusett’s law, so, what gives?

    Again, deeds not words are the telling tales here. Maybe even Democrats in their own little State worlds see the coming problems and are not eager to jump onto that vessel the Democrats are sailing with such clueless glee into those deeper, colder waters.

    It was titanic legislation,right? Doubt anyone used that word, but oh how so fitting as time progresses.

  14. Just curious to any who want to take this on: if the PPACA was such a wonderful legislative masterpiece that was going to save the nation, why did no Democrat use it in campaigning and why did the Democrats lose such a large proportion of the House in 2010? That is a fact and data shows the American people as a majority did not like the legislation as a sizeable part to their voting choices. Not that I like the substitutions made, but hey, this one party system doesn’t give real invested and involved voters much choice, doofus or roofus. I just love the Democrat machine ignoring that little historical piece of information to this day.

    Denial, gets deep in that river, eh?

  15. The answer is real simple: the insurance companies do NOT want a single-payer system and were a major part of the $125 million in campaign bribes to keep it off the table when reform/ObamaCare was passed. You are 100% correct in supporting it, but did you send CASH? That works.

    Yes, we will ultimately have single payer, but as Winston Churchill says, only when everything else fails.

  16. ” I also think that everyone above the FPL income level should pay something in income taxes even if it’s only $50 or $100 just to convey the idea that government services and benefits aren’t free.”

    I actually think you’re right, Barry. And I also think this should go the other way as well. I think those with exponential multiples of FPL should be made to feel a slight pain too, so they also understand that doing business in a country that makes untold riches possible is not free. I’m not sure what amount of taxation would bring that message home, but I’m sure we can calculate something…..

    As to always turning to the broad base for revenues, yes, there are few other choices, but taxing the former middle class ($50,000 is really poverty), should be accompanied by a redistribution of profits from the top down. Governments are the ones chartering corporations and when those creations get out of hand, it is governments’ responsibility to rein them in. If people had seen their incomes grow over the last decades in the same proportion as the top extractors of wealth, my guess would be that a) we wouldn’t be having this conversation or b) folks wouldn’t mind paying a little more in taxes.

  17. Statistics can be a double edged sword, and for health care especially, you can get cut both ways. Doesn’t really matter if Romney or Obama are in the White House come January 2012, the legislation as is will not solve problems, and why is it Democrat supporters either shout down facts/data that show concern or just turn and ignore the dissent, until it goes away?

    I mean really, pass significant legislation and wait for the main parts to kick in 4 years later? What does that say about the viability of a bill? I don’t need data or irrefutable facts to ask that, it is human nature to be wary of people telling you to wait, the benefits are coming. Really?

  18. In the ACA Exchanges, a family whose income is $50,000 will get a subsidy of at least $10,000 a year if they buy a qualifying family policy.

    The drafters of the ACA assumed that the exchanges would only cover about 15 million persons from the individual market, and that a lot of the new participants would not be familiies.

    However, if corporations find a way to slide their employees into the exchanges, where the employees will be better off at most income levels, the costs of the ACA will take off.

    20 million families getting a subsidy of $10,000 a year comes to $200 billion a year, and there will be inflation also. This is far more than any fees that the health care industries agreed to pay when Obama brought them on board.

    It is not a bad way for our nation to spend money, surely better than most of the defense budget………….but it will call for broad new taxes, as Barry suggests.

  19. Maggie –

    While many of the insurance related provisions in the ACA are very popular including preventive care without co-pays, the requirement to take all comers without regard to pre-existing conditions and a generous but yet to be fleshed out essential benefits package, insurers will have to price these policies to cover their medical claims costs and earn a modest profit. Even with subsidies, I think many people will be surprised at how expensive coverage will be. It’s also important to note that insurers can charge older people up to three times more than younger people (age rating) unless state law requires a lower multiple in which case younger people will pay considerably more than they do now in states that use medical underwriting which are all but five states.

