Category: Health Alerts

Why Tax Capital Gains?

Today I’m taking a break from health care issues in honor of the 16th Amendment.

Income tax day is an appropriate moment to go to the heart of President Obama’s complaint about the taxes Warren Buffett and other rich people pay, or don’t pay. What the president is really complaining about is that the tax rate on capital gains is too low.

But there is a more basic question to be asked: Why tax capital gains at all?

Did you know that the term “capital gains” does not even appear in the official income accounts for the U.S. economy? That’s right. No matter how high stock prices climb, they do not affect the official reckoning of national income one iota.

“Capital losses” aren’t included either.

When stock prices soar, stock owners are wealthier — at least they feel wealthier. When stock prices plunge, owners of stocks feel less wealthy. But none of these ups and downs have any bearing whatsoever on the official calculation of the income for the economy as a whole.

So here is the policy question: If we are going to have an income tax, should we tax only income? Or should we tax activities, events and transactions that are not counted as part of our national income?

At the New York Times Economix Blog, Princeton University economist Uwe Reinhardt argues that capital gains should be taxed at the same rate as ordinary income (which is included as part of national income, by the way). I had a debate about all of this with Michael Kinsley at Slate some time back. Interested readers may want to refer to the text of that debate for more details than I plan to go into here. Also, don’t miss Steven Landsburg’s  devastating critique of Uwe’s piece.

‘Cause I’m the taxman, yeah, I’m the taxman
And you’re working for no one but me.

Print FriendlyPrint

Apr 16, 2012 | 11 comments | by

What Food Stamps Can Teach Us about Health Care

There are about 50 million people on Medicaid in the United States and the biggest problem they have, by far, is finding a doctor who will see them. Yet this is actually an easy problem to solve if only the health policy community were not blinded by an overwhelming prejudice: The belief that for medical care to be accessible to low-income families it must be free at the point of delivery. In fact, the exact opposite is true. The quickest, surest way to create access to care for poverty-level families is to allow them to pay market prices.

A year or so ago I was in Boston and I struck up a conversation with a taxi driver, who informed me that she was on MassHealth (Massachusetts Medicaid). “How is it working for you?” I asked. “The biggest problem is finding a doctor,” she said. “I had to go down a list of 20 doctors’ names before I found one who would see me.”

“Were you going through the Yellow Pages?” I asked. “No,” she said, “I was going down a list that MassHealth gave me.”

Remember: this is what Massachusetts calls “universal coverage.”

Mark, a yen, a buck or a pound,
That clinking, clanking, clunking sound,
Is all that makes the world go ’round.

Print FriendlyPrint

Apr 11, 2012 | 24 comments | by

High Deductible Health Insurance

Question: If I asked you to point to the most obvious examples of wasteful health care spending, where would you direct me? This is a no brainer. There is nothing more wasteful than first-dollar health insurance coverage. Even deductibles as low as $1,000 or $1,500 are incredibly wasteful in many places. By that I mean that if you choose a higher deductible, the premium savings is greater than the additional expense you are exposed to. That means you can put some of the premium savings in the bank to cover the additional risk exposure (dollar-for-dollar) and still come out ahead.

Second question: When is the last time you saw an article in Health Affairs or any other health policy journal pointing out this obvious way to eliminate waste? My guess is that your answer is “never.” I’m sure you have seen articles about the hazards of high deductible insurance. Why are the journals so reluctant to focus on the benefits?

Every serious study that has ever been done on the subject has found that patients spend less on health care when they are spending their own money. The latest study by the RAND Corporation estimates that families with high deductible plans and Health Savings Accounts spend about 30% less than families with conventional insurance. And that’s with HSA plans designed by Congress. Think how much more effective the accounts could be if they were designed by the marketplace.

Further, no patient group was harmed by the switch to high-deductible insurance — not even vulnerable populations. This echoes the earlier findings of the RAND Health insurance experiment more than 30 years ago.

