Looking around, there really isn't one Western nation that is dealing with health care and retirement savings in a sustainable way. It's really a case of "pick your poison," and pretty much every one of them is going to hit some sort of wall as the boomers get old. It's sort of like the Drug War. I know that what we have sucks, I'm just not sure I see anything better. Yet.
The biggest problem on the medical front is that no systen I've seen has incentives for thrift and savings at the patient level - with predictable results (unlimited demands, decoupling of responsibility, spiralling costs, enforced shortages & rationing from governments). As for Social Security, Canada Pension Plan, whatever... those are all just Ponzi schemes. If you or I did it, we'd be thrown in jail. How fortunate that politicians can pass laws to exempt themselves from such inconveniences.
So, what's to do? New blogger Dan Morgan has split his dwellings between red states and blue states over the years, and even has the sense to vacation up at Stony Lake, Ontario. He has an interesting proposal... and you've gotta give him props for ambition.
"Set aside current politics for a moment," he says, "and think about sustainable long term solutions." NoSpeedBumps.com proposes 3 fundamental reforms. They're startling at first, but keep reading:
- – Begin mandatory Retirement Savings Accounts (RSAs) and phase out Social Security.
- – Begin mandatory Health Savings Accounts (HSAs) and achieve universal health care coverage, phase out Medicare and Medicaid.
- – Implement a loophole-free Effective Flat Tax (EFT) that has a completely flat perceived rate [JK: but still taxes according to ability to pay].
These policies all work together in a grand plan. They are not at all independent; they fit together like three pieces of a puzzle. The result is an extremely simple income tax, with an identical flat rate for all individuals and businesses – yet progressive revenue collection is still achieved. The idea of taxing according to ones ability to pay is retained in the tax code.
This at first may sound contradictory. How can you have both a flat rate and progressive revenue collection at the same time? This gets back to how the three policies work together. The tax rate is really a “tax & save” rate, instead of purely an income tax rate like in today‘s system...."
OK, but I was still confused. Progress taxation in a flat tax system? WTF? Then he explained the concept a little more:
...low income workers pay no taxes and instead get a subsidy if they make more than $7000 per year. Their net income tax rates, when considering the total flow of money between them and the government, are actually negative. But their tax & save rate remains flat - they perceive the same effective rate as all other workers. It is just that all of their withheld income is being diverted into their savings accounts rather than to government as taxes.
That's when a light went on and I thought to myself: "this is really interesting." Read the whole thing and see what you think.
awful, terrible ideas.
France has a perfectly good health care system.
For many of these sorts of proposals, I can think, "hmm, might work for my family." Then I start thinking of the tough cases--how would the plan work for them?
Ultimately, Society lets people suffer the consequences of their bad choices, and bad luck. Oh, and their kids can suffer too. Or--Society forces choices on everybody, to protect the unwise and the unlucky.
The medically fortunate will find $3000 for health expenses each year to be more than enough. For the sick, it's a drop in the bucket, and the chronically ill are uninsurable at affordable rates under any rational business model. Of course, we can demand that insurers take them at (artificially) low rates--and maybe we should. But then who subsidizes these rates; if it's the other insureds, then that $3000 isn't really $3000.
As we struggle to come up with answers to a seemingly endless series of questions like this, the simplicty of this tripartite system falls away. We're left with a series of messy compromises and patches, with promised market efficiencies just out of reach, and with a host of groups of unhappy people--each group unhappy for a different reason.
Uh, the one where 10-15,000 old people died during the summertime because... oh yeah, that one. There are good aspects of the French system, mind, starting with the fact that every service comes back with a bill you can see and a percentage payment by the individual. From a generally positive Civitas briefing
Uh huh. So you have a high tax on jobs, and when people complain you raise the subsidy on individuals to buy votes. Yeah, looks like a great idea to me. Very sustainable. How well do you think this is going to work in 20-30 years, when an aging population and shrinking workforce are already a problem in other areas?
There is no free lunch.
Interestingly, Joe, we hear in the US how bad our health care system supposedly is for the percentage of GDP it consumes, but with France at 20% of payroll, my jaw drops.
Robin, bingo !
Joe, yes, the tranfer from withholding to savings is key. it also puts the health care consumer back into the incentives mechanism.
The f8urther govt gets into health care, the less you get for your money. if medicine is to be a business, there are really bad effects to removing the incentives that normally guide a business.
Those bad effects is why the "Third Way" ends up little better than communism, you cant have the benifits of a market, without actually having a market.
Without the artificial price floors (the minumum price always rises to what the govt pays) the only thing left is to exterminate the malpractice racket, put the J.Edwards who channel spirit guides in court to bankrupt the innocent out of business.
We have the best healthcare on the planet, except for the government damage, the sooner we go back to what created it, and stay there, the better.
