How Would You Balance the Budget? Preferred ratio of tax increases and spending cuts

[keegs]

As there is some interest in the Swiss health care system; I though I would give a few links:

http://www.nytimes.com/2009/10/01/health/policy/01swiss.html?_r=1&hp

Best Buy: Privatised Healthcare Systems in Europe | The Brussels Journal

I saw a tv show last last year on the various systems in the world. I recall that the Swiss system is via private insurers. There is a boiler plate set plan that the private insurers provide on a nonprofit basis. Where the private insurers make their profit is the sale of additional boarder coverage.

Oops! One more link:
http://www.civitas.org.uk/pdf/Switzerland.pdf

Thanks for posting this....America could be well on its way to solving its debt problems if we would agree on a way to get our arms around healthcare costs.

 

[FinanceDude]

Which is why it's such a bad thing that the deficit commission punted on health care costs, and why the much maligned Health Reform legislation is such an important first step in fixing our structural budget imbalances.

It fixed the problem? How can you empirically prove it when the CBO can't? I guess Paul Ryan just makes up numbers out of the thin air?

 

[samclem]

I'm a little surprised by the way the poll has turned out so far.
-- 84% of those answering believe most or all of the deficit reduction should come from spending cuts
-- 16% believe most or all of the deficit reduction should come from increased tax revenue.

The composite average response: Spending cuts should constitute 73% of the deficit reduction, tax increases should account for 27% of the deficit reduction.

As it happens, the ideas publicized by the Debt Commission co-chairs were of a very similar ratio: 3/4 from spending cuts, 1/4 from higher tax revenues.

Maybe there's a general consensus about the very biggest issue, anyway.

I would have guessed a more even split between "more taxes" and "less spending" votes. On the other hand, maybe the LBYM culture of the board plays into this. When new posters come to the board with debt issues, most answers seem to focus on the need to reduce expenditures rather than on ways to earn more money. Maybe we'd give this same kind of advice to our indebted Uncle Sam.

 

[clifp]

The composite average response: Spending cuts should constitute 73% of the deficit reduction, tax increases should account for 27% of the deficit reduction.

As it happens, the ideas publicized by the Debt Commission co-chairs were of a very similar ratio: 3/4 from spending cuts, 1/4 from higher tax revenues.

Maybe there's a general consensus about the very biggest issue, anyway.

Interesting, but I am not to surprised, most of the folks praising the Commission use words 'they are acting like adults'. Most of the folks on the board are also adults. Unfortunately many politician and certainly the loudest and most extreme folks on both sides aren't adults.

Lord of the Flies has taken over America

 

[keegs]

Which leads to the question I asked of Samclem, why are we pretending that there is a free market alternative? And if one exists, why can't anyone describe it in detail?

apparently Sam is more interested with his poll numbers...

 

[samclem]

apparently Sam is more interested with his poll numbers...

GfG has read brief proposals from me and others (one of them linked in a previous post) about how we could use competition to reduce the cost and improve the quality of health care in the US (the same way we depend on it for every other facet of our economic existence--food, shelter, services, etc). But, I haven't written a 2000 page prescriptive text.

You've posted to this thread 8 times, some of them loosely related to the topic. But I don't know where you stand on the issue because you haven't said and you haven't voted. Are you just a sniper?

 

[samclem]

Yes, and what I'm saying is that when you work through the details of actually making that work, you inevitably end up with something that looks a lot like the reform that was just passed (which doesn't look much like a "free market" at all).

So lets look at the Swiss system . . .
1) Individual mandate - check
2) Basic insurance policy coverage dictated by the government - check
3) Price controls on the basic coverage - check
4) Prohibition against discriminating because of age, or medical condition - check
5) Subsidies if basic insurance premiums are above a certain % of income - check
6) Private supplemental insurance available - check

That sounds almost identical to the legislation that just passed. Surprise, surprise.

Okay:
- Are employers the "first choice provider" of health insurance? Not in the Swiss system. Another useless layer of complexity driving up costs, adding complexity, and blurring the critical distinction of "who is the customer."
- Is government single-payer insurance for aged participants (Medicare) part of the Swiss system? No. Medicare is our biggest "budget buster" and the present US legislation retains it almost without change. We'll have a series of "mega doc fixes" in the future. Government cannot provide the cost discipline and cost control supplied by a market. In the US, government now buys over 50% of all the health care we get, and it will increase under the new legislation. The Swiss government share is much less, and most of it is provided to consumers (as subsidies) for their use in making individual decisions on the purchase of insurance.

