In layman's terms, the hard blue line is the expected growth in average wages. The dashed-purple line is what's actually appearing in workers' wallets, which is average wages minus health premiums. In other words, health care is robbing you of your bonus.
So why aren't workers rallying in the streets for health care reform? They don't see this graph. Instead, as Ezra points out, they see their wages stagnating and chalk it up to a stagnant economy, a stagnant company, or a stingy boss.
But this is exactly why it's a bit cheeky to present graphs like this (via Greg Mankiw) as evidence that Americans are inherently reluctant to pay for health reform.
So long as this issue is presented as "Pay for health care reform" vs. "Don't pay for the status quo," we're skirting the main issue here. We are paying for the status quo. Every year, in our paychecks alone we are paying for the cost of doing nothing, to the tune of about $5,000 per worker per year. How about a poll that presents the first graph and asks respondents: "This is what will happen to your wages, and the wages of your children, as health premiums continue their predicted climb. Is that a system to you want to preserve? Please answer yes, no or unsure."
Funny, this same graph has been floating around conservative and libertarian circles for years (with more years in the past as well) explaining why the problem of wage stagnation is not as great as it seems.
Of course we're paying for the status quo. We'll have to pay for health care some way regardless, but sure, there's a point that the money from taxes will replace money from wages. Too bad that Candidate Obama didn't have the same kind of honesty when it came to criticizing Senator McCain's plan to move away from employer coverage. He reaps what he sows.
Greg Mankiw's poll is dishonest (unless it's talking about, e.g., the extra cost of insuring the uninsured) to the same degree that claiming that not having national health care hurts companies' competitiveness is dishonest, and for the same reasons.
Your statement of "Every year, in our paychecks alone we are paying for the cost of doing nothing, to the tune of about $5,000 per worker per year" is also pretty dishonest. We're paying about $5,000 per worker for year for health care. Saying that's "paying for the cost of doing nothing" makes it sound like that's the extra marginal cost right now of not moving to another system, not the total cost of the current system compared to the unknown post per worker under another system.
And that, along with the rest of all this is begging the question of whether we're getting something for our money. Health care now is not at all the same as health care ten or twenty years ago, nor would I expect it to be the same in the future. There have been advances in pharmaceuticals and in procedures. Not for everything, but since my mother started working in pediatric bone marrow transplantation, it's gone from something very rare not covered by any insurance to a fairly routine and extremely effective cure for some rare diseases. So the price comparisons are not for the same good as twenty years ago.
The question comes back to efficiency. The current belief right now among reformers is that we're just having too much health care. The more palatable ideas of insufficient preventative treatment don't stand up to scrutiny. But I suspect that "our reformed system will cost you less because we'll cover less and stop you from getting useless treatments" wouldn't have much political play for the President, even though that appears to be the belief.
Other countries do cover less, and spend less, and get similar outcomes. But would a US system do so? Or would it spend like Medicare, which also covers more than other countries' national health service and spends at the same rate as our quasi-private system?
This is so silly. It's like somebody moving from a studio apartment to a 3-bedroom house when he gets a raise, and then complaining that the rising cost of housing is stealing is raise.
How is it stealing if you are getting something for it? Healthcare is better than it was 10 years ago and we pay for it. So what's the problem?
And I'd like to see a graph that wasn't mostly projection, also. After all, didn't Pres. Obama just get healthcare leaders to promise to hold down cost increases? Does this graph reflect that? ;)
Mr. Thacker is a remarkable whacker of straw men, but his final point deserves debate:
If the American people come to learn that the high cost of medical treatment in this country is seemingly arbitrary, I'm sure many opinions on the matter will change. The real notion I find unbelievable with the conservative populist argument on health care is that somehow the American people will look favorably on the for-profit health insurance industry if given an alternative!
People reluctantly pay insurance for the risks they choose to take (like driving), but nobody has a choice on taking the risks of living. I doubt that very few small-business owners think they are getting optimal value from the medical coverage they are paying for directly, and if the average wage worker figures out they're in the same boat, resentment toward the current system will foment. I expect the conservative populist anti-health argument to shy away from actual facts and tend towards rhetoric.
