Controlling Costs On The Backs Of The Middle Class

Rather than just copping to the fact that the policy he favors does indeed impose a stiff cost on middle class workers, Ezra Klein argues:

[Herbert] doesn't really argue that the excise tax is bad policy. Instead, he argues that there will be losers. Workers who will see higher deductibles. Union members who will find a portion of their policies taxed.

Actually, Herbert's argument explains why he opposes the excise tax - it would enact cost control by making the middle class pay for it. In Herbert's view, and mine, that is bad policy. In Ezra Klein's view, that is good policy. Remember that the competing financing mechanism presented by the House bill is to tax persons making 500k/yr. Ezra is saying he prefers a policy that punishes middle class workers to one that places the burden on the wealthy. you can call Ezra's position many things, but certainly not progressive. But of course not every good policy has to be progressive in nature. what is Ezra's argument for this non-progressive policy?

Cost control is based on precisely opposite premises, in fact. First, more insurance is not always better. Health-care outcomes in Canada and England -- both of which have strong pressures against overuse -- are not worse than those in America.

Fascinating that Ezra chooses England and Canada for his counter-examples. As we all know by now, both England and Canada have implemented a public insurance reform to their health care systems. Neither uses an "excise tax." Of course, neither England or Canada could as neither use a private insurance/employer based system. Ezra writes:

There is no way to sharply cut costs in a fifth of the economy without there being losers.

Assuming this is true, I am not comfortable with a policy that puts the pain on the middle class as opposed to the wealthy. Ezra urges such a policy. All in the name of "cost control." Ezra writes:

Those who would kill this attempt should think really hard about what their counter-policy is, and who will lose from that policy, and why that is preferable, and whether it can actually pass, and where we're left if it doesn't, and who loses from that.

(Emphasis supplied.) Ezra well knows that people who oppose the excise tax almost universally favor a public insurance reform. He argues that "it can't pass." And of course, as we all knew, it can not pass with 60 votes. But it could pass through reconciliation. Of course, what Ezra will not discuss is that he prefers the fanciful "exchanges and regulation reform" which can not survive the reconciliation process to the public insurance reform that actually has a proven track record of working in the United States.

That is certainly his right, but it is long past time for him to come clean and discuss these issues honestly.

Bob Herbert objects to the policy that Ezra endorses - the excise tax - which is cost control at the expense of the middle class. This is bad policy and bad politics according to Herbert (and me.) Herbert prefers that we enact universal insurance (at least the idea of it) in the manner the House bill prescribes - by taxing the rich. Ezra opposes that. It seems clear which position is the progressive one.

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    My proposed amendment (5.00 / 1) (#1)
    by andgarden on Tue Dec 29, 2009 at 02:13:33 PM EST
    Any employer who switches an employee from a plan subject to the excise tax to one that is not must pay to the employee the difference between the new plan and the old plan.

    And once all those people (5.00 / 2) (#17)
    by inclusiveheart on Tue Dec 29, 2009 at 03:28:06 PM EST
    have cycled out of the workforce what then?

    Aren't we just left with less desireable plans in the end?


    Another reason why a Public Option (none / 0) (#19)
    by andgarden on Tue Dec 29, 2009 at 03:34:28 PM EST
    would be wonderful, no?

    yes of course it would... (none / 0) (#34)
    by inclusiveheart on Tue Dec 29, 2009 at 05:01:09 PM EST
    I am sorry to say, though, that I was just pointing out the fact that this excise tax thing as it is set up now to prey on the working and middle class does not lend itself to workable or ultimately useful "fixes".

    And the tax consequences? (none / 0) (#2)
    by oculus on Tue Dec 29, 2009 at 02:17:08 PM EST
    As a compromise, I would subject the (5.00 / 1) (#3)
    by andgarden on Tue Dec 29, 2009 at 02:20:04 PM EST
    Additional income to normal tax rates.

    They putting that in there? (none / 0) (#23)
    by Militarytracy on Tue Dec 29, 2009 at 04:08:34 PM EST
    Isn't it true that the tax-favored status of (5.00 / 1) (#4)
    by steviez314 on Tue Dec 29, 2009 at 02:32:35 PM EST
    health benefits as opposed to wages is also regressive?  (As is the similar tax status of capital gains, mortgage interest etc.)

    So, by reducing that tax advantage, and using that money to buy insurance for low-wage, non-insured workers, isn't that removing regressivity?

    And yes, we could do the same for the other tax advantaged items, but their constituencies are MUCH larger.

    It is (5.00 / 1) (#5)
    by Big Tent Democrat on Tue Dec 29, 2009 at 02:39:23 PM EST
    If you are proposing single payer here Stevie, let me be the first to agree with you.

