In a post below, I raised questions about the application of a new tax on relatively expensive insurance policies, pointing out the potential inequities depending how it was designed. Well, thanks to Senator Baucus, we now have confirmation that I was correct to be concerned.
As noted in this Boston Globe story by Lisa Wangsness, the tax has a broader reach than so-called "Cadillac" plans. It disproportionately affects states whose health care premiums are above the national average, or plans within states that are more expensive for actuarial reasons.
We are finding out, again, that President Obama's formulation of health care reform as offering more access, lower costs, and consumer choice is flawed and misleading. As long as Congress tries to pass a bill based on this fiction, it will be forced to make political -- not policy -- choices that try to hide the real costs.
But the derivative of doing so is that the battle between the states will begin in earnest: Now, it's just about money. There is a minuscule chance of holding together 51 votes for the Baucus plan when 17 states -- including many represented by Democrats -- are affected disproportionately. Especially because their labor partners oppose it. (By the way, on that front, keep an eye out for union-friendly amendments that would exempt collectively bargained insurance plans from the tax.)
But, here's the rub. If you diminish or roll back this tax, you have to come up with other money to keep the program deficit-neutral, a commitment made by President Obama. If you can't find new dollars, you have to cut back on subsidies for low-income people and undermine the goal of universal access. I think access is the most important goal, but it requires a broad-based, progressive tax plan. We should accept the fact that we have to pay for a national priority.
How will the taxes be applied to plans that are run by tax-exempt orgainzations? I suspect that many of the high-end collectively bargained plans are associated with public employee unions and the public agencies are exempt from paying taxes. Also, I suspect that some of the big non-profit medical centers have high-value plans for some of their employees.
ReplyDeleteWould the federal government pay itself taxes on the plans that cover congress and the president?
There was in interesting exchamge between Pres. Obama and George Stephanopoulos yestertay about whether premiums for insurance that young adults would be required to buy would be a tax. I believe that to the extent that the premium is greater than the actuarial risk value for the individual that it would in fact be a tax, and therefore a violation of the promise to not raise taxes on people/couples making less than $250k per year.
I think the question you need to address is why your state has the highest insurance premiums of any state. I suspect some if this may derive from the past actions of your afiliation with Mass General and leveraging of insureres to grant higher payments to you than your competitors, despite no clearly discernable difference in quality of care. This is just the type of tool needed to rein in the growth of health care and to get hospitals to stop competing to build the best Taj Majal Medical Center.
ReplyDeleteI think the Dartmouth data has more than proven that there are marked discrepancies in health care costs that are not explained by demographic mix. In your very competitive sandbox called Boston, there is simply a mix of hospitals competing to have the newest toys and the glitziest hospital that more likely explains the reason for the high costs. I don't think people in Mass. are that much older demographically or more sick than the rest of the country.
Without some cost containment measures within the bill, we will end up with insurance for everyone and no cap on the expense, which is a recipe for disaster. So to even out the expense of insurance and bring costs down to the most efficient levels in the states that do the best job makes infinite sense to me.
We are not affiliated with MGH. You must be confusing us with Brigham and Women's Hospital. Yes, their reimbursement rates are substantially higher than ours and everyone else in the state.
ReplyDeleteI fin the notion of raising revenue through this kind of tax absurd. Insurers will pass 100% on to premium payers many of whom will react be replacing the offending plan with something more tax favorable. Of course if they do so the revenue projections go out of the window. The NYT has observed this problem as well:
ReplyDeletehttp://twi.cc/CtVd
"But the derivative of doing so is that the battle between the states will begin in earnest: Now, it's just about money."
ReplyDeleteWhen is the focus of the public, political, and health care community discussion of this issue going to get around to disscussing what will be done to actually reduce the cost of health care? How will the productivity and efficiency be increased and the unnecessary costs be eliminated? Where are the WalMarts and Home Depots of the business. Where are the equilavents of Intel/AMD competition of microprocessor development, and the Dell/Hewlett-Packard of computers, in the health care business.
Until there is serious competition within all aspects of the business, at a degree that will threaten the profits and even the survival of expensive providers, there will be no significant reduction of growth of health care costs.
The opposition to the public insurance plan is based on the fact that it will threaten all of the elements of the business, from insurance providers to those delivering health care. Without that real threat there is no real incentive for them to cut costs.
Exactly! - Hamlet
ReplyDeleteThis bill is a work in progress and is already changing following your post. What I don't understand is why the feds aren't looking at Massachusetts and seeing what's staring them in the face - Mass. can't afford universal coverage and is having to enact payment reform, in a hurry. Hello??!!
ReplyDeleteEngineer on Medicare is entirely correct to point out this lack of focus on the cost of health care. There are 2 new articles on this in the latest New England Journal of Medicine:
1. Relman, Arnold, M.D., "Doctors as the key to health care reform"
(to be published online this Thursday), and
2. Fisher, E.S. and Skinner, J.S. (the Dartmouth people): "Getting past denial - the high cost of health care in the United States".
http://healthcarereform.nejm.org/?p=1739
It is this lack of attention on the part of our politicians to cost control which will eventually doom this bill; not its many other individual flaws.
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