Healthcare Econ 101
 

Actions have consequences.

Currently there are many US companies (that have been in the business of making things for years, responsible for creating a booming middle class, etc.) that have been supplementing their retiree benefits with an enhanced prescription drug plan as compared to Medicare. These companies have been able to take a tax deduction for this cost, decreasing the net obligation of Medicare and it has been giving millions of retirees a better benefit. A win, win, win, the companies were doing a good thing, getting a deduction, saving Medicare some money and benefiting millions of retirees.

Under the new health care plan, the deduction goes away.

The government is expecting increased taxes collected to help pay for the plan and they have assumed no negative consequences.

Here are a few of the things we may expect:

*Profitability of these companies declines, net worth of investors decline, corporate taxes collected goes down, capital gains taxes goes down.
*These companies become less competitive internationally, costing jobs and further eroding our manufacturing base.
*These companies discontinue the program, causing millions to lose a valuable benefit, increasing the burden on Medicare, and reducing the taxes collected.

Those who believed the CBO scoring, bought into pure fantasy. CBO can not account for these kinds of consequences outside of the direct language in the legislation.

Obama Tax?s $14 Billion Charge Starts at Caterpillar (Update1) - Bloomberg.com

This legislation is loaded with unintended consequences and "hidden" costs (not really hidden for those who actually look into the details), there was never an honest and open debate on the details.

So some possibly bad things "may" happen. Like how the stock market was going to tank immediately after the bill was signed?

I'm not saying nothing bad or unintended won't happen. What I think should be more clear is that there are always unintended consequences, especially with something this huge- so of course the plan is loaded with unintended consequences.

As for honest and open debate, well, that wasn't really possible. It's like raiaiainainaianinanaiannan on your wedding day. Who woulda though? It figgers.

A more useful metric would require weighing the bad things that "may" happen with the good things that "may" happen. So that individual predictions of doom would be balanced out by individual predictions of improvement.

Sounds like several excellent arguments for removing employer paid health care to a single payer system.

Great minds think alike. I was thinking the same thing as I read ace's post.

Still, it's fun to assume theoretically possible consequences of passing healthcare reform are all somehow likely despite having not demonstrated likelihood. Other consequences there might be:

- Having kids stay on their parent's coverage until age 26 could inspire scientists to develop an anti-aging drug that prevents people from aging past 26, thus allowing people to perpetually stay under their parent's plans. The healthcare industry collapses in a decade and mankind devolves into hunter-gatherers again from a lack of modern medicine. Plants evolve emotions and become the dominant form of life on earth.

- Mandated healthcare in 2014 hits, but no one notices because the earth was destroyed in 2012 by space-Mayans.

- Once preexisting conditions have to be covered by the healthcare industry, people are more lax with the use of radioactive materials and the rates of birth defects and mutations skyrockets. The resulting Mutant Registration Act (or Proposition X), will split the mutant population and cause a civil war. Captain America will be assassinated.

Why was there never an open and transparent debate about sentience in plants?

Very few people on either side are being honest about the bill.

Kind of sad the way things work anymore. The more you lie the more people you convince to support you. It's a sick system.

Who predicted that? On a day to day basis there can be many factors that move the market, the long-term question is will the net impact of this legislation be positive or negative - we won't know the answer until decades from now. the concern I have is the unwillingness of some to look at this issue objectively.

Obama sold this to the public on pure fantasy. We are going to cover millions more, lower costs, cut taxes, reduce premiums, and reduce the deficit. Did you, or do you actually believe that? If you don't, did others? Why? Why didn't more questions get asked?

that would have been a good start.

---------- Post added at 07:00 PM ---------- Previous post was at 06:57 PM ----------

I actually believe we need single payer or a "free market" system. Our current system and the legislation that just passed is a mess. We did not really fix the underlying problems and we still have a system that is unfair.

---------- Post added at 07:05 PM ---------- Previous post was at 07:00 PM ----------

Funny stuff.

