Health Versus Wealth
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| Fri, 07-09-2004 - 11:54am |
By PAUL KRUGMAN
Published: July 9, 2004
Will actual policy issues play any role in this election? Not if the White House can help it. But if some policy substance does manage to be heard over the clanging of conveniently timed terror alerts, voters will realize that they face some stark choices. Here's one of them: tax cuts for the very well-off versus health insurance.
John Kerry has proposed an ambitious health care plan that would extend coverage to tens of millions of uninsured Americans, while reducing premiums for the insured. To pay for that plan, Mr. Kerry wants to rescind recent tax cuts for the roughly 3 percent of the population with incomes above $200,000.
George Bush regards those tax cuts as sacrosanct. I'll talk about his health care policies, such as they are, in another column.
Considering its scope, Mr. Kerry's health plan has received remarkably little attention. So let me talk about two of its key elements.
First, the Kerry plan raises the maximum incomes under which both children and parents are eligible to receive benefits from Medicaid and the State Children's Health Insurance Program. This would extend coverage to many working-class families, who often fall into a painful gap: they earn too much money to qualify for government help, but not enough to pay for health insurance. As a result, the Kerry plan would probably end a national scandal, the large number of uninsured American children.
Second, the Kerry plan would provide "reinsurance" for private health plans, picking up 75 percent of the medical bills exceeding $50,000 a year. Although catastrophic medical expenses strike only a tiny fraction of Americans each year, they account for a sizeable fraction of health care costs.
By relieving insurance companies and H.M.O.'s of this risk, the government would drive down premiums by 10 percent or more.
This is a truly good idea. Our society tries to protect its members from the consequences of random misfortune; that's why we aid the victims of hurricanes, earthquakes and terrorist attacks. Catastrophic health expenses, which can easily drive a family into bankruptcy, fall into the same category. Yet private insurers try hard, and often successfully, to avoid covering such expenses. (That's not a moral condemnation; they are, after all, in business.)
All this does is pass the buck: in the end, the Americans who can't afford to pay huge medical bills usually get treatment anyway, through a mixture of private and public charity. But this happens only after treatments are delayed, families are driven into bankruptcy and insurers spend billions trying not to provide care.
By directly assuming much of the risk of catastrophic illness, the government can avoid all of this waste, and it can eliminate a lot of suffering while actually reducing the amount that the nation spends on health care.
Still, the Kerry plan will require increased federal spending. Kenneth Thorpe of Emory University, an independent health care expert who has analyzed both the Kerry and Bush plans, puts the net cost of the plan to the federal government at $653 billion over the next decade. Is that a lot of money?
Not compared with the Bush tax cuts: the Center on Budget and Policy Priorities estimates that if these cuts are made permanent, as the administration wants, they will cost $2.8 trillion over the next decade.
The Kerry campaign contends that it can pay for its health care plan by rolling back only the cuts for taxpayers with incomes above $200,000. The nonpartisan Tax Policy Center, which has become the best source for tax analysis now that the Treasury Department's Office of Tax Policy has become a propaganda agency, more or less agrees: it estimates the revenue gain from the Kerry tax plan at $631 billion over the next decade.
What are the objections to the Kerry plan? One is that it falls far short of the comprehensive overhaul our health care system really needs. Another is that by devoting the proceeds of a tax-cut rollback to health care, Mr. Kerry fails to offer a plan to reduce the budget deficit. But on both counts Mr. Bush is equally, if not more, vulnerable. And Mr. Kerry's plan would help far more people than it would hurt.
If we ever get a clear national debate about health care and taxes, I don't see how President Bush will win it.

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For someone who claims to shun fear as a "debilitation," you certainly seem afraid of trusting the American people to make their own choices.
Life Expectancy of 79.35 years third highest in G-711
Country
Life Expectancy - 2002
Canada
79.35
U.S.A.
76.8
U.K.
78.05
Japan
81.5
Italy
79.8
France
79.25
Germany
77.7
G-7
78.92
Source: OECD Health Data 2003
Could access to basic health care for all citizens explain why other developed countries have a higher life expectancy?
BTW in the UK one can choose your Dr.
What makes you think I don't trust people to make choices? Isn't it the cons who want to impose their beliefs on people? The cons want to take away a person's right to choose anything that disagrees with their dogma. Fear is debilitating!
