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

[FinanceDude]

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Originally Posted by Gone4Good I'm fine with that. I'm just trying to understand the alternative.

The alternative is to make smaller steps to address the problem. There was a House Bill presented (by Republicans)during the Healthcare Debate that addressed the very issue of pre-existing conditions. We could have started with that, as most agree that is a huge problem. Yet it became an "all or nothing" political tool. Now we have a new House with a much different look, not that it will help anything..........

[ERD50]

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Originally Posted by Gone4Good Well then, all we have to do to be in agreement is for either of you to acknowledge that every one of samclem's proposals is included in 'Obamacare' and that samclem's proposals are actually the very heart of the legislation.

'Beef' is the main ingredient in both a Big Mac and the Chateaubriand I had at a French Bistro recently. Very few people would be likely to confuse them, unless it was in their best interests to appear to do so.

And since this 'discussion' has melted down to this level, I'm going to find something better to do with my time....


-ERD50

[Gone4Good]

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Originally Posted by FinanceDude There was a House Bill presented (by Republicans)during the Healthcare Debate that addressed the very issue of pre-existing conditions.

Yes. And their solution was to expand "high risk pools" which begs the (unanswered) questions; are the pools subsidized?; what happens to folks who still can't afford insurance under the pools?; is it wise or desirable to have a system where for-profit companies provide health insurance to healthy people but are able to offload them on to 'high risk' pools the moment they become sick (isn't that an insurance system that privatizes profits and socializes losses?)

It seems to me with 'high risk pools' we're still talking about socialized medicine, we're simply limiting it to the most costly cases and, by definition, to the largest consumers of health care. That doesn't sound like much of a limit, and it's not really clear to me what is gained. I do see what is lost; chiefly the premiums of all the healthy customers that could be used to offset the cost to taxpayers for keeping "high risk pool" insurance at least nominally affordable.

[Gone4Good]

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Originally Posted by ERD50 'Beef' is the main ingredient in both a Big Mac and the Chateaubriand I had at a French Bistro recently. Very few people would be likely to confuse them, unless it was in their best interests to appear to do so. And since this 'discussion' has melted down to this level, I'm going to find something better to do with my time.... -ERD50

Yes, except in this case it is possible to strip down the legislation to the point where it exactly matches samclems proposals, but that doesn't suffice either. Why is that?

Props to financedude for at least acknowledging the motivations here.

[Independent]

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Originally Posted by samclem 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.

I'll try some sample numbers. Suppose UK and Germany spend exactly 10% of GDP on health care, that would be $3,551 and $3,669 per person. If the US spends 16%, that's $7,454 per person. Suppose that US governments at all levels already pay about 1/2 our total health care bill, that's $3,727.

So it seems to me that we could fund 100% of our health care with government spending without raising taxes at all.

I won't try sample numbers on the claim that we've got a bigger GDP because our government is less intrusive. That would be interesting, but not necessary.

[keegs]

Erskine Bowles and Alan Simpson, Co-chairs, US Deficit Commission

Charlie Rose - Erskine Bowles and Alan Simpson, Co-chairs, US Deficit Commission

[samclem]

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Originally Posted by Independent I'll try some sample numbers. Suppose UK and Germany spend exactly 10% of GDP on health care, that would be $3,551 and $3,669 per person. If the US spends 16%, that's $7,454 per person. Suppose that US governments at all levels already pay about 1/2 our total health care bill, that's $3,727. So it seems to me that we could fund 100% of our health care with government spending without raising taxes at all.

Or, viewed though another prism:
As you state, the government already spends enough money on their programs to provide health care to every American, if the US government programs were only as efficient as Germany's.
So, with plenty of money (enough to provide care to all Americans) and a captive audience (Medicare, Medicaid, VA, military populations), one has to be impressed by the awesome inefficiency of the portion of the US health care system most closely controlled by the government, and wonder why anyone would want to give them even more resources.

