I have said before and I will say again, the only way to cope with paying for healthcare while assuring universal coverage and equitable cost sharing is through a form of Medicare for All.
That does not mean it’s free, and it does not mean every possible health related service is covered and it certainly does not mean government provided health care.
However, beware of progressives with gifts. The Medicare for All Act of 2023 is such a Trojan Horse. Among other things:
- Requires no cost sharing – co-pays, deductibles, etc. even for prescription drugs
- It greatly expands coverage including dental, vision and hearing and long-term care coverage
- Establishes a national budget
- Utilizes regional budgets for facilities with annual lump sum payments of the budgeted amount
- Assumes significant savings
- Allows the states to add additional benefits
- Allows individual providers to override practice guidelines
In other words, the Act attempts to be all things to all people while naively assuming lower costs and prudent, efficient behavior by patients and providers. 😎
QUINNSCOMMENTARY 
Apologize for the length of this note:
Dick, you ask: “I know it will be a political football just like Medicare is today but … what is a viable alternative covering every American on a fair basis in terms of access and cost?”
You have the wrong standard – “fair”. Fair treatment means treating me as I believe I should be treated. That is an impossible standard – it is how we got to where we are today, by placing the government in charge of so much of our lives, where they try to be “fair” (aka buying votes and sending the bill to those too young to vote, generations yet unborn, including the ~$50+ – $200+ Trillion in unfunded Social Security and Medicare committments (A, B, D) – depending on whose extimates you prefer, and the $31+ Trillion in national debt).
The correct standard is “equitably” – treating similarly situated people the same and treating differently situated people differently, while ensuring everyone has “skin in the game”. The government, exercising its tax and spend power could adopt such a standard, but, they never will – as it does not result in vote buying once everyone knows what’s expected, what their burden is/will be, once it is predictable.
You also ask: “I’m open, what is the better way?”
The better way is to allocate the burden of health care based on three principles:
(1) EVERYONE IS LIABLE FOR SOME SPEND – including preventive spending and a modicum of out-of-pocket spend each year, for yourself, a spouse, your children (up to age 26 if you like), so, once you know you are at risk (that any spend you have will accumulate until you pay for it – yes a medical “credit card”), the responsible action is to plan for it (like our parents and grandparents did). Unpaid bills are due at tax time each year. You can “overinsure” and buy insurance for this, or self-fund, including through a Health Savings Account. This include individuals who are currently covered by Medicaid and Medicare and other taxpayer-subsided coverage.
(2) SOCIETY FUNDS SOCIETAL BURDENS – The federal goverment, read wage earners and those with income, via a flat income tax of TNI. TNI = All salaries and wages (W), rent (R), interest (i), and profits (P). So, GDP > TNI > W.
If GDP > TNI > W , that means medical spend is > 20% of Wages, more like 25+% of Wages. Do you have a 25+% deduction from all of your income solely to fund medical care? Me neither. Only a handful of Americans have such high costs. The government has set the standard via Health Reform as < 10% (9.12% of household income for 2023). So, medical spend is being financed by other taxes, foregone wages by employer spend on health care, or by adding to our annual deficits – $1+ Trillion on average for every year since 2010 – when President Obama promised us everything but gave us Health Reform.
You and I are old enough to remember the TV ad – "Promise her anything but give her Arpege." Looks like the federal government long ago adopted that early 60's "Mad Man" pitch to buy votes. Here is a 1987 update of that 1961 commercial (books have been written about this famous marketing pitch). https://www.youtube.com/watch?v=h4xXholso1M
Our stupid sh*t members of Congress and our idiot Presidents (R's and D's) have all sold the "free lunch" or "reduced cost lunch" concept, on one thing or another – that someone else should pay, and by hiding the true cost of medical spend.
So, a reasonable approach won't even be considered until expectations change. And, that won't happen because there are no votes in telling people the truth, the reality!
LikeLike
Well, you have a point. My vision would be a system fully and always funded by a combination of employer and citizen taxes, premiums and out-of-pocket costs. The key words being “always funded” so everyone see the cost of all the things they want. A big dream, right?
LikeLike
Your system truncated item (2) and dropped (3) and dropped the start of the next paragraph.