AMac has done a god job of defining the dilemma. the more a system incents people to act responsibly the more often innocents and unfortunates are treated unfairly. The more universally innocents and unfortunates are treated fairly, the more often others are incented to act irresponsibly.
Neither extreme is attractive not has either proven enduring. Through sequential reestimation we are seeking a position in the middle that will converge on an appropriate compromise. Our current system has plenty of unfortunates but they are somehow provided for in their emergencies. But many are also acting irresponsibly because they bear litle burden for marginal costs.
The problem, aside from human nature, that is driving this dilemma is that for the first time in history we can provide more effective medical care than many can afford. Who decides when the marginal cost of medical care exceeds the marginal benefit? When one is deciding for one's self is the answer different than when one, or a bureaucracy, is deciding for another?
Richard
I dont accept that primis, only one of them is "extreme", I reject the fake equality.
I reject the idea that really fantastical things are possible if you have the money, is a "problem".
First of all, such things are never expensive forever, over time the costs will come down, and your focus will be on whatever the latest new expansions of our capability that have arrived.
What was fantasical yesterday is todays everyday.
The leftist solution destroys such advances.
Canada might get a few more MRI machines, hand me downs from the USA after our superior market based system reaches twoard 1 of them for every 100 Americans.
In the meantime they die waiting in line while they watch us in envy.
O well, thems the breaks.
Following up on Richard Heddleson's remarks (#6), one can ask these sorts of questions for any scheme, including our present patchwork:
I'll sit up and pay attention when a scheme's proposal includes three paragraphs.
Heres a solution i'd love to see more of: catastrophic medical insurance. If consumers had to pay out of their pocket for check ups and basic prescriptions demand would drop, followed by price. The problem now is that people are so used to not seeing their extravagent health care bills because they are buried in their premiums, often payed for them by their employer (trust me, the 'employer' never pays a dime, that is part of your salary). The reason this wont happen is that young healthy people like myself have been forced into the current scheme to pay for the chronically ill, as well as those who simply must have the most expensive treatments available (hey, its free right?). If I could pay half of what im paying now (still highway robbery compared to what im likely to ever need) and have a 10,000 dollar deductable, i'd take it like a shot. But then the whole house of cards comes down. Im afraid we may be too far down this road to turn back.
AMac
You can start by getting govt out of it.
Otherwise, you sanction destruction.
The final great offense, is that because govt anything costs 10X to 1000X more than if they wast involved, it has effect of reducing the actual medicine delivered per dollar expended.
Its the typical leftist screw the poor scheme,
Tax the rich !!,, here comes the taxes.
Costs of taxes passed down to the consumer ( who pays the dollars the rich pass on as his taxes)
End effect, the costs (with all those tax the rich taxes included in the price) of all goods from a car to a laof of bread go up.
And the poor gets screwed.
Imagine how much cheaper an MRI machine would be without the compound taxation costs hidden in its price! (the compound taxes in the final price get really offensive on big ticket items like that)
How much cheaper would MRI scans be if we have the 60% more MRI machines that would exist? (yes the tax burden in its price is that large, lots of income tax withholding in its price, due to its labor intensive manufacture)
Want cheaper medicine ? cut the taxes, make all mediacine medical equip, the workers who make everything from pills to MRI machines free of the tax burden. presto an almost 50% aggregate reduction in health care costs.
Get the govt out and let the market work, watch what happens without the artificial price floor.
This is a govt created problem.
Its never too late to give communism the boot.
Unless you want to accept that the cure, is more of the poison that made you sick.
Or that a proper level of poison is that which makes you sick, just as long as its not enough to kill you.
A little leftism dont work very well, a lot of leftism dont work at all. what else is new.
Im tired of the dishonesty. the king has no clothes, and more people like me are unwilling to buy the lies any more.
_I'll sit up and pay attention when a scheme's proposal includes three paragraphs.
One that starts, These are the people who will be very unhappy under these new rules.
One starting, This is how the new system will deal with those groups.
And one beginning, Here are some Unintended Consequences that will have to be addressed, lest they sink this proposal._
I's sit up and pay attention too, because that would be one of the stupidest proposals ever made. It's been my experience that oponents of a proposal present these points more clearly and honestly than the proponents. That's why we engage in public debate.
Richard Heddleson (#12)
>...because that would be one of the stupidest proposals ever made...
Touche.
Jane Galt brought up a relevant point in a different discussion:
So, a workable proposal on health care reform should consider people's behavior at the margins, and be structured such that players have incentives to do the 'right' thing.
Then we can move to subtle applications of the Law of Unintended Consequences, rather than listing obvious ones.