    Regarding tax increases, I long argued that the current tax rate on capital gains and qualified dividends is too low. The top rate for all income was 28% under the Tax Reform Act of 1986 which passed with bipartisan support when Reagan was president. I would be perfectly willing to go back to that even though I benefit from current low rates on investment income. It’s also important to note that marginal tax rates in many of our more populous states, including NY, NJ, and CA among numerous others are all considerably higher than they were in the 1980’s and investment income is treated the same as ordinary income at the state level in most states.

    Longer term, even raising taxes on those making above $150K won’t be anywhere near adequate. I personally expect to see a broad based value added tax implemented within the next five to ten years. That’s how we are most likely to raise taxes on the middle class. I also think that everyone above the FPL income level should pay something in income taxes even if it’s only $50 or $100 just to convey the idea that government services and benefits aren’t free.

    Finally, I’m at least moderately optimistic about our ability to ultimately reduce the growth rate of healthcare costs to something closer to the growth in GDP. As you probably know, the entire most recent issue of Health Affairs (September, 2012) is devoted to payment reform. To supplement these efforts, though, I think we need to try to find ways to break the “do everything” culture that is far too prevalent in the U.S. due to a combination of often unrealistic patient expectations and doctors’ determination to avoid lawsuits at all costs. I think sensible tort reform is an important part of this effort which liberals and trial lawyers don’t appreciate because they are too focused on the easy to quantify malpractice premiums and court awards which don’t account for a high percentage of healthcare costs while they completely miss the impossible to quantify culture of defensiveness among doctors and unrealistic and often unreasonable patient and family demands for care, especially at the end of life, which they expect other people to pay for. See rbaer’s comments on the Cheesecake Factory thread, especially his comparison of attitudes in the U.S. vs. Germany.

  20. Barry–

    I agree that quirks in the ACA will not be fixed if Republicans win.

    But at this point, it seems to me very likely (far from certain) that Obama will
    win.

    If he doesn’t, we’re looking at a very uncertain picture for health care reform.
    Much chaos.

    In many ways it will go forward (much has happened that can’t be rolled back), but funding will be uncertain.

    You write: “Raising taxes on the top 1% or even 5% won’t come close to solving the problem and to suggest that it will is disingenuous to put it mildly.”

    I agree– to solve all of the problems that this country now faces (not just
    healthcare, but the huge need for infrastructure repair, more money for
    education, the deficit, etc. etc. we will need to raise taxes further.

    But if Obama wins, he will not longer be running for re-election, and
    I believe that he will raise taxes, not just on the top 2% to 3% (individuals earning over $200,000) but on individuals earning over $150,000 and families earning over $175,000)– a much larger group of people who also are paying much lower taxes than they did in the past.

    The middle-class (the most recent Census reports show that median household income is $50,000) will not need to pay higher taxes, (Median income defines the “middle class” ) Half of all
    Americans households earn less than $50,000, They just can’t afford to
    contribute much.

    Finally, Obama is likely to raise taxes on capital gains and on inheritances.

    Assuming Obama is elected, as a second-term president he will no longer be
    running for re-election.

    The liberals I talk to in Washington belive that he the will feel able to raise taxes

  21. Feels like some basic math would have resulted in the complete opposite point Reich was trying to make: employers paid 4% more in health care costs (stated in popular press), and employees paid 4.5% ($4,129 to $4,316). So, by this simple math, everyone paid 4% or 4.5% more last year. Far from employers selfishly sticking it to their workers.

    It must stink when your main thesis is blown apart by your own data. As President Clinton said just a few nights ago, “It’s called arithmetic.”

  22. Bob–

    Yes, these Exchange policies are going to be expensive for insurers because of the the caps on deductibles and co-pays, plus the fact that they must cover all essential benefits– plus the fact that they can no longer “cherry-pick”–(refusing to insure people who have pre-existing conditions.)

    The only insurers who survive will be very good non-profits and insurers who team up with providers to create accountable care organizaitons where
    insurers and providers are part of one company (like Kaiser and Geisinger).

    Instead of being adversaries Insurers and providers will be on one page: trying to keep patients well so that healthcare is less expensive for the insurer, and more satisfying for the provider.

    This is all good.