Looks like this:
(2) SOCIETY FUNDS SOCIETAL BURDENS – The federal goverment, read wage earners and those with income, via a flat income tax of TNI. TNI = All salaries and wages (W), rent (R), interest (i), and profits (P). So, GDP > TNI > W.
Unable to recreate, should have looked something like this:
(2) SOCIETY FUNDS SOCIETAL BURDENS – The federal goverment, read wage earners and all those (everyone) with income, via a flat income tax of $25,000. Providers receive lower of Medicare or Medicaid reimbursement rates. Aggressive cost management applies. If you treated the individual for spend $25,000.
(3) GAP COVERAGE BECOMES AFFORDABLE – Because everyone is responsible for the base spend in each houshold, and the taxpayers pick up the excess, the gap becomes affordable. You can fill the gap between the base and the excess via the individual marketplace, self-funding, employer-provided coverage, Medicare or Medicaid. But, a large portion of taxpayer financial support for Medicare Part B & D, Medicaid, and marketplace coverage will no longer be necessary.
Keep in mind that America is already spending more, much more than Americans realize. Health Spending is almost 20% of GDP. So, what does that really look like? GDP = total national income (TNI) plus sales taxes (T), plus depreciation (D), and net foreign factor income (F). Or, GDP = TNI + T + D + F.
What is TNI? TNI = All salaries and wages (W), rent (R), interest (i), and profits (P). So, GDP > TNI > W.
If GDP > TNI > W , that means medical spend is > 20% of Wages, more like 25+% of Wages. Do you have a 25+% deduction from all of your income solely to fund medical care? Me neither. …
LikeLike
The population of the US grows monthly with people who need medical care and many who probably have preexisting conditions that haven’t been treated before they got here. Combine this with the medical needs of the current population and it is a high cost undertaking to provide for all needs along with expanded benefits for hearing, vision, dental, long term care and more.
The current federal spending annually is about 25% borrowed with a wish list waiting to be added. How much more can be added before we test whether governments can indeed spend unlimited without regard to a national debt growing to the heavens. I think it can hold out during my lifetime but I am concerned for kids and grandkids. So continue rearranging the deck chairs on the Titanic with all needs of everyone taken care of.
LikeLike
As I said, no greatly expanded benefits beyond existing Medicare coverage. All existing employer – every employer would contribute – and worker and private insurance spending would go toward this coverage. Health care would be reimbursed somewhere at a level between existing Medicare and private insurance levels. There is no federal spending it’s all from individuals and companies of all sizes and taxes and deductibles and co-pays adjust to cover the cost of services and if people want a universal plan with greater benefits they pay more for it.
LikeLike
Instead of repeating a second time, I’ll try to point out a few opinions based on past experience and a few facts.
Funding:
First, this will continue the neverending attempt by Congress to buy votes (same as for the past 60 years), and then try to send the bill to those too young to vote and generations unborn – until we define and enforce the requirements for each individual (so that they know what burden they have, and, the wealth transfer expected), Congress will keep promising more and lying to Americans about what is needed,
Second, when working people have to pay, Congress will somehow avoid blame, confirming that they didn’t vote to tax YOU, but that was a prior Congress, or the tax you voted for only applies to that guy behind the tree (Don’t tax you, don’t tax me, tax that guy behind the tree),
Third, today the studies all confirm people are leaving high tax states to go to low tax states. Where can people hide once this new tax is obvious (as a deduction from take home pay) and the tax is everywhere in the country? That’s why it has to be a VAT, so, the majority is never seen – just looks like inflation. Nothing will stop Congress from raising the VAT once it is in place. Thankfully, a VAT may require a Constitutional amendment. Maybe you will see something like that, right after they get around to deleting the 2nd Amendment. Folks will migrate even more to minimize taxation, the underground economy will swell, including everyday bartering, while those who can will trade work for leisure. Soon, we’ll look like Greece from 15 years ago.
Fourth, once the system is universal, we will either have the English system of NICE or dramatic increases in utilization.
Fifth, once the system is universal, we will also likely have limits on access to expensive drugs, limits on reimbursements on expensive drugs and, over time, no new drugs – who would invest when the Government takes your patent whenever it wants to, and sets prices where they want to.
