PNHP

Cato on implicit taxes of the individual mandate

Cato on implicit taxes of the individual mandate

Obama’s Prescription for Low-Wage Workers: High Implicit Taxes, Higher Premiums

by Michael F. Cannon
Cato Institute
January 13, 2010
Executive Summary
House and Senate Democrats have produced health care legislation whose mandates, subsidies, tax penalties, and health insurance regulations would penalize work and reward Americans who refuse to purchase health insurance. As a result, the legislation could trap many Americans in low-wage jobs and cause even higher health-insurance premiums, government spending, and taxes than are envisioned in the legislation.
Those mandates and subsidies would impose effective marginal tax rates on low-wage workers that would average between 53 and 74 percent — and even reach as high as 82 percent — over broad ranges of earned income. By comparison, the wealthiest Americans would face tax rates no higher than 47.9 percent.
Over smaller ranges of earned income, the legislation would impose effective marginal tax rates that exceed 100 percent. Families of four would see effective marginal tax rates as high as 174 percent under the Senate bill and 159 percent under the House bill. Under the Senate bill, adults starting at $14,560 who earn an additional $560 would see their total income fall by $200 due to higher taxes and reduced subsidies. Under the House bill, families of four starting at $43,670 who earn an additional $1,100 would see their total income fall by $870.
In addition, middle-income workers could save as much as $8,000 per year by dropping coverage and purchasing health insurance only when sick. Indeed, the legislation effectively removes any penalty on such behavior by forcing insurers to sell health insurance to the uninsured at standard premiums when they fall ill. The legislation would thus encourage “adverse selection” — an unstable situation that would drive insurance premiums, government spending, and taxes even higher.
http://www.cato.org/pubs/pas/pa656.pdf

Since the numbers and policy details in the final reform legislation have not yet been released, the results presented here by Michael Cannon of the Cato Institute may be modified, but unchanged will be the conclusion that the complex, jerry-rigged method of paying for health care premiums will not eliminate inequities.
It is almost impossible to get right the amount that each person or family should pay with so many variables moving in different directions: insurance premiums, actuarial values, premium subsidies, cost-sharing subsidies, income levels, family sizes, age rating, bracketed income cliffs of eligibility, and other factors. Financing health care by using a fixed premium for a given private insurance plan no longer works because premiums for adequate plans are no longer affordable for the majority. Trying to make health care affordable by applying corrections for the many variables increases the administrative complexity while falling short on equity.
Financing would be greatly simplified and much more equitable if we established a single risk pool that covered everyone and funded it through progressive taxes. (That likely would not be the conclusion of the libertarians at Cato, but they offered no alternative suggestions in this report, and we wouldn’t agree with them anyway.)

California Health Professional Student Alliance Single Payer Rally in Sacramento

About a thousand California Health Professional Student Alliance marchers and supporters gathered on the steps of the Capitol in Sacramento to rally for single payer health care reform–their fifth annual event. Featured speaker was Senator Mark Leno, author of SB 810, California OneCare, the single payer bill now making its way through the legislature. The bill is expected to pass late in the summer of 2010.

The future of healthcare reform came to Sacramento yesterday

by Shockwave
DailyKos
Tue Jan 12, 2010

The supporters of SB 810, the most vetted and mature Single Payer legislation in America, marched and rallied at the Capitol in Sacramento yesterday. 

The action in the front lines of the movement that WILL succeed in doing what DC politics could not do, pass legislation for the ONLY public option healthcare that pays for itself, were glorious.

Here is a YouTube with some highlights;

When Single Payer succeeds in California it will be adopted by other states, not unlike what happened province by province in Canada.

If you think Single Payer is ultimately the way to go, please Recommend this diary.

This is my initial report.

I joined the California Health Professionals Students Alliance at the Embassy Suites about a mile from the Capitol building.

These were University of California Irvine(UCI)students. Students from every medical school in California came in buses the night before.  I was impressed by their enthusiastic support of SB 810 and their ability to explain the advantages of Single Payer and this pivotal legislation which will be re-introduced at the Senate floor next month.

We then marched about a mile toward the Capitol building.

What do we want?  Single Payer
When do we want it? NOW

Hey, hey, ho, ho.
Healthcare greed has got to go.

Insurance companies rich and rude.
We don’t like your attitude

All America should beware
Insurance companies just don’t care

Decent healthcare is our right
We are here and we will fight!

Once there we joined up at the Capitol steps with healthcare activists from many organizations supporting SB 810 that make up the core of a well thought out and managed campaign called California One Care.  Some of the organizations present included the California Nurses Association, California Physicians Alliance,  Healthcare for All California, theCalifornia School Employees Association, the California Retired Teachers Association and many others. 