    You’re right: Bill Gates supports the future, Mitt Romney does not.

    But Gates is a winner and will continue to be influential in persuading the
    very wealthy to share their weath.

    Romney, by contrast is “No Bill Gates” on so many levels.

    It is possible that Romney will be elected to the White House, but not likely. (See polls.)

  23. Bob –

    What is the “garbage insurance” you are referring to? Any comprehensive high deductible plan would pay for the cancer treatment in your example once the deductible is reached and the co-pays are satisfied to reach the policy’s out-of-pocket maximum which might be $10K or so at most assuming 20% co-insurance on the next $25,000 of costs beyond the deductible and would probably be less than that.

    Regarding the financing of health insurance, I disagree that progressive financing is the right approach. In Germany, health insurance is financed by a 15.5% payroll tax nominally split evenly between the employer and employee but it only applies to wages up to €44,550 or about $58,000 at recent exchange rates. This is not even considered a “tax” in Germany but rather social insurance. Health insurance for children in Germany is financed from general revenue on the ground that they are considered a national treasure according to Princeton professor and noted health economist Uwe Reinhardt. France also uses the payroll tax approach. In Switzerland, people, including the elderly, purchase individual insurance polices with deductible that can range up to 2.300 CHF or about $2,460 per person. About 45% of the population qualifies for subsidies to help them purchase insurance with the subsidies financed by general revenues.

    Interestingly, Germany also use payroll taxes to finance long term care, unemployment benefits and pensions. All of these are not considered taxes but social insurance and the employee share for all four categories combined exceeds 20% of wages up to €44,550 for health insurance and long term care benefits and €66,000 for unemployment benefits and pensions.

    Maggie –

    The quirk in the law regarding subsidies that I referred to cannot be fixed administratively. It will require Congress to pass legislation that addresses the issue which might be easier said than done depending on the outcome of the election in November.

    On Elizabeth Warren’s opposition to the tax on medical device manufacturers, I get that most House and Senate members vigorously defend the interests of their districts and states but that’s a big part of the problem. On issues like tax reform and deficit reduction, the universal attitude is to fix the problem at someone else’s expense but don’t cut my program or raise my taxes. That’s got to stop. Raising taxes on the top 1% or even 5% won’t come close to solving the problem and to suggest that it will is disingenuous to put it mildly.

  24. Thanks Maggie.

    This gets complex, but let me share two thoughts…………..

    a. These Exchange policies are going to be expensive. In my example of a cancer diagnosis, the insurer willl pay $60,000+ more than they are paying with today’s “garbage insurance.

    Like you say, this will drive the cheapo high-deductible insurance bandits right out of the business.

    Pray that the subdidies survive!

    b. You are correct about taxes on the wealthy.

    Just to use a simple formula………..

    if health care is funded by insurance premiums, Bill Gates pays $15,000 a year for family coverage. (plus his income taxes for Medicare part B and Medicaid, which are not light.)

    But if health care is funded by taxes, a Bill Gates who declares $20 million as income pays $2 milllon.

    Bill himself might sat OK. Mitt Romney and his followers will not say OK

  25. Barry–

    Good to hear from you. As usual, your comments are fact-based.

    Yes, Elizabeth Warren is opposed to the tax on device manufactures, and I
    am very disappointed about that.

    The Affordable Care Act guarantees millions of new customers for device
    manufacctuers, and even now the device industry enjoys fat profit margins.

    Many new devices, that are no better than the devices they replaced, are overpriced. (See Dr. Atul Gawande’s recent “Cheesecake Factory” piece in the New Yorker.)

    But for a Congressional candidate to protest taxes on an industry that is important to his or her state is hardly unusual. It is not just that the candidate needs contributions from the industry in question: voters who work in the industry–or are related to someone in the industry– will vote against someone who is not entirely loyal to that industry.

    In the tobacco states, candidates support the cigarette industry. (At least
    medical devices are not designed to kill us–though sometimes they do.)

    in states that produce coal, politicians defend a cola company’s right to pollute the environment (and add to the global warming that is producing drought in other states.)

    This is a function of our “representative democracy” –particularly at a time when the country is so polarized– and not something pecular to liberal candidates.

    Warren is in a very tight race, and I imagine her advisers told her that she must come out against this tax on device-makers. I am very sorry that she listened to them.

    But I can’t think of anyone among today’s Republican candidates who wouldn’t have followed this advice. Can you? (In the past, yes, Lowell Weicker might have ignored that advice, but that was a long time ago, and he was a liberal-centrist Republican. They don’t exist any more..)

    There will now be caps on out-of-pocket costs in All Medicare Advantage (MA) plans only because the Accountable Care Act requires these caps for MA. Government regulation of the private sector is doing what it should do.
    Everyone in Washington (CMS /HHS) realizes that traditional Medicare will now need to institute such caps.

    In many ways, the Affordable Care Act will force traditional Medicare to change.

    On employee wages and the cost of healthcare for employers:
    In the mid 1990s, when “managed care” actually had controlled the cost of healthcare (in the mid-nineties it was barely rising) and employers were enjoying fat profits in many sectors, employers still refused to raise employees’ wages.

    At the time, many people believed that they would have to . But they didn’t .
    As both Wall Street analyst Steve Roach and I wrote at the time, employers were not willing to share with their ever-more-productive employees. They were only willing to sharewith investors who would hike the prices of their stocks, and thus lift the value of the stock optoins that executives enjoyed. In the late 90s, employee wages enjoyed a slight bump–that was it.

    Stagnant wages over the last 30 years cannot be blamed on the rising cost of health care. See Harvard economist Jim Medoff’s work on “total compensation”–which factors in rising cost of benefits.

    I hadn’t noticed the quirk in the law that you point out in your first paragraph that doesn’t spell out the impact for familes vs. individuals. As you suggest it will be fixed. (Major legislation always includes many such lapses. When hudnreds of hands are invovled in writing hundreds of pages, this is inevitable. The Supreme Court has acknolwedged this in the past.)

    Finally, re: whether people will hide income in order to qualify for subsidies:
    To get a fat subsidy, they would have to hide a large amount of income.
    The subsidies are set on a sliding scale.

    So if you declared $2,000 less than you actually made, you would gain
    very little.

    To make the risk (of being caught ) worth the prize, you would have to delcare something closer to $20,000 less than you made.
    At that point, you’re more likely to raise red flags in the computers.

  26. “This is political hackery at its worst. It’s fine to tax insurers and drug companies because their employment is mostly in other states but leave medical device manufacturers alone. Give me a break.”

    You think so?! But for the partisan crowd, business as usual. And I sense a true genuine cluelessness when they are called on the same behaviors they shriek about the other clueless party doing as well.

    What does Forrest Gump call it: stupid is as stupid does. Sums up this legislation for me.

  27. Maggie –

    First, regarding the subsidies, there is a quirk in the law that still needs to be fixed. That is, to determine whether or not and employee is eligible for employer coverage that the PPACA deems “affordable,” his or her share of the premium must be less than 9.5% of income for SINGLE coverage. If that is the case but the employee actually needs family coverage, there is no subsidy provided.

    Second, regarding the taxes in the law to help pay for subsidies, it’s interesting to note that both Massachusetts senate candidate, Elizabeth Warren, a favorite among liberals, and Senator John Kerry both staunchly oppose the tax on medical device manufacturers because these companies have a large presence in Massachusetts. This is political hackery at its worst. It’s fine to tax insurers and drug companies because their employment is mostly in other states but leave medical device manufacturers alone. Give me a break.

    Third, your reference to out-of-pocket caps protecting people from huge medical costs in the event of cancer or other serious illnesses, you didn’t mention that there are no such out-of-pocket caps in standard Medicare and there never were since Medicare began in 1965. The initial deductible for Part B services is roundly $150, a relative pittance, but there are no out-of-pocket caps. There is also a deductible of roughly $1,100 for each hospitalization and there is a lifetime cap on the number of hospital days Medicare will pay for. Medicare Advantage, by contrast, offers plans with reasonable out-of-pocket caps and deductibles eliminating the need for Medigap policies. The tradeoff is some restrictions on provider choice. More than 25% of seniors have chosen an MA plan and I’m told that 40% of boomers aging into Medicare are choosing MA plans. The lack of an out-of-pocket cap in standard Medicare is one more example of its failure to innovate, in part because of politicians’ desire to sprinkle benefits over as many seniors as possible including the healthiest 50% of seniors who, in any given year, account for only 4% of Medicare’s costs.

