My Cognitive Surplus

Healthcare benefits and logic of universal care

In a recent post, the Center for Budget and Policy Priorities advocates for taxing health benefits to pay for universal health care.  Actually, they call it "Limiting the Tax Exclusion for Employer-Sponsored Insurance" (say what you will about Frank Luntz, when he does his verbal misdirection at least it's pithy).  It think this is a lousy idea which from what I can tell is now out the picture.  It did however clarify some issues around health care reform.

The idea for taxing the benefits is that you would tax benefits for the better compensated workers who are getting the biggest tax break because of their relative marginal tax rates.  The problem is that from what I can tell, these are the people for whom the health care plans were set up and everyone else is just along for the ride.

Most insurers require groups the insure to have at least 75% of eligible members participate.  The reason for this is that they don't want to get just this sick people.  To get people to participate, the sponsor (usually the employer) subsidizes the premiums so that young, healthy employees don't opt out.  Also, they encourage workers with low marginal tax rate to participate (a group who gets less of a tax subsidy and would notice the cost more).  Basically, sponsors are going through a great deal of effort and cost to provide a benefit for a slice of their workforce which a) they value, b) needs health care and c) does get a benefit from the tax exclusion.  In other words, when the insurers are limited on who they can exclude, they want everyone in the pool.  The company realizes the value of the benefit to employees who need/want it  (employees who have families/kids or older workers who have health needs associated with aging) and who they tend to value (older, better compensated workers e.g,, managers or technical specialists and long-term employees) and drags everyone else in to make sure they can give the benefit to the people to whom they want to give it.

This in essence is the argument for universal care writ small.  Everyone needs health care, but it gets unavoidable from the time you have kids to the time you die.  For the poor and the young, the marginal cost exceeds the benefit compared with other goods, but the business logic for the payor is that if you exclude them from the pool, the average cost goes through the roof.

Why torture? The answer is found in six words.

"Bin Laden Determined to Strike in U.S"

Section head from the August 6, 1001 Presidential Daily Briefing

As soon as 9/11 started, the last administration knew that it had been warned and that it blew it.  The next eight years were spent trying to find a justification or an alibi.  Why did we need to strike at Iraq?  Because the Bush administration needed to change the whole world to cover their mistake.

When they tortured in Iraq, the WMDs gave up pride of place to the links between Al Qaieda and Iraq - or as they personalized it, Bin Laden and Saddam.  It couldn't have been  just one guy in Afghanistan (about whom they had been warned). It had to have been a global conspiracy (echoes of a "A conspiracy so vast...").

Josh Marshall said this past week:

In any case, for all the puffed up chests these folks always had a certain air of needing confirmation or perhaps better to say validation about them. The desire was intense. And now, seeing it all together, you can just see Cheney -- who was really one of these guys -- having a few of these 'high value' guys in his grasp and just not stopping the waterboarding until they admitted it was true.

That's because they were desperate.  And they were desperate because they knew they failed.  They knew the Clinton guys were right.  The reality of the what they had let happen drove them around the bend.

We're an empire now, and when we act, we create our own reality.

When you realize how desperate they were, that quote from 2002 takes on a whole new meaning.

Thoreau and the Modern Conservative Movement

I was listening to the BBC radio program(me) In Our Time, hosted by Melvyn Bragg, about Henry David Thoreau. What struck me was that Thoreau was in many ways truly conservative. He was anti-modern, in favor of individual rights, an entrepreneur and an advocate of self-reliance.

He was also a Unitarian and against foreign wars. Which means he would be instantly outcast from the modern conservative movement. So here we have a movement that requires you to sign up for one of your crazier, religious movements, a crazy foreign policy or a be willing to pay lip service because you believe that a rich, white man can't catch a break in America.

I don't really expect the Republican party to go away, but at some point it is possible to use up the tremendous advantage of being on party in a two-party world.

Health Care: The Public Option

According to a Harvard study (pdf) ("Health Care Delivery Covered Lives - Summary of Findings"; John F. Kennedy School of Government),in 2007 Medicare and Medicaid insured about 15% of the population, slightly less than the overall uninsured population. 

 

One of the easiest ways to get to Universal Health Care is to expand Medicare by letting people either buy-in or extending eligibility. It also sets a floor offering that keeps the other players honest.

Another approach, a voucher system for health care  seems to make intuitive sense and would make it easier for individuals to buy into supplemental coverage if they want it.  If you created coverage plans that included higher funding for diagnosed conditions (AIDS, Diabetes, etc) on top of a base actuarially appropriate rate, people could go to existing insurers and buy coverage.  Also, the insurers could put their money where the mouth is on incentive and disease management programs.

The Frontiers of Euphemism: Banking

So the New York Times reports that Bank of America needs a "cushion" of $33.9B.  This is on top of the "fluffy pillow" of $20B it got in January and the "warm blanket" of $15B it got in the fall.

This must be particularly surprising to them given that as recently as March they thought they could pay back the first $45B.

This is a leaked result of the stress test.  The stress tests were supposed to model what the banks' capital structure would look like if:

• Unemployment hit 8.9% in 2009 and 10.8% in 2010 [March: 8.5%]
• Home values dropped an additional 22% in 2009 [Q4 2008: -6.5% ~ 23% annualized)
• The economy contracted by 3.3%  [Q1 2009: -6.1%]

Doesn't look that much more stressful than real life right now.