With respect to the promise of a universal, Medicare system:
First, you do know, of course, that traditional Medicare has insufficient hospitalization coverage – with maximum days limits per event?
Second, you do know that the Medicare part A deductible is $1,600 per hospitalization event, and that the annual part b deductible is $226.
Third, you do know that out of pocket costs under Medicare are not subject to an out-of-pocket maximum (soon a limit will apply to Rx).
Fourth, all of those cost sharing items, including premiums, are per person – so a family of four would have four individual deductibles – and if they were all ill, say due to COVID, the deductible for a three day stay in the hospital for that family would be $6,400. Then if they all relapsed with COVID, a couple months later, it would be another $6,400.
Fifth, you do know that the cost of Medicare, with a gap filling Supplement is $15,000+ – in large part because there are so few limits on utilization, and because of the widespread fraud,
Sixth, once you move all this to income taxes or to a VAT, it will all likely be on an after tax (or excise tax) basis, you’ll lose the tax preferences on employer and employee contributions – increasing the cost, on average (and averages can be deceiving) by approximately 25% – 33%. But, guess what, the workers will ultimately suffer, as they always do, as over time, increases in taxes dampen wages such that everyone who is working will see a decline in net pay and purchasing power.
You also know that a retired couple, each with a pension and each with a social security benefit, and modest distributions from retirement savings (due to RMD) of say $100,000/year, will each be paying that 8% (since the taxes/premiums are per person), or about $16,000 in annual premium for Part A coverage they paid their whole life for. For example, when a couple hits the IRMAA limits today, they both pay IRMAA – even if only one had earnings and filed a joint tax return.
Or, do you plan on further increasing the burden on folks who are not yet Medicare eligible to subsidize those who are already retired?
Better the devil you know, that, with significant adjustment, can continue to work as it has for the past ~60 years. I have relatives who are paying nothing for Part B and Part D today, who receive enhanced benefits. That is unsustainable. That is the M4A that everyone sees in the TV commercials and thinks Congress would promise.
LikeLike
I do know all that and I know that even existing proposals refer to “medically necessary and appropriate care” I know there will be waits, but today the average wait for hip replacement is 13 to 17 weeks only slightly less than in England. I know it will be a political football just like Medicare is today but … what is a viable alternative covering every American on a fair basis in terms of access and cost? Since I have been involved in health benefits starting in 1961 we have tried every new strategy, every concept and nothing has worked, now we have gotten to the point where health care is unaffordable to those with health insurance. All the different systems and programs harm the others in one way or another by cost shifting or adverse selection or subsidies. I’m open, what is the better way?
LikeLike
BenefitJack says: on November 8, 2022 at 10:56 AM (with insertions)
The problem isn’t that we don’t have a universal insurance system using uniform coverage and reimbursements. The problem is that politicians want to promise more than they are willing to tax – so they hide the true cost of coverage under Medicare and Medicaid and the Public Exchanges by limiting covered charges, providing taxpayer subsidies, etc.
Insert: Few Americans know that average Medicare costs (with a Supplement) > $15,000/year, and > $30,000 a year for a retired couple.
if we were all in one system, well then, they would likely be limited to one system of financing coverage. I would have been happy to pay for my coverage throughout my lifetime. However, I spent all of my working years (50+ to date) subsidizing coverage for other folks – both via FICA-Med and FITW (Medicare Part B, recently Part D, Medicaid, and now the Public Exchanges).
Insert: As of year-end 2022, almost half of all Americans were receiving taxpayer subsidized coverage. That was the #1 result from health reform, essentially make coverage “affordable”, in terms of individual’s out of pocket costs (not in terms of actual cost) for the uninsured, and to lower income Americans. Did you see your income taxes go up substantially to fund this? No, that is why we have been chugging out $1+ Trillion/year deficits since President Obama took office, continued by Trump and Biden.
And, of course, it would be that much harder to buy votes – because the cost of health care is not a function of compensation (think of all the PPACA limits and subsidies based on income), nor would it be a “right” or “entitlement” – but a tax, or like auto insurance, a mandate (where 15+% of Americans on the road this day are not insured). The cost would be a function of risk, actual spend, etc. – meaning the costs increase with age, and, will be highly concentrated among individuals with physical and medical conditions, co-morbidities, etc.
