If you look at this, yesterday we had on the Kaiser Commission of the Uninsured and Medicaid, this slide was presented. Among people with less than $30,0000, they’re in fairly low tax marginal brackets. The way I describe it is if I have a really rip-roaring toothache, and I need a root canal, and where I live it’s about a thousand bucks to get a root canal and another thousand for the crown. When I pay that out of the HSA, it will cost me, at most, $600, because if you add up all these taxes that I face at the margin, for every dollar I put into the HSA, it cost me only, at most, $0.60. The gas station attendant, the waitress, the WalMart worker, it cost them around $900 for the same root canal in after-tax dollars. I personally think that that’s an ethical proposition that we should debate. I’m not saying we shouldn’t do it, but I do argue that it should be openly debated. This is not neutral.

The second issue is, obviously this is meant to be a cost control and benefit cost-control device, but we are looking mainly to the lower part of the national income distribution to do the belt tightening and to do all this stuff. And, of course, as I mentioned and I never fail to remind you that those are the people to whom America looks to go abroad to fight. It is not our children, though our son did, but that’s almost weird, it isn’t the elite’s children who do the fighting, it is mainly people in the lower half, not the very poorest, but in the lower half of incomes who fight for us. So they bear already the blood and financial burden of the war, and we want to load that on top of them. I personally think we should debate that. How much can you load on these wonderful people?

And the third, this is the income distribution of the United States 2002, 33-percent have an annual income of $40,000 or less. Interestingly, most health policy wonks and policy makers are in the upper two. Think about it, if you are a young professional and you are married to another young professional, you are up there. That’s what I tell my students, "You’re going to be living up there. You’re not part of American society as it reveals itself in the hinterland at all." And so, we have these images of "skin in the game" and so on, but I would say someone with a $200,000 family income, is anyone here willing to tell me that their healthcare behavior would be even in the slightest impacted by a $4000 deductible? I know it because I’ve always had them; not at all. This is peanuts; it’s a skiing trip. To a waitress and a husband with $40,000 or less income, $4000 and then more on top of it is a huge hit. They will modify. So it’s fair to say we’re looking to the bottom half of the income distribution to carry the load of cost containment in American healthcare. I saw this in Business Week, 1 in 4 workers makes less than $18,000; if they’re married, that’s $40,000.

So I go to eHealthInsurance, where you can buy these individual policies, the farmers’ market of that, and I made myself a 35-year-old woman with three kids and no husband; that’s what I put in. I picked Dallas, Texas because that’s where the National Center for Policy now is. [Laughter] Let’s see what you can get there. What you see is if she is healthy; I think if she’s sick, in that market she’d have trouble getting it because they’re underwritten. But if she’s not sick, she can get a policy for $148 a month with a $10,000 deductible. Those are the deductibles that you find on that web site, and Diane already walked you through this. I say that surely we don’t believe a family with an annual income of $20,000 will respond to a $10,000 deductible the same way you and I would if we have $200,000. So, what I’m arguing is, I think, unassailable. Now, of course, you could avoid this by making the deductible and maximum risk exposure, linking it to income. So that would say if a household of $40,000 can bear a deductible of $4000 and a maximum risk of say, $6000, it would mean that for congressmen and policy wonks, that deductible should be $20,000 with a maximum exposure of $30,000. Then you would have the same sensation of empowerment, or whatever you may call that, that the waitress and her husband will have. That means all of the Congress, the entire Congress, should have a minimum deductible of $20,000. It would mean executives of corporations shouldn’t have any health insurance at all. Because when you make $20 million, why do you need insurance? Ask yourself this. Yet, I saw this in The New York Times, here is Mr. Wile [misspelled?] (Note: I assume he means Sandy Weill of Citicorp) who probably was paid $30 million that year, he had $61,000 out-of-pocket dental and health insurance, the company paid it, and because it’s imputable income, they paid his taxes too. There was a piece in The Wall Street Journal a couple of years ago on how many, many corporate executives have first-dollar coverage; corporation pays everything plus the taxes. I personally wonder if these people, who are so risk adverse and of such an entitlement mentality, as you have in the corporate suites, ever think what they’re saying when they say that people "skin in the game," right? That is sort of, to me, that is a form of Marie Antoinetteism.

Finally, there is no question that we are talking about shifting the financial burden of ill health more out of the households of the chronically healthy to the chronically sick. I saw this, it must be the Jerry Andersen’s study, but more than half of healthcare spending is on behalf of multiple chronic conditions. As Katherine pointed out, this is in fact the 2001 per capita health spending of insured, the privately insured people below 65. Ken Thorpe gave me these numbers; you could see that if you had a $4000 deductible, in fact, the bulk of Americans would be saving money. But those people, the ones who are chronically ill year after year after year, would have to pay this deductible. It doesn’t take much to do that.

