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In an editorial today, the NYTimes claims:

The proposed excise tax on high-cost plans is the most significant measure in either bill to slow the relentless rise in health care spending.

Can someone provide the evidence for this claim? I have never seen anything but assertions. Since an excise tax on health insurance plans has never been implemented to my knowledge, there is actually no evidence to support this claim. There are ARGUMENTS for why this would be the case, but no evidence. This is an experiment. It would work better as one of the pilot programs in the proposals that are being so highly touted. Try it with folks earning over 250,000 a year and see how it works. Then we will see if indeed the excise tax is a "significant measure to slow the relentless rise is health care spending."

Speaking for me only

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    It's interesting, isn't it, that there is so much (5.00 / 1) (#1)
    by Anne on Sat Jan 16, 2010 at 10:24:56 AM EST
    willingness to get behind an idea no one knows will actually work, and a refusal to get behind one that has been shown to work, and work well, and work as intended, in country after country: single payer.

    That the WH has to hire an expert, with a track record of already being in favor of the very concept the WH likes, and then pretend that this expert was totally independent of the administration, is galling.

    There is no way that any sentient being can look back over the last year and conclude that this administration and this Congress have been engaged in a good faith effort to reform the system and expand access to and affordability of health CARE; it just does not compute.

    I do not know what is wrong with Krugman; he has lost his way this last month or so, and I can't decide if it's because he's auditioning for Geithner's spot at Treasury and trying to prove he'd be a good soldier who can take orders and won't disrupt the plan, or what.  Regardless of the reason, it's very disappointing to see.

    There is nothing wrong with Krugman (5.00 / 1) (#11)
    by Manuel on Sat Jan 16, 2010 at 11:09:27 AM EST
    On issue after issue he has taken a pragmatic approach.  For example, he advocated for nationalizing the banks, having a greater stimulus, etc.  In the end, however, he recognizes that the country isn't ready politically for single payer.  I think he has a different view on what is possible than you do.

    Perhaps, those of us who want to work for more progressive causes in the Democratic party should emulate the tea partiers.

    Parent

    Reminds me of... (none / 0) (#2)
    by jbindc on Sat Jan 16, 2010 at 10:33:05 AM EST
    I do not know what is wrong with Krugman; he has lost his way this last month or so, and I can't decide if it's because he's auditioning for Geithner's spot at Treasury and trying to prove he'd be a good soldier who can take orders and won't disrupt the plan, or what.  Regardless of the reason, it's very disappointing to see.

    the bloggers were supportive of HRC, but then did an immediate about-face on Obama.  Everything he did wrong in the past was all of a sudden forgotten and no criticism of Teh One was allowed.

    Maybe they give folks a special potion or something....

    Huh? (none / 0) (#3)
    by Big Tent Democrat on Sat Jan 16, 2010 at 10:40:19 AM EST
    Oh I see (none / 0) (#4)
    by Big Tent Democrat on Sat Jan 16, 2010 at 10:40:55 AM EST
    you meant that as a response to Anne's comment.

    Parent
    Sorry (none / 0) (#5)
    by jbindc on Sat Jan 16, 2010 at 10:46:18 AM EST
    thought I hit "reply".

    Parent
    If you raise the tax on X, the demand for X goes (none / 0) (#6)
    by steviez314 on Sat Jan 16, 2010 at 10:56:42 AM EST
    down.

    It's true for gasoline, cigarettes and anything else.  Why would it not be true for health care?

    Because health care (none / 0) (#8)
    by Big Tent Democrat on Sat Jan 16, 2010 at 11:00:34 AM EST
    is a necessity not a luxury.

    Elasticity of demand. I know you know about that stevie.

    Parent

    But we're generally not talking about BASIC (none / 0) (#10)
    by steviez314 on Sat Jan 16, 2010 at 11:07:16 AM EST
    health care when we talk about the excise tax.

    At the margins up there, of course there will be reduced demand (or actually substitution).

    I'm not talking about the fairness of it, just the economics.  To get under the excise tax number, some services won't be covered anymore (accupuncture, gym visits--the REAL Cadillac items).  They just need to define cadillac plans by services not price.