    Fourth, every reputable economist will tell you that the employee actually pays for the employer healthcare premium contribution in the form of lower wages than he/she would have otherwise been paid. So, if family coverage costs $15K, about average according to the Kaiser Family Foundation, the employee is effectively paying the entire amount regardless of the nominal employer / employee split. The employee is also effectively paying the employer’s share of FICA taxes as well as his own for the same reasons.

    Finally, regarding the subsidies, for those who are eligible, they can still be in the thousands of dollars for people needing family coverage who earn up to 400% of the federal poverty level (FPL) income which will be about $96,000 for a family of four by 2014. At 401% of the FPL, the subsidy is zero. This will provide yet one more incentive to hide or understate income in order to maximize the health insurance subsidy. The IRS will be tasked with the job of determining how much in subsidies a given individual or family is eligible for but the only information it will have to do that is the income it knows about that was reported to it on tax returns. I think it’s highly likely that subsidies will cost significantly more than the CBO estimates they will.

  28. Bob, Peter 1, and Margalit

    Bob–The cap applies only to people buying insurance in the Exchanges– in 2014 that will be people who have no employer-based insurance and are buying their own insurance as well as the employees of small businesses.

    (Down the road, the plan is to open the Exchanges to the employees of large businesses.)

    The cap has nothing to do with subsidies. In other words, if you are buying insurance in an Exchange, you can get a subsidy and still have your out-of-pocket expenses capped.

    “Out of pocket expenses” refers to your deductibe plus co-pays. It does not
    refer to premiums.

    Going to your example: First of all if your employer gives you a choice of plans and you choose one with a $5,000 deductible and a 20% co-pay you would be very foolish —unless you are quite wealthy.

    As your example shows, if you become seriously ill you would have a very large bill to pay off. And frankly, if it’s cancer the bill is likely to be much
    higher than $65,000 (unless you die very soon after the diagnosis.)

    If your co-pay applies to hospitalization, you shouldn’always pay a higher premium to get the lowest co-pay possible. Twenty percent of a hospital bill will be thousands of dollars, even if you are only hospitalized for a few days.

    When it comes to the deductible, it’s a question of whether you have $5,000 or more in a savings acccount that you wouldn’t mind dipping into to pay doctors’ bills. If you don’t, pay a higher premium for a lower deductible.

    In most cases these days, the employer pays roughly 60% of the premium.
    The employee is paying only 40%. This is why he can afford to pay 40% of a somwhat higher premium to get lower co-pays. And this is why the ACA doesn’t worry about giving him a subsidy or capping his out of pocket expenses. He already has a very good deal.

    Keep in mind that, in many countries in Europe, a household pays 10% of its income (in some form of taxes) just for healthcare. In a country where everyone has healthcare, this is considered normal. By contrast, in the U.S., if a family earns $100,000 a year and has employer-based insurance, it probably doesn’t pay 10% or $10,000. (It probably pays about $3,000 -$3500 a year in premiums and doesn’t pay another $7,000 to $6500 in co-pay and deductibles unless it has a high deducitble and a tax-sheltered health savings account.)
    A middle-class European family spends less on certain discretionary items (clothing, car, household furnishings, and most European families don’t eat out as often as we do.)
    On the other hand, they don’t have to worry about being bankrupted by
    medical expenses, or being forced to sell their home.