They aren't "almost identical." We could improve on the Swiss system by relying more on competition and less on some of the government cost controls they have in their system, but it's much better than the proposed US plan. The Swiss spend 1/3 less of their GDP on health care and get more for it.

 

[Gone4Good]

They aren't "almost identical." . ..

- Are employers the "first choice provider" of health insurance? Not in the Swiss system.
- Is government single-payer insurance for aged participants (Medicare) part of the Swiss system? No.

I really don't understand. Maybe that is deliberate on your part, or maybe I'm just dense.

But what you seem to be saying is that legislation that moves us substantially in the direction of the Swiss system is bad because things that existed before that legislation was enacted are bad (medicare and employer-centric health insurance)? That doesn't make the legislation bad, just too timid. If that is really your chief complaint, then the solution is to move everyone on to the exchanges, including Medicare recipients and folks with employer-provided health insurance.

But I have trouble reconciling the implied desire here to extend the scope of the legislation with previous comments indicating that the whole thing should be replaced with something else (which is still undefined). Thus, my confusion.

 

[Gone4Good]

GfG has read brief proposals from me and others (one of them linked in a previous post)

Again, this is me being dense. But I don't see how that proposal is substantively different then the reform we have. The big picture things you suggest are all included. Why, then would you not support the legislation generally, while saying there are many specific things that still need to be fixed. I happen to share that view.

1) Mandatory Coverage: Everyone must buy a policy.
2) Government vouchers based on need. (Just as food stamps do for nutrition)
3) Private policies of four or five standardized types. A limited number of policy types greatly enhances price competition. Label them A-E and require that the insurers call them by that label.
4) No underwriting: If an insurer elects to sell a particular type of policy, the insurer must accept all applicants. Differences in price arr allowed based on geographic area. But--citizens can change policy types only once every 5 years (reducing the "hey-I've got a bad disease, I'm gonna go with the Cadillac policy now" syndrome)
5) All policies (of the 4 or 5 types) would cover preventative care that serves to reduce medical costs overall (Pap smears, immunizations, prenatal care, annual checkups, etc). Policies would differ by the co-pay amounts, private vs semi-private rooms, types of perscription drugs covered, degree of "doughnut-hole" that the insured would cover largely on his own, etc). All policies would feature catastrophic coverage based on the insured's household income--maybe all medical costs over 30% of income would be covered.
6) A government-run clearinghouse with with medical/consumer information. Provides info on customer satisfaction with various insurers by policy types, information on outcomes by procedures for various hospitals/centers, average out-of-pocket costs incurred by consumers in each state for each type of insurance, etc). This helps promote consumer knowledge and informed decisionmaking.
7) Individual purchase of medical care is allowed. Unlike some countries which prohibit individual purchase of medical care, it would be allowed in the US. In addition, if you want to purchase an additional medical policy to cover cosmetic surgery, experimental treatments, nursing home care, daily electroshock therapy, in-home aromatherapy, accupuncture, etc, that would be okay, too

 

[samclem]

But I don't see how that proposal is substantively different then the reform we have. The big picture things you suggest are all included. Why, then would you not support the legislation generally, while saying there are many specific things that still need to be fixed. I happen to share that view.

In theory, the new health care law could usher in some needed changes. For example, the exchanges might work to improve competition. But the law carries over so many bad parts of the present system, and fails to incorporate so much change that is desperately needed, that I just can't see how we can call it an enhancement.

1) The continued involvement of employers in how people get their health care is no small thing. People can't elect to go to the exchanges (or, maybe, can't get the subsidies) unless their employers don't offer coverage. If your employer offers coverage--that's what you get. Want a different policy? Quit your job. What kind of houses would we be living in if our employers bought them for us?

2) Medicaid: The new program expands this government single payer program. We should be going in exactly the opposite direction.

3) Medicare: A continuation of the proven ineffective top-down centralized government price control scheme. The part that had some degree of patient choice in selecting an insurance provider (the far-from perfect Medicare Advantage program) was gutted as a billpayer. Again, it's not like the new law made a specific decision to address those under 65 and to leave Medicare alone. I could understand that--"We're taking on a lot here, let's tackle Medicare after we get the other stuff running, maybe we can let Gramps shop for his insurance on the exchanges, too". But, that's not what happened, the new law is a step backward from the direction we should be going.

4) Florida, Nebraska, Louisiana--need anyone say more? Symptoms of the dishonest process by which this law was spawned, and of the large and small abscesses that lurk within it.