Insert: So, when you suggest an income tax, even a flat percentage, just like the Medicare Part A payroll tax, you are doing more income redistribution. Introducing a VAT in America is a recipe for disaster – as opaqque as it gets, easy to increase, and use to buy votes.
The solution will likely require various levels of stop loss, pooling, reinsurance, etc. – again, funded by taxpayers. And, do you propose to have Medicare or Medicaid pricing/reimbursements? Watch how physicians respond, look to Canada, England, etc.
You mention all the time about people making poor decisions regarding purchases – such as Halloween stuff. Just think about the cross currents of criticism about paying for treatment of lung cancer for those who smoke, diabetes for those who are obese, accidents due to reckless or risk taking activities.
LikeLike
Better idea that meets all criteria of 100% coverage in one system and cost sharing largely based on income level and utilization? No scheme since I was involved from 1962 has worked. Perfect no, problems yes, but that describes our current system. Ask my sons trying to cope with $4,000 deductibles and needing to go out of network.
LikeLike
That $4,000 deductible = a $100 Deductible in 1970, once adjusted for actual increases in health spending (7.4%/year, 1970 – 2019, National Health Spending, CMS/HHS).
However, average out of pocket spend has increased modestly, from $115 to $1,240 (1970, 2019, same data base). However, median out of pocket spend in America is < $500/year – in large part because people are overinsured – they seek to minimize their out of pocket exposure by paying a larger premium, in part because they are living paycheck to paycheck, and are in debt (Indebtedness is higher than ever before according to the New York Federal Reserve).
Simply, if your sons have a choice, they may want to consider selecting HSA-capable coverage and saving all they can (even before saving unmatched dollars in the 401k) – because, sooner or later, they are likely to have medical expenses – if only after retirement. My children, currently ages 38 and 35, learned the HSA lesson at an early age, and, the one who is employed (the other went back to graduate school) are currently participating in HSA-capable coverage. Both have sizeable accumulations.
Today's WSJ has a half way decent article on selecting the right health plan – of course, that only works if your employer offers a choice.
LikeLike
One son has a $4,000 deductible and the other $7,000. In addition, one son got a raise this year for which the net was wiped out by an employer raise in the premium. Both have had to use their coverage exceeding the deductible. One has an HSA that has been used. It’s not easy funding an HSA, retirement and trying to put something away for kids college. Needless to say neither have a pension and one works strictly on commission.
LikeLike
If you think health care is expensive now, wait until you see what it costs when it’s free! — P J.
O’Rourke
LikeLike
As I said, not free and prudent use of income based deductibles, co-pays
LikeLike
If you think health care is expensive now, wait until you see what it costs when it’s free! — P J.
O’Rourke
LikeLike
Where’s the money coming from to pay for all this ? Just asking.
LikeLike
That’s easy, same place it does now, employers and citizens. It’s the same money most of us spend now, but realigned. Employer payroll tax on all wages, premiums, deductibles and co-pays for individuals based on income. The tax on employers based on the average spent today by employers would be about 8%. If all that doesn’t work to sustain the coverage, then a modest dedicated VAT say 3-5%.
LikeLike
Maybe we should just borrow it!
LikeLike
No, it is going to come from all the billionaires and millionaires. You know the ones, the 401K millionaires that need several million to retire. You know, you and me.
This is what free healthcare will get you:
“Canadian Panel Pushes Assisted Suicide for Minors Without Parental Consent.”
“They considered two tracks, one for whom there is ‘reasonably foreseeable’ death, the second track for those for whom ‘mental disorder is the sole underlying medical condition’.”
https://www.foxnews.com/media/canadian-panel-pushes-assisted-suicide-minors-parental-consent
LikeLike
As I said everyone pays, but in the aggregate not necessarily more. What do people pay now? Employers pay 8% of total payroll on average today. Under Medicare my wife and I pay $998 per month BEFORE the IRMAA income based premiums.
LikeLike
Not only No…but HELL NO! Another bizarro world proposal from a bunch of lazy socialists.
LikeLike