As far as health care, I hope you don't think people make the decisions. Actually it is big medical and insurance companies that decide who will be covered for what procedures and at what expense. I am opposed to big corporations and their power; I support a person's right to choose, even if it death they choose. Let's be clear about who is for the right to choose, and who isn't.
'Ownership Society' or Snake Oil?
http://www.washingtonpost.com/wp-dyn/articles/A21852-2004Sep14.html
Trying to be a good citizen, I start from the beginning, and do what the government ads tell me to do: I open my computer, and type in www.medicare.gov. A screen comes up, asking me what I want: A personal health plan? A prescription drug card? A nursing home? I pick the first, type in my Zip code, and am immediately presented with 15 choices. Do I want "original Medicare"? "Kaiser Permanente"? "Insurer Medigap Plan H"? Arbitrarily, I pick one of two "Elder Health Maryland" plans -- and get six more pages of information.
Among other things, I learn that if I opt for this plan, I will pay a deductible of $876 for inpatient hospital care, and $109.50 for each day over 20 days, but less than 100 days, that I spend in a skilled nursing facility. I also learn that I am entitled to bone mass measurement (if I pay 20 percent of the cost) and a hepatitis B vaccine (if I pay 20 percent of the cost) but flu and pneumonia vaccines are free. I can also go to a chiropractor (at 20 percent of the cost) as long as the goal is "manual manipulation of the spine to correct subluxation."
If I were being a good citizen I would spend the rest of the morning comparing that set of offerings to all of the others. If I were a really good citizen, I would read the footnotes to these plans, some of which contain phrases such as: "5) Covers the difference between your doctor's actual charge and Medicare's approved amount, if your doctor doesn't accept assignment. Plans F, I, and J pay 100% of the excess charges. Plan G pays 80% of the excess charges." And if I were an exceptionally good citizen, I would then compare and contrast the various skilled nursing facilities in my area.
But the statistics are weirdly useless. What, for example, does it mean if a nursing home has a low percentage of residents who have moderate to severe pain, but a high rate of urinary tract infections? What does it mean if zero percent of the residents are bedridden -- well below the national average -- but that 76 percent (nearly double the national average) regularly lose control of their bowels or bladder? Does that mean that this is a good nursing home or a bad one?
Fortunately for me, I don't have to be a good citizen, because I'm not old enough to qualify for Medicare or a nursing home. But the well-documented, continuing confusion of those who are eligible represents the greatest and least-discussed obstacle to what President Bush calls "the ownership society" in the campaign rhetoric he's been using on the road this week.
"The ownership society" is innately appealing and eminently logical: Everybody has his or her own health care policy, which can be taken from job to job. Everybody has his own Social Security savings plan, which grows along with the stock market. Nobody is harmed by a sudden congressional decision to raise the retirement age or to cancel coverage of manual spinal manipulation. When offered the choice in Britain some years ago, I happily chose to pay a part of my contributions to a private rather than a government pension plan. I wish I could do it here.
Over time (quite a lot of time) both "private" Medicare and "private" Social Security should -- in theory -- save money as well, if the rules are written to make genuine competition possible. What I don't think anyone has figured out is how competition works in practice when, as the president puts it, "consumers are empowered to have choices" but are simultaneously drowning in information. I cannot honestly say that if I were retiring tomorrow, I would be able to pick the most efficient of the myriad Medicare options available.
Nor am I alone: When private pension plans first became available in Britain, thousands of people were talked into buying the wrong ones. The Bush administration's prescription drug discount cards, which became available four months ago, have been unpopular and underused, largely because people don't understand them. Research into other kinds of investment decisions shows that the more options available, the more likely consumers are to panic and choose the simplest -- and least lucrative.
Maybe this is the sort of teething problem that will just go away once better software is invented. Or maybe information overload will eventually make people think "ownership society" is another way of saying "snake oil." Perhaps it's too much to expect the president to talk about the possible side effects of poor consumer choice on the campaign trail. I'd still feel a lot better if he didn't make the phrase sound like a panacea, either.
This is a assumption not a foregone conclusion. Did you know that "big government" has grown during Bush's term of office.
It's designed to deceive the public, prevent them from examining the package. Snake Oil indeed.
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