GOP Health Insurance Voucher Plan Is Like The Excise Tax

Matt Yglesias writes:

I was on the radio yesterday, for example, with a woman who said that the GOP’s Medicare privatization plan would save money by giving people vouchers to buy private insurance. [. . .] [W]hat Ryan’s plan actually does is first privatize/vouchers Medicare, and then “save money” by arbitrarily mandating that the cost of the vouchers have to grow slower than the cost of health care. In other words, with every passing year Ryancare vouchers get smaller and smaller relative to the cost of medicine. That’s just “saving” money by buying less.

(Emphasis supplied.) I am not sure why Yglesias objects to Ryan's plan while supporting the Gruber excise tax in the Senate health bill. Both work in the same way. Both are designed to encourage savings in health care by encouraging people to buy less expensive health insurance. Or, to put it in Yglesias' words - "saving money by buying less." If Ryan limited the vouchers to say insurance plans that cost $8,500 per individual and $23,000 per family, per year, with an inflation adjustment of CPI +1%, would Yglesias agree with the plan? Why not? Wouldn't the effect be the same as the excise tax in the Senate health bill?

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    Just think of all the money that (5.00 / 2) (#4)
    by MO Blue on Sat Feb 06, 2010 at 10:26:17 AM EST
    could be "saved" by the government if Medicare changed from a 80/20 split to a 60/40 split. The cost shift from the government or insurance industry to the individual is the basis behind the excise tax and this voucher system. Designed to make people choose between health care or other basic living expenses. Not designed to provide actual affordable health care.

    The idea that patients (none / 0) (#5)
    by gyrfalcon on Sat Feb 06, 2010 at 10:29:50 AM EST
    can "drive" the health care "market," like Paul Ryan keeps insisting, makes me absolutely nuts.

    Excuse me (5.00 / 1) (#9)
    by Big Tent Democrat on Sat Feb 06, 2010 at 11:06:51 AM EST
    Jon Gruber and the Villagers insist the same thing. That is why they favor the excise tax as a "cost control."  

    Drives me nuts when they do it too (5.00 / 1) (#10)
    by ruffian on Sat Feb 06, 2010 at 11:15:02 AM EST
    Certainly not exclusive to Ryan.

    Exactly (none / 0) (#6)
    by ruffian on Sat Feb 06, 2010 at 10:58:04 AM EST
    Totally unproven (at best - I was going to say false) premise from the get-go.

    Like most US "social" programs Medicare (5.00 / 1) (#16)
    by esmense on Sat Feb 06, 2010 at 12:10:18 PM EST
    is designed to support providers (industry) as much as, if not more than, consumers (citizens).

    The simple fact is this; the elderly and dying, and chronically ill -- the largest consumers of health care -- are rarely in a position to pay for the actual cost of their care. If those costs aren't socialized in some way (covered by the healthy and whole through some mechanism like insurance and taxes), providers can not afford to provide the care patients need, nor can they expect to enjoy the kind of profits and income that, in the last half century, most have come to take for granted.

    There's a reason why my cousin the surgeon, who began practicing in the 1960s, is a millionaire several times over and his physician Granddaddy -- an equally dedicated and respected doctor, in the same part of the world, much earlier in same century, often was paid in barter.  

    Medicare has another purpose, too, beyond providing an "entitlement" to consumers who could not otherwise afford care and an assurance of profit and income to providers. That purpose is to off-load responsibility for the sickest, most costly, least profitable patients from private insurers to the taxpayer.

    There simply is no way to reform our current health care system without recognizing that it has developed the way it has in order to benefit providers even more than to benefit consumers and citizens. (Large numbers of whom receive no or little benefit until late in life -- if they make it that far).

    Given that fact, measures that treat consumers as the major, or only, cause of exploding costs are designed to fail.

    I agree completely (5.00 / 1) (#17)
    by cawaltz on Sat Feb 06, 2010 at 12:19:41 PM EST
    There seems to be this fallacy that people choose whether to be sick or well or that people are spending their resources at the Doctor's office like it some kind of recreational activity like taking in a movie. Putting the onus on the consumer rather than the industry is wrong headed because these are not the case in the majority of the situations.

    Truthfully (none / 0) (#20)
    by TeresaInSnow2 on Sat Feb 06, 2010 at 12:46:37 PM EST
    I know people with Cadillac health insurance, (usually state or federal plans) who go see the doctor for EVERYTHING, literally for a hang nail.  The worst case I know of is one instance where someone cut their foot, went to one ER, wasn't satisfied with how their foot was wrapped, so they went to another ER THE VERY SAME NIGHT for a new emergency case, all covered by their Cadillac plan -- their 100 deductible already met that year!  Who would do that if they don't enjoy going to the doctor?  Yes, some people seem to see the doctor as their hobby.

