Monday, March 29, 2010

OMG Teh Jackboots iz cuming!

The right-wing blogosphere (and lots of the left-wing blogosphere too) is in the midst of a collective freakout about the possibility of the IRS enforcing the new healthcare tax that'll happen in 2014 if you don't buy health insurance by then. Now, I'm sort of baffled by the notion of the IRS enforcing a tax being somehow unconstitutional -- that was sorta decided in 1794 when President George Washington called out the U.S. Army to enforce the whiskey tax after the early version of the teabaggers refused to pay the tax -- but then, everybody knows that George Washington was an America-hating big government advocate, unlike that great patriot Ronald Reagan, who in his tax reform bill of 1986, err... forced everybody to either get a mortgage, or pay a tax on the money that would be used to pay a mortgage. Hmm... why did Ronald Reagan hate America?!

But nevermind any of that. First of all, the IRS is not going to come audit you to see if you have health insurance. As explained by the IRS commissioner, you're going to get something like the 1099 forms that are issued by your bank for interest income, except it's going to come from your insurance company and be issued if it's an HHS-certified "qualified health plan". As with your 1099 form, the IRS is automatically going to get it, and if the IRS audits anybody, it'll be the insurance company, not you. Furthermore, it was recently broken on the right-wing site that even if you don't pay the healthcare tax, the IRS is specifically prohibited from sending jackboots to seize your home or throw you in jail. You won't get your tax refund, but that's it. Furthermore, if you read the actual government document referenced there, you'll find that if buying the minimum health insurance needed to fulfill the "qualified health plan" requirement would cost more than 8% of your family income, you're automatically exempted from the tax -- which, give that the average individual plan costs over $5,000 and the average family plan costs over $12,000, means that individuals making under $62,500 and families making under $150,000, i.e., over 75% of Americans, are exempt from the tax to begin with.

In other words, Republicans (and left wingers) whining about jackboots blah blah blah are pulling shit out of their ass, as usual. But as the right-wing site points out, the fact that most Americans are exempted from the tax, combined with the mandate upon insurers that they must provide coverage, creates another problem -- as they point out, why would anybody buy insurance before they get sick, if they know they can get it at any time if they get sick? The result is that only sick people would buy insurance... and as I've previously pointed out here, sick people spend 16% of the national income of the United States, but earn only 3-4% of the national income of the United States. It's not a sustainable model, in other words -- the health insurers would go broke swiftly because to pay their insurance claims they'd be trying to suck more money out of the few people enrolling than those people actually earn.

Congress knew this, of course, but they caved to the right-winger paranoia about jackbooted IRS agents enforcing a tax by taking your home blah de blah. They're hoping that the incentives they have for getting health insurance -- the subsidies, the tax credits to businesses, etc. -- will suffice to motivate most people to get insurance without them having to jack up the enforcement side of things. Unfortunately the incentives being offered are likely insufficient to do so. What that means is that in 2014, we're going to have some problems. Unfortunately those problems are only hypothetical right now, so Congress has no incentive to fix them until they see exactly what form those problems take. We could have resolved all these problems ahead of time by simply going to Medicare For All and adding an 8% tax on payrolls and unearned income (you're already paying this "healthcare tax" anyhow, might as well pay it to the government rather than to a private insurer), but that would have required Democrats to have a spine and choose the less popular option for providing health coverage. Rather than do anything now, they decided to punt it down the road to 2014, at which point they have to do something or everything collapses. Sad to say, as Winston Churchill pointed out, Americans seem to do everything but the right thing until they have no choice but to do the right thing... and as was true of American support for Britain early during WWII, so it is true today of healthcare today.

-- Badtux the Healthcare Economics Penguin


  1. Anyone that thinks they understand politics is an idiot.

  2. We need something like Medicare for all. The insurance companies created this mess and they sure as hell aren't going to fix it because they are making too much money the way it is now.

  3. As I've repeatedly pointed out, insurers did not cause the mess, they simply responded badly to it. What caused the mess was spiraling provider costs caused by a) unnecessary duplication of expensive facilities and equipment (every single hospital had to get the very latest surgery robot, even though it's only used once or twice a year at the typical hospital), b) continued spiraling drug costs as drug companies spend over 1/3rd of their revenue on advertising, and c) outrageous physician income for specialists, the highest of any nation on the planet, even nations such as France and Switzerland that have healthcare reputations as good as that of the United States.

    My biggest complaint on the costs side is that this bill does nothing about any of those problems, it keeps the insurers from reacting badly to them (prevents insurers from denying care and prevents insurers from kicking out sick people) but doesn't do anything about the root causes of the costs spiral. But the insurers aren't the ones who are making costs go up and up and up, and giving them the blame for this mess is not useful.

    - Badtux the Healthcare Economics Penguin

  4. I'm glad to see that you're not drinking the kool-aid with every other Democrat who thinks this legislation is the greatest thing since civil rights. This thing will have to be fixed, and we all know that Obama intends it to lead to single payer of some sort. So it has been a charade. This was a monument to himself a-la FDR.