    Parent

    Or they will be covered by it (none / 0) (#12)
    by Big Tent Democrat on Sat Jan 16, 2010 at 11:13:11 AM EST
    Anyone who is covered by the things you describe probably has very inelastic demand - to wit, they are already willing to pay higher premiums to get coverage for those things.

    Paying a tax on the marginal value of the plan is not likely to influence behavior to any great extent.

    Indeed, the real effects of the plan will be on the possibility of persons foregoing NEEDED care due to lack of funds.

    I think that will likely be a marginal effect in the short term but could expand in the longer term. Of course, that sounds like bad policy to me, but I grant you that it will have a marginal effect on total health care spending.

    But what effect? One theory in support of the health bill is that the uninsured getting insurance will actually lower health care costs in the aggregate because they will engage more preventive and primary care, as opposed to waiting until they need an emergency room.

    This theory would overturn the logic of the excise tax on cutting spending, since the opposite effect is sought with the excise tax.

    The reality is these are all untested ideas an nobody knows nuthin.

    I do object to making people's health care part of the experiment.

    Just tax the rich.

    Parent

    Exactly ... (5.00 / 1) (#17)
    by Robot Porter on Sat Jan 16, 2010 at 11:45:07 AM EST
    One theory in support of the health bill is that the uninsured getting insurance will actually lower health care costs in the aggregate because they will engage more preventive and primary care, as opposed to waiting until they need an emergency room.

    This theory would overturn the logic of the excise tax on cutting spending, since the opposite effect is sought with the excise tax.

    And at the root of this is the question:

    Do you want to cut health care costs or health care spending?

    I think most of us want to cut the former.  There are a lot of ways to cut spending.  Denying coverage health care to anyone who was sick would drastically reduce spending, but that doesn't make it a good idea.

    So even if the excise tax cut spending does that really give us a better system?

    Parent

    I think a $23K a year family policy takes care of (none / 0) (#16)
    by steviez314 on Sat Jan 16, 2010 at 11:44:14 AM EST
    all needed, basic care and more.  I cannot imagine someone who downsizes from a $30K a year policy to $23K is foregoing any basic care, or even more.  Even my small business plan in high cost NY covers A LOT for that money.

    Besides, we'll need to be taxing the rich for many things in the near future anyway.

    Parent

    Not if their policy is through a state risk pool! (none / 0) (#30)
    by suzieg on Sat Jan 16, 2010 at 10:47:13 PM EST
    I pay close to $18,000 for basic coverage with no perks with a $1,000 deductible + $3,000 in co-pays. Who will pay the excise tax in this case and what will happen to us if the states no longer can afford to offer insurance because of this additional 40%?

    Parent
    We're not? (none / 0) (#25)
    by cawaltz on Sat Jan 16, 2010 at 03:31:40 PM EST
    Which part of our health care plan isn't basic please?

    The physician visits or the testing?

    We actually HAD what qualified by definition as cadillac and I'd really like to know what the heck you believe is the difference between a basic plan and a cadillac one?

    The biggest difference I saw was I didn't have to come up with a grand before insurance companies kicked in their share(since that money was paid up front in monthly deductibles by the corporation)

    Parent

    The irony is that ... (none / 0) (#7)
    by Mr Natural on Sat Jan 16, 2010 at 10:57:13 AM EST
    "The proposed excise tax on high-cost plans" really "is the most significant measure in either bill to slow the relentless rise in health care spending."

    In other words, there is little in either bill but pretense.

    Listen to the business blowhards on CNBC.  They're elated. Health care reform has been transformed into a health care industry bonanza.  Now it's a growth industry.  The objective, apparently increasingly successful, is to milk every last penny from everyone before they die.

    We're screwed.

    Right wing talking point (none / 0) (#9)
    by mmc9431 on Sat Jan 16, 2010 at 11:05:32 AM EST
    The argument that the rising costs are due to abuse is such a right wing talking point. Blame it on the public rather than the corporations.

    This was the same argument that was used in the bankruptcy law. It wasn't the people that issued the credit cards fault. It was the people that got them. So we had to pass a law that secured an unsecured debt. Again we're passing legislation to protect the villain rather than the victim.