    And I suspect that people who are surrounded by other people on government/Cadillac plans (aka politicians IN WASHINGTON) see that kind of behavior more than the rest of us do.

    However, you're right, it isn't generally as rampant as they presume.


    I suspect your "friend" (5.00 / 1) (#24)
    by cawaltz on Sat Feb 06, 2010 at 01:13:07 PM EST
    is the minority. I have a cadillac plan. I took my son to an ER after I suspected his flu had progressed. I'm grateful I had a $25 co pay because otherwise his pneumonia might have gotten worse and gone untreated(and it could have proven fatal to him). I can not even begin to imagine having to come up with 100s of dollars upfront on a $50,000 a year job let alone people like those working at Walmart or other places for half that.

    Tell me do you go to the doctors for fun? How about anyone here on this board? I suspect not.

    Furthermore, if given the choice I would rather have spent the $35(money spent on doctor plus medication) on something a little more fun like pizza and a movie or a inexpensive restaurant meal or even put the money away as a third of the cost on a membership to the aquarium for my family. You might mention these options to your friend. These options are infinitely more entertaining then waiting in a waiting room for 2 hours to see an overworked professional who has to triage sickness.


    To my knowledge there is no system (5.00 / 2) (#27)
    by MO Blue on Sat Feb 06, 2010 at 01:51:43 PM EST
    ever developed that someone has not misused. In the group of people who have really good coverage, I am willing to bet there are X number of people who really hate going to the doctor, think that what ever is wrong will go away without treatment and put  off going when they really need to go. Failure to receive treatment until it has reached a critical stage is often more expensive to the system.

    Systems need to be developed that provide the same good health care to everyone regardless of their financial status and not developed to deal with a only few that may misuse it.


    Treatments for hang nail or a child's (none / 0) (#28)
    by esmense on Sat Feb 06, 2010 at 02:14:38 PM EST
    routine cough aren't the kind ofservices that are costly to provide or are driving up healthcare costs in general. Frankly, payments for such simple, routine and low cost services help finance and maintain the genuinely costly technologies and resources required to treat much more serious, less routine illness and chronic and end of life care -- the things that ARE costly to provide (more costly the average consumers could ever afford on their own, without private or public insurance) and ARE the real driverS in terms of health care cost.

    It wasn't a routine cough (none / 0) (#29)
    by cawaltz on Sat Feb 06, 2010 at 04:28:03 PM EST
    It was the flu which turned into pneumonia. They did do a chest X Ray and I was happy they did so so they could determine it was pneumonia. When he initially got sick we did not rush to the doctor (despite the fact that we have a cadillac plan) because I realized that there was little that could be done for a flu other than to treat symptoms, provide fluid and rest. Contrary to popular belief those of us that have good insurance have no more desire to spend time in a doctor's office then those that do not have good insurance. Hospitals and Dr's offices expose you to germs and I would not suggest anyone use them to fill time as it was suggested this person's friend did.

    I do understand your larger point, I worked in a hospital and a vial of Epogen ran around $3000 dollars. It's only a small part of the treatment that someone with cancer might require. My stepfather's treatment at Sloan Kettering cost my mother and siblings their house(he wasn't insurable because he was diagnosed with cancer at 17).


    Of course, a "routine" cough (none / 0) (#30)
    by esmense on Sat Feb 06, 2010 at 04:48:15 PM EST
    can indicate or develop into something much more serious. In fact, consulting a medical professional early about a "minor" problem can be cost saving -- because it can help insure that minor problem doesn't turn into something major.

    I fail to see how encouraging, or forcing, people to restrain from consulting a physician until they're at death's door -- requiring emergency treatment or hospitalization -- can actually provide much health care savings in the long run.


    Yep (5.00 / 1) (#34)
    by cawaltz on Sat Feb 06, 2010 at 06:50:05 PM EST
    I could have waited until my son's cough was really bad and the pneumonia was more advanced(which might well have happened if I had been forced to come up with hundreds as a deductible and been literally forced to choose between rent and health care) and he could have been as a result hospitalized which would have come at a much higher cost to the system.

    One of the reasons I oppose the excise tax is because I believe high deductible insurance will drive up costs. More people will wait to get care because the deductible will be cost prohibitive for them. They'll wait to see the doctor rather than making a visit when the problem doesn't require hospitalization or a battery of tests because the problem has multiple symptoms spanning multiple systems.


    I really don't know either way, (none / 0) (#35)
    by observed on Sat Feb 06, 2010 at 07:52:42 PM EST
    but what I have read about the high cost of medicine in this country is that it derives from DOCTOR's decisions more than patients.
    High ticket tests and operations are performed too much; too much testing also leads to more unnecessary procedures.
    Whether doctors whose patients have "cadillac plans" are more likely to overprescribe  tests, drugs and operations is something I'd like to know.
    There are definitely other factors; for example, there are unexplained regional variations in the frequency of some operations---e.g. caesarians, heart catheterizations.

    Evidence based medicine ought to bring costs down.
    Perhaps the sneaky theory behind the excise tax is that driving people into HMO's will lead more people to doctors who are forced to abide by evidence based rules (just guessing, but it is true that Ezra wants you to be in an HMO).


    I'm not big on that argument (5.00 / 1) (#38)
    by cawaltz on Sat Feb 06, 2010 at 09:44:48 PM EST
    particularly when Linda Nee of UNUM (a whistelblower) pointed out that 99% of contractual policies do not have an evidence based medicine clause. It's just used as an excuse to deny claims.


    I also find this troublesome when regarding an HMO as the gatekeepers of care.

    California HMOs reject one out of five medical claims, according to an analysis by the California Nurses Assn. of data the companies submit to the state.


    Then there's the whole ERISA thing which is bothersome as well.


    Thank. Interesting information. (none / 0) (#43)
    by observed on Sun Feb 07, 2010 at 07:27:01 AM EST
    I doubt the person you (none / 0) (#41)
    by Andy08 on Sat Feb 06, 2010 at 10:29:19 PM EST
    mentioned got through the ER for free. These ill-termed and ill-defined "Cadillac plans" require a copay; usually high for ER as well
    as fancy imagining. On the order of $50-$100 each....  

    Meh (none / 0) (#42)
    by cawaltz on Sat Feb 06, 2010 at 10:54:18 PM EST
    I was surprised because our plan actually lowered the cost of our ER co pay(It was $50 and they lowered it to $25). I only pay $5 more to use the ER. My specialty visit for my daughter's derm(she had a mole removed that the derm doctor felt needed to be biopsied and has one or two that bear watching)went up by $20. I'm still happy though because compared to many a $35 visit is incredibly affordable and she only needs to be seen annually(the biopsy came back benign).

    That being said I can't imagine anyone thinking that a good time is sitting in an ER for hours(which is likely what he did if his foot was wrapped up already and he wasn't an emergency). Perhaps the pain from the cut made him seek out a second opinion. I'm less inclined to believe he did it just to have something to do.


    My plan which is (none / 0) (#44)
    by Andy08 on Sun Feb 07, 2010 at 12:00:58 PM EST
    the MA state "self-insured" plan has raised for everyone the co-pay for ER to $100 and of any of CT-scan, MRI, etc also to $100.
    It was raised twice in 6 months ( from $50 to $75 to $100 starting Feb 1). Same with co-pays.  Docs are now "tiered" :  Tier 1 is $15/20 (if specialist) Tier 2 ( out of state and most specialists) is $30; Tier 3 (or some specialist) is $35/40. They put new deductibles in some things and higher in others. Prescriptions are also tiered with copays of $10/$25/$50
    And they took away the annual check ups; they are every 2 years until you are 60.

    And it costs what would be called a "Cadillac" one....


    Considerations of the"exploding costs" (5.00 / 1) (#25)
    by KeysDan on Sat Feb 06, 2010 at 01:21:44 PM EST
    of health care assume that they are not unlike any other commodity or service--just the same market place forces to be dealt with.  However, health care is not necessarily the beneficiary of the efficiencies and economies of progress.  Indeed, new technologies that advance surgical and pharmacological treatments increase, rather than decrease, costs. The expertise of the personnel becomes more and not less costly.  I like the example, in this regard,  that Professor Joseph Stiglitz uses: A string quartet that made music in the eighteenth century, still requires four musicians for the same sound.  And, it is unlikely that the musicians of today would be willing to work for the same wages.

    The Dems drew up the blueprint, and now (5.00 / 1) (#31)
    by Anne on Sat Feb 06, 2010 at 05:03:44 PM EST
    the GOP is essentially tweaking it in their inimitable way; now, instead of having a good Dem bill to contrast against a typically bad GOP alternative, what we have is two bad choices, setting up the inevitable lesser-of-two-evils thing that has infected the entire political and governmental system.

    It's a race to the bottom; kinda hard to work up much enthusiasm for that, huh?

    Hold on young lady. You're not (none / 0) (#32)
    by observed on Sat Feb 06, 2010 at 05:09:58 PM EST
    going anywhere---you're sticking with the Dems because the alternative is just too horrible to contemplate. Just read some more Ezra and you'll be fine.

    Read "more" Ezra...? (5.00 / 1) (#36)
    by Anne on Sat Feb 06, 2010 at 07:55:02 PM EST
    Sheesh - I can barely stand to read him at all; he's just one more blogger-turned-mainstream-media-Broderite who has lost all credibility - with me, at least.

    The "horribleness" of the alternative has undergone a fair amount of tempering now that I have been able to contemplate the horribleness of the New Democratic Party.

    Pretty sad that the party poo-bahs have managed to make indifference seem a preferable alternative to their anything-for-Obama, sell-out


    Isn't the calculation that a Democratic (none / 0) (#37)
    by observed on Sat Feb 06, 2010 at 07:57:34 PM EST
    party which loses real Democrats on the left will make up the loss and more from the mushy middle?
    That seems to be the Obama game plan.

    The assumption (none / 0) (#1)
    by cal1942 on Sat Feb 06, 2010 at 10:12:40 AM EST
    is that Yglesias actually thought this through.  Something I doubt.  

    It also seems that he would avoid a comparison that might jeopardize his standing among the emerging Village media.

    One almost wishes that the Republicans (none / 0) (#2)
    by andgarden on Sat Feb 06, 2010 at 10:15:42 AM EST
    had actually passed something like this during the Bush Administration. We might then have been able to "fix" it by implementing something like Medicare for all.

    Your expecting intellectual honesty (none / 0) (#3)
    by cawaltz on Sat Feb 06, 2010 at 10:24:14 AM EST
    Unfortunately, it's a quaint option that got tossed out. It's much easier to pretend the other side is "EVIL" then to actually take apart policy.

    Exactly BTD. (none / 0) (#7)
    by Andy08 on Sat Feb 06, 2010 at 10:58:18 AM EST
    This is what I have argued all along that the Excise tax is an equivalent form of the "cost control" idea that has been (and it is now again) being proposed by Republicans.

    What's your take about being able to buy health ins. across state lines (like car insurances)? (McCain argued for this...)
    Would that lower costs? Any merit there?

    It would lower costs of course (5.00 / 3) (#8)
    by Big Tent Democrat on Sat Feb 06, 2010 at 11:06:05 AM EST
    at the price of worse coverage.

    The idea is a bad one unless there are federalized standards of coverage.


    Agreed; federal standards (none / 0) (#39)
    by Andy08 on Sat Feb 06, 2010 at 10:13:45 PM EST
    should be in place. I was asking b/c read different accounts/opinions on  whether competition across state lines has lowered car insurance premiums or not....

    vouchers? (none / 0) (#11)
    by Ga6thDem on Sat Feb 06, 2010 at 11:26:36 AM EST
    vouchers are a stinking joke no matter how the GOP plans to use them. They proposed giving parents $2500 vouchers for private schooling when that nowhere near covers the cost of a private school. It's the same thing here. They are going to arbitrarily give you an amount of money that really does nothing at all.

    The difference (none / 0) (#12)
    by Manuel on Sat Feb 06, 2010 at 11:52:15 AM EST
    is that the excise tax offers  the possibility to reduce total health system costs (public + private) while the voucher plan will reduce the public cost but leave the private cost unchecked.

    That could be an argument in favor (5.00 / 1) (#14)
    by Big Tent Democrat on Sat Feb 06, 2010 at 11:57:37 AM EST
    of the Ryan Plan, since it only uses this insidious idea for government plans, which will rein in government expenditures.

    The bottom line is the same - you can rein in costs very easily by this method - pass a law capping the amount of money people can spend on health insurance and health care.

    Problem solved. Of course, that is not likely to be a winning formula and a lot of people will die a s a result.

    But costs will be controlled.


    Well said!! (5.00 / 1) (#40)
    by Andy08 on Sat Feb 06, 2010 at 10:20:59 PM EST
    This is as clear as water to everyone except those who proposed and support the excise tax/vouchers.

    Health care costs should be controlled in other fashions; for starters whatever deal big Pharma got needs to be renegotiated...


    Government expenditure (none / 0) (#15)
    by Manuel on Sat Feb 06, 2010 at 12:08:28 PM EST
    is not the primary factor in total health care costs.  In fact, as many have noted, the government does a better job than the private sector in cntrolling such costs.

    The results of CBO's projections suggest that in the absence of changes in federal law:

    ■ Total spending on health care would rise from 16 percent of gross domestic product (GDP) in 2007 to 25 percent in 2025, 37 percent in 2050, and 49 percent in 2082.

    ■ Federal spending on Medicare (net of beneficiaries' premiums) and Medicaid would rise from 4 percent of GDP in 2007 to 7 percent in 2025, 12 percent in 2050, and 19 percent in 2082.

    My point is that one can logically support the excise tax as a cost cutting idea that works while opposing the Ryan plan as a cost cutting idea that won't work.


    The government DOES do a better job (5.00 / 1) (#19)
    by cawaltz on Sat Feb 06, 2010 at 12:32:27 PM EST
    which is the larger point for most of us who support a public option of some sort or a single payer system. If that is the case then why isn't a public option or a government plan being proposed rather than penalizing people for purchasing a private plan that provides protection for their families and minimizes out of pocket costs when illness actualy occurs? The only thing the excise tax is going to do is encourage employers to offer junk insurance with high deductibles that many people will not be able to pay upfront.  

    There is no way of knowing (none / 0) (#22)
    by Manuel on Sat Feb 06, 2010 at 12:58:44 PM EST
    The only thing the excise tax is going to do is encourage employers to offer junk insurance

    This is not the only option but you may be right.


    The 40% tax will be passed on (5.00 / 1) (#26)
    by cawaltz on Sat Feb 06, 2010 at 01:24:52 PM EST
    Many employers have already jettisoned health care or foisted more of it off on employees, if you increase their costs(which this tax will do) the trend will continue.

    Furthermore, we KNOW that the government has had  success with controlling health care costs through Medicare so why not create a plan that has the same heft as Medicare(10% of the population) or expand Medicare itself to another portion of the population.

    I just don't get why the Villagers are so averse to something like a public option or Medicare for All when it has the proven potential to control costs if implemented.


    A "public option" makes the government's (none / 0) (#33)
    by esmense on Sat Feb 06, 2010 at 05:22:41 PM EST
    involvement in the health care market direct and explicit. Which is a serious no no. We must pretend, for foolish ideological reasons, and, more important, because doing so serves industry interests, that our "private" health care system isn't heavily dependent on government support and isn't "socialized" -- when in fact both things are true. The problem is, our system has been designed to socialize profit very efficiently -- while socializing care very inefficiently.

    The other reason is this; the efficiency of a public option -- where government support is direct and provided explicitly to the consumer -- will make the inefficiency of our current "private" system obvious.


    Not my point (none / 0) (#18)
    by Big Tent Democrat on Sat Feb 06, 2010 at 12:23:48 PM EST
    In terms of concerns regarding government expenditure, Ryan's plan is more to the point.

    In any event, you really want to ignore the elephant in the room and I'd rather not discuss it with you if you want to do that.

    maybe someone else will humor you. Not me.


    What elephant? (none / 0) (#21)
    by Manuel on Sat Feb 06, 2010 at 12:52:35 PM EST
    Your post claims that two things are alike.  I agree with your point that there is similarity in the cost control angle.  I am arguing, however, that there is a significant diferences which might lead someone to one and not the other.  The key word in the Ryan plan is "privatize".

    I think I understand why you are against the excise tax.  However, that doesn't mean people who support them are being intellectually dishonest when they reject some other idea, no matter how similar, that can be shown not to work.

    As an example, you have argued eloquently for progressive taxation.  If the excise tax were revised to be more progressive, would you support it?

    One final thought, could unions get around the excise tax by hiring their own doctors and running their own clinics?  At one time I recall the United Farmworkers doing something like that.  I recently learned that SAS, a technology company in North Carolina provides health care directly to employees.  It sounds like an interesting cost cutting idea.


    This is a deflection (none / 0) (#23)
    by Big Tent Democrat on Sat Feb 06, 2010 at 01:08:45 PM EST
    If you want to argue that it is ok to use the Ryan concept in the exicse tax format, then say so.

    This is PRECISELY what you were not addressing.

    In short, your argument is that controlling cost by offering worse insurance  is ok for the private insurance market but not ok when applied to public insurance.

    It is a strange argument to me, but at least you have FINALLY made it.


    Really? (none / 0) (#13)
    by cawaltz on Sat Feb 06, 2010 at 11:56:05 AM EST
    I'm pretty sure it doesn't without an actual public option do any such thing in regards to a public market.