    Peter 1–

    Yes, a family could be a family with just one wage-earner. But the size of the family would determine the subsidy. In other words a single mother with children would get a larger subsidy than a single woman with no dependents.
    Kaiser’s subsidy calculator shows that a 35-year-old single mother with three children earning $40,000 would receive a subsidy of over $9,000 and pay less than $2,000 in annual premiums. (See
    http://healthreform.kff.org/SubsidyCalculator.aspx)

    When it comes to the cap, the cap is $12,500 for a family, even if only one person works. Though these days, unless the head of the household is a single mother, the person who doesn’t work is usually an older spouse who is on Medicare and Social Security. (Typically an older husband married to a younger woman. ) Very few mothers can afford to stay at home–IF you look at the demographics those do don’t work tend to be married to men earning over $100,000.

    Finally, out-of-pocket means co-pays and deductibles. It does not include premiums.

    Basically, if you become very sick and need to be hospitalized (or need extremely expensive cancer drugs) you will be facing a big bill. The point of capping the subsidies is to make sure that the bill won’t be so big that you’ll be forced into bankruptcy or have to sell your home.
    Without the ACA, these days a family with high co-pays (say 20%) can
    easily face a medical bill of $200,000 or more. Under the ACA, it’s capped at $12,500. That’s quite a difference. Over time, a middle-class family could pay off $12,500 (a hospital would set up a payment schedule),cut down on spending (vacations, eating out) and pay off the bill.

    Margalit–
    I agree. And the subsidies are financed by a progressive tax — the tax on singles eanring over $200,000 (couples earning over $250,000). The other big chunk of funding for the ACA comes from the fees that
    drug companies, device companies & insurance companies have agreed to pay because they ACA will give them millions of new customers who will come to them, subsidies in hand, able to pay their bills.
    Taxpayers will not be paying for health care costs above and beyond
    the maximum allowable out-of-pocket expenses. Insurers will be paying that-(as they do now in plans that have caps on total out of pocket expenses.)
    The ACA is set up so that it fully pays for itself. And if we reduce the cost of care by getting away from fee for service, paying for value not volume, and ultimately, negotiating for disconts on drugs and devices, healthcare for all will be affordable (Though squeezing waste out of the system will take time.) And those earning over $200,000 are going to have to go back to paying the taxes they paid in the late 1990s (still, historically very low).

  29. Even if she answers “yes”, who is paying it?

    We have active leadership that says debt is a payment system indefinitely.

  30. Maggie, it sounds like you are saying that an out of pocket cap applies to any American if he or she does not participate in the subsidies for individual insurance.

    Walk me through this example:

    Say I have a health insurance policy from my employer with a $5000 deducible and a 20% copay on all expenses with a $20,000 out of pocket cap.

    I am single and make $60,000 a year, so I get no subsidy even if I had no employer plan.

    I get cancer and there is a bill for $65000 My share would be
    $5,000 plus 20% of $60,000 for a total of $17,000.

    But are you saying that no matter what, I can cap my obligation at $5,950???

    That sounds too good to be true.

    I thought that only the participants in the Exchanges got this out of pocket cap.

    I have been wanting to see a national liability limit for years. Did the drafters of the ACA sllp one in and I did not even know it?

    best wishes,

    bob hertz

  31. “If an individual earns more than 400% of the Federal poverty level($44,800 his out of pocket expenses are capped at $5,950.)”

    “For families earning at or above 400% of poverty their out of pocket expenses would be capped at around $11,900.”

    Maggie, both scenarios could mean single wage earner. Does “out-of-pocket” mean monthly premium cost AND co-pays & deductibles?

    In a family of two where one person gets coverage at work and the other is uninsured will the uninsured one be required to pay the $11,900 cap?

  32. Progressive, or is it really regressive taxation? Hasn’t anyone paying attention to this failed debate about debt, entitlement programs, hell, even foreign policy, intolerance nor over tolerance do not get results.

    I’ll credit both parties with this though, the lack of meaningful real progress by entrenched, narrow minded leadership had created much resentment and alienation in the 50% plus of us in the middle, who embrace moderation, compromise, and the good of the communities we live in.

    Note, I have been to D.C. many times over the years, and it does not resemble a community where these alleged representatives live and practice their “livelihood”, and it is a bunker mentality, well entrenched after 9/11.