    Many companies offer a range of plans (none / 0) (#13)
    by Manuel on Sat Jan 16, 2010 at 11:18:05 AM EST
    It sounds quite plausible that people may opt for less costly plans (e.g. higher deductibles, copays) in order to avoid the tax. The plans that are too costly now, will have an incentive to lower their csts so they are picked by more people.

    Yes, it is an experiment but there is reason to think that it will work as intended.

    As to the original claim, are there any other significant cost control measures left on either bill?  If this is the only one, then the claim is correct no matter how flawed it may be.

    A plausible experiment (none / 0) (#14)
    by Big Tent Democrat on Sat Jan 16, 2010 at 11:23:27 AM EST
    Is what the NYTimes should have written.

    Personally, I think it is pretty implausible that it will take effect in a positive way.

    Parent

    How does me paying more out of pocket (none / 0) (#15)
    by ruffian on Sat Jan 16, 2010 at 11:38:48 AM EST
    because I picked a plan with a higher deductible lower the cost of the health care? Are you saying the providers are prepared to lower their fees for masses of people with no insurance?  Great! Let's go back to my plan of a few months ago and just ban insurance altogether, get back to square one, and see how much health care really costs.

    Parent
    Plans with copays (none / 0) (#18)
    by Manuel on Sat Jan 16, 2010 at 11:58:33 AM EST
    even small ones have been shown to reduce demand for services.  It makes people stop to think for a moment about the cost of the service.  This reduces costs which results in lower premiums.

    There was a small bit in Freakanomics about an Israeli child care center which allowed parents to pick their kids up late.  Many parents were chronically late causing higher costs (overtime for workers).  After they instituted a small fee, parents were on time more often lowering costs.

    The out of pocket model is already used in many places in the world.  What sucks about it isn't the cost.  It is the quality.

    Parent

    What you seem to be missing here is (5.00 / 1) (#19)
    by Anne on Sat Jan 16, 2010 at 12:47:56 PM EST
    that some of the services people forego because of co-pays and deductibles are for needed health care.  You know, like "gosh, I've had this sore throat/cough/pain in my side/funny-looking mole/lump in my breast/migraine for weeks now, it's not getting better, but I really can't afford the co-pays for the office visit or medication, and what if they want to do tests - I can't afford that, either - I'm sure it will go away soon."   That kind of care.  Not, "gee, I have nothing better to do than make appointments with the doctor because they're FREE, and maybe I can talk hin into making my eye job a medically necessary procedure."

    People are already rationing their care - are their premiums going down?  Um, no.  Is the cost of the actual CARE going down?  No, again.

    While we're at it, let's talk about the cost of the insurance.  Why does health insurance for a family cost them or their employer or some combination of both $23,000 a year?  How many families actually get $23,000 worth of CARE in that premium year?  What do we ever get from insurance companies about the cost of their product that isn't doubletalk and gobbledygook which amounts to "because this is what it costs?"

    Give me a break.

    Parent

    That is a different topic (5.00 / 1) (#20)
    by Manuel on Sat Jan 16, 2010 at 01:24:29 PM EST
    When our kids were younger we noticed a lot of parents who would be off to the pediatrician at the first sign of any discomfort.  Ear aches would lead to often unnecessary antibiotic prescriptions which can lead to even worse health consequences.

    $23,000 in health care isn't all that much.  Despite negotiated prices one single emergency room visit can cost many times that.  My father in law had to have open heart surgery last year.  The bill was well into the six figures.

    It is insurance.  A large part of the premium goes towards covering claims.  I pay a car insurance premium and a home insurance premium which keep going up despite the fact that I never get anything for them.

    I am for single payer but as long as we are going to be a country based on private health insurance, we are going to need to find ways to regulate insurance company abuse and curb unnecessary demand.

    Parent

    But that's just it: (none / 0) (#21)
    by Anne on Sat Jan 16, 2010 at 01:57:26 PM EST
    where is the regulation of the insurance companies?  And "unnecessary demand" sounds a lot like "managed care" to me, which has been a huge failure - it hasn't reined in costs and it hasn't improved outcomes; it has, however, improved the bottom line for the insurance industry.

    Until we decide that health is more important than profit, we will continue to see schemes that do nothing to improve either our access to care or the affordability of that care.