It was a cold (OK by California standards) and cloudy day but spirits were high, everybody was passionate.  Speaker after speaker gave hard hitting speeches.  The whole event was incredibly well organized.  This California healthcare movement is a well oiled grassroots machine.

SB 810 is now sponsored by Senator Mark Leno who was the first speaker. He said something that I think is the bottom line of the healthcare reform movement in California and everywhere.  Something that when I said it in toe to toe discussions with teabaggers at townhall meetings and Christmas parties makes the foam at the mouth.  Something that was echoed by the other speakers.  Something that I think is the reason why I am involved in healthcare reform;  healthcare is a basic human right, not a privilege of those who can afford it.

Senator Mark Leno is very eloquent and IMO he will be effective in Sacramento starting next month when SB 810 comes to the floor.

After the action at the Capitol steps was over we went inside where smaller groups of activists, mostly the well prepared members of the California Health Professionals Students Alliance visited the offices of most of the Senators to discuss SB 810 with each one.

First they gathered in a large conference room to coordinate the visits and prepare for possible arguments;

I decided to tag along in a visit to Republican Senator Dave Cox with a group of students. Obviously the Senator opposes SB 810 so I was very intrigued by the whole concept of medical students arguing with a powerful Republican Senator.

We were received by Kevin Bassett, his Chief of Staff, who invited us into the Senator’s office to discuss the pros and cons of SB 810.

The CHPSA members defended the bill by using tragic personal anecdotes of patients they knew who had been  denied healthcare by insurance companies.  Mr. Bassett awkwardly and repeatedly used the argument that many young people do not have healthcare because they feel “immortal” not because they cannot afford it.  This concept of “no healthcare by choice” was hammered each time by a different student who eloquently brought up another advantage of Single Payer accompanied by yet another personal anecdote.

After about 30 minutes the Senator did show up.

He started his own argument against SB 810 by saying that Single Payer is “crazy” because it cannot be afforded.  He said that Medi-Cal was broke and so were the healthcare systems of all countries that had Single Payer.

Eventually the Senator gave his vision of what he said was the future of healthcare.  But this will be in some of my next diaries.

Again, if you believe that Single Payer IS the way to go because it is the only self funding public option then support California One Care or at least Recommend this diary. I will then re-double my efforts to keep you all posted of the healthcare reform movement in California, our last best hope for real healthcare reform.

Yesterday marked the beginning of the end of greedy health insurance companies in America, starting in California.

http://www.dailykos.com/story/2010/1/12/114651/003?new=true

Uwe Reinhardt, Single Payer and Corporate Control

By Russell Mokhiber
Single Payer Action
January 13, 2010

Princeton University Economics Professor Uwe Reinhardt came to Washington, D.C. yesterday.

He was invited by the Cato Institute to participate in a panel discussion.

The subject: Timothy Carney’s new book – Obamanomics: How Barack Obama Is Bankrupting You and Enriching His Wall Street Friends, Corporate Lobbyists, and Union Bosses (Regnery Books, 2009).

Carney’s goal – to bury the idea that the Republicans are the party of big business, and the Democrats are the party of the people.

“Both parties are the parties of big business,” Carney said yesterday. “They both promote corporate socialism.”

Reinhardt generally agreed with Carney’s thesis, calling it an “eye-opening book that should give American citizens pause as they boast to the rest of the world that we have the best government in the world.”

During the question period, Dr. Margaret Flowers stood up to question Reinhardt about why Reinhardt – one of the nation’s leading authorities on health care economics and who writes a blog for the New York Times – wasn’t pushing single payer to the forefront.

After all, Reinhardt claims he was instrumental in pushing Taiwan to a single payer system.

So, if it’s good enough for Taiwan, why not for the United States?

“Many of us have to struggle to have our voices heard,” Flowers said to Reinhardt. “But you have a very public voice. Why has single payer not been a more prominent part of the discussion among people of your stature who recognize that this is the way we can control health care costs?”

Reinhardt said that single payer would be “dead on a arrival in a country where interest groups own the government.”

Single payer should have been debated more, Reinhardt said.

“But the reason it didn’t get any mileage here is the Obama administration looked at it and said – this is dead on arrival,” Reinhardt said. “We are going to get killed over it. And Mrs. Clinton once told me that too – that she would have favored a single payer system. But in fact President Clinton said no – this won’t go.”

“Unless people of your stature are getting this message out, people won’t understand,” Dr. Flowers said.

So, Professor Reinhardt believes that single payer is dead on arrival in a country where interest groups own the government.

But what about the interest groups that control academia?