    For some reason, I think you have something else in mind.

    BTW, what's your take on the tax deduction for mortgage interest? The preferred tax treatment of capital gains?

    If the argument is that the tax structure is flawed, well make that argument.

    that is not the argument being presented. It is that this is a good cost control measure. accepting that as true, I think the cost to the middle class does not provide enough for that exchange, ESPECIALLY when the BEST form of cost control has been rejected.

    I accept that there are good progressive parts of this bill. The excise tax is not one of those parts.

    And as reform. it is a bad joke.


    I've always been of the opinion that a (none / 0) (#8)
    by steviez314 on Tue Dec 29, 2009 at 02:46:57 PM EST
    public option that squeezes insurance companies and then providers in line will only solve about half the problem.

    The other half , and this is hard to deal with, is that as long as the health care consumer has no incentive to reduce their demand for care once the premium is paid, costs will be difficult to control.  

    It's just unfortunate that "Cadillac plans" are defined by their cost rather than what they provide (I'd use free accupuncture as an extreme example, but zero copays doesn't seem right either).

    I like a closed system, for the positive feedback loop possibilities it presents--pay for uninsured health care with "excess" health care dollars elsewhere.  I have no problem with ALSO taxing the wealthy for other purposes, but doing it under this bill doesn't change any health care incentives at all.


    the way to squeeze (5.00 / 1) (#10)
    by Big Tent Democrat on Tue Dec 29, 2009 at 02:51:15 PM EST
    at least in the US, is through public health insurance.

    All the rest of this is just nonsense.

    I would not give you 2 dollars for the worth of the "reforms" in this bill.

    Universality is the selling point. Payment by the wealthy for it is the progressive answer to the financing question.

    there is no meaningful cost control in this bill.


    We've already tried "reform" based on (5.00 / 4) (#21)
    by esmense on Tue Dec 29, 2009 at 04:01:21 PM EST
    reducing demand for care. That's what the HMO reforms of 1973 were suppose to do -- control cost and expand coverage by making insurers the gatekeeper between patient and provider and thereby discouraging the over-use that traditional indemnity plans were believed to encourage.

    That worked out well, didn't it?

    The problems in our health care system don't arise from consumer demand for unnecessary care. They arise from a failure to set honest priorities, to be honest and upfront about cost, about who is paying those costs, and how they are paying (employers are paying with a loss of competitiveness, workers are paying with a loss of flexibility, tax payers are paying for care they themselves may never have access to, the un and under employed are paying, quite often, with their lives).


    By Ezra's own admission (5.00 / 1) (#30)
    by andgarden on Tue Dec 29, 2009 at 04:18:42 PM EST
    the excise tax is designed for force everyone from their PPOs to HMOs.

    How do you think that would poll?


    Current reform proposals are likely to be (5.00 / 1) (#36)
    by esmense on Tue Dec 29, 2009 at 05:10:45 PM EST
    as popular with consumers as the reforms of 1973 proved to be.

    Evidence, please? (none / 0) (#14)
    by gyrfalcon on Tue Dec 29, 2009 at 03:24:21 PM EST
    Evidence that it's the patients' fault for demanding the health care they've paid for be provided to them that is "driving health care costs up"?

    I have yet to see anybody provide convincing statistics that it's the patients' fault, or that the vast majority of them/us are even remotely in a position to shop intelligently for health care the way we do for Doritos.

    Putting the blame for the wild dysfunctionality of the health care system on the backs of patients is perverse and insane.  IMHO, of course.


    It is funny how the whole movement (5.00 / 5) (#18)
    by inclusiveheart on Tue Dec 29, 2009 at 03:32:56 PM EST
    to reform healthcare came to be in response to a clear lack of access amongst both uninsured and insured folks, but now some people claim that the real problem is that we use the system too much.

    Which is why I think Medicare is (5.00 / 5) (#20)
    by oculus on Tue Dec 29, 2009 at 03:46:51 PM EST
    about to be slashed drastically.

    You know how they used to say (none / 0) (#22)
    by Zorba on Tue Dec 29, 2009 at 04:02:38 PM EST
    "Only Nixon could go to China"?  Maybe only a Democrat can slash Medicare.  It does appear that the big plan to slash health care costs is to slash Medicare and to make other patients with insurance pay more and more of the costs themselves with the hope that they will "use less."  Or maybe die more quickly, which would also certainly cut costs. [/snark]

    Not just Medicare (5.00 / 4) (#38)
    by Romberry on Tue Dec 29, 2009 at 06:51:50 PM EST
    Look for Obama to get together with other conservative Republicrats to push through the establishment of the much talked about unelected blue ribbon budget commission with a mandate to rein in "entitlements"...including the self-funding (and paid up well in advance) Social Security program right about the same time they cut a deal to extend the "expiring" Bush tax cuts.