    But I have to say I'm disappointed that you still don't see that the true problem isn't private enterprise, but that fact that we, since the 40's have inserted two middlemen between patients and providers (insurers and employers) where they ought not be! Remove those two middlemen, and market discipline fixes the inefficiencies you bemoan. Oh, the free market fairy! (as you have derided in the past) But tell me, what incentive does a person have to 1) demand price transparency, 2) question their doctor about expensive tests/treatments 3) budget for medical needs IF THEY KNOW their employer/insurer will always foot the bill. And what incentives do providers have to advertise prices transparently or to be conservative in treatment, when they know that the patient doesn't give a darn and so they have to wrangle after-the-fact via a bureaucracy. They have all the incentive in the world to jack up the price as much as possible in hopes they can get reimbursed a decent fraction of it.

    Worst of all, this bill infringes on freedom at unprecedented levels. Come on, forcing people to buy insurance via tax law? Oh, just because we already micromanage people via tax law that makes it okay? And using the Federalist Whiskey tax to justify it? Come on. Excise taxes are on goods that people can choose not to buy. But having penalty tax because you did not buy something? What is next, a penalty if couples don't buy birth control or who don't buy a Prius? Where do you ever draw the line? When does freedom ever come out on top with you guys?

  5. 1) I wish it would lead to single-payer, because that is the most efficient system for paying for health care, but this system is closer to the German system than to the Canadian system. It basically turns the insurers into regulated utilities like the German insurers. The German system has been around since 1883, so clearly that's not a good indicator for this system leading to single-payer.

    2) I didn't note the problem that you note (the middlemen) for the same reason that I didn't note pink unicorns or cotton candy trees -- because it's not real. The actual problem is that in many cases doctors can literally say, "your money, or your life." The plight of uninsured people who are forced to spend hundreds of thousands of dollars they don't have in order to pay for heart surgery they needed to stay alive shows that it's not a middleman problem, because there was no middleman involved there, it was the equivalent of a Central Park mugging where the doctors basically said, "your money or your life", except with a scalpel rather than a gun. That is why I think insurers have been unfairly demonized by both the left and the right -- they're trying to police the Central Park muggers, and yeah, they need to be regulated because they're also taking out some of the pedestrians on the sidewalks too by firing at will in all directions like an Iraqi Army unit taking sniper fire (the so-called "death blossom"), but the core issue here is providers with the power of life and death using that to extract people's wallets, not insurers or middlemen or anybody else.

    3) A tax if you don't buy health insurance infringes on freedom? Puh-LEEZE. Hyperventilating like that makes you look like an idiot. By that standard Ronald Reagan hated freedom because in the Tax Reform Act of 1986, he forced all of us to have mortgages by charging us taxes on the money that would otherwise go to pay mortgages! The power to tax is one of the core enumerated powers in the Constitution, and as I've pointed out, enforcing taxes at gunpoint has been the case since at least 1794. Why did George Washington hate freedom? :).

    The deal with this particular tax is that you have a choice. You can either pay into the uncompensated care fund so that when you go to the hospital emergency room with a broken arm from falling down your stairs, the ER can get reimbursed from that fund, or you can buy insurance and use the insurance to pay that ER bill. You have the freedom to be everything but a deadbeat. You seem to be defending deadbeats who want to go to the ER with a broken arm but not pay for it in some way. Since when did being a deadbeat become one of your core freedoms that you want to defend?!

    - Badtux the Healthcare Penguin

  6. One last thought: If middlemen were the problem, then the uninsured would pay less for health care than the insured, because the uninsured can shop around for the best price. But that's actually not the case. Instead, the uninsured are routinely charged four times more than the insured.

    So that middleman thing just doesn't work. If competition worked in healthcare, the uninsured would pay LESS, not four times MORE, because competition would allow them to find less expensive healthcare. But that doesn't happen. In the end, competition in the healthcare field is about as real as the Tooth Fairy and Santa Claus -- it just doesn't happen, because of the "your money, or your life" nature of the business. Might as well talk about competition in the field of Central Park muggings at that point...

    - Badtux the Health Care Penguin

  7. You have some good points, but also some faulty reasoning. I went over the comment size limit, so I posted a rebuttal to your gun-point reasoning here


Ground rules: Comments that consist solely of insults, fact-free talking points, are off-topic, or simply spam the same argument over and over will be deleted. The penguin is the only one allowed to be an ass here. All viewpoints, however, are welcomed, even if I disagree vehemently with you.

WARNING: You are entitled to create your own arguments, but you are NOT entitled to create your own facts. If you spew scientific denialism, or insist that the sky is purple, or otherwise insist that your made-up universe of pink unicorns and cotton candy trees is "real", well -- expect the banhammer.

Note: Only a member of this blog may post a comment.