What Professor Reinhardt didn’t tell his audience yesterday at Cato – and what he doesn’t tell his readership at the New York Times – is that he sits on the board of a health insurance corporation – Amerigroup – and at last report controls 144,000 shares of Amerigroup stock worth roughly about $4 million.

He also sits on the board of Boston Scientific – a medical device company.

And he sits on the board of two health care funds – Hambrecht and Quist Healthcare Investors and Life Sciences Investors Funds.

He also sits on the board of Triad Hospitals Inc.

When we found out about Reinhardt’s corporate connections, we sent him an e-mail asking him why he didn’t disclose this information to Dr. Flowers and the audience at Cato.

Professor Reinhardt wrote back.

“I normally would – I feel I do not have anything to hide here – but this was a session on a book, not on health reform,” Reinhardt wrote. “I was really, as I thought to bring out, a session on our system of governance. My board membership have little to do with that.”

“As it happens, I am usually credited for recommending the single-payer approach to Taiwan,” Reinhardt said. “I have never supported it here, because it has failed too often by referendum in California. I do not believe the country is ready yet for a single payer approach – it might some day though. It has nothing to do with my board memberships.”

Not convincing.

Professor Reinhardt has a legal obligation to maximize the profits for the shareholders of Amerigroup, Boston Scientific and the others.

A single payer national health insurance system would significantly impact those profits.

So, when someone asks you, Professor Reinhardt – why don’t you support single payer for the United States, given that you favored it for Taiwan – you should be right up front and disclose your conflicts.

You say your answer “has nothing to do with my board memberships.”

Maybe yes.

Maybe no.

Vermont Health Care Debate

By Rachel Kent
Fox 44 News
Jan 12, 2010

There was a heated debate Tuesday night in Vermont state capitol over health care reform. It attracted hundreds of people. It was a three hour debate over whether or not there should be a state run health care plan.

The group known as *Healthcare Is a Human Right Campaign* came to Vermont’s statehouse Tuesday night, armed with more than 3,000 signatures. The signatures support a bill for single payer or state-run health care.

We feel like healthcare is a human right and whatever bill passes the house or senate have to have that as an underlying factor,” health care activist Amy Lester said.

People shared testimonials and why they believe the United States is in dire need of health care reform.

We don’t qualify and we’ve been turned down over and over again,” Vermont resident Ann Gibbs said.

The United State’s Senate voted on a bill excluding the public option or a federally run health care system.

Vermonters want state legislators to take health care reform a step further.

 “Health care should be treated as both a human right and part of out economic infrastructure. You cant have a healthy economy without healthy citizens,” Vermont resident Ron Palcer said at Tuesday’s hearing.

While those in favor of a state run health care plan may have been louder, opponents tried to make their point.

“In these economic times we cant afford more taxes and that’s exactly what this will do,” opponent Joeie Clark said.

Guest speaker Vermont Independent Senator Bernie Sanders says states need to take the lead on healthcare reform.

 “My view is at the end of the day it will be the states that will lead this country towards a rational healthcare system not Washington,” Sanders said.

Vermont state legislators say no decisions were being made Tuesday night. Vermont Legislators are hoping whatever happens in Washington D.C individual states will keep the right to decide what healthcare system will work best. 

http://www.fox44now.com/Global/story.asp?S=11812400&nav=menu660_2

Health insurers fund Chamber attack ads

Health Insurers Funded Chamber Attack Ads

By Peter H. Stone
National Journal
January 12, 2010

Just as dealings with the Obama administration and congressional Democrats soured last summer, six of the nation’s biggest health insurers began quietly pumping big money into third-party television ads aimed at killing or significantly modifying the major health reform bills moving through Congress.

That money, between $10 million and $20 million, came from Aetna, Cigna, Humana, Kaiser Foundation Health Plans, UnitedHealth Group and Wellpoint, according to two health care lobbyists familiar with the transactions. The companies are all members of the powerful trade group America’s Health Insurance Plans.

The funds were solicited by AHIP and funneled to the U.S. Chamber of Commerce to help underwrite tens of millions of dollars of television ads by two business coalitions set up and subsidized by the chamber.

In late October, (AHIP President Karen) Ignagni wrote in a letter to the Washington Post defending a health insurer-funded study critical of congressional cost estimates, “Let me be clear and direct, health plans continue to strongly support reform.” However, by that time money was already flowing through AHIP to the chamber to fund its negative ads.

The fundraising started last September and continued through December using AHIP as a conduit to avoid a repeat of the political flak that hit the insurance industry after it famously ran its multimillion-dollar “Harry and Louise” ads to help kill health care reforms during the Clinton administration.

http://undertheinfluence.nationaljournal.com/2010/01/health-insurers-funded-chamber.php

AHIP’s December 2008 proposal for reform (pages 7-11):
http://www.americanhealthsolution.org/assets/Uploads/ahipreformpolicyproposal.pdf

Comment: 

By Don McCanne, MD

This is not a simple Gotcha! The largest private insurers in the nation have been caught red-handed, secretly passing funds through their lobby organization, AHIP, to the United States Chamber of Commerce to help fund the Chamber’s advertising campaign opposing the reform proposal currently before Congress.

AHIP’s Karen Ignagni repeatedly has professed publicly to “strongly support reform,” yet has now been caught in this dishonest scheme campaigning in opposition to the current proposal. When you read AHIP’s proposal for reform (link above), you will see that it almost could be used as a description of the legislation. That is no surprise since it essentially was written by the private insurance industry. The legislation contains virtually every major policy that they requested.

So why should the insurers be involved in this effort to sabotage the bill? The answer is in two parts: what they don’t like about the current legislation, and what they do like about the status quo.

As the bill moves along in the late stages towards enactment, Karen Ignagni has stated many times that this bill does not require the government to do enough to control health care spending. The industry has been struggling with innovations in health plans to slow the increase in premiums, which are already placing a strain on individuals and businesses. Health care costs are so high that they can no longer provide insurance products with affordable premiums if those products are designed to provide adequate protection from financial hardship for those who actually need health care.

Working with Congress, the Congressional Budget Office, and now academically-compromised Jonathan Gruber, the industry has seen that their proposal must leave perhaps tens of millions without insurance, and leave the majority of working families with plans set at actuarial values that are so low that anyone who needs health care will still face major bills. The answer to this problem was to be found in the subsidies, but for them to be adequate would require a massive increase in government spending. Neither Congress nor the Obama administration were willing to consider the massive tax increases that would be required to make this work.

Increasingly unaffordable premiums for plans with diminishing benefits increases the instability of the private insurance market. The insurers should rightfully fear that the time is not far away when our policy makers would decide that we finally would have to replace the insurance industry with an efficient single payer system that actually would provide everyone the essential care that they need. They know that they cannot possibly deliver of the promise of affordable health care for everyone.

So what do they like about the status quo? The largest, healthiest, least expensive sector – the employer-sponsored market – is still working very well for them. In fact, that market would change very little with the current legislation, though the insurance industry would be inconvenienced with some additional regulatory oversight. The private Medicare Advantage plans are working well for them as well, but they would not be as lucrative under the reform proposal. The individual market works well for them because they can skim off the healthy, but they would have to include the high-cost chronically ill under the reformed system, making plans even less affordable.

Why would they want to comply with all of the other measures in this bill when they already have most of what they want, and they are very effectively avoiding what they don’t want? If they can kill this bill, they would be much better off.

What we have now is not working – too many are uninsured, and too many of the insured still face excessive medical bills. What this legislation proposes will not work – too many would remain uninsured, and too many of the insured would still face excessive medical bills. What we could have, an improved Medicare for everyone, would work – everyone would be insured, and no one would have to face excessive medical bills. Furthermore, as a nation, it would provide us with a financing system that we could afford, unlike our current system or the system in the flawed proposal.

AHIP, Aetna, Cigna, Humana, Kaiser Foundation Health Plans, UnitedHealth Group and Wellpoint have lied to us, telling us that they support reform while secretly spending millions on a campaign to defeat it. Congress and President Obama now have every reason to show these crooks the door, and they should do so immediately.

A call for health reform

Statehouse crow details system's faults, horrors, urges change

By Daniel Barlow
Times Argus (MONTPELIER, Vt.)
January 13, 2010

MONTPELIER – Hundreds of Vermonters filled the Statehouse Tuesday for a public forum on health care reform, with a vast majority urging lawmakers to adopt a single-payer system.

The Vermont Legislature’s two health care committees scheduled the forum to get direction from residents as they prepare to study a host of dramatic changes to Vermont’s health care system, including a single-payer system, a public option and other proposals.

U.S. Sen. Bernard Sanders, a Vermont independent, was the first speaker at the forum. Hoarse from a cold, Sanders defended his vote in favor of the national health care reform bill and told lawmakers that the country will now be looking to the states to lead for more progressive reforms.

“At the end of the day, it will be a state that will lead the country to a rational health care system,” Sanders said. “We have an opportunity here for America to show them what a comprehensive, universal system looks like. If Vermont leads, other states will follow.”

Many of the supporters of a single-payer system – a health insurance program run by the state or federal government that guarantees access, paid for via taxes – wore red shirts declaring that “health care is a human right.” The effort is part of a movement started by the Burlington-based Vermont Workers Center.