    The Medicare cuts are bad enough. Older people, many of whom have been fairly reliable Democratic voters, will know and will not forget. And when you start messing with Social Security...well...is Obama a Trojan horse or what?


    Just think of it (5.00 / 1) (#46)
    by cal1942 on Tue Dec 29, 2009 at 11:56:53 PM EST
    Obama will have achieved something that eluded Bush.  What a legacy.

    I don't know about you, but if they (none / 0) (#33)
    by inclusiveheart on Tue Dec 29, 2009 at 04:58:35 PM EST
    slash Medicare and hang onto these mandates, then it will be harder for me to defer my healthcare needs in favor of my elderly parents' needs when that comes up - which it has already once - for months when I had to bring my Mom to my house and care for her.  This bill is not okay with me - at all.  I've been screwed for some time now, but at least I've had the flexibility to make choices about the priorities in the moment.  Now I have to figure out how to pay for myself in a sagging economy and figure out how to make sure that there is some rainy day fund for me to care for others.  I honestly have no clue how I will pull the next health crisis off without someone losing more than they really ever should.

    Slash medicare & keep mandates (none / 0) (#40)
    by BackFromOhio on Tue Dec 29, 2009 at 07:33:01 PM EST
    = huge Repub gains in 2010 -- and 2012. If the majority of Dems in Congress allow this to happen, it will be the final proof that Dems are spineless and essentially have nothing they truly stand for.

    I agree (5.00 / 3) (#25)
    by Zorba on Tue Dec 29, 2009 at 04:10:21 PM EST
    with your humble opinion, gyrfalcon.  While it is certainly true that there are some patients who overuse emergency rooms and doctor visits, I think most people just want decent care when they are ill.  Most sick people are not in the position to judge which procedures are necessary, which doctor is more "cost effective," which drugs are cheaper but still work well.  When you're ill and in pain, you're not going to go calling around and flip through a "Consumer Reports for Patient Care" (if there even is such a thing).  You go to your doctor, and depend upon him or her to diagnose your illness and prescribe what tests/treatments/medicines you need.  You may even look stuff up on the internet, but most of us don't have the training to sift through all that information and decide who's right.  I guess we're all going to have to go to medical school now (and keep up with the current medical literature).

    Most people prefer not to be sick... (5.00 / 3) (#28)
    by NealB on Tue Dec 29, 2009 at 04:15:09 PM EST
    ...or injured; a lot of us would prefer not to see a doctor much ever, except for occasional checkups.

    In spades Neal (5.00 / 1) (#45)
    by cal1942 on Tue Dec 29, 2009 at 11:54:59 PM EST
    Whenever I hear the overuse argument I know that the people who advance that argument are either stunningly stupid or they have an ulterior motive to deny universal coverage.

    Overuse is a GOP line that some neo-liberals appear to be adopting.


    No mortgage interest deduction... (none / 0) (#24)
    by NealB on Tue Dec 29, 2009 at 04:10:21 PM EST
    ...on loans over $500,000.

    Well (none / 0) (#29)
    by Big Tent Democrat on Tue Dec 29, 2009 at 04:17:54 PM EST
    Only 500,000 is quite the crimp.

    It would crimp (none / 0) (#44)
    by NealB on Tue Dec 29, 2009 at 11:29:26 PM EST
    home loans over $500,000.

    BTW (none / 0) (#6)
    by Big Tent Democrat on Tue Dec 29, 2009 at 02:40:05 PM EST
    why go for "less regressivity" when the House proposal has a truly PROGRESSIVE proposal?

    It just occurred to me that someone making (none / 0) (#9)
    by steviez314 on Tue Dec 29, 2009 at 02:49:41 PM EST
    $25,000 a year and getting no employer insurance might just consider an excise tax to be progressive too.

    As they say, where you stand depends on where you sit.


    Pretty sure they would (5.00 / 2) (#11)
    by Big Tent Democrat on Tue Dec 29, 2009 at 02:52:48 PM EST
    qualify for Medicare already.

    BTW, even that person would agree with me that it is better and actually PROGRESSIVE to tax the WEALTHY instead of the middle class to get them health insurance.

    Remember, the choice is between the House wealthy surtax and this middle class tax hike.


    No, they wouldn't (5.00 / 1) (#16)
    by gyrfalcon on Tue Dec 29, 2009 at 03:26:31 PM EST
    That's not poverty level, it's about twice poverty level, which no state provides Medicaid for.  And the majority of states do not provide Medicaid for single adults no matter what their income.