Ooh I’m driving my life away,
looking for a better way,
for me

Print FriendlyPrint

Apr 09, 2012 | 47 comments | by

How We Can Keep from Going Broke, Part II

As noted in our previous post, Social Security, Medicare, Medicaid and other social insurance programs are bankrupting America. They will produce ever-escalating deficits for as far as the eye can see.

Is there an alternative to all of this that is politically practical? In particular, is there a way to solve our problems so that everybody comes out a winner instead of a loser? Let’s be clear about what we mean by everyone else being better off. Social Security and Medicare have huge unfunded liabilities that carry with them implicit burdens for future taxpayers.

Yet there are tens of thousands of high-income retirees who would do just fine without Social Security or Medicare benefits. Shouldn’t we consider whether they could find a way to exit the system and leave taxpayers with a lower burden than they had before? And why limit ourselves to the wealthy? There is a more general principle here: Anytime anyone — rich or poor — can find a way to solve the social problems Social Security and Medicare were designed to address and leave the taxpayers with a smaller burden in the process, we should welcome the change.

Yeah, I thought I’d saved some but, you know, it’s funny
There’s too much month at the end of the money

Print FriendlyPrint

Apr 04, 2012 | 8 comments | by

Is There a Republican Alternative to ObamaCare?

“GOP to the Uninsured: (Feel Free to) Drop Dead.” So reads the title Michael Millenson post at the Health Care Blog yesterday. It gets worse:

[N]o Republican presidential candidate has ever presented a serious plan to cover all the uninsured … The difference between Democrats and this generation of Republicans — unfortunately including even the GOP Doctors Caucus — is not at its core a disagreement on what government can legitimately do to help create universal access to health care for the 50 million Americans without it, but whether the goal itself is worth pursuing.

Was Millenson completely asleep (like Rip Van Winkle) during the last election? Does he not read my Wall Street Journal editorials? Does he never visit my blog? Or was this meant to be an April fool’s column?

John McCain’s health plan was more radical and even more progressive than Obama Care. I’ve never seen any serious health policy wonk deny that.  Maybe Millenson doesn’t live in a battle ground state. If he did, he would know that the Obama campaign spent more money attacking the McCain health plan during the election than has ever been spent for or against a public policy idea in the history of the republic. In fact, it is probably no exaggeration to say that Obama successfully turned the election into a referendum on the McCain health plan!

The McCain health plan is discussed at this blog here, here, here, here and here.

And although Millenson singles out Oklahoma Senator Tom Coburn as an especially egregious example of the Republican failure on health policy, the McCain vision actually was based on a bill, sponsored by Sen. Coburn and Sen. Richard Burr (R-NC), along with Reps. Paul Ryan (R-WI) and Devin Nunes (R-CA), [hereinafter called the Coburn bill]. That bill, in turn, was based on an idea which Mark Pauly and I proposed in a Health Affairs article more than a decade ago. (Does Millenson not read Health Affairs?)

Why Not Me?

 

Print FriendlyPrint

Apr 02, 2012 | 38 comments | by

Is Fee-For-Service the Problem?

Almost everyone involved in health care will tell you that the greatest problem in our system is that we pay on a fee-for-service basis. Almost everyone is wrong.

The logic is obvious – paying a fee for a service encourages providers to get more fees by providing more services. Ergo, we consume too much and spend too much. Ipso facto, getting rid of fee-for-service would result in fewer services and less spending. Case closed.

Well, maybe not.

In fact, almost everything we do in the course of our economic lives, we do on a fee-for-service basis. When we go to the movies, get our oil changed, have our roof replaced, buy a computer, get a haircut, hire a baby sitter, buy a steak dinner, get someone to do our taxes or defend us in a suit, we do it on a fee-for-service basis. None of it is particularly inflationary.

Print FriendlyPrint

Mar 28, 2012 | 36 comments | by

Lying About Health Reform

You can always tell that a person is losing an argument when he throws reason, logic and factual evidence aside and starts personally attacking his opponent. That’s the modus operandi of Paul Krugman, liberal columnist for The New York Times.

Opponents of ObamaCare are telling “lies,” wrote Krugman the other day. In fact he used the word “lie” three times to characterize the critics in the space of a single column. Those who disagree with him “make stuff up” and concoct “completely fraudulent” statements, he adds.