[RonBoyd]

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Originally Posted by M Paquette Just in time, the NY Times has this interactive feature: Budget Puzzle: You Fix the Budget - Interactive Feature - NYTimes.com

Bean Counters to the Rescue!

For example:

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Gail Collins: ... But we part company on this business of raising the Social Security retirement age. It sounds seductive. (Push it to 70 and get $247 billion by 2030.) The much-made argument is that people are living longer so they should retire later. But the longevity is skewed to the high-income earners, and if there’s one thing we already have enough of in this country it’s government programs to make the rich richer. David Brooks: Sorry, we’ve got to raise the retirement age. If you are 60 right now, you can expect to live another 22.4 years. There’s no way young people can subsidize the oldsters for nearly a quarter of their lives. Especially when children today will be getting a negative net return on the money they put into the system. The whole thing will go kablooie if we ask people to surrender to a program that makes them worse off.

But Bottomline is:

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I bet between us we could come up with a package in about five minutes. The problem is never with the policy substance. The problem is finding a political strategy to get it passed. Maybe next Sunday, David Leonhardt and his team could put together a chutes and ladders type game. Roll the dice and try to move your piece through the legislative process. Pass a bill and get re-elected! That game would be really hard.

[keegs]

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Originally Posted by samclem Or, viewed though another prism: As you state, the government already spends enough money on their programs to provide health care to every American, if the US government programs were only as efficient as Germany's. So, with plenty of money (enough to provide care to all Americans) and a captive audience (Medicare, Medicaid, VA, military populations), one has to be impressed by the awesome inefficiency of the portion of the US health care system most closely controlled by the government, and wonder why anyone would want to give them even more resources.

Sam...Medicaid and Medicare use the private system to deliver health care services. The VA on the otherhand doesn't and provides better service at lower cost.

[Independent]

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Originally Posted by samclem Or, viewed though another prism: As you state, the government already spends enough money on their programs to provide health care to every American, if the US government programs were only as efficient as Germany's. So, with plenty of money (enough to provide care to all Americans) and a captive audience (Medicare, Medicaid, VA, military populations), one has to be impressed by the awesome inefficiency of the portion of the US health care system most closely controlled by the government, and wonder why anyone would want to give them even more resources.

I suppose that means we should compare our system of government to theirs. If they are that much more efficient just because our gov't is so inept, maybe we need to copy their government before we copy their health care system.

Do you think the US gov't is uniquely inept and unable to run anything efficiently? Or, do you think all governments are somewhat inefficient, and our problem with health care is that we've made some political/social decisions that we could change?

[samclem]

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Originally Posted by Independent Do you think the US gov't is uniquely inept and unable to run anything efficiently? Or, do you think all governments are somewhat inefficient, and our problem with health care is that we've made some political/social decisions that we could change?

The later.
How about this: The Swiss use private entities exclusively to deliver health care. We use primarily private entities to deliver health care, and do it far less efficiently (for structural reasons). The US government already "owns" a huge pool of patients and has sufficient resources (if the efficiency of the Swiss system is any guide) to fund their care, if only they would implement such a competitive, efficient, private system. They (we) should do that. Use the existing patient pool and resources as a lab to show that it can be done. That avoids all the turmoil and political backlash of having the majority of the American public, who are now satisfied with their health insurance, from being forced to participate. If the federal program succeeds, everyone would be clamoring to board the train. We'd have a politically easy way to slip out of the employer-provided health care noose once people see that quality care will be available and once they see the cost savings that they'll get.

One silver lining that we're both seeing: "Luckily", the present "system" (both taxpayer funded and private) is so wasteful and inefficient that providing better health care can likely be accomplished at very little/no additional cost. That will be important in the upcoming tight fiscal environment.

[samclem]

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Originally Posted by Independent I suppose that means we should compare our system of government to theirs. If they are that much more efficient just because our gov't is so inept, maybe we need to copy their government before we copy their health care system.

I know you are being facetious. They've "efficiencied" themselves into a GDP per person 1/4 lower than hours. That kind of efficiency is a killer.