    So, spare me the progressive and “we all share” mentality when the leaders are exempt from the very laws they force on the citizens they still depend on every 2 to 6 years in November. At least as I noted at the top of this thread, the partisan hackery do not disappoint.

  33. The question is not if the payer is the same for all, or not. The question is how the payments are collected, and they should be collected through progressive taxation. May help offset a little bit of the subsidies, and do away with the growing Medicaid disgrace and the Medicare anomaly.
    If you want private insurers to administer the payments and facilitate price negotiations, by all means let them do that and expect zero (0) profit taking on this business.

  34. I think Robert Reich is off base as usual regarding the merits of a single payer system.

    In all likelihood, 30% of Medicare spending is wasteful and unnecessary, no different from the healthcare system overall. There is widespread fraud in the Medicare program though nobody can quantify it with any precision. Its widely touted low administrative costs are significantly understated because of numerous functions performed for CMS by other government agencies that are not reflected in the CMS budget or Medicare spending. Most experts think CMS’ true administrative costs are closer to 6%-8% of program costs instead of 2%. Moreover, if they put more money into fraud mitigation, their administrative costs would be higher still but total program spending might be lower.

    Whatever innovation there is in the Medicare program is usually driven by efforts to reduce higher than expected costs. Medicare didn’t even offer a prescription drug program until 41 years after the program started while private insurers offered it for decades before that. Its dictated prices wind up overpaying for some services and underpaying for others, including primary care. Doctors and hospitals spend untold money on administrative costs documenting their care in fear of post utilization audits by CMS hired recovery audit contractors (RAC’s). If we ever moved to a single payer system in the U.S., I think we would quickly come to regret it.

  35. Bob H., Merrill, Robert R.

    Bob Hertz– If an individual earns more than 400% of theFederal poverty level($44,800 his out of pocket expenses are capped at $5,950.)

    If he earns less, his out of pockets expenses are capped at a lower level.
    For instance, if he learns less than 200% of the Federal poverty level (or $22,340), his out of pocket expenses are capped at $1983.
    see

    For families earning at or above 400% of poverty their out of pocket expenses would be capped at around $11,900.

    This also assumes you pick a Bronze plan (the plans with the lowest premiums.)

    If you pick a silver plan (which will have a slightly higher premium), and earn somewhere between 300 and 400% of poverty, your cap will be 70% of
    the numbers above (i.e. for an individaul 70% of $5950, or $4,165.

    See table 1 here
    http://www.kff.org/healthreform/upload/8177.pdf

    It’s complicated but the bottom line is that no individual be paying more than about $6,000 out of pocket, and no family will be paying more than roughly $12,000. A nice chunk of change, but if your child is diagnosed with cancer, you won’t have to sell your house.

    Moreover, there are NO Co-pays for preventive care which covers a long list of services. This will greatly reduce out of pocket spending for the average relatively healthy family.

    Merill– thanks for the numbers. You are right, both employers and employees have seen their share of the cost of health care rise, in tandem with the fact that Americans are undergoing more tests, treatments, and surgeries every year (some necessary, some not) and prices for medical
    technology of all kinds continue to rise.

    Robert R–
    Merrll’s correct–Employers’ spending on health care has been rising about as fast as employees.,
    Though I agree profitable corporations should be sharing those profits with employees–in the form of higher wages. Wages have been stagnant for too long.

    Also, as I note above, under the Afffordable Care ACt out of pocket-expenses will be capped, and there will be no co-pays for preventive care.
    In addition, low-income and middle-income familiies that don’t have employer-based insurance will receive generous subsidies.

    Single-payer just isn’t a panacea. The only countries in the developed world with single-payer are Canada and the UK, and while there systems are,
    arguably better than ours, they are not as good as the systems in Germany, France, Denmark, and many other countries that use private sector
    insurers–but REGULATE THEM– as we will be doing under the ACA.
    (Under the ACA there will be no more “Swiss Cheese” policies– all
    policies will have to cover essential benefits which are quite strictly defined; all insurers will have to pay out a certain percentage of premiums for care, or rebate the difference to customers; most importantly, they will no longer be able to shun the sick or charge them more.

    A great many private for-profit insurers will get out of the business. With these regulations, they won’t be able to make enough money to satisfy
    Wall Street.

    Finally, with single-payer you run the danger that a conservative government will come to power (think Thatcher) and decide to “starve the beast.” With no
    alternatives except that single payer, a great many people would suffer.

    In many ways, the healthcare that a non-profit like Kaiser or Geisinger
    offer is better than Medicare. And some for-profit insurers offer much
    better hospice coverage than Medicare.

    Government healthcare is not always the most enlightened care.

    I would prefer to see a combination of private insurers (mainly non-profit) and a public option. Eventually, I think that’s where we will end up.

    Finally,overtreatment and undertreatment are both big problems in this
    country. If you have good insurance or are on Medicare you are likely to
    be overtreated.

    Not only is this expensive, but it means that patients are
    exposed to risk without benefit. All tests and treatments carry some risk.
    Being hospitalized carries a substantial risk.. .

  36. We would need a more precise breakdown of employer health costs before we can assess any signficance to the Kaiser data.

    About half of American workers are covered by large corporations who maintain self-funded plans. These ERISA-protected plans can ignore state mandates, open clinics right on the worksite, not hire sick people, and avoid state premium taxes.

    Another 15% or so of workers are covered by government health plans.
    If these workers face slightly higher costs, no one in flyover country is going to feel sorry for them, as their overall compensation and job security is so vastly superior to the private sector.

    The individual and small group health insurance markets may as well be in a different country in many respects. They are at the mercy of insurance companies, and many have received huge premium increases as parts of this market enter an actuarial death spiral.

    The Affordable Care Act has many provisions to help individuals and small groups. Sadly, not all the potential beneficiaries are even aware of the assistance they will receive (if the law survives). I study health policy as a hobby, and even I do not know exactly how out-of-pocket expenses will be limited under ACA. It took about a year for me to understand how the tax credits will work, and again I have some expertise.

  37. While I am usually sympathetic to Bob Reich’s point of view, I have to differ here. The increase for individuals (from $4129 to $4316) is 4.5 percent, not much different from the overall rise in the cost of insurance. The slowdown in health care spending is real, and some of it has to do with hard pressed families cutting back on necessary and unnecessary care to save on co-pays or because it falls within their deductibles. But some of it also has to do with providers being more sensitive to costs because of reform, even though it hasn’t gone into effect yet. I wouldn’t underestimate that. The last time we saw a sustained slowdown in health care spending was in the mid-1990s (when Bob was Labor Secretary). That era’s reform failed, but it should got insurers attention and they succeeded in holding down costs by putting everyone in HMOs, which generated the patient rights movement (but I digress).

    Co-pays and deductibles have risen sharply for families over the past two decades, but not because employers as a whole are shifting costs onto their backs (some do, of course). Rather, it’s because costs have risen sharply for both. Their relative shares of the total health care pie have stayed relatively equal over time. According to the CMS actuaries annual report on health care spending, total consumers out-of-pocket expenses for health care (this includes both private insurance and government programs) equaled 26.2 percent in 2007, the year before the Great Recession. It fell to 26.0 percent in 2010, the last year data is available. CMS projections for 2014 show consumer out-of-pocket costs falling some more to 25.7 percent. I suspect it is because the Affordable Care Act picks up a significant chunk of change from seniors who previously fell into the donut hole, and forces plans to offer preventive services for free. Sorry Bob. Can’t blame employers for this one.

  38. A single payer system usually involves some type of tax or fee charged annually for every individual which helps spread the cost across the entire population. It also removes employers from being the main provider of healthcare through employee benefits. How can Republicans argue against a system that reduces costs to business, especially small business? I completely agree with you on the need for a single payer system.

  39. And do we get to read a partisan rebuttal by a republican hack to argue otherwise? Monolithic change of health care by politicians and benefactors alone, not responsible nor effective.

    Can’t wait to read the partisan shrills of Reich wannabes and choir members.

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