My concluding timing is perfect. My concluding remarks are I can style the HSA high deductible as a liberation from the shackles of government regulation or private health plans, managed care, and it is often marketed that way. I saw this thing "Reclaiming Personal Power and Freedom in Decision Making." That sounds mellow and it sounds good; it’s a way to market this idea. But I could also say I could present it to the nation the way it is now being proposed by the President. One can describe it, fairly, as one more policy to redistribute economic privilege, big tax cuts, and healthcare resources upward in the nation’s income distribution. That’s another way to describe it. I’m not saying we shouldn’t do it. Maybe we up there are very meritorious and should have these privileges, but I plead only for an open and honest discussion of these ethical facets, and not just reduce it to a technical discussion. I particularly take some umbrage of the issue of "skin in the game," particularly how it’s often pronounced by people who don’t really know what that would mean because they’re in an income class where there is no "skin in the game."

Supposed voice of liberal moderation Michael Kinsely is out with a Washington Post op-ed called Before We Go ‘Single Payer’ which is just staggering. I thought Arnold Kling was bad in his misunderstandings, but I apologize to the libertarians on this one. Kinsley’s piece just doesn’t make sense, which indicates to me that he doesn’t understand what he’s talking about.

He accuses Krugman and Wells of ducking the rationing issue — they don’t. Instead they say it can be delayed by cutting out some administrative costs, but it will come in the end. You may not buy that argument, but it is a proven fact that admin costs are lower in single payer nations than they are here. Check the CMS cost data if you don’t believe me.

But then he wonders off into absurdity.

But anyone is insurable at some price — a price that reflects the cost he or she is likely to impose on the insurer. Adverse selection is only a problem to the extent that insurance is not really insurance but rather a subsidy.

Frankly I have no idea what he’s talking about with this “subsidy” stuff. If he means that some people pay more in premiums than they receive in benefits and some pay less, then that’s what insurance is. But I have a simple way of correcting his notion that everyone is insurable at a price. Let’s give Kinsely a pre-existing condition, and send him out into the individual market. He’ll change his tune faster than Mark Pauly wold under the same circumstances.

And then he seems to have missed the whole concept of the debate on the political left between the Enthovenistas/voucher crowd and the single payers. And most importantly that no one seriously thinks Americans won’t be allowed to trade up to a better class of waiting room with their own money.

The problem is putting in a floor for everyone, not getting rid of the ceiling — that’ll come naturally once everyone’s in the same system.

Nowhere does he mention the one thing that is necessary for fixing health care — the imposition of some type of mandatory universal insurance system. Something that everyone in the voucher v single payer argument realizes is essential. And however it happens that is not “incremental change”.

(Trap, you can use this as a thread to beat up on Kinsely, Krugman me et al)

UPDATE: Meanwhile a (gasp) Republican, although not one in the good graces of the loonies running the country any more, has some ideas that are at least getting at (some of) the problem and mention the "mandatory" word. Here’s what Paul O’Neill said:

Mr. O’Neill has long argued that addressing health care with tax
incentives is an inadequate approach. "When they’re talking about tax credits,
they’re talking about our money, not their money," he said in a phone interview
last night. "When you use tax credits and deductions, unless they are
refundable, … they’re very inequitable, because the value of the credit or
deduction depends on the level of income or wealth accumulation an individual
has."Mr. O’Neill said Congress should pass a law requiring all Americans
who make more than $30,000 a year to purchase catastrophic health care coverage
for themselves and their families, with fewer deductibles and co-insurance
payments. The government would then use general revenue funds to purchase health
insurance coverage for lower-income people, he said.

I was reading an article about about political infighting in the Chinese Communist Party — a decidedly non-THCB topic — called A Sharp Debate Erupts in China Over Ideologies. (Traditionally the CCP has been like Republicans, all on message with no internal dissent. Apparently they’re becoming Democrats).

Anyway this one quote grabbed me:

In a subsequent interview with Business Watch, a state-run magazine, Mr. Liu said, "If you establish a market economy in a place like China, where the rule of law is imperfect, if you do not emphasize the socialist spirit of fairness and social responsibility, then the market economy you establish is going to be an elitist market economy."

Now does that remind those of you looking at the US health care system, and in particular our basically unregulated and self-serving insurance system, of anything in particular? I thought so.

(And don’t come after me about how our insurance system is already regulated enough, or I’ll set Jonathan Cohn on you….)