By David Moberg
In These Times
Aug. 21, 2009

In last year’s presidential race, Barack Obama scored points when he attacked John McCain for proposing to tax people’s employer-provided health insurance as income. Conservatives argued that the business tax deduction for health insurance distorted healthcare markets, encouraging people to overconsume healthcare.

That assumes people are doing the equivalent of choosing extra colonoscopies over a vacation at the beach. It was bad policy and bad politics.

Then, in their destructive confusion over health reform, some Democrats–especially in the Senate–began reviving McCain’s idea, and even the administration signaled openness to it. Democrats were seeking money to pay for their proposal, and some argued that current tax subsidies favored “gold-plated” policies for high-income executives, thus making a tax on benefits progressive. Strong criticism from liberals and unions has for now beat back the plan as bad politics.

Now Harvard physicians David Himmelstein and Steffie Woolhandler, co-founders of Physicians for a National Health plan, have shown that the supposedly progressive rationale for taxing employer-provided health insurance is as flawed as the conservative justification.

In an article online in The New England Journal of Medicine, they show that a tax on benefits would be regressive, taking a far higher percentage of income from low- and moderate-income taxpayers than from high-income individuals.

In absolute dollar terms, the affluent gain more, but as a percentage of income, lower-income earners receive a greater benefit and thus their tax rate–if benefits were taxed–would be higher. That’s the usual definition of tax regressivity.

For example, Himmelstein and Woolhandler calculate that the mean (or average) benefit for families earning $10,000 to $19,999 and receiving employer-paid coverage is $2,115, or 13.9 percent of their income. But families earning $100,000 or more receive a mean tax benefit of $4,498, or just 2.7 percent of their income.

Of course, lower-income families are less likely to have employer-provided insurance (13.8 percent of those earning $10,000 to $19,999 compared to 61.8 percent of those earning $100,000 or more).

So when Himmelstein and Woolhandler mapped the effects of a benefit tax on the whole population, not just those whose employers provided insurance, the mean tax rate for low-income families was low, rising to a peak for middle-income families, then falling back down for the more affluent. It was still basically regressive.

They calculated the effects assuming families paid the tax, but Himmelstein says most analysts assume that if employers were taxed instead, they would simply deduct the cost from wages. If insurers were taxed, their likely strategy is less clear, but they would probably raise rates for everyone.

If only high-priced policies were taxed, people living in states with higher medical costs would be penalized, and without indexing of the cut-off for inflation, more families would be affected each year. Also, Himmelstein says, federal law generally requires employers to offer the same benefit package to all employees. So lower-paid workers at an employer (like Harvard) with comprehensive health benefits would be hit, not just high earners.

Although the plan to tax benefits now seems off the table, Himmelstein expects it to spring up again. “We’re hoping,” he says, “to drive a small stake through its heart.”

http://inthesetimes.com/working/entry/4793/putting_a_stake_through_the_heart_of_bad_health_policy/

By Carol Miller
Taos Daily News
August 15, 2009

The people are crying-out for access to health care. The economy is in freefall with no sign yet of the bottom. It is time for bold action. Poll after poll finds that two out of every three Americans supports converting to a universal health care system similar to Medicare.

I find myself wishing there was someone like the Wizard of Oz to give courage to politicians, the courage to stand up for us–the people, the taxpayers, the voters.

So, what’s the problem?

One problem is that most elected leaders, from the president on down, are cowards when it comes to standing up to the corporations. A few recent examples: bailouts for banks while homeowners still face foreclosure and homelessness; the AIG mega-insurance corporate bailout; and the current and most cruel bailout–protecting large sickness insurance corporations rather than giving us guaranteed access to health care. This is not reform.

A truly reformed system would focus on improving health by expanding public health, prevention, wellness programs, and easy access to health care without causing fear as to how individuals will pay for it.

It is becoming obvious that there is more interest in raising current and future campaign funds than giving us access to the higher quality, lower-cost health care that the rest of the industrialized world enjoys.

How much money has corporate health care invested in politicians to protect their profits? In the past 10 years, a cool $3.4 billion. 2008 was a big investment year for health corporations: $167 million to Congressional candidates (60% to Democrats), $18.7 million to the Obama Campaign, and $7.3 million to McCain. While that sounds like a lot to us, it is pocket change for these corporations–they make billions in profit every year.