Nancy Welch, a Burlington English professor, told the crowd about how her insurance company tried to fight treatment for her husband’s kidney and brain cancers. She said the company appointed her husband a caseworker who would routinely deny him coverage for procedures that his doctors recommended.

She pointed out that Medicaid, the government-run health insurance for low-income people, only spends about 3 cents from every dollar on administrative costs. Most private insurance companies spend between 15-30 cents, she said.

“The insurance companies were squeezing profits from the health care system while trying to run down the clock on my husband’s life,” she said.

Dr. Deb Richter, a resident of Montpelier with a practice in Cambridge, rolled out a pile of paper that was nearly 200 pages long detailing all the different insurance companies and plans that her small office needs to bill after it sees patients.

As Richter spoke, single-payer supporters passed the unfurled scroll of paper across the room. At its full length, it could have run from one side of the House chambers to the other. Under a single-payer system, billing would probably only cost her office about 3 cents from every dollar, she said.

“I could probably see 20 percent more patients if it wasn’t for this paperwork,” she said.

Not everyone supported a single-payer system. One woman in the crowd waved a sign that said “health care is a privilege, not a right.” Bill Day, who said he was a former state health official, said a government-run health care system would lead to the rationing of care and a doctor shortage.

“This will give bureaucrats the power over life and death,” he said.

And the Vermont Republican Party, in a statement released shortly before the forum began, criticized Democrats for holding the session and not focusing on the $150 million budget hole. Republicans said lawmakers should let Washington, D.C. finish its debate before considering further action in Vermont.

“Rather than wasting time scoring political points with special interest groups, the health care committees in this building should be evaluating every department, division, and agency over which they have jurisdiction in order to restructure and find the efficiencies and critical savings we need,” said House Republican leader Patti Komline.

But many Vermonters who attended Tuesday’s forum said health care – and sometimes the lack of health care – were among the top issues facing the state and the country.

Peggy Safire of Craftsbury said she drives her husband, who has been diagnosed with bladder cancer, to a New Hampshire hospital for treatment because local ones don’t accept Medicaid payments. If a single-payer plan was passed in Vermont, she wouldn’t face a regular four-hour round trip, she said.

“You have it in your power to be courageous in this Statehouse,” she told lawmakers. “We’ll be watching to see what you do.”

Tuesday’s forum was scheduled by Sen. Doug Racine, D-Chittenden, and Rep. Steve Maier, D-Middlebury. Racine, a gubernatorial candidate and chairman of the Senate Health Care Committee, has said the two groups would spend the session working closely together to investigate a number of possible reforms.

The committees are expected to begin that work today with hearings on at least six different health care proposals – including single-payer and public option plans – in Room 11 at the Statehouse at 1:30 p.m.

Daniel.Barlow@timesargus.com

http://www.timesargus.com/article/20100113/NEWS/100119988

Health insurers fund Chamber attack ads

Health Insurers Funded Chamber Attack Ads

By Peter H. Stone
National Journal
January 12, 2010
Just as dealings with the Obama administration and congressional Democrats soured last summer, six of the nation’s biggest health insurers began quietly pumping big money into third-party television ads aimed at killing or significantly modifying the major health reform bills moving through Congress.
That money, between $10 million and $20 million, came from Aetna, Cigna, Humana, Kaiser Foundation Health Plans, UnitedHealth Group and Wellpoint, according to two health care lobbyists familiar with the transactions. The companies are all members of the powerful trade group America’s Health Insurance Plans.
The funds were solicited by AHIP and funneled to the U.S. Chamber of Commerce to help underwrite tens of millions of dollars of television ads by two business coalitions set up and subsidized by the chamber.
In late October, (AHIP President Karen) Ignagni wrote in a letter to the Washington Post defending a health insurer-funded study critical of congressional cost estimates, “Let me be clear and direct, health plans continue to strongly support reform.” However, by that time money was already flowing through AHIP to the chamber to fund its negative ads.
The fundraising started last September and continued through December using AHIP as a conduit to avoid a repeat of the political flak that hit the insurance industry after it famously ran its multimillion-dollar “Harry and Louise” ads to help kill health care reforms during the Clinton administration.
http://undertheinfluence.nationaljournal.com/2010/01/health-insurers-funded-chamber.php
AHIP’s December 2008 proposal for reform (pages 7-11):
http://www.americanhealthsolution.org/assets/Uploads/ahipreformpolicyproposal.pdf