    I think he's refering to where we are (none / 0) (#27)
    by Militarytracy on Tue Dec 29, 2009 at 04:11:19 PM EST
    with the expansions.

    If they really think they can do this (5.00 / 2) (#26)
    by Militarytracy on Tue Dec 29, 2009 at 04:10:39 PM EST
    to the middle class at this time with this economy, they are already doomed.  This cannot succeed, they've doomed it already.

    Medicaid, not Medicare. (none / 0) (#12)
    by oculus on Tue Dec 29, 2009 at 02:58:52 PM EST
    Also, according to my unemployed offspring, those with children qualify ahead of those w/o children for Medicaid in CA.  

    That would not be the case (5.00 / 3) (#13)
    by Big Tent Democrat on Tue Dec 29, 2009 at 03:02:35 PM EST
    under the bill. everyone would qualify.

    We are arguing about how to pay for it.

    I say tax the wealthy.


    Senate bill--correct? Did I miss something? (5.00 / 1) (#15)
    by oculus on Tue Dec 29, 2009 at 03:25:48 PM EST
    Millions of people, with income up to 133 percent of poverty, will be newly eligible for Medicaid, the health program for the poor. Currently many states set eligibility requirements well below that level of poverty.
     [Italics added.]



    Why choose? (none / 0) (#32)
    by steviez314 on Tue Dec 29, 2009 at 04:52:12 PM EST
    Raise taxes on those making over X.

    Have an excise tax on cadillac plans over Y given to people making more than Z.


    Has there ever been a study or (5.00 / 2) (#43)
    by Anne on Tue Dec 29, 2009 at 08:51:10 PM EST
    a survey to determine how many employers still pay 100% of the cost of employee insurance plans, and how many of those are "Cadillac" plans?

    And among those employers who do foot the entire cost, how many of those have gone to plans with reduced coverage over time because the cost of really good coverage keeps going up?

    And speaking of "Cadillac," is that a description of how much the plan costs, or a description of how much it covers?  If it's about how much it costs, where is the examination of whether the coverage is commensurate with the cost?  If it's about coverage, someone needs to explain to me why it's a bad thing to have good coverage.  Why should anyone have to be saddled with the stress of worrying whether they can afford to see the doctor?

    Shouldn't the country that spends the most per capita on health care have the healthiest population?  Why is Washington not answering that question, or trying to sell us on the high cost being our fault?

    Sometimes I just want to scream at the idiocy that has all these allegedly smart people expending this much effort, tieing themselves in knots and bringing new meaning to the term "contortion," just to avoid the one option that by all accounts, and based on real-world, long-term experience, has proven to be more cost-effective than anything else: single payer.  

    It's insanity.  


    I doubt seriously... (5.00 / 2) (#39)
    by Romberry on Tue Dec 29, 2009 at 06:55:26 PM EST
    ...that anyone anywhere will consider the excise tax to be progressive. Many employees have bargained for better benefits as wages have stagnated or fallen. Now the benefits go away and anyone who think that our munificent corporations are gonna give that money back in the form of wage increases (which would immediately have the Fed crying "Oh noes! Wages are rising! Inflationary! Bad!") needs to share whatever they are smoking.

    It's (5.00 / 2) (#7)
    by TeresaInSnow2 on Tue Dec 29, 2009 at 02:45:50 PM EST
    not cost control.  Cost control means premium control.  There is nothing in this that says premiums can't go up, only that coverage will go down.  Yeah, I know about the 85% of premiums has to be paid out in "healthcare".  I've seen books cooked before.

    "Cost control" for employers and wealthy (5.00 / 3) (#31)
    by esmense on Tue Dec 29, 2009 at 04:28:29 PM EST
    taxpayers (not patients and insurance policy holders). That's what is usually meant, but never honestly stated, by the beltway supporters of these reforms.

    The fact is, a sophisticated, modern health care system costs a lot of money. The fight isn't really over how to make it cost less -- it is over who to stick with the bill.


    OK, let me see if I understand (5.00 / 8) (#35)
    by mjames on Tue Dec 29, 2009 at 05:02:26 PM EST
    Right now, we are faced with a terrible problem in this country. The cost of health insurance, including deductibles and copays, is prohibitive to many working families, and to others that day is coming soon, as premiums continue to rise and insurers find new ways to deny or limit coverage. How to solve this problem? First, keep the health insurers and employment-based coverage. No question about that. Not even an issue. Then expand coverage to a tiny portion of those without health insurance by taxing those who are holding on by a thread. And force small businesses to switch to crummier coverage because they simply cannot afford either to pay the tax penalty for the better plan (if I'm understanding that correctly) or to pay the ever escalating cost of premiums for employees. All the while, place no limits on what insurers can charge.
    The result? Well, you'd have to be an Obama apologist not to see: obviously those hanging on by a thread - and there are many many million of those out in the real world - will fall off. And out. And that's the old Dem base: the working poor (but not poor enough), the blue collar worker, the union worker, the female worker (who is already paid less for her work), and the minority worker. Brilliant politics. Awe-inspiring policy.  
    Now I have to go throw up.