A Billion Dollars a Day

I know there are a lot of numbers in this commentary, but if you want to memorize only one, here it is: health insurance administrative costs alone waste one billion dollars a day, $365 billion dollars a year, and a trillion dollars every two and a half years. This is a trillion dollars that are sucked out of the health care system every couple of years for wasteful paperwork and corporate profit. Not one penny of this provides any health care. This is why the corporations are fighting to have the 49 million uninsured handed over to them.

Elected Politicians are Helping Government Haters Kill Health Reform

When our elected officials refuse to strongly defend the popular, lifesaving and well-run government health programs, they open the door and airways to endless government bashing. We see now how out of control these government haters have become. Some of these are even the people we have elected to represent us!

Why won’t the president stand up and defend government health programs? He has had so many opportunities, but instead he plays into the hands of the sickness insurance corporations, feeding the myth that people like their insurance companies.

U.S. Socialized Medicine Is Popular

Americans are so trained to think that socialized anything is bad that they get frightened when they hear lies in the media that the government is going to impose socialized medicine. The definition of socialized medicine is when the government owns the hospitals and clinics and all of the staff are government employees.

This system actually sounds very familiar to 20 million Americans, and almost one out of every four New Mexicans. You know why? The United States already has a very large socialized medical system that includes military health, veteran’s health, and the Indian Health Service.

Why doesn’t President Obama ever mention this? He could let people know that the VA is a great system, recently honored as having the highest patient satisfaction of all health plans for the sixth year in a row. The military has always had a socialized health system, and service members consider it the most important benefit of service.

America Already Has a Single Payer System

It is amazing that the thought of government-run health care frightens so many people, including those who already have it. The United States today has the largest single payer health care system in the world, with 103 million beneficiaries–more than one out of every three Americans.

In New Mexico, 800,000 people have single payer health care, through Medicare and Medicaid. Add in the more than 400,000 in the socialized system, and two out of every three New Mexicans is already in government run health care. The truth is, most of them like it and are more satisfied with their coverage and care than people in corporate sickness insurance.

Here is why Medicare is popular–it keeps the private delivery system intact and leaves it to the government to pay the bills. If people want “choice,” they will find more choice of doctors and hospitals in Medicare than any other insurance plan.

The president has said time and again that if we were starting the system from scratch, he would favor a single payer system. He is clear that he knows it is the best. But he always follows this up with the comment that a lot of people like what they have, so we will build on the current system. But 123 million people already have government health care, 41% of the country. Why not get to universal health care by building on these systems?

At a recent AARP Forum on Health Reform, President Obama was unable to convince a Medicare beneficiary that Medicare is actually a government-run program. The person refused to believe that the government could operate such a great program.

Rather than standing up for the government, the president missed the perfect opportunity to educate and move the country. He could have explained that reform will not be about taking away anything from the 45 million seniors in Medicare, but instead would welcome their children and grandchildren to join them in the most popular government program.

Compare that to the current system which has grandma in Medicare, mom and dad either uninsured or in another plan, and often the children in yet another, each with annual enrollment, changing rules, and benefits unknown until you are sick and an insurance company bureaucrat tells your doctor what care you can get. Imagine the whole family in one health system, with the same rules, benefits, and enrollment for life–this is an idea worth fighting for!

People Like Their Insurance?

Really? Who are these people? This is a huge lie. The president says it over and over. Our members of Congress say it over and over, but repeating this lie will never make it true.

For the most part, people like their doctors and the hospitals and clinics where they get care, but in my many years of working in health care, I have never met anyone who told me they love their insurance company.

Insurance companies collect money every month, supposedly to pay for health care, but their profits are based on denying and rationing as much care as possible. The rationing starts before someone even signs up for an insurance plan, because sales agents are trained to discourage or deny coverage to sick people or people who they think might become sick.

With corporate for-profit insurance, you never know in advance what will be paid for and how much they will leave for you to pay. Too many people have learned the absolute heartlessness of ruthless insurance companies. More than 500,000 people in the United States go bankrupt every year as a result of medical bills or illness. Most who declare medical bankruptcy are “insured,” or so they thought. They paid their premiums every month, but when they or a family member became sick, they learned that they were not protected from financial ruin.

Who benefits from this system? Insurance executives and CEOs with sky-high compensation packages reaching to the tens and hundreds of millions of dollars. The former CEO of United Health Care holds the record, receiving over one billion dollars in a single year in salary and stock options. This is the same corporation that just “won” the contract to run the behavioral health system in the State of New Mexico.

Continuing the for-profit sickness insurance industry and using tax dollars to expand it further is yet another unaffordable corporate bailout. This is a nonessential industry that makes profits from rationing health care to people who need it and, even worse, it rations the care to people who have already paid for it!