This is not a simple Gotcha! The largest private insurers in the nation have been caught red-handed, secretly passing funds through their lobby organization, AHIP, to the United States Chamber of Commerce to help fund the Chamber’s advertising campaign opposing the reform proposal currently before Congress.
AHIP’s Karen Ignagni repeatedly has professed publicly to “strongly support reform,” yet has now been caught in this dishonest scheme campaigning in opposition to the current proposal. When you read AHIP’s proposal for reform (link above), you will see that it almost could be used as a description of the legislation. That is no surprise since it essentially was written by the private insurance industry. The legislation contains virtually every major policy that they requested.
So why should the insurers be involved in this effort to sabotage the bill? The answer is in two parts: what they don’t like about the current legislation, and what they do like about the status quo.
As the bill moves along in the late stages towards enactment, Karen Ignagni has stated many times that this bill does not require the government to do enough to control health care spending. The industry has been struggling with innovations in health plans to slow the increase in premiums, which are already placing a strain on individuals and businesses. Health care costs are so high that they can no longer provide insurance products with affordable premiums if those products are designed to provide adequate protection from financial hardship for those who actually need health care.
Working with Congress, the Congressional Budget Office, and now academically-compromised Jonathan Gruber, the industry has seen that their proposal must leave perhaps tens of millions without insurance, and leave the majority of working families with plans set at actuarial values that are so low that anyone who needs health care will still face major bills. The answer to this problem was to be found in the subsidies, but for them to be adequate would require a massive increase in government spending. Neither Congress nor the Obama administration were willing to consider the massive tax increases that would be required to make this work.
Increasingly unaffordable premiums for plans with diminishing benefits increases the instability of the private insurance market. The insurers should rightfully fear that the time is not far away when our policy makers would decide that we finally would have to replace the insurance industry with an efficient single payer system that actually would provide everyone the essential care that they need. They know that they cannot possibly deliver of the promise of affordable health care for everyone.
So what do they like about the status quo? The largest, healthiest, least expensive sector – the employer-sponsored market – is still working very well for them. In fact, that market would change very little with the current legislation, though the insurance industry would be inconvenienced with some additional regulatory oversight. The private Medicare Advantage plans are working well for them as well, but they would not be as lucrative under the reform proposal. The individual market works well for them because they can skim off the healthy, but they would have to include the high-cost chronically ill under the reformed system, making plans even less affordable.
Why would they want to comply with all of the other measures in this bill when they already have most of what they want, and they are very effectively avoiding what they don’t want? If they can kill this bill, they would be much better off.
What we have now is not working – too many are uninsured, and too many of the insured still face excessive medical bills. What this legislation proposes will not work – too many would remain uninsured, and too many of the insured would still face excessive medical bills. What we could have, an improved Medicare for everyone, would work – everyone would be insured, and no one would have to face excessive medical bills. Furthermore, as a nation, it would provide us with a financing system that we could afford, unlike our current system or the system in the flawed proposal.
AHIP, Aetna, Cigna, Humana, Kaiser Foundation Health Plans, UnitedHealth Group and Wellpoint have lied to us, telling us that they support reform while secretly spending millions on a campaign to defeat it. Congress and President Obama now have every reason to show these crooks the door, and they should do so immediately.

Investment bankers win big in health care

Banks Prepare for Big Bonuses, and Public Wrath

By Louise Story and Eric Dash
The New York Times
January 9, 2010

The bank bonus season, that annual rite of big money and bigger egos, begins in earnest this week, and it looks as if it will be one of the largest and most controversial blowouts the industry has ever seen.

Industry executives acknowledge that the numbers being tossed around — six-, seven- and even eight-figure sums for some chief executives and top producers — will probably stun the many Americans still hurting from the financial collapse and ensuing Great Recession.

Though Wall Street bankers and traders earn six-figure base salaries, they generally receive most of their pay as a bonus based on the previous year’s performance. While average bonuses are expected to hover around half a million dollars, they will not be evenly distributed. Senior banking executives and top Wall Street producers expect to reap millions. Last year, the big winners were bond and currency traders, as well as investment bankers specializing in health care.

Even some industry veterans warn that such paydays could further tarnish the financial industry’s sullied reputation. John S. Reed, a founder of Citigroup, said Wall Street would not fully regain the public’s trust until banks scaled back bonuses for good — something that, to many, seems a distant prospect.

“There is nothing I’ve seen that gives me the slightest feeling that these people have learned anything from the crisis,” Mr. Reed said. “They just don’t get it. They are off in a different world.”

http://www.nytimes.com/2010/01/10/business/10pay.html

Comment: 

By Don McCanne, MD

Amongst the biggest winners for the bonus paydays are the investment bankers specializing in health care.

Not only do these people not get it, the members of Congress and the Obama administration who insist that these people be left in charge don’t get it either. Or, worse yet, maybe they do.

Why Taxing Health Care Plans is a Terrible Idea

The Myth of "Cadillac" Health Plans

By BILL SALGANIK
January 12, 2010

The theory behind the so-called “Cadillac tax” on high-premium health plans is that people like Betty Diamond have too much health insurance, which causes them to get more medical care than they need.

And if people like Diamond had thinner health care benefits, the theory continues, their bosses would pass the savings along in nice wage increases.

But after serving on two bargaining committees—and surviving two cancers—Diamond, a technician at an AT&T data center in Miami, says the theory is off base.

The health reform bill which passed the Senate in December would impose a 40 percent excise tax on health insurance plans with premiums above $23,000 a year for families and $8,500 for individuals. The tax would hit insurers and big self-insured employers—who would force them onto workers.

The House’s health reform bill doesn’t tax benefits; it would finance health reform by increasing income taxes for households making more than $1 million a year or individuals making more than $500,000. Over the next weeks, House and Senate leaders have to bridge their differences and craft a consensus bill, with taxes as one of the major unresolved issues.

It’s not just Diamond’s life experience that pokes holes in the “Cadillac tax” argument. A series of research studies also shows that the tax is based on faulty assumptions.

There are three key ideas put forward in support of the benefits tax—the tax will hit only lavish plans, it will help bring down health costs, and employers will pass the cost savings directly into wages.

All are wrong.

The myth of rich-benefit “Cadillac” plans is the first flaw in the theory. By 2019 the benefits tax would hit one-fifth of households making between $50,000 and $75,000 a year, according to figures from the Congressional Joint Committee on Taxation. The tax would pose a heavy burden on working families.

Studies by the Economic Policy Institute and for the policy journal Health Affairs show that plans with big premiums don’t necessarily have big benefits.

Rather, high premiums go with an older workforce (like Diamond, a 40-year employee), because older people use more medical services. Smaller employers are also more likely to be affected; they pay, on average, 18 percent more than large employers for the same benefits, according to the White House Council of Economic Advisers. And health costs also tend to be higher for women, so work groups that have large female representation—such as teachers, nurses and telephone call center employees—are more likely to be taxed.

Diamond is also more likely to be hit by the tax because of where she lives. An average family policy in Miami costs more than $20,000 a year—meaning the average policy comes close to the “Cadillac” definition in the Senate’s legislation—while a policy with the same benefits in Phoenix costs less than $15,000, according to the actuarial consulting company Milliman. The difference has nothing to do with “Cadillac” benefits. It’s a function of prices and medical practice styles in the different markets.

Betty Diamond’s coverage, negotiated by the Communications Workers with AT&T, is good, but hardly lavish. She had to pay hundreds of dollars out of pocket a few years ago when she had cancer surgery. And she pays nearly $1,000 a year out of pocket for prescriptions; her cancer exams also turned up a hereditary problem with her lungs, which requires her to take medicine to avoid dangerous blood clots. She goes for regular checkups to her oncologist to make sure the cancer is still in check, with a co-payment that’s going up this year, from $20 to 10 percent of the charges, under the new CWA contract.

Second, supporters say the tax would hold down health costs by pushing employers into less expensive plans. If there were cheaper plans out there that offered equivalent benefits, opponents counter, employers would already be in them. Instead, the only way employers can make plans less expensive is by cutting benefits—and that’s what nearly two-thirds of employers plan to do, according to a survey by Mercer, a benefits consultant. And that means higher co-pays and deductibles.

Ah, say supporters of the tax, if consumers face higher out-of-pocket costs, they’ll cut out unnecessary care and shop for better prices. Studies show that consumers do use less care when they have to pay more, but they cut back on necessary as well as unnecessary treatments.

That can lead to higher costs down the road. For example, one study tracking higher co-pays for office visits and prescriptions found that workers did cut back—but that savings were offset by higher hospital admissions, especially for older workers and those with chronic health problems.

Even with higher co-pays, Diamond says that, having survived cancer twice, she’s not about to skip an oncology checkup, never mind pass on needed surgery. Nor should we want a health policy that will force her to.

“Personally, I don’t go to the doctor unless I have to,” she says. But, mindful of her life-threatening medical conditions, “I tend to do what the doctor tells me.”

Third, supporters of the benefits tax also say that people like Diamond don’t have to worry about a tax on benefits. Sure, the employers would trim benefits but wages, they say, would go up as health costs came down.

A report from the Economic Policy Institute tracking health costs and wage growth over the past 20 years concluded that isn’t so. While there’s some connection between wages and benefit costs, employers are more likely to keep any savings for themselves rather than pass them on to workers, especially in an economy with high unemployment.

Betty Diamond didn’t need a study to tell her that. She’s served on two CWA bargaining committees where her employer fought hard to keep health costs down. And neither time did management offer to pass the savings back to the workers in extra pay hikes. “Absolutely not. Please,” Diamond says—when she stops laughing at the idea.

And while this isn’t a great time for unions in bargaining, at least organized workers have some leverage. “They never give you anything,” Betty Diamond says. “You only get what the union bargains for. And they wouldn’t give it to you if the union wasn’t there.”

Bill Salganik is a member of CWA Local 32035, the Washington-Baltimore Newspaper Guild, and does writing and research for a CWA Web site, www.healthcarevoices.org.

This article originally appeared in Labor Notes.

Auto Workers’ Union Holds Jobs Protest

By MARY M. CHAPMAN
New York Times, Wheels blog, January 11, 2010

DETROIT — Nearly 100 auto workers and labor activists demonstrated in snowy, blustery conditions near the North American International Auto Show here, calling for a federal jobs recovery bill, a national single-payer health system and a green industrial policy.

“A recovery without jobs is no recovery at all,” said Frank Hammer, former president of United Auto Workers Local 909 and one of the rally’s organizers. He cited Michigan’s unemployment rate, pegged at 14.7 percent in December. In Detroit, the jobless rate was 27 percent.

Carrying a sign that said “Job One Is Job Creation,” a retired General Motors employee, Miriam Pickens, chided U.A.W. national leadership for not aggressively going after a federal jobs recovery measure. “I’m very frustrated with the U.A.W. right now. They’re not fighting as hard as the rank and file,” she said. “They need to push harder, but I think they’re afraid” of alienating Detroit automakers.

Demonstrators encircled the sidewalk, some of them waving American flags and chanting “A job is a right, fight, fight, fight.” Some signs said “Rebuild America with American workers,” and “Invest in jobs, not in Wall Street.”

Reacting to this morning’s announcement that Ford swept North American Car and Truck of the Year honors, Ron Lare, a demonstration organizer, said it was “outrageous to cut the pay of new hires just as they’re showing off their new models.”

Under terms of recent concessions, new workers at Detroit manufacturers will make $14 an hour, about half what workers with more seniority make.

Mr. Hammer said the country would benefit from a national industrial policy that transforms the auto industry through the conversion of shuttered plants into factories that use green technology to produce energy-saving mass transit systems, such as light rail, in addition to fuel-efficient and electric cars.

“We can help the cause of global warming while putting people back to work,” he said. “The auto industry has been slow to understand what role they have to play in climate change.”

At the onset of World War II, he said, it took the federal government less than a year to convert auto plants into military plants.

“We need the same kind of deployment now, except this is a different kind of war,” said Mr. Hammer. “This is a war against unemployment and climate change.”

While lauding the auto show’s unveiling of several eco-friendly vehicles, Mr. Lare said that would not be enough to reduce the carbon footprint. “It’s a good direction to go rather than internal combustion, but if they’re selling for around $35,000 each, not enough people will be able to buy them,” he said.

“So that ain’t going to cut it.”

http://wheels.blogs.nytimes.com/2010/01/11/detroit-auto-show-auto-union-holds-jobs-protest/

Investment bankers win big in health care

Banks Prepare for Big Bonuses, and Public Wrath

By Louise Story and Eric Dash
The New York Times
January 9, 2010
The bank bonus season, that annual rite of big money and bigger egos, begins in earnest this week, and it looks as if it will be one of the largest and most controversial blowouts the industry has ever seen.
Industry executives acknowledge that the numbers being tossed around — six-, seven- and even eight-figure sums for some chief executives and top producers — will probably stun the many Americans still hurting from the financial collapse and ensuing Great Recession.
Though Wall Street bankers and traders earn six-figure base salaries, they generally receive most of their pay as a bonus based on the previous year’s performance. While average bonuses are expected to hover around half a million dollars, they will not be evenly distributed. Senior banking executives and top Wall Street producers expect to reap millions. Last year, the big winners were bond and currency traders, as well as investment bankers specializing in health care.
Even some industry veterans warn that such paydays could further tarnish the financial industry’s sullied reputation. John S. Reed, a founder of Citigroup, said Wall Street would not fully regain the public’s trust until banks scaled back bonuses for good — something that, to many, seems a distant prospect.
“There is nothing I’ve seen that gives me the slightest feeling that these people have learned anything from the crisis,” Mr. Reed said. “They just don’t get it. They are off in a different world.”
http://www.nytimes.com/2010/01/10/business/10pay.html

Amongst the biggest winners for the bonus paydays are the investment bankers specializing in health care.
Not only do these people not get it, the members of Congress and the Obama administration who insist that these people be left in charge don’t get it either. Or, worse yet, maybe they do.