    You say you are for single payer, but seem resigned to being saddled with the private and largely employer-based model; what we need to find are ways to move us closer to single payer, not more ways to make a failing model work.  

    Lowering the Medicare age to 55 would have been a start - and not hard to do; that proposal died an ignominious death for no good reason that I could discern, but I'm willing to bet that all that industry cash being funneled to Congress had something to do with it.

    Parent

    What I have accepted (none / 0) (#22)
    by Manuel on Sat Jan 16, 2010 at 02:19:51 PM EST
    is incremental evolutionary change instead of revolutionary change.  Not all the regulations are there that I want but portability and pre existing cnditions are a start.

    I would get rid of the employee mandate altgether and move to government based insurance.  It is ironic to me that the business class doesn't realize that this would be in their best interest even if they are motivated by profit.  Of course it isn't just the insurance companies that are opposed.  The medical profession and health care providers are also against it.

    Profit is not the same as cost.  My daughter thinks that everything should be free.  I tell her it is a great idea but I don't think it will happen anytime soon.

    Parent

    since money is a collective illusion (none / 0) (#23)
    by Dadler on Sat Jan 16, 2010 at 02:30:55 PM EST
    the only reason anything costs what it does is greed. somewhere down the line someone wants to squeeze more money out of someone else. if money were a seed, or a bird, or a living thing, then "costs" would be related to something organic and explicable as such. as it is, money is just paper with numbers, or computer blips, or stamped pot metal -- it is just chips in a casino, where the games are all rigged.

    your daughter may be naive, but her instinctive logic is absolutely correct. we ALL know things should not be as they are, but we simply accept it most of the time rather than really doing the hard and risky work of changing things.

    Parent

    Money is just shorthand (none / 0) (#24)
    by Manuel on Sat Jan 16, 2010 at 03:00:22 PM EST
    There are tangible costs involved in producing anything (materials, time, effort).  Money allows us to trade with one another in a more efficient manner.  Where I think things go wrong is when the time value of money comes into play.  And yet, that concept can unleash tremendous productivity gains. Greed and fear are great motivators.

    Parent
    So wouldn't it make more sense to (none / 0) (#27)
    by cawaltz on Sat Jan 16, 2010 at 03:47:56 PM EST
    go at it from the doctor's end?

    By the way, I don't know about your physician but MINE is extremely capable about understanding drug resistance and weighing the benefits and risks of prescribing drugs.

    Then again I figure if someone can survive 8 years of schooling perhaps we ought to be giving THEM the ability to determine whether or not a test or treatment is warranted after listening to the patient's subjective and weighing the objective evidence.

    What an excise tax does is throws out the idea that a subjective and objective decision by a qualified professional has merit in determining whether or not a treatment is warranted. It puts the on us on non qualified professionals without access to the means of objective data like testing to determine whether or not medical intervention is warranted.

    I'd rather not play Russian roulette and believe that if a person has a fever and symptoms that are abnormal that perhaps a medical professional ought to help them weigh the benefits and the risk. Then again, I worked in the field and am more than aware that alot of really bad things start out with symptoms that could seem benign and that delaying treatment can cost people their lives. Here's to hoping someone with a skin rash and fatigue who has luekemia doesn't die because of the "grand experiment" and his delay because he waited too long and delayed treatment figuring it was no big deal.

    Parent

    Do you really honestly believe that (none / 0) (#26)
    by cawaltz on Sat Jan 16, 2010 at 03:35:56 PM EST
    people go to their physician's office for their jollies?

    There is an opportunity cost involved with time to you know.

    Parent

    paID OFF DUDE (none / 0) (#28)
    by jedimom on Sat Jan 16, 2010 at 07:09:38 PM EST
    Isnt the NYT just peddling what they were sold by Gruber? the dude who was paid by the HHS-WH per FDL

    Of course it is ridiculous toa ssume corps will pass to workers in salary what

    paID OFF DUDE (none / 0) (#29)
    by jedimom on Sat Jan 16, 2010 at 07:09:50 PM EST
    Isnt the NYT just peddling what they were sold by Gruber? the dude who was paid by the HHS-WH per FDL