My challenge to the New Mexico Congressional delegation and the president is this: even if you don’t have the courage to support a transformation of the health care system that would let everyone into a restored Medicare program, why not at least let the 49 million uninsured enroll in this most popular government program? This is the easiest and least costly way to cover the uninsured.

There are two bills in Congress to create a Medicare-for-All program, House Bill 676 and Senate Bill 703. On July 30th, U.S. House of Representatives Speaker and California Congresswoman Nancy Pelosi committed to a vote on HB676 when Congress comes back from vacation in September.

The outcome of that vote depends on us making sure that all of our representatives know we oppose the looming corporate bailout and want health care, not health insurance.

What we want is simple: one system, everyone in, nobody out.

By David Moberg
In These Times
Aug. 21, 2009

In last year’s presidential race, Barack Obama scored points when he attacked John McCain for proposing to tax people’s employer-provided health insurance as income. Conservatives argued that the business tax deduction for health insurance distorted healthcare markets, encouraging people to overconsume healthcare.

That assumes people are doing the equivalent of choosing extra colonoscopies over a vacation at the beach. It was bad policy and bad politics.

Then, in their destructive confusion over health reform, some Democrats–especially in the Senate–began reviving McCain’s idea, and even the administration signaled openness to it. Democrats were seeking money to pay for their proposal, and some argued that current tax subsidies favored “gold-plated” policies for high-income executives, thus making a tax on benefits progressive. Strong criticism from liberals and unions has for now beat back the plan as bad politics.

Now Harvard physicians David Himmelstein and Steffie Woolhandler, co-founders of Physicians for a National Health plan, have shown that the supposedly progressive rationale for taxing employer-provided health insurance is as flawed as the conservative justification.

In an article online in The New England Journal of Medicine, they show that a tax on benefits would be regressive, taking a far higher percentage of income from low- and moderate-income taxpayers than from high-income individuals.

In absolute dollar terms, the affluent gain more, but as a percentage of income, lower-income earners receive a greater benefit and thus their tax rate–if benefits were taxed–would be higher. That’s the usual definition of tax regressivity.

For example, Himmelstein and Woolhandler calculate that the mean (or average) benefit for families earning $10,000 to $19,999 and receiving employer-paid coverage is $2,115, or 13.9 percent of their income. But families earning $100,000 or more receive a mean tax benefit of $4,498, or just 2.7 percent of their income.

Of course, lower-income families are less likely to have employer-provided insurance (13.8 percent of those earning $10,000 to $19,999 compared to 61.8 percent of those earning $100,000 or more).

So when Himmelstein and Woolhandler mapped the effects of a benefit tax on the whole population, not just those whose employers provided insurance, the mean tax rate for low-income families was low, rising to a peak for middle-income families, then falling back down for the more affluent. It was still basically regressive.

They calculated the effects assuming families paid the tax, but Himmelstein says most analysts assume that if employers were taxed instead, they would simply deduct the cost from wages. If insurers were taxed, their likely strategy is less clear, but they would probably raise rates for everyone.

If only high-priced policies were taxed, people living in states with higher medical costs would be penalized, and without indexing of the cut-off for inflation, more families would be affected each year. Also, Himmelstein says, federal law generally requires employers to offer the same benefit package to all employees. So lower-paid workers at an employer (like Harvard) with comprehensive health benefits would be hit, not just high earners.

Although the plan to tax benefits now seems off the table, Himmelstein expects it to spring up again. “We’re hoping,” he says, “to drive a small stake through its heart.”

http://inthesetimes.com/working/entry/4793/putting_a_stake_through_the_heart_of_bad_health_policy/

By Leslie Savan
The Nation
08/20/2009

Something rather remarkable happened on Tuesday’s Morning Joe. Rep. Anthony Weiner of New York pointed out that the health insurance industry has no clothes, and Joe Scarborough, after first trying to spin it some gossamer threads, broke down and said, By God, you’re right, this emperor is a naked money-making machine!

Well, he didn’t use those exact words, but Joe did seem to finally get that America has granted insurance companies the right to create bottlenecks in the financing of healthcare in order to extract profits out of the suffering of ordinary people–without providing any actual healthcare whatsoever.

“Why are we paying profits for insurance companies?” Weiner asked Scarborough. “Why are we paying overhead for insurance companies? Why,” he asked, bringing it all home, “are we paying for their TV commercials?”

Weiner, who recently warned that President Obama could lose as many as 100 votes on a health bill if a public option is not included, really wants single payer–Medicare for all Americans is his goal. What a crazy, way-out, reckless notion, Joe went into their encounter believing. But Weiner asked some simple, direct questions that no politician, much less Obama or HHS Secretary Kathleen Sebelius, has managed to pose:

What is an insurance company? They don’t do a single check-up. They don’t do a single exam, they don’t perform an operation. Medicare has a 4 percent overhead rate. The real question is why do we have a private plan?

“It sounds like you’re saying you think there is no need for us to have private insurance in healthcare,” Joe asked at one point.

Weiner replied: “I’ve asked you three times. What is their value? What are they bringing to the deal?”

Scraping the bottom of a seemingly bottomless pit of spin, Joe is repeatedly left speechless, “stunned” and “astounded,” he said, by the questions themselves. Indeed, when confronted with unfettered capitalism’s massive failures, the right usually has nothing to say. The “free market” is supposed to eternally grow, not crash under its own greed. They’re left ideologically crippled.

But unlike, say, Lou Dobbs, who began dobbering when confronted with similarly direct argument for single-payer, Joe was able to take a deep breath and return from a break with his eyes opened.

He even repeated Weiner’s points clearly: The goverment would take over only the “paying mechanism” of healthcare, not the doctors or their medical decisions themselves. His ears perked up every time Weiner mentioned that the nonprofit Medicare spends 4 percent on overhead, while private insurers spend 30 percent.

And Joe, who has been criticizing mob rule at town halls, seemed to appreciate the way Weiner counters the fearmongering over Medicare: After decades of railing against the program’s wasteful, “runaway” spending, Republicans have done a 180 and are now trying to scare seniors that the Democrats’ proposed Medicare cuts will come directly from their medical care and not, as is actually proposed, from wasteful, stupid practices in the system–like, as Weiner mentions, putting people into a $700-a-night hospital bed when all they really need, and often prefer, is a visit by a homecare attendant in the two-digit-a-day range.

Maybe the real turning point came when Weiner asked, “How does Wal-mart offer $4 prescriptions?” Joe and co-host Mika Brzezinski looked as if they’d been thwacked by a hardback copy of Atlas Shrugged, and sat back to let the congressman explain it all to them:

They go to the pharmaceutical companies and say, “Listen, we have a giant buying pool here. You’re going to give us a great deal.”

Who’s bigger than Wal-Mart? We are, the taxpayers. Do we do that? No. Because we have outsourced this to insurance companies who don’t have necessarily as much incentive to keep those costs down because, frankly, they are getting a piece of the action.

Progressives tend to understand this stuff, but many conservatives won’t trust such logic, especially in the abstract, which is how most Dems have been communicating. But Weiner, aware that if you can’t visualize something it ain’t going to stick, argued with a specific, familiar visual–that of a successful, supercapitalist, and, as Mika might say, “real American” company. And suddenly, as the mote dropped from the MJ crew’s eyes, Weiner went from “scaring American citizens,” in Joe’s words, to instant celeb.

“That was SO great!” said Mika, as she and Joe asked Anthony to please, please come back soon, this week if possible!

“You have succeeded in doing something that no one else has done on this show in two years,” said Joe, his fists rapidly knocking the table in excitement. “You made me speechless. And you made me speechless because you so clearly came here and stated your position.”

While maintaining that he and Weiner have “different worldviews,” Joe nevertheless raved, “This is fascinating, and one of the problems with the president’s message is that it’s muddled.” And, damn, that’s true.

Could this episode herald a Single-Payer Awakening? Or is this just the thrill of logic running up Joe’s leg, soon to be forgotten as corporate media try to undermine real reform of a system that feeds the nets millions in ad revenue? When the big mainstream players shouted in unison to prematurely declare the public option dead, I couldn’t help but think: In the corporate media’s total takeover of ideas, they, too, have a death panel–made up of three or four conglomerate owners and chaired by Rupert Murdoch–that will determine whether an idea lives or gets its plug pulled.

On Thursday, Morning Joe replayed Weiner’s best hits, but Joe was occasionally dobbering himself, complaining that our healthcare problems come down to costs, costs, costs but “now all the President is talking about is a moral imperative.” (Of course, Obama put morality on the table only yesterday; until then, he focused on costs, costs, costs.)

We’ll see how far this relative openness to single-payer goes. In the meantime, though, the education of Joe Scarborough is, as always, a sight to behold: