A Less Than Honest Policy

I fully support this policy. The concept of “free” healthcare has been one of the major reasons why the business model of healthcare is what it is– sick care that profits off volume. When people spend $5 on a doctor visit or a medication or a test, they have no skin in the game. People don’t value “free.” And when it’s free, they simply don’t care how much is done. They become at the mercy of a professional who is supposed to be acting in the patient’s best interest– nothing more, nothing less. But doctors are paid to do as much as they can. And since the doctor doesn’t have to look their patients in the eyes and tell them that this test they probably don’t need costs two month’s salary, neither the doctor nor the patient care about costs. In fact, none of the players in our healthcare system care about costs. Therefore, we have an endless ATM pumping money into the sickness industry.

Who’s going to take a stand and say stop? The insurance companies? Nope. They’ll just continue to play bank. It doesn’t matter to them. Money in, money out. Whateva. The doctors? Nope, they’ll just continue to do as much as they can because there’s an endless stream of ATM money paying them for as much as they can do. The employers? Yep, they’re starting to feel the heat. They’re looking for alternative options. The “patients?” They’ll feel the heat after employers ratchet down health insurance options. In 2019, the average premium will be $28,500 per employee. Their options will come to a halt way before the average premium equals more than the average salary. We’re starting to witness this now.

The only way costs in healthcare will be kept under control is when consumers, en masse, start demanding that healthcare be less expensive and provide transparent consumer experiences that meet their needs. We’re witnessing the cost of “free” healthcare…and it’s way more expensive than the argument that some people will wait too long to get something checked out. When you offer free healthcare with no checks and balances, you get the most healthcare. We don’t want health insurance companies micro-managing. That’s expensive. But they’ll continue to do that until consumers start saying no to the expense and take it upon themselves, as empowered consumers, to spend their own money on healthcare.

Where are the consumers demanding cheaper, better service from the healthcare industry? I realize consumers are fighting legal monopolies, but nothing will change until the average American starts feeling the heat. And taxing insurance policies that enable “free and unlimited access” to healthcare is the first step toward getting more and more consumers into the pool of pissed off people that demand something better, something cheaper, and something that meets their needs.

We should all be asked to spend 10% of our income out of pocket on healthcare, then health insurance should kick in. That would transform the opacity of the healthcare system overnight as every single healthcare provider, testing center, hospital, and pharmacy would start treating you like a real consumer with advertised prices, special deals, and consumer experiences that are pleasantly designed to get you to become a lifetime customer. Would you go to a doctor with a 4 hour wait or would you go to the doctor that’s designed their processes so there is a maximum wait of 10 minutes? Would you go to a test center that won’t tell you how much a test is prior to it being administered? Or would you go to one that’s advertising shoulder MRIs for $649?


The bill that passed the Senate with such fanfare on Christmas Eve would impose a confiscatory 40 percent excise tax on so-called Cadillac health plans, which are popularly viewed as over-the-top plans held only by the very wealthy. In fact, it’s a tax that in a few years will hammer millions of middle-class policyholders, forcing them to scale back their access to medical care.

Which is exactly what the tax is designed to do.

The tax would kick in on plans exceeding $23,000 annually for family coverage and $8,500 for individuals, starting in 2013. In the first year it would affect relatively few people in the middle class. But because of the steadily rising costs of health care in the U.S., more and more plans would reach the taxation threshold each year.

Within three years of its implementation, according to the Congressional Budget Office, the tax would apply to nearly 20 percent of all workers with employer-provided health coverage in the country, affecting some 31 million people. Within six years, according to Congress’s Joint Committee on Taxation, the tax would reach a fifth of all households earning between $50,000 and $75,000 annually. Those families can hardly be considered very wealthy.

Proponents say the tax will raise nearly $150 billion over 10 years, but there’s a catch. It’s not expected to raise this money directly. The dirty little secret behind this onerous tax is that no one expects very many people to pay it. The idea is that rather than fork over 40 percent in taxes on the amount by which policies exceed the threshold, employers (and individuals who purchase health insurance on their own) will have little choice but to ratchet down the quality of their health plans.

These lower-value plans would have higher out-of-pocket costs, thus increasing the very things that are so maddening to so many policyholders right now: higher and higher co-payments, soaring deductibles and so forth. Some of the benefits of higher-end policies can be expected in many cases to go by the boards: dental and vision care, for example, and expensive mental health coverage.

Proponents say this is a terrific way to hold down health care costs. If policyholders have to pay more out of their own pockets, they will be more careful — that is to say, more reluctant — to access health services. On the other hand, people with very serious illnesses will be saddled with much higher out-of-pocket costs. And a reluctance to seek treatment for something that might seem relatively minor at first could well have terrible (and terribly expensive) consequences in the long run.

If even the plan’s proponents do not expect policyholders to pay the tax, how will it raise $150 billion in a decade? Great question.

We all remember learning in school about the suspension of disbelief. This part of the Senate’s health benefits taxation scheme requires a monumental suspension of disbelief. According to the Joint Committee on Taxation, less than 18 percent of the revenue will come from the tax itself. The rest of the $150 billion, more than 82 percent of it, will come from the income taxes paid by workers who have been given pay raises by employers who will have voluntarily handed over the money they saved by offering their employees less valuable health insurance plans.

This is the sort of nonsense that has been driving policy for 30 years. It’s called Reaganomics, and it makes no more sense now than it did then. Well, actually it makes less sense, considering we have concrete evidence that show that all it has accomplished is stagnating wages and wealth being concentrated into fewer and fewer hands. But, you know, whatevs. Ronald Reagan was AWESOME.

A Less Than Honest Policy