This simple little chart shows the steps needed to keep your doctor if the health care plan put forth by Senator Baucus becomes law. For a closer look, click this link.
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Health Care
Climate Change and Health Care: Free Lunches?
In the debate over health care reform, advocates of expanded government health insurance suggest we can pay for this by making Medicare and Medicaid more efficient.
In Paul Krugman’s most recent column, he makes a similar claim about reducing greenhouse gas emissions:
The evidence suggests that we’re wasting a lot of energy right now. That is, we’re burning large amounts of coal, oil and gas in ways that don’t actually enhance our standard of living — a phenomenon known in the research literature as the “energy-efficiency gap.” The existence of this gap suggests that policies promoting energy conservation could, up to a point, actually make consumers richer.
Both claims of a “free lunch” are heroic, at best.
In the case of health insurance, Medicare and Medicaid are inefficient, but to make them more efficient we have to reduce government subsidy for health insurance, not expand it.
In the case of energy efficiency, more energy-efficient practices exist (e.g., replacing incandescent light bulbs with CFLs), but they are expensive: if they actually made consumers richer, most would be using them already.
Now the fact that expanded government health insurance and increased energy efficiency would cost more, not less, does not prove they are bad ideas (that’s a separate discussion). But it means society must evaluate a tradeoff, not just assert we can have something for nothing.
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Now We See the Violence Inherent in the System
In case you’re wondering how Congress and President Obama plan to enforce their little compulsory health insurance schemes, here’s a note explaining their strategy from the head of Congress’ non-partisan Joint Committee on Taxation to Sen. John Ensign (R‑NV).
Yeah, but … it’s not like it’s … you know … a tax or anything. Oh, wait.
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Transparent Health Care Legislating?
Will Americans get “quality time” with proposed health care legislation before it passes?
Some say no: The Senate Finance Committee recently turned back an effort to put Chairman Max Baucus’ bill online for 72 hours before the committee’s vote. The Committee is on the wrong side of history.
Transparency shifts power away from the center, so it’s favored by those out of power. It’s no wonder that Republican representative John Culberson, a member of the minority party, is putting H.R. 3400 (a significant health care bill) online for comment, using a tool called SharedBook.
Transparency won’t be a gift from government. It is something we have to take. That’s why I think the action lies in private efforts like OpenCongress, GovTrack, and (my own) WashingtonWatch.com. (Links are to sites’ H.R. 3400 pages.)
The public has a way of conforming their expectations to what’s possible, and transparent law-making is entirely possible today. Closed processes like the Senate Finance Committee’s consideration of health care legislation will not satisfy the public, and it will emerge from the committee with one strike against it irrespective of the merits.
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The President’s Health Care Tax
As Michael Cannon discussed in an earlier post, the White House is trying to claim that health care “reform” does not mean higher taxes. This is a two-pronged issue. First, there is a mandate to purchase health insurance. Second, there is a tax (the White House calls it a fee) on people who fail to purchase a policy.
The White House claims this mandate is akin to state-level requirements for the purchase of health insurance, and that the newly-insured people will be getting some value (a health insurance policy) in exchange for their money. These assertions are defensible, but that does not change the fact that a tax is being imposed.
It might be plausible to argue that the mandate is not a tax if the value of the insurance policy to the individual was equal to the cost. But since these are people who are not buying policies, their behavior reveals that this obviously cannot be true. So this means that they will be worse off under Obama’s plan and that at least some of the cost should be considered a tax.
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Gruber on Whether Mandates Are Taxes
Yesterday, on PBS’s NewsHour, I debated MIT health economist Jonathan Gruber on (among other things) whether the individual mandate in President Obama’s health plan is a tax. As you can see in this video, Gruber pretty clearly states that the mandate is not a tax:
Which seems to conflict with what he wrote in his textbook:
Suppose…the government mandated that everyone buy full insurance at the average price of $825 per year…This would not be a very attractive plan to careful consumers, however, who could view themselves as essentially being taxed in order to support this market, by paying higher premiums than they should based on their risk.
There are really two government interventions at play in that example: the mandate that requires everyone to purchase insurance (whether they want it or not), and the price controls that force low-risk consumers to pay more than an actuarially fair premium. One could say that it is the price controls, rather than the mandate, that Gruber likens to a tax. It might be inconsistent, however, to suggest that when price controls force you to pay more for something than the market would charge, that is a tax, but when a mandate forces you to purchase something you don’t want at all, that’s not a tax.
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Cutting Health Care Costs
Ezra Klein, the young Washington Post blogger who writes a lot about health care, contributed an article to the paper’s Sunday Business section in which he made this compelling point along the way:
The surest way to cut health-care spending would be to make people shoulder more of the burden directly, as opposed to hiding it in taxes and lost wages.
Bingo! Exactly! So why does Klein want government to get more involved, to wrap our health care in a web of mandates and subsidies and regulations and gatekeepers and monitors? When, as he says, making the cost of health care clear and direct would be “the surest way to cut health-care spending”?
Michael Cannon’s proposal for “Large HSAs” would move us in the right direction. It would allow workers to receive the full amount that they and their employer spend on their health benefits as a tax-free cash contribution to the worker’s health savings account. That would give consumers control over their health care dollars, giving them an incentive to shop around, ask questions, and generally hold down costs as consumers do in normal competitive businesses.
You can’t say it enough:
The surest way to cut health-care spending would be to make people shoulder more of the burden directly, as opposed to hiding it in taxes and lost wages.
Congress should stop moving in the other direction.