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Brad DeLong's health care plan is outed
It is described as utopian, read it here, excerpt:
20% Deductible/Out of Pocket Cap: The IRS snarfs 20% of your family economic income and uses it to pay your family health bills. If your expenses in a year are less than 15% of your family economic income, the balance is returned to you with your tax refund check (or stuffed into your IRA).
Single-Payer for the Rest: All family health bills greater than 20% of your family economic income are paid by the federal government out of the 5% not returned (and perhaps, someday general revenues). The main point, after all, is insurance: if you fall seriously sick, you want right then and there to be treated whether or not your wallet biopsy is positive.
Sin Taxes: on Tobacco, Gorgonzola, Three-Liter Bottles of Liquid High-Fructose Corn Syrup, Tanning Clinics (Melanoma), et cetera: Sin taxes (and, perhaps, someday general revenues) pay for an army of barefoot doctors and nurses and mobile treatment vans roaming the country and knocking on doors: Let me examine your prostate. Mind if I check your refrigerator and tell you how to eat healthier? Have you exercised today? I'm a Pilates instructor, and we could do a session now? Are you up on your immunizations? Anybody here have a fever and need antibiotics? Come on out to the van and I'll clean your teeth." The idea is to make the preventive care cheaper-than-free, to insure that nothing with a high long-run benefit/cost ratio gets left undone because people would rather get a bigger check the next April to use to buy an HDTV.
A Lot of Serious Research on Best Public-Health, Chronic-Disease, and Hospital Practices
That's it. No deduction for employer-paid health expenses. No insurance companies.
There is plenty of further rationale given, do read the whole post. But I have to say, those rubber gloves have me worried...
Posted by Tyler Cowen on June 8, 2007 at 05:01 PM in Medicine | Permalink
Comments
Every single one of these plans to "fix" healthcare reminds me why I should just be happy with what I have.
Posted by: Chris at Jun 8, 2007 5:35:13 PM
So in other words, the sole purpose of living is to stay alive ...one.....more......day..... And you have no choice in the matter. Great.
I guess with the five bucks I have left over after payroll and sin taxes I will take a day off of work. And do laundry, or something.
Posted by: steveintheknow at Jun 8, 2007 5:40:48 PM
If your expenses in a year are less than 15% of your family economic income, the balance is returned to you with your tax refund check
What if you get the refund electronically?
OH!!! I see, he's dumbing it down for people who can't understand the concept of receiving money from the government other than as a paper check.
Posted by: Person at Jun 8, 2007 5:47:05 PM
Oh joyousness, I cant wait till the U.S becomes more like Western Europe after the 08' election. High taxes, low rates of GDP growth, high unemployment, larger immigration problems, ever expanding government outlays to healthcare and social security. On top of all of that, this is America so all of these new government programs will be run much much more inefficiently in comparison to their European counterparts and will probably deliver much less bang for the buck. Sounds like lots of fun and a much better alternative to the current reality. Im giddy like a 10 year old on Christmas morning for this new America. Nothing like replacing a really screwed up health care system with an alternative that will not only make the current health care situation worse but will also throw the economy into the gutter as well. What is it about Germany, Italy, and France that makes it look like a good idea to emulate their government and market structures.
Posted by: John Pertz at Jun 8, 2007 5:53:56 PM
I could buy insurance for a lot less than 20% of my gross.
And how's the inevitable rationing going to be handled? Too bad he doesn't mention that.
(Inevitable because, well, even all that money is very much finite, and someone has to decide when to stop paying for grandpa's hopeless only-delaying-the-inevitable-at-great-expense cancer treatments, or hip replacements for people in very ill health anyway, etc.
When people are spending their own money, or the benefits of insurance they contracted for, it's nobody else's business if they spend it on things like that; hell, fight for every last moment of breath - it's your dime and your life.
But when the State takes everyone's money and pays it out to everyone that "needs" it, someone has to define "need" and "enough". Not because someone hates sick or poor people, but because there's never enough money to pay for everything - even if the easiest kind of money to spend if "somebody else's".)
Posted by: Sigivald at Jun 8, 2007 5:58:09 PM
Based on the preceding comments, there seems to be nothing substantively wrong with DeLong's plan.
Posted by: Commenterlein at Jun 8, 2007 6:00:53 PM
I seem to have trouble with everyone's health care plan... long on plans; little on problem identification. Exactly which specific problem is Mr. DeLong's solution trying to solve?
Posted by: James R Ament at Jun 8, 2007 6:01:50 PM
... obviously excluding Sigivald's comment, which was posted while I was writing.
Posted by: Commenterlein at Jun 8, 2007 6:02:06 PM
20% of my gross income is a fat load to pay in addition to my current tax burden. That'd raise my effective tax rate to basically 50%, considering that my health insurance costs me 3.25% of my gross income now and covers pretty much anything with a $700 deductible, I'd be getting pretty awfully screwed over under DeLong's plan. Even if I got it back, I'm still lending the government 15% of my income, interest free, for a year. No thanks.
Posted by: Timothy at Jun 8, 2007 6:14:47 PM
Why, oh why does anyone listen to De Long?
As for the inevitable rationing, De Long should know that the British NHS is refusing care to the morbidly obese.
Posted by: Lee at Jun 8, 2007 6:18:57 PM
From looking at DeLongs photo, clearly he cant make good decisions about
his own lifestyle. Do you want this guy and his minions telling you
how to exercise. Give me a break.
Commenterlein, darling, Ive seen you defend DeLong before, from your
trust-funded perch in Cambridge MA. While I understand
defending DeLong is a very unenviable position, perhaps you could offer some
substantive insights yourself, rather than a characteristic cheapshot.
Posted by: jack at Jun 8, 2007 7:10:54 PM
A seriously ill Paris Hilton? This is a new one... Acquired acephalia, that must be it.
Posted by: A Tykhyy at Jun 8, 2007 8:46:09 PM
Jack, to be fair he did come back and note that there had been a substantive objection. Or rather, an apparently substantial gap in DeLong's thinking.
Posted by: Bernard Guerrero at Jun 8, 2007 9:15:47 PM
Utopian, dystopian, whatever.
Posted by: MattXIV at Jun 8, 2007 9:39:48 PM
I think you guys are focusing on the single payer part and missing out on the first, and most important part: up to the 20% of income deductible the health care system will be strictly capitalist pay-to-play. This idea is great because it has all the important economic effects of a free market system: consumer price pressure, competition, etc. while at the same time the plan gets rid of health insurance bureaucracy and market failures, shields individuals from catastrophic expenses, and provides public health initiatives for services that have exceptionally high cost to benefit ratios (i.e. immunization, birth control, preventative care).
Posted by: nelziq at Jun 8, 2007 9:49:02 PM
Jack,
I actually think that defending Delong is by and large a pretty good position to be in. In any case, the merits of his plan are pretty obvious - a deductible equal to 20% of annual income is huge and gives extremely powerful incentives to make care more efficient. Nelzig right above nails it. Also, pretty much any serious healthcare economist I know agrees that we do way too little on preventive care and blow billons because of it, so addressing this issue is certainly a good idea. Finally, sin taxes don't force anyone to exercise more or drink less but help to internalize the obvious negative externalities of bad personal behavior on our health system. Pigouvian taxes and all that jazz, you can ask Mankiw for the details. So from my trust-funded perch in Cambridge, MA, Delong is looking pretty good at this point.
Posted by: Commenterlein at Jun 8, 2007 10:13:35 PM
I'd be willing to consider a reasonable deductible, but 20%?
Non-starter.
Posted by: fustercluck at Jun 8, 2007 11:29:36 PM
Finally, sin taxes don't force anyone to exercise more or drink less but help to internalize the obvious negative externalities of bad personal behavior on our health system.
1. The externalities of health "sins" are not accurately quantifiable - too many variables all affecting each other in obsurely complex ways.
2. There is no reason to believe that even if they were quantifiable, that Congress would set the sin tax to fit the crime, as it were.
3. And even if they did it right, I'm not sure it's moral to penalize the guy who is genetically predisposed against melanoma for going to the tanning salon.*
* The "Stay out of the sun so you don't get skin cancer" vs. "Sunlight produces Vitamin D which is twice as good for you as smoking is bad" is a good example of the aforementioned complexities. If that's not enough - recently banned in NYC restaurants, Margarine is a good source of the natural form of Vitamin D.
Posted by: Jonas Cord Jr. at Jun 9, 2007 12:29:43 AM
Commenterlein:
Look, Im sure that you were not a fan of my original post. However, how exactly does Delong's plan not amount to a GIGANTIC exploitation of the healthy by the unhealthy. The only winners in this plan are the terminally sick or the elderly. Everyone else is a loser. What about all of those people in this country whose health care budgets do not consume more than 5 percent of their annual incomes? You dont see any moral hazard implications with this program? How about the evolution of health care technologies that will allow the younger generations to consume scarce health care resources much more efficiently? How, exactly do you square up with a healthy person who has clearly paid more into the system than drawn out of it? Or do you simply just say thats social justice, hope you enjoy?
Posted by: John Pertz at Jun 9, 2007 1:26:31 AM
The coming years will be a struggle for America's soul; will you remain a semi-decentralized, free country or turn into a centralized and authoritarian country like we have in Europe. Unfortunately, I think freedom is doomed. Scumpeter was right.
Posted by: Erik at Jun 9, 2007 3:26:08 AM
The disturbing thing is all the Kossacks in DeLong's comments section criticizing him for not being redistributionist enough.
I don't have a problem with sin taxes as preferable to taxes on productive activities (though tobacco usage likely reduces government expenditures over a lifecycle), but having government-funded nannies rummage through my refrigerator is appalling.
The bureaucracy required to be attached to the IRS to determine if the holistic crystal shaman is a legitimate medical expense is also something to fear.
Posted by: Ted at Jun 9, 2007 10:37:54 AM
Definitely "utopian". His plan is a non-starter on so many different levels it is difficult to know where to start. However I will deal with two of them.
(1) A 20% deductible on income simply will not happen. If we go down this road, it will be a 60% tax on some, and no tax on others, and a range in between. To know this, one only needs to read the comments on the lefty blogs. They are extremely unhappy that income is not redistributed far more with this program. This item alone makes DeLong's plan pointless.
(2) The army of doctors and nurses going around in vans is asinine. Anyone trying to come into my house to look in my refrigerator, or to give me a physical, is going to have my foot shoving their prostate out of the top of their heads. I can only think that DeLong was drunk when he wrote this part. In addition, I simply don't buy the preventative-medicine-saves- lots-of-money crap that is constantly slung around by universal care advocates. Unless you force overweight people to eat better and exercise more, then Americans are just going to be as unhealthy as ever. Preventative medicine is not going to change this behavior, unless you really mean to enact coercion to force it. If we go down this road, I will take up arms with my fellow, but obese, Americans and start shooting the government employees trying to accomplish it.
Now, is there anything good about the plan? The one item that I kind of admire is the 20% deductible with refund option. This is nearly the same as a high deductible, catastrophic health insurance plan. And, if it were refunded on a monthly basis, it could be quite palatable to me. However, since even the Left won't support this, I don't even have to consider it.
Posted by: Yancey Ward at Jun 9, 2007 1:27:51 PM
Unless you force overweight people to eat better and exercise more, then Americans are just going to be as unhealthy as ever.
Well, Delong did pose the idea of sin taxes on things that are bad for you (HFCS, hydrogenated oils, etc.). We could certainly calculate an "expected health care cost" associated with such behaviors, and internalize the externality. Of course more-at-risk people should get a greater share of the externalities, but that is hard to do.
Similarly, you could subsidize gym memberships, yoga, etc. in proportion to how much they are estimated to reduce health care costs.
No one's proposing a command-and-control policy forcing people to exercise.
In fact, the army of barefoot doctors isn't forcing anything either. It's just making things very accessible (OK, and sometimