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    heh..., 2008-09-08 12:59:24 | Main | drill here, drill now..., 2008-09-11 13:01:23

    "Thatís called 'income redistribution.' It's a socialist tenet.":

    Up until a few minutes ago, everything I'd ever heard about McCain's healthcare plan was that it'd basically just allow individuals to claim the same tax breaks on health insurance payments as businesses, which, all things being equal, makes perfect sense. I don't know why I was hearing that, because it turns out that that's almost exactly what it isn't. Instead, he would start taxing employer healthcare benefits, and send individuals a rebate: 2,500 if you're single, 5,000 otherwise.

    The average cost for a family health insurance plan is something like $13,000 a year, all of which is tax-exempt for employers. McCain's healthcare plan is to provide a 5,000 tax rebate to families - earmarked for health insurance - which he'll pay for by taxing said $13,000 in employer sponsored health insurance benefits, currently the source of coverage for 2/3rds of American workers. For this perfectly average family, that's a net tax break of about $1,750. If you pay less for insurance you'll get a bigger break, if you pay much more for insurance you'll enjoy a penalty.

    Offhand, this seems like it would undermine employer sponsored healthcare by incentivizing healthier people to get individual plans, which would undermine that little bit of consumer leverage in the insurance market. The idea that atomized individuals would be able to bargain down prices against highly centralized insurance markets, like the McCain camp says, better than businesses acting as collective bargaining units for their employees, is utterly laughable. Individuals have no leverage, that's why so many people can't get insurance at all unless it's through an employer.

    Individual insurance rates are determined by one's exposure to risk, the less demographically prone to good health you are the more you pay, if you can get coverage at all. Only if you imagine in some bizarre fashion that most health related risks are the product of choice - like you chose to be standing where that piano was falling, or to be hit by that drunk driver, or to contract a predisposition for chronic illness from your parents, or to age another lonesome year - does this make any sort of ethical sense, and nobody is talking about restricting risk-based pricing models of the insurance companies to a narrow band of personal health-related lifestyle choices like diet, drug use, and exercise. Economically speaking, the disaster waiting to happen would be otherwise productive individuals being priced out of the market, and leaving their chronic or preventable conditions to fester for expensive emergency rooms. The result for those that can afford insurance would be an atomized market of stratified risk pools, dominated by GEICO-like firms that keep costs down by targetting "preferred low-risk demographic groups". As healthy people leave employer-sponsored plans, those plans will rise in price. Those with inadvertently lower insurance costs would receive a larger effective tax break from McCain's rebate, subsidized by the less healthy people who are still paying taxes on their increasingly-expensive employer sponsored health benefits. The sick would subsidize the healthy.

    Once employer based plans disappeared completely due to this massive income redistribution, they would also cease producing revenue to pay for the tax rebate. The entire financial premise of the plan evaporates, and the rebate checks are funded entirely out of general revenue, to the tune of many hundreds of billions of dollars. This would be, at some 2,500 per individual, equivalent to paying for the average OECD single payer system's per capita costs, but we'd still have a healthcare system that costs over twice that. In other words, the government would end up paying in McCain's insurance rebate checks what Britain, Australia, or France pay to fund their entire healthcare systems. Needless to say we still won't have anything like universal single-payer health insurance coverage, but at least the argument that it would cost too much would make even less sense than it does now.

    So if you have a chronic condition, produce a sick child, live in a toxic environment, a dangerous workplace, a poor genetic inheritance, bad habits, or, like myself, subpar bureaucratic talents when it comes to deciphering the maddeningly complex array of available coverage options in relation to their obscured fine print and ultimately shocking costs, your taxes will be redistributed to somebody else who has no conditions, produces healthy children, lives in a clean environment, a safe workplace, has the golden genetic endowment of the gods, perfectly square habits, and a law degree. As an added bonus, when the insurer tries to stick it to you, instead of facing off with your employer, it faces your clueless ass. Luckily, you might be a lawyer. Unluckily, it is more probable that the division of labor has left you sadly inadequate to the task.

    It's more or less completely bonkers. To put it in terms Bill O'Reilly would understand, McCain's plan is to rob from the sick and give to the healthy. If you're thinking about keeping that down syndrome baby, you may want to reconsider.

    Neither candidate deals with our astronomical administrative costs, both are making what are likely empty promises to allow medicare to negotiate drug prices, and neither would reduce drug costs in the private market. It's all so much dicking around with the portholes on the Titanic. To be perfectly practical, it would probably be easier for the public to organize their own monopolistic, cut-throat, bare-knuckled consumers' union to provide income-adjusted insurance rates, negotiate prices with providers, coordinate legal defense, and establish a single open source document standard - that is, to establish a shadow single-payer system - than it would be to get a reasonable healthcare plan out of Washington.


:: posted by buermann @ 2008-09-10 15:48:18 CST | link





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