The reason I posted what I posted is because today real people are making real decisions, affecting real people because of this new legislation. There are consequences. If one company faces a $100 million charge, to pretend that won't impact future decisions is kinda silly, isn't it? The CBO score doesn't account for these kinds of variables, the CBO score was virtually worthless.

What company would face a $100 milllion dollar charge, and for what?

I am honest about the bill. I have asked honest questions. I have honest concerns. Just because Obama's team and the folks on MSNBC want to paint everyone who has a question with a broad brush, like - if you don't accept Obama's plan you want to do nothing - is simple b.s.

---------- Post added at 07:12 PM ---------- Previous post was at 07:10 PM ----------

Read the article in the OP.

Jim Cramer, pan. I imagine other folks did as well. If you were really taking this "let's be objective and wait and see" approach I suspect you might have gone about the OP a bit differently.

I actually expect the legislation to have parts that were designed to be unworkable down the road to encourage further legislation. Toward that end, I won't be surprised if it doesn't work out exactly they way it was pitched. That's the nice thing about legislation is that you can change it if it doesn't work.

The reason that the perception exists that more substantive questions weren't asked is that most of the media time was spent talking about stupid bullshit like death panels and creeping socialism. The media failed, as usual. It's difficult to have a discussion when the folks who are supposed to facilitate it are aiming for the lowest common denominator. It's also difficult to have a discussion when 99% of the people paid to have the discussion are shills for one side or another.

I've read it twice. I still want to know what company WILL have a $100 million charge, and for what?

no company *will* have a 100 million dollar charge, but i suppose a company**could** have one in the same way that the earth **could** be vaporized to atoms by a comet or someone from the future with a time machine **could** erase the entire population that ever had anything to do with contemporary telecommunications by going back to 1350 and killing the wrong person in a skirmish.

the position i have about this thread filtherton already stated.

I don't think this is so radical. Those of us who purchase our insurance on the open market have never been able to deduct it from our taxes.

This sounds a lot more like my position.

ok so will and filtherton.

mea culpa.

Unlike the Republican leadership's dream world, in this things have to be paid for. Of course, one person's "tax increase" is another persons "ending subsidy." And costs should be cut from medicare part D. This is the part where if the republican leadership was honest to its proclaimed ideals, they'd get behind. But right now the republican leadership has changed it's tune from repealing the reform to reforming it to keep the "good stuff" in but doing away with taxes and mandates. Apparently, the "fiscally conservative" thing to do is to spend more but tax less.

And there will always be unintended consequences to everything. Thankfully, congress didn't cease to exist, and so they can further amend it if needed.

---------- Post added at 01:34 PM ---------- Previous post was at 01:29 PM ----------



Easy now, I believe the 'Stimulus Plan' and this health care reform bill have eclipsed any spending the Republicans have done during the life of the party.

So far, the stimulus has been a huge flop and there is no way the outlined taxes and fees are going to pay for this reform bill. No freakin' way.

The 01 and 03 tax cuts that primarily benefited the top bracket cost over $1 trillion and no offsets were provided.

The 05 Medicare Prescription Drug bill cost nearly $1.2 trillion (the Republicans ignored the CBO score at the time of the vote and said it would cost less than $1/2 trillion) and no offsets were provided.

The war in Iraq cost nearly $1 trillion and was purposefully kept off budget (so it wouldnt show up as Bush deficits) and no offsets were provided.

Both the stimulus program and the health reform bill have offsets that the CBO scored at various levels (best case to worst case), while the offsets may not all materialize (in the way of savings), both major pieces of legislation are far closer to deficit neutral than anything the Republicans enacted.

As dc_dux mentioned, these recent plans all are at least partially offset by tax increases.

Medicare part D alone is an unfunded liability not offset by ANY tax increases, and it's unfunded liability has been estimated as being anywhere between 17 and 35 trillion dollars over the next 75 years. The stimulus, which actually contained a hefty chunk of tax cuts that expire, will cost between 1 and 1.5 trillion over its entire life. Similarly, current estimates see the health care reform bill to actually be deficit reducing over the long term. Even if a lot of the offsets never materialize, that is still very far from 17 to 35 trillion over 75 years.