The new law seems so poorly conceived as to prompt questions about the real intent of the legislation. In 2004, Barrack Obama said that we couldn't move to government-controlled single payer health care in one step, that we'd need to transition from private employer-sponsored insurance over 15-20 years. Well, if the new "reform" does enough damage to businesses (through fines and expensive mandated high coverage levels), it's entirely likely businesses would call for a takeover of the whole mess by the government. That would please a lot of people.

We can have a better system. We can dump employer involvement. We can allow people to make choices in selecting insurance providers. We can hold costs down by assuring the recipients of a service have incentives to consider costs and effective means to control them (through a choice of services and objective information on various options). Government has a role to play, for sure.

 

[M Paquette]

NY Times: You Fix the Budget (interactive and PDF)

Just in time, the NY Times has this interactive feature:

Budget Puzzle: You Fix the Budget - Interactive Feature - NYTimes.com

The interactive version without all the costly computer equipment is here, or here.

Kill the earmarks, and See the Enormous Progress!

I have to go tenderize some meat for the Congressional BBQ I'm hosting.

 

[Independent]

Thanks for posting this....America could be well on its way to solving its debt problems if we would agree on a way to get our arms around healthcare costs.

"Well on it's way" is definitely true. The "horrific deficits" projected for 2014 and 2015 are 3.9% of GDP. The US spends about 16% of GDP on health care, while the top end for European nations is about 11%. If we could simply get the European results by taking any one of the European programs, we'd save enough in total to eliminate out deficit.

(The "in total" doesn't reflect the private/public split. In those years the federal government's share of medical costs will be about 6% of GDP, so we'd have to use some of the private savings to completely balance the federal budget.)

 

[samclem]

The US spends about 16% of GDP on health care, while the top end for European nations is about 11%. If we could simply get the European results by taking any one of the European programs, we'd save enough in total to eliminate out deficit.

In fact, since the US is considerably wealthier than Europe on a per capita basis, if we had per-person medical costs like some of those programs, the percentage of our GDP would also be considerably less than the equivalent European country.

2008 numbers: EU GDP per person: $31,182
For reference: Germany: $35,511
UK: $36,689
US GDP per person: $46,588
For reference: Alabama: $36,469

The big "however": A primary reason the US is far wealthier than Europe is that the economy is more efficient and government is less intrusive (and takes a smaller tax toll). I'm sure we could create a "Europe of the US"--same welfare state, same helpful government safeguards and bureaus, same "free" health care, and all the personal wealth of Alabama--just like Europe.

 

[keegs]

Paul Ryan voted for president Bush's unfunded prescription drug plan says Obama-care will bust the budget and thinks Germany's got it right on economic policy .....go figure.


Charlie Rose - Rep. Paul Ryan, Wisconsin (R)

 

[Gone4Good]

In theory, the new health care law could usher in some needed changes. For example, the exchanges might work to improve competition. But the law carries over so many bad parts of the present system, and fails to incorporate so much change that is desperately needed, that I just can't see how we can call it an enhancement.

Thanks for the clarification.

But, ahem, at least half of those bullet points are a direct result of the opposition to the big picture reform.

1) We couldn't change the employer sponsored health care system directly because reformers were forced to say that everyone who has insurance will be able to keep it. And in fact, a big criticism, then and still, is that reform would encourage corporations to drop coverage and force people on to exchanges. So the complaint seems to be both that corporations will continue to provide coverage, and that they won't.

2 & 3) I think are kind-of the same thing. Yes, getting rid of Medicare Advantage was a philosophical difference. But there certainly is cost savings here. And, unlike the Medicare Prescription drug benefit expansion, health care reform had to lower deficits as determined by CBO projections. So MA is one place where spending was cut. Hardly a fatal flaw.

4) None of those pay-offs would have been necessary if the folks who sponsored the Republican's alternative to "Hillary Care" in 1993(?) supported the same fundamental reforms in 2010. In fact, if the 1993 alternative was used as a starting position for honest negotiations, we could have ended up with very good reform legislation. Too bad.

Even with these criticisms, it still seems to me that we agree about the basic foundation reform must have (i.e. individual mandates, blah, blah, blah). And we also seem to agree that 'ObamaCare' contains that basic foundation. So lets strip away the bad parts and build on the good parts. Unless, of course, the real problem isn't with the foundation, but with who built it.