[samclem]

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Originally Posted by keegs The VA on the otherhand doesn't and provides better service at lower cost.

That's a claim that is often made, and which is widely disputed. The CBO says the facts aren't in.
This article is on the CBO study. In part:

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For starters, the vast majority of veterans who receive some of their care from the VA also get care outside the system. In fiscal 2007, 79 percent of veterans in the VA system also had health coverage elsewhere, typically Medicare but also private health plans, the CBO said. Veterans often pick and choose where and how to get their medical care, weighing the cost, the distance to the nearest VA facility, the availability of their favorite doctors and other factors. Because medical care received outside the VA system isn't automatically entered into the agency's computer system, the VA often has incomplete records on its patients, the CBO said. While the VA can use its data to show its own improvement over the years, comparisons of the agency's performance with non-VA providers "are problematic" and "need to be interpreted with caution," the CBO said.

And, whether VA is controlling costs better than Medicare depends on what period we look at. See figure B-1 (page 32) in the CBO report. For the last 5 years, at a time when VA's number of younger, relatively healthier patients has increased, their costs have increased at the same rate as Medicare.

McClatchy report.

My opinion: The people most impressed by VA medical care aren't the ones who are using it.

[Independent]

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Originally Posted by samclem The later. How about this: The Swiss use private entities exclusively to deliver health care. We use primarily private entities to deliver health care, and do it far less efficiently (for structural reasons). The US government already "owns" a huge pool of patients and has sufficient resources (if the efficiency of the Swiss system is any guide) to fund their care, if only they would implement such a competitive, efficient, private system. They (we) should do that. Use the existing patient pool and resources as a lab to show that it can be done. That avoids all the turmoil and political backlash of having the majority of the American public, who are now satisfied with their health insurance, from being forced to participate. If the federal program succeeds, everyone would be clamoring to board the train. We'd have a politically easy way to slip out of the employer-provided health care noose once people see that quality care will be available and once they see the cost savings that they'll get. One silver lining that we're both seeing: "Luckily", the present "system" (both taxpayer funded and private) is so wasteful and inefficient that providing better health care can likely be accomplished at very little/no additional cost. That will be important in the upcoming tight fiscal environment.

I'm not sure why you are focusing on the Switzerland as opposed to a dozen other European countries, but I did look up the Wikipedia article.

It looks like everyone over 25 pays the same premium, which is the lesser of $4,200 per year or 8% of their incomes, to private, non-profit insurance firms.
I'm not sure how that insurance structure converts into lower costs.

Maybe the savings are in doctors' or hospitals' charges or in utilization.

[samclem]

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Originally Posted by Independent I'm not sure why you are focusing on the Switzerland as opposed to a dozen other European countries, but I did look up the Wikipedia article.

It just seems natural. Converting to the UK system is a non-starter, unless we're going to make nearly every doctor, nurse, and PA a government employee--no tlikely.

Germany--Maybe, but their costs (as % of GDP) are identical to Switzerland (10.8% according to the respective Wikipedia articles). Their system is experiencing escalating costs and is now being reformed--again.

Switzerland: Why not? Continued private employment of doctors, private insurance is still available outside of the mandatory program, and costs are much lower than ours. Regarding the non-profit vs for profit insurance: If we include an approx 5% profit for insurance companies, we're still way better off than today, and get the enhanced efficiencies that result from a company seeking to continually enhance efficiencies and market share for the benefit of shareholders.

[Independent]

But, how do the Swiss get the lower costs without the profit incentive to insurers? It looks like the profit motive for insurers isn't critical to efficiency.

Note that most medical care costs don't occur inside insurance companies, but in doctor's offices and hospitals. How does the Swiss system reduce them?

[samclem]

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Originally Posted by Independent But, how do the Swiss get the lower costs without the profit incentive to insurers? It looks like the profit motive for insurers isn't critical to efficiency.

That might be true. I wouldn't see any problem with having both non-profit and for-profit insurers in the US system, just as we have non-profit and for-profit universities and hospitals. Consumers would have more choice this way, the market would sort things out.

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Originally Posted by Independent Note that most medical care costs don't occur inside insurance companies, but in doctor's offices and hospitals. How does the Swiss system reduce them?

But how much of the costs in the doctors' offices and hospitals are driven by the insurance companies and our present reimbursement scheme (billing, coding, rebilling, cost shifting, etc)?

From what I've read, the Swiss system is having problems with escalation of costs just as we are and just as the European socialized systems are. The two unavoidable contributing factors (high-cost new technology/drugs and an aging population) are present everywhere. In the US, most people today get the choice of one insurance company--whoever their employer uses. In the Swiss system, consumers get to choose from scores of different companies, and from several different levels of deductibles.co-pays. This competition is what the Swiss rely on to reduce costs, and their costs are about 30% below ours (as a % of GDP) and they achieve good quality universal coverage with very low waiting times and allow people to buy additional insurance if they choose.

[FreqFlyer]

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Originally Posted by samclem Switzerland: Why not? Continued private employment of doctors, private insurance is still available outside of the mandatory program, and costs are much lower than ours. Regarding the non-profit vs for profit insurance: If we include an approx 5% profit for insurance companies, we're still way better off than today, and get the enhanced efficiencies that result from a company seeking to continually enhance efficiencies and market share for the benefit of shareholders.

Why not? Because it all hinges on a mandate for coverage which is potentially unconsitutional and Big Brother jack-booted government (at least according to some).

A constitutional amendment won't happen. Let's continue to shuffle the old/weak/sick/poor to the tax-payer's dime and let the insurance companies profit from the rest.

Capitalism these days does seem to be socialized losses and hand-outs to "Too Big To Fail".

[M Paquette]

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Originally Posted by FreqFlyer Why not? Because it all hinges on a mandate for coverage which is potentially unconsitutional and Big Brother jack-booted government (at least according to some). A constitutional amendment won't happen. Let's continue to shuffle the old/weak/sick/poor to the tax-payer's dime and let the insurance companies profit from the rest.

Why should I have to pay for insurance when I can get free medical care at the emergency room? And hey, I'm in great shape. I got no reason to buy insurance. (Yo, supersize those fries!) Medical insurance is a complete ripoff. If I get hurt, I'll just sue the store/driver/city to pay for it. I would simply self-insure if I needed to go to a doctor.

(Above cribbed from multiple posts at OpenMarket.org complaining about the requirement to buy insurance.)

[samclem]

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Originally Posted by samclem The US government already "owns" a huge pool of patients and has sufficient resources (if the efficiency of the Swiss system is any guide) to fund their care, if only they would implement such a competitive, efficient, private system. They (we) should do that.

It looks like some folks are proposing this, including longtime Democrat Alice Rivlin:

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One of the Democratic Party’s prominent voices on fiscal issues has thrown a hand grenade into the debate over the long-run sustainability of Medicare, the signature Great Society health program for the elderly. Alice Rivlin, the 79-year-old former budget director under President Clinton, has teamed up with 40-year-old Rep. Paul Ryan, R-Wis., the incoming chairman of the House Budget Committee, on a plan to essentially privatize Medicare for those turning 65 a decade from now. It’s very similar to Ryan’s “Roadmap for America’s Future” in that seniors would get lump-sum payments for the value of their Medicare benefits and use them to buy coverage in the private marketplace . . . . . Rivlin has long backed the idea of a “premium support” program, which would keep traditional Medicare as the default for seniors but would charge them more out of pocket. Seniors who didn’t want to pay the higher premiums could take a voucher and enter a “Medicare Exchange,” similar to the health care exchanges being set up for uninsured people under the new health care law . . . Rivlin, now with the Brookings Institution, said the pain would not be as acute as some might think, because seniors’ out-of-pocket costs would go down as managed care plans competed for their business. And no one could be turned away from the Medicare exchange.