- The Pure Food and Drug Act
- Medicare
- Medicaid
- Licensing of doctors
- Pharmaceutical patents
These and the tens of thousands of other laws and regulations work synergistically to increase health care costs. Removing the subsidies to consumers e.g. Medicare and Medicaid will not reduce costs without removing the subsidies to producers e.g. patents, licensing, etc.The key problem with savings accounts is that they utterly fail to pay for large expenses, and as people approach the end of life, more and more of those expenses crop up.
It goes even further than that, actually, in that it's entirely possible for a low-income worker to incur more expenses in a single medical problem than their entire lifetime of earnings. If you're a waitress your whole life, you will not earn enough to pay for a transplant operation!
And of course, if you're young and need expensive surgery, you're screwed - no lifetime to have built up the medical account means that you don't have that cushion. Ditto if you have a kid with a congenital health problem. Ditto if, goodness forbid, you have TWO kids with congenital health problems.
So you'd still need medical insurance. The difference would be that you could afford a higher deductible... because, of course, the government is earmarking part of your income as only useful for medical expenses. (Wonder if you could spend it on medical insurance? ;p) But you'd have a big disincentive to have medical insurance if you were young, healthy, and unlikely to spend all of the amount you were being forced to sock away for medical expenses; catastrophic would be the only reason you needed insurance. So everybody else would have to pay that much more in return, with the relatively healthy out of the system...
The economics of medical insurance are a little screwy because we won't let it be run like auto or home insurance. If you wreck your car, your insurance agent can say "we'd have to spend more money to fix it than it's worth, let's total it and move on." But people get really stroppy when insurance agents do that with people!
Honestly, how do you fix medical care? There really are only two ways. You can have the government take control, and trade universality for quality of care; everybody can get what care there is, but what care there is, is under the control of a bureaucrat who can and must say "no" to expensive care. Poor people don't suffer as much, but the very sick suffer, as they don't get their treatment (if we even HAVE treatments for them, which isn't necessarily the case in a nationalized health care system.)
Alternatively, leave the system as it is, and trade quality of care for a limited pool of eligibility. The very sick can get the treatments they need if they can afford the insurance, and the poor get screwed pretty much across the board.
There's NO WAY to combine universal care with the quality we receive from the modern system. (That goes double for the US; it's not too much to say that the majority of innovation in health care takes place in this country. Other countries can socialize their medical care and then rely on us to advance the state of the art, but if WE go down that path, who's going to do it?)
There two fundamental problems with all simple and effective approaches.
For these reasons short-sighted and self-serving politicians are unshakably opposed to anything simple or effective. The first makes their skills irrelevant, the second exposes that fact.
Avatar devastates a strawman as he suggests anyone is proposing MSAs without insurance. Thw whole point of the MSA is to have the patient make economic and treatment decisions aobut the regular medical costs we all incur with high deductible insurance covering extraordinary costs. Thus people have an incentive to behave in a rational way when they obtain regular medical care instead of thinking it is free or "the insurance company ios paying" for it.
Richard
Bingo, the false choice "argument" does get tiresome.
try being poor and having aids or cancer right now. you cant get the cutting edge treatments that mean years of healthy living that the rich do. the new system does not fix that problem. the people at the very bottom get screwed.
on the other hand for the young who can't afford a catastrophic illness, insurance. young people are cheaply insured. for the post retirement age people they have been contributing 1k per year over the course of their work, plus whatever they didnt spend in the 3k. that should be enough to keep some money for the more routine stuff and get some long term disability such stuff. i'm assuming the 3k can be used for health care.
the other thing this system does is it allows groups and families to move on up. example: family of three, single working mom. mom gets hit by bus at age 60. retirement and health accounts would be fairly full and could be passed on to kids, which they can use to invest in (education, equities, property) as they see fit. i think this system could have a very real effect in helping the lower earners move up over generations. currently the mom who makes not enough to leave anything behind and dies at 55 leaves nothing to her kids... there is no escape.
for the very poor you are still "f'ed in the a" as cartman would say, but at least the market would be in play and the relatively healthy would have a chance of making something more of themselves.
Great discussion, but missing another possibility -- Tax Loans.
Where the gov't gives money to temporarily poor people as a Loan, and the loan has to be repaid. From taxes paid plus a loan repayment.
There is a need to have an incentive for care receivers to limit the care demanded -- through paying more.
There is a need to help poor folk afford care when they need it -- loan funding does this.
The loan repayment to the gov't should be based on income, like a 5% of income repayment. (Very much like a 5% income tax.) So yes, some poor folk will die "owing" the gov't money. But mostly the folk will repay the benefits they get, thus turning those benefits into "their" money.
Tom
And to make the problem as small as possible, the least leftist creation of the poor as possible.
Ironic, isnt it, that leftism addresses the problem of the poor by creating more of them, and the more leftist you go the more poor you have.
Which of course, creates their power base, which becomes and end onto itself.
Thanfully, america caught onto their game, before it became the ruin of us.