    Conservatives must secretly love this (5.00 / 1) (#37)
    by Dan in CA on Tue Dec 29, 2009 at 06:12:08 PM EST
    Conservatives want everyone to "shop" for health care by foisting Health Savings Accounts on us.  That's what's going on here, except they're not explicitly HSA's, they're just high deductible plans period.  

    It's pretty clear that's the plan to deal with health care "reform" long term, to foist high deductible plans on as many of us as possible and discourage us lucky duckies from actually getting medical services.  No cost controls on insurance premiums, just medical expenses, and it's working people who take the hit.

    Thanks, Ezra.  Gingrich et al. would be proud.

    Conservatives will love this (none / 0) (#47)
    by cal1942 on Wed Dec 30, 2009 at 12:17:17 AM EST
    for political reasons as well.  If this monstrosity is foisted on the American people Conservatives will have anti-Democratic Party and anti-government ammunition for decades to come.

    By trying to satisfy their paymasters and lay off the cost on those already insured the Democratic Party has succeeded in slashing its own wrists.

    For the GOP this is heaven sent.


    Terms of art (5.00 / 2) (#41)
    by lambert on Tue Dec 29, 2009 at 07:48:43 PM EST
    BTD writes:
    As we all know by now, both England and Canada have implemented a public insurance reform to their health care systems.

    C'mon, BTD. You can say the words. Canada has a single payer system. That's the centrist solution. The UK has the National Health Service. That's the left, socialist position.

    Ezra is an ideological pervert (5.00 / 1) (#42)
    by Salo on Tue Dec 29, 2009 at 07:50:41 PM EST
    Really wired analysis.

    Labor (5.00 / 2) (#48)
    by KLCarten on Wed Dec 30, 2009 at 07:13:05 AM EST
    I really can not see unions sticking with Obama and with dems on these bills they keep cranking out. When I worked construction the only benefits I had with my Local Union was my pension and our health benefits.  If you were sick and missed a day you did not get paid, vacation pay did not exist at that time.

    When I was learning my trade, in a four year program I was making like 8.50 my second year, you could make nearly 11 bucks flipping burgers at the local fast food places.  The thing was trying to get thru and make some decent money when I became a journeyman. Most people think those union guys and girls make a lot of money and figure they don't deserve it.

    Let me tell ya, the insurance was worth it. When you worked at a plant you sign a waiver that if you get hurt you don't sue. Its a standard contract between the plant and the contractor, thats why the union makes sure your covered.

    My body was pretty banged up working construction, its a job that takes some guts, and well frankly, someone that really is nuts.  I sure had fun, especially when I get into jobs with hazard pay. When I topped out I traveled and most unions have better package benefits and much better pay, I lived in the south and to stay competitive, the money was lower than most other states but the benefits were standard for the I.B.E.W. I don't know if most people here really know how it works in unions and I wanted you guys to see from someone that worked industrial construction, its pretty different from light commercial and residential.

    I don't see the unions coming out knocking on doors and raising the money like they normally do for the dems or obama, this health care bill hurts them, frankly its a slap in the face.

    I guess we will see in 2010, but the guys I am talking to are not happy and when the rank and file aren't happy they don't work too hard for politians that sell them out.  I remember my dad which was a teamster when Carter deregulated trucking, it really hurt him, and I see Obama making the same mistake.  

    I'm from a Teamster family (none / 0) (#49)
    by Cream City on Wed Dec 30, 2009 at 10:19:56 AM EST
    and with a lot of family members still in industrial construction -- those that still have jobs, with others in light and residential, so even more laid off now in that line of work.  The gift was when they got into unionized jobs because of the benefits, because of the constant need for health care from injuries on the job or just from bodies wearing down, you bet.  It all takes a toll.

    But with so many of them laid off now, including one here today doing some work for us -- you certainly are correct about unhappiness with Obama.  I just came from that conversation with the family member here today.  And you know, but let's make sure everyone reading this knows:  These people are not dumb.  They may not have college educations (some do), but they are very well-read and savvy to the news that they can use when they vote.  And they do vote in numbers well above the average for Americans.