While he’s ranting and raving about people he calls “the enemy,” Krugman tells a few whoppers of his own, however. This is his defense of ObamaCare:

The fact is that individual health insurance, as currently constituted, just doesn’t work. If insurers are left free to deny coverage at will — as they are in, say, California — they offer cheap policies to the young and healthy (and try to yank coverage if you get sick) but refuse to cover anyone likely to need expensive care.

Now anyone who knows anything about the health insurance business knows that it is illegal under federal law for an insurance company “to yank” (cancel) someone’s insurance because he or she gets sick. That’s not only illegal; it’s been illegal for the past 16 years!

I thought by now you’d realize
There ain’t no way to hide your lyin’ eyes

Print FriendlyPrint

Mar 26, 2012 | 19 comments | by

Economists Address the Supreme Court

(Today’s Health Alert was written by Greg Scandlen.)

Today’s “myth buster” is brought to you by 215 economists headed by Douglas Holtz-Eakin, former CBO director and currently with the American Action Forum. These economists have filed an amicus brief with the U.S. Supreme Court in connection with its consideration of the Affordable Care Act, known familiarly as ObamaCare.

In the course of writing the brief, these folks bust a number of long-standing liberal myths that are built into any discussion of health care, including the ideas that:

  • Health care is different than other market segments and so is exempt from the rules that apply to other markets.
  • Because health care is so unique, allowing extraordinary federal interference will have no precedent for other markets.
  • There are no non-consumers of health care services, so each and every resident is “active” in the health care market.
  • Failure to be insured means that people impose large costs on the more responsible members of society.

Each of these ideas (myths) is not just refuted but demolished — and long overdue. Let’s take them one at a time.

Print FriendlyPrint

Mar 21, 2012 | 19 comments | by

How We Can Keep from Going Broke, Part I

Social Security, Medicare, Medicaid and other social insurance programs are bankrupting America. They will produce ever-escalating deficits for as far as the eye can see.

So what can we do about it? All we hear out of Washington are “eat-your-spinach” solutions — both from Democrats and Republicans. These involve cutting benefits, forcing doctors to ration health care, etc. Naturally, the beneficiaries resist such change.

My colleagues and I at the National Center for Policy Analysis have been thinking about a different approach. Reform of entitlement programs should be a win-win proposition. That is, it should be good for the individual who agrees to accept fewer government benefits as well as for the taxpayers.

Does that sound too good to be true? Read on.

I think we can make it, if we try.
I think we can make it, if we try.

Print FriendlyPrint

Mar 19, 2012 | 15 comments | by

Why Can’t We Buy Health Care the Way We Buy Food?

Think of a supermarket. There are probably more than a hundred in the city of Dallas alone. I can walk into any of them — in most cases, at any time day or night — and buy thousands of different products. The only wait I experience is at checkout, but express lanes speed that along if I want only an item or two. When I go to purchase something I want, the product is always there. I can’t recall an instance when a shelf space offering something I wanted to buy was empty. Further, the products being offered are produced by thousands of different suppliers, and they travel thousands of different routes to get to market. What is true of Dallas is true of every city of any significant size in the country.

Contrast that with the market for medical care, where almost nothing is available at the drop of a hat. According to a Commonwealth Fund study, nearly one in four patients has to wait six or more days for a physician appointment. Less than one-third of physician practices have made arrangements allowing patients to see a doctor after hours when the practice is closed. Sixty percent of patients find it difficult to get care after hours or on weekends. Newspaper reports around the country tell horror stories of the consequences of the shortage of cancer drugs and other life-saving pharmaceuticals. Four- and five-hour average waiting times at hospital emergency rooms are not uncommon.

So why is there so much difference between these two markets? I would argue that one is a real market where consumers face real prices, whereas the other is an artificial market where the price system has been suppressed.

 You can’t always get what you want
But if you try sometimes you just might find
You get what you need

Print FriendlyPrint

Mar 14, 2012 | 26 comments | by
« Previous Page — Next Page »