Perhaps Mr. Thacker has read and rejected the latest piece in the New Yorker, but I believe he is in the minority.
http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande
thejeffg:
I have read the article in question. My points are:
1) The graph is irrelevant unless the cost savings materialize from switching.
2) While I broadly agree with the article's point about the inefficiency of too much care, I think that politically it will be a tough sell. I believe that American public health care will function a lot like government-encouraged employer health care-- agitation for low premiums and coverage of everything. It will look like Medicare.
3) That said, no I don't think that any private system would do better, notably because there would still be the same political campaigns to force insurance companies to cover everything and then complain about the premiums.
People hated the HMO cost cutting in the 90s between of the restriction of care and choice. Those restrictions temporarily restrained cost increases but consumer anger and political efforts resulted in those practices stopping and costs increasing again. Will Americans celebrate those same HMO practices when it's the government doing it? I doubt it.
And I stand by my criticism of President Obama's campaign ads on McCain's health care suggestion. Obama's ads repeatedly denied the idea that health care insurance from one's employers came out of your wages. The ads repeatedly denied the idea that if employers were not spending on your health care, they would pay you other compensation instead.
So you admit, jeffg, my point that the current belief (which I share) is that the way to reduce costs is not the politically palatable one of "we need more preventative care," but actually the surprising one of "we're ordering too many preventative care tests and diagnostics?"
From the article:
So your diagnosis is less care, less visits, more waiting periods, fewer tests, etc.? I agree that it seems like the efficient thing to do, but it certainly is MORE rationing than currently. It's sensible, logical rationing, but it is more rationing. And I don't think that's going to fly with the American people, nor do I think that that's the way that the plan is going to be sold. Will it actually end up that way? Will they be able to subvert the will of the people for the good cause? I doubt it.
I should say that there are a handful of things where it looks like more preventative care would be useful, but those don't make up anywhere near a significant amount of the cost savings. Not compared to eliminating unnecessary tests and care.
Well, and the other point of the article is that the insurance payer is irrelevant; no matter who pays, the problem lies in ordering too many tests, etc. The only difference of government controlled insurance would be rationing, but the article indicates reduction in tests, costs, etc. can be accomplished without that sort of intervention. This is a fantastic article that, unfortunately, seems too complex to get into a political sound bite and thus unlikely to be actively pursued, despite the fact that it is the best article I've seen addressing health care costs.
Nola Dawg--
Right, as long as there is third party payment, similar problems occur whether it's insurance or government. Either type of payer can reduce the problem through high-deductible HSA type plans or co-payments, but those things are also unpopular with many people.
The article is complicated. One more takeaway from the article-- it strongly suggests that Medicare is no more efficient than the private insurance system, and we can cut around 30% of Medicare spending right now with no loss in patient outcomes by changing doctor incentives and behaviors. I'm slightly skeptical of the figures, but much more skeptical of the political possibility of doing so.
One possibility would be to try to make those changes in Medicare first; then, if it proves politically possible to have a uniform standard of care and extra efficiency in Medicare, go for the nationalized system.
Instead, the Administration and their supporters propose first making the entire system like Medicare, then looking for the savings. And in their budget, they're counting on being able to make the savings.
But successive Administrations throughout the years have proposed making smaller versions of changes in Medicare reimbursements that would work towards the more efficient care that is the goal. Congress has, thanks to political pressure from caregivers and recipients alike, rejected these efforts. Why exactly would it be easier to do when the program covers all Americans rather than just some?
In short, if these savings are possible, let's do it in Medicare, then we'll talk. Or else have a really good explanation of why you can't do it without making the whole system like the equally inefficient Medicare first.
Nola Dawg--
Right, as long as there is third party payment, similar problems occur whether it's insurance or government. Either type of payer can reduce the problem through high-deductible HSA type plans or co-payments, but those things are also unpopular with many people.
The article is complicated. One more takeaway from the article-- it strongly suggests that Medicare is no more efficient than the private insurance system, and we can cut around 30% of Medicare spending right now with no loss in patient outcomes by changing doctor incentives and behaviors. I'm slightly skeptical of the figures, but much more skeptical of the political possibility of doing so.
One possibility would be to try to make those changes in Medicare first; then, if it proves politically possible to have a uniform standard of care and extra efficiency in Medicare, go for the nationalized system.
Instead, the Administration and their supporters propose first making the entire system like Medicare, then looking for the savings. And in their budget, they're counting on being able to make the savings.
But successive Administrations throughout the years have proposed making smaller versions of changes in Medicare reimbursements that would work towards the more efficient care that is the goal. Congress has, thanks to political pressure from caregivers and recipients alike, rejected these efforts. Why exactly would it be easier to do when the program covers all Americans rather than just some?
In short, if these savings are possible, let's do it in Medicare, then we'll talk. Or else have a really good explanation of why you can't do it without making the whole system like the equally inefficient Medicare first.
After we nationalize health care and make it "free", let me see a graph between wages with health care taxes and wages without health care taxes.
This stupid argument about what it costs you, is irrelevant - unless you are dumb enough to believe givernment provided health care is free.
Dispensing health care efficiently, and collecting the money to pay for it cheaply, that's the purpose of the exercise, no one can compete with government at these two tasks.
America’s Veteran Administration is the largest, lowest cost; best outcome producing at any cost, health care delivery system in the US, it uses the world’s best medical software, and it has been controlling the problems with access, cost, quality, and malpractice successfully for years.
(The Best Care Anywhere by Phillip Longman)
http://www.washingtonmonthly.com/features/2005/0501.longman.html
A national sales tax is the simplest, fairest, cheapest, and most efficient way to collect the money needed to pay for a public health care delivery system.
Using a dedicated national sales tax funding source in conjunction with the VA's proven care delivery and software records systems means we don’t need to reinvent the wheel to establish a scalable system to rapidly serve the entire country.
Why do this?
For the Federal Budget; distributing all government programs, including Medicare and Medicaid, through the national system will produce hundreds of billions of dollars in tax savings annually, and produce better care outcomes for patients.
For individuals; selecting public care; all prescribed care and medications would be free, no insurance, no co pays, no precondition exceptions, free period, no more worries about acquiring or how to pay for health care.
For businesses large and small; choosing the public care option would free them from all financial burdens or any involvement in any way for the health services their employees receive, whether it’s a one truck plumber or General Motors, they can forget about health care and go back to building their businesses.
For private insurance and care providers; they would no longer be required to subsidize indigent and pre condition patients; they could compete more freely for patients who would prefer to use their private systems for care.
The private care option; would allow individuals or businesses the unlimited choice of doctors, clinics, hospitals, timing, and treatments, Ford Fiesta or Rolls-Royce, but it would require the user to pay privately for their health services, either by self pay, company pay, private insurance, whatever, but any government funded programs should only be distributed through the new national system to assure cost control and outcomes.
The system could be jump-started by acquiring health delivery systems around the country that would choose to sell to, and be integrated into, the new public National Health Care System.
A national health care system could acquire and integrate state and local government health care systems, which would assure enhanced cost controls, consistent operating standards, and relieve local funding problems, while providing total transferability for patients
Building new public health care facilities and their satellites could produce capital assets which will continue to serve Americans for generations, while providing millions of construction jobs today, and millions of new health care jobs forever.
An OMB study comparing this to other reforms would be fascinating.
As a Disabled Veteran, I think I can say without hesitation, that the Veteran's health system is terrible. When I was injured during my time in the Marines, I would literally be handed an inch and a half of paperwork, each time I would travel from Camp LeJeune up to the Naval Hospital in Norfolk. More efficient?? I think not. When I was finally discharged from the Marines. (After a month and a half of waiting for paperwork relating to my medical condition) I had to wait six months before I actually got in to see a VA physician. To say that the government would more efficiently handle health care and the related costs needs to have their head examined. I wouldn't trade my BCBS coverage for goverment health care for any reason. There is no such thing as "Free, Efficient, Government Health Care"!
Well, nobody ever said it would be free- but how exactly would paying into a bigger risk pool under a national system not reduce costs on a scale basis alone?
I firmly believe that the American people working together can outcompete a private firm working in today's system. Surely a more American system would do something about the high cost of medical care in some parts of the country versus the lower-cost areas that somehow also deliver a higher standard of care.
What's that you say? Long waits and rationed care under a National system? How exactly is that different from our current system? I know you haven't breezed right into the treatment phase of your last doctor visit unless you were mid heart attack or had a knife resting gently in your chest. You're really going to tell me that we don't wait now, or that private insurers don't ration care based on your coverage?
What's all the fuss, right?
Yes. I firmly believe that political pressure would mean that we'd have to spend more in the lower-cost areas without improving their standard of care, so that it was fair and that they got the same level of treatment.
I completely believe that we can deliver the same standard of care spending less in high cost areas. I just fail to believe that putting it up to a vote of the American people will lead to cutting those extra treatments in high cost areas.
thejeffg, you can't have it both ways. If we're going to cut down on unnecessary treatments in order to obtain the same standard of care, then we're going to have to ration care more. You're calling for more sensible rationing of care. Sure, it may be completely rational rationed care, we might be eliminating totally unnecessary treatments. But it still means doing less than we used to, and telling people "No." Those low cost areas right now also have fewer doctors, fewer tests and procedures, and, yes, longer waiting periods.
Yes, we ration care now. You can't praise the areas now that ration care more, claim that we'll emulate them, and then not claim that we'll be rationing care more. And even if it is sensible, I think it will be unpopular.
Long lines in the current system? My insured friends who recently had to undergo breast cancer surgery and knee surgery did not have to wait long to get access to surgeons. My friends who need to take a kid in with an infection get in within a day. Your description of our current system does not describe my own experience or the experience of people I know.
I can get in to see a G.P. in an hour or two by going to a nearby immediate care clinic and paying $90 for a consultation. That seems pretty fast to me.
People who want single payer systems or more government funding of medical care for poor people would gain more credibility of they described the existing system accurately.
John Thacker points out that charts like this have been floating around libertarian/conservative circles for years. However, I disagree that the purpose is to indicate that everything is fine the way it is. The purpose is to support the case for tax reform (like Sen. McCain proposed) to give those health-care dollars back to the workers who earned them, so that we have more choice in health benefits.
President Obama's "reform" is likely to do the opposite: put even more of our health-care dollars under government and corporate control.
Professor Mankiw's survey is misleading only to the degree that it assumes that there is some level of taxation that would enable the government to provide (meaningful) health insurance to everyone. In Canada, everyone has "health insurance" but about 15% of the population doesn't even have primary care according the College of Family Physicians of Canada. (They gave up on high-tech care years ago, after the Fraser Institute had continuously embarrassed the government with its annual surveys of waiting lists for specialist care.)
Well, the purpose as far as indicating that "everything is fine" is generally to make the claim that "look, wages haven't really stagnated, it's that the value of benefits have increased." It then requires arguments attempting to justify that the benefits really have increased in value, and that where they haven't, it's due to government meddling forcing insurance companies to cover more things and charge more, etc.
When that chart is used to discuss medical policy, yes, it's used as you say, John R. Graham.
Insurance is always the easy scapegoat for this cost argument. But if you look a little deeper, ask WHY both healthcare and insurance costs are escalating. Certainly the neverending cost creep is part of the equation, as we all want the latest and greatest procedures and devices, which are expensive. We also need to remember that the growing obesity epidemic is driving up costs needlessly with all the diabetes, CHF and other conditions that follow-on.
What would happen if health insurance worked more like your car insurance? You engage in risky behavior - you pay more. If I take care of myself, why do I pay the same as someone who smokes, sits on the couch and eats Cherry Garcia all day? As a good driver, I pay less than those who aren't, so why don't we reward good health behavior and penalize bad the same way? Only this kind of incentive system will curtail our costs and allow us to put that money towards covering the uninsured.
Insurance is always the easy scapegoat for this cost argument. But if you look a little deeper, ask WHY both healthcare and insurance costs are escalating. Certainly the neverending cost creep is part of the equation, as we all want the latest and greatest procedures and devices, which are expensive. We also need to remember that the growing obesity epidemic is driving up costs needlessly with all the diabetes, CHF and other conditions that follow-on.
What would happen if health insurance worked more like your car insurance? You engage in risky behavior - you pay more. If I take care of myself, why do I pay the same as someone who smokes, sits on the couch and eats Cherry Garcia all day? As a good driver, I pay less than those who aren't, so why don't we reward good health behavior and penalize bad the same way? Only this kind of incentive system will curtail our costs and allow us to put that money towards covering the uninsured.
This is an interesting argument for sure and the need to reform seems on shaky ground. The recent paper by NCPA would suggest that all reasons currently provided for reform are suspect at best and I would agree. As an HR person, I haven't experienced an increase in our employer provided health care policy in 5 years - don't expect one this year. I'm aware of other companies with the same experience. So the graph above for our employees (and others) is false.
The "reform" is designed to pay for the uninsured - some 47M if you believe the numbers. The real hard-core uninsured by the Census Bureau's own figures is about 8M or 2.5% of the population. A total reform to address 2.5% of the population seems odd. Providing health insurance for all at the same level is predicated on assumption that people have a "right" to health care. Last check of the Constitution does not find this right. Lets do this one right - if health care for all is a right, then add it to the Constitution. If everyone is entitled to a job - lets add that. If everyone is entitled to a house even though they can't afford it, lets add that one too. We have manufactured "rights" all over the place but not where they should be, in the Constitution.
Unless we see some real data that plausibly defends the need to change the current system, handing it over to the government is a disaster in the making much as public education, social security and medicare are now. What makes us think single payor government sponsored health care will be cheaper, better or even close to what we have now?
This is ridiculous. Healthcare badly needs to be reformed, but instead of making easy fixes to what is broken, congress is just coming up with a new universalized system that will cost us billions. Small changes can be made to our system that will decrease the cost of healthcare dramatically. Small businesses are the backbone of our economy, yet account for the biggest reason people are uninsured: small businesses cannot afford health insurance for their employees. Large corporations and labor unions are allowed a lot of leeway when choosing their healthcare plans, but small businesses do not get the same options. If we could loosen these rigid federal laws that are holding our small businesses back, we would be on the right road to making a complete healthcare overhaul. For instance, we could allow small businesses to band together across state lines to spread risk and increase their bargaining power, or allow them to purchase individually owned healthcare plans, such as health savings accounts, for employees using pre-tax dollars.These simple fixes require LESS government regulation, instead of total government regulation as is now being suggested by the Obama administration. At the NCPA we are working hard to provide free market alternatives to America's problems! www.familyissues.ncpa.org
This is ridiculous. Healthcare badly needs to be reformed, but instead of making easy fixes to what is broken, congress is just coming up with a new universalized system that will cost us billions. Small changes can be made to our system that will decrease the cost of healthcare dramatically. Small businesses are the backbone of our economy, yet account for the biggest reason people are uninsured: small businesses cannot afford health insurance for their employees. Large corporations and labor unions are allowed a lot of leeway when choosing their healthcare plans, but small businesses do not get the same options. If we could loosen these rigid federal laws that are holding our small businesses back, we would be on the right road to making a complete healthcare overhaul. For instance, we could allow small businesses to band together across state lines to spread risk and increase their bargaining power, or allow them to purchase individually owned healthcare plans, such as health savings accounts, for employees using pre-tax dollars.These simple fixes require LESS government regulation, instead of total government regulation as is now being suggested by the Obama administration. At the NCPA we are working hard to provide free market alternatives to America's problems! www.familyissues.ncpa.org
What people want:
- Lower costs.
- No decrease in access to physicians and complex cutting edge treatments.
If someone wants to explain how we can get both I'm all ears. But my suspicion is that we can't lower costs without delivering more care.
Granted, a lot of care given today is waste. But most people do not want the sort of efficiency that causes them to not get what they want - even when what they want is a waste. People who claim there's a great solution are probably willing to make trade-offs that a large portion of the population do not want to make.
If you are uninsured and does not have insurance, you should check out the website http://UninsuredAmerica.blogspot.com - John Mayer, California