One amusing fact about the stimulus program is that most middle class taxpayers will benefit in some manner by the $285 billion in tax cuts in the bill....and in a recent survey, most Republican (and Tea Party) respondents were clueless about this largest single component of the stimulus program and believe their taxes will go up as a result of the stimulus bill.

I think the real question here is, why are large companies getting $100 million of tax credits in the first place? Where does that number come from?

How many employees do they have in order to get up to $100 million?

(This is the problem with these short news stories, they don't go into the details of where they get these numbers from, or what type of people they polled, or even if they are stating facts or opinions.)

My tax bill went down a whopping .4% this year. I'll wait a few years until I see what happens to my taxes before claiming this made that big a difference. I would have gotten along just fine without this stimulus bill being passed.

You do realize that whatever happened to you, personally, doesn't change the aggregate, right? That the amount of the stimulus that was tax breaks, and the number of people who got tax breaks are what they are regardless of what happened to you, personally, right?

Yes, and I know that for me personally, between the stimulus fiasco and the health care fiasco, the Democratic party has done nothing for me, and that I don't expect to ever vote for any Democrat in the future, and these two fiascoes have resulted in my no longer being politically passive.

It remains to be seen whether they will be anywhere near what the CBO predicts. And don't get me wrong, I don't think either party is taking responsibility for their actions. They both spend our money like drunken sailors on Meth. With taxes to offset the deficit or not, in the end it all comes from the same place, our pockets.

It just makes my testicles shrivel to see 3.5 trillion in spending signed into law in a year. No matter who's pen it was.

Not your pockets, investors who are buying bonds' pockets. Taxes haven't been enough to cover spending in a while, and most of that spending is on social security, medicare, and the military. So unless when the time comes you refuse medicare and social security, you are actually paying less than what you are getting out of the government.

The result is that some taxes eventually will have to go up, and a lot of this new spending actually comes from cuts in medicare.

Bonds, investments, dividends, rent all qualify, you're assuming I'm not vested in one or more of these. And that I make less than $250K/yr. Alright, ya got me on the last one. But my boss does and when he takes a hit, I'll take a hit.

I'm not talking about bonds as an investment strategy. I am talking about who is financing the US deficit. It's whoever buys US treasury bonds, and they are being paid interest for that.

The bottom line being, the vast majority of people complaining about taxes take out more than they put it.

https://getwhatyouwant.ceridian.com/mk/get/HCALERT1

posting this in all health care threads. Just received in an email from Ceridian Corp. They manage all of my groups flexible spending accounts.

I don't understand your point, can you expand upon it? CAT, $100 million, DE $150 million, T announced today a $1 billion charge.

AT&T sees $1 billion healthcare related charge - Yahoo! News

---------- Post added at 08:25 PM ---------- Previous post was at 08:23 PM ----------

Correct, we either should go to a single payer system, or a true "free" market system. Under the current system the playing field is not fair.

Ace...why should companies like CAT and ATT continue to receive tax credits for subsidies paid by the federal government for retiree drug benefits....particulary when the bill provides a direct $250 payment to those seniors to help close the Medicare donut hole and better drug benefits down the road for those seniors?

Those companies can simply pay those retirees $250 less and save that cost.

I again assert why not just remove employers from the loop of health all together. Why should your health care be linked to your job? Move it all to a single payer system and stop these pay out and kick backs.

That is what many preferred, but not enough for it to be a feasible option at this time. Pragmatism prevailed and the new law is far better than the status quo for most Americans.

But you are certainly right about the loopholes from which companies like CAT and ATT have benefited.

Under the 2003 Medicare prescription drug program, companies that provide prescription drug benefits for retirees have been able to receive subsidies covering 28 percent of eligible costs. But they could deduct the entire amount they spent on these drug benefits - including the subsidies - from their taxable income.

The new law allows companies to only deduct the 72 percent they spent.

I like this, not sure how accurate it is since it lists Mexico as trying to start a national health care system. I live and Mexico and at least where I live national health care is available. Hell I'm a US citizen and IMSS is available to me for less then $500 a year.

http://www.gadling.com/media/2007/07...reworldbig.jpg

Anyway if this is correct then we don't have national health care for our citizens but the US tax payer is providing just that for both Iraqis and Afghans. Makes sense, right?

I don't understand your thinking either. Are you suggesting this issue is not real and won't have a real impact on people, Medicare, budget issues including deficit projections?

ace..I dont understand why you are opposed to closing corporate tax loopholes.

Why should companies like CAT and ATT be able to deduct the entire amount they spent on retiree drug benefits - including the govt. subsidies - from their taxable income....and not just the 72 percent they spent on those benefits?
able i
Isnt that like double dipping...getting a 28% govt subsidy and also deducting that subsidy from their taxable income.

There are multiple concerns, but I agree corporations should not get tax deductions that individuals can not get in the area of health care. I would support either no deductions or deductions for everyone.

---------- Post added at 09:35 PM ---------- Previous post was at 09:34 PM ----------

I would support this.

---------- Post added at 09:51 PM ---------- Previous post was at 09:35 PM ----------

Finally some meat.

The benefit to retirees offered by these companies was better than the Medicare prescription plan. The retirees wanted to maintain what they had.

The federal government would have incurred added costs if the employees under these plans converted, everyone knew that.

Companies had been taking a deduction for 100% of these costs, but the costs were and are voluntary. The subsidy was to give incentive for the companies to keep these plans, most did. And there still is a net cost.

This illustrates my point. The government creates these complex entanglements rather than relying on simple systems. And the folks in Washington don't know or don't care about the consequences of these entanglements. Like I have been saying either, single payer or true "free" market systems. The hybrid systems are inefficient, ineffective, unpredictable, and far too complex. To think CBO or anyone can predict the impact of this legislation 10, 20 years down the road is a joke. So, why do they pretend otherwise?

---------- Post added at 09:56 PM ---------- Previous post was at 09:51 PM ----------

Because you don't read what I write. I support single payer or true "free" market. In a true "free" market there would be no special subsidies, loopholes, or anything else from government.

You are looking too closely at the trees and can not see the forest. Re-read the OP, the issue presented is a little broader than your post here suggests.

---------- Post added at 10:04 PM ---------- Previous post was at 09:56 PM ----------

I was recently talking to a person from China, the way he described health care in China was: "you get sick, you die".

Thinking about most of the countries in Africa a question comes to mind, what is the difference between national health care and no national health care when the country has no doctors and medical facilities? Answer: There is no difference.

Ya lost me here. You're comparing China and most African nations to our paying for national health care in Iraq and Afghanistan why? Are you saving there are no doctors in either country? Because I keep seeing news reports of people going to the hospitals there all the time. Just last week I saw a report on the BBC about some disabled kid in Iraq getting an operation to restore his hearing. According to the map I used that means the US tax payers likely paid the cost of that op.

I find it ironic that the kid in Iraq gets US paid health care while many kids in the US do not. In fact I don't really find it ironic as much as it flat out pisses me off.

I simply looked at the map posted. China provides some form of national health care, but so what! If what my friend says is true, and he has never given me a reason to doubt him, generally people not connected in China have very little in the form of medical care compared to what we get here, even the uninsured. In most non-urban areas of China any form of professional medicare care is rare. In Africa the same is true. So, connecting the two - does national health care really matter, if there are no doctors, no facilities, no medicine, etc.?

I think in the US we confuse access to medical care with health insurance.

So your point now is relevant because we don't have enough doctors in the states to handle it even if we did have national health care? If that's the case, which it might be in some rural areas, I'd say we do what Mexico does and offer free med school to those who meet or exceed set standards in their first four years of college. Then have them serve a rural area for 4-5 yrs. My current doctor went to med school at UCLA, completely paid for by the Mexican government, she then provided medical services in small town near here named Ticul for 4 yrs. So I agree- US needs health care and access to it.

Still haven't heard anyone address why were paying for health in other countries but failing to do so in our own.

I'm having a hard time understanding what the fiascoes were if your taxes went down (albeit slightly)?