 

[samclem]

Much hinges on the SCOTUS ruling regarding the individual mandate. If that is ruled unconstitutional, then we'll have to rethink quite a bit of this. It's possible that in the US "universal coverage" will look a lot different from anywhere else--more like "universal access and the government will do everything possible to help everyone afford coverage. Those who don't sign up, if not ruled legally incompetent, will not be taken on as the collective responsibility of everyone else at the national level. When they get sick, States can choose to have programs for them, or they will be left on their own or to the voluntary help they can get from others." Tough love, but maybe that's what freedom looks like.

While we wait for the SCOTUS, we can deal with the other aspects of our fiscal problems. That should keep everyone fully occupied.

Edited to add: Regarding the changes in what Republicans are willing to accept-- Hey, my own "bar" changes depending on the environment. Sometomes a "less bad" alternative looks great after the reality sinks in concerning some crazy package that's about to become law. Everyone recognizes that our present "system" is a mess and that we have to do something about health care costs (to individuals and to society). So, if the passage of the new health care law encourages Republicans to come off their perch and give on some issues, that's good. And if the impending dismantlement of the "reform" law causes Democrats to compromise some more, that would be good.

And, regarding the continuation of employer involvement under the new law: While we are looking back and casting blame, I think we can agree that this was, in large part, a result of positions taken during the presidential campaign. Candidate A proposed a bold move away from employer-provided health care. Candidate B immediately used this as a bludgeon--"He wants to take away the health care you get now and you like! He wants to make you buy your own insurance!" It was effective and after that Candidate B was forced to ride that lame horse all the way through this ugly process, and the rotting hide of that varmint still stinks up the present legislation.

 

[Gone4Good]

Much hinges on the SCOTUS ruling regarding the individual mandate.

True. But while we both seem to agree that it is a necessary aspect of health care reform, one of us is actively hoping for it to be overturned. How strange.

 

[FinanceDude]

Again, this is me being dense. But I don't see how that proposal is substantively different then the reform we have. The big picture things you suggest are all included. Why, then would you not support the legislation generally, while saying there are many specific things that still need to be fixed. I happen to share that view.

Just Youtube Paul Ryan...he has the answers to most of the questions and how to fix them. And, unlike the past few years, where Dems and Republicans alike just patted him on the head and said he was doing a "fine job", they're going to have to listen to him now.........

 

[FinanceDude]

Paul Ryan voted for president Bush's unfunded prescription drug plan says Obama-care will bust the budget and thinks Germany's got it right on economic policy .....go figure.
Charlie Rose - Rep. Paul Ryan, Wisconsin (R)

Bush's prescription drug plan is a drop in the bucket compared to Obama's behemoth.........

 

[ERD50]

Thanks for the clarification.

But, ahem, at least half of those bullet points are a direct result of the opposition to the big picture reform.

1) We couldn't change the employer sponsored health care system directly because reformers were forced to say that everyone who has insurance will be able to keep it. ...

I didn't bother to read further, as this comment is just too 'self limiting' to be of any value.

You really can't envision some way that we can wean ourselves away from employer based health insurance (or don't want to?)? Maybe grandfather the current plans? There are many ways to deal with this, but you seem so set in your "this is a great bill" defense that you just can't allow yourself to envision the possible alternatives.

I doubt that many people are buying your line. When I see the opposing views as weak justifications, it just strengthens my own view. Keep up the good work!

-ERD50

 

[ERD50]

Bush's prescription drug plan is a drop in the bucket compared to Obama's behemoth.........

But that doesn't make it right. I agree that it needed to be properly funded, and I do think the R's lost some votes over it from true fiscal conservatives.

-ERD50

 

[Gone4Good]

I doubt that many people are buying your line. When I see the opposing views as weak justifications, it just strengthens my own view. Keep up the good work!

-ERD50

Ok.

Still waiting to see the details of the alternative, though.

 

[ERD50]

Ok.

Still waiting to see the details of the alternative, though.

I think samclem has outlined what's workable. If you want details, send me to Congress to write them!


-ERD50

 

[samclem]

True. But while we both seem to agree that it is a necessary aspect of health care reform, one of us is actively hoping for it to be overturned. How strange.

We need to abide by the Constitution. If the individual insurance mandate is unconstitutional (I think it is), we can then decide as a nation if we want to amend the Constitution.
If the SCOTUS rules that the Constitution, as presently written, allows the government to force individuals to spend their money to purchase a product from a private company, then we move forward and use that ruling to our collective and individual benefit.

 

[FinanceDude]

Unless, of course, the real problem isn't with the foundation, but with who built it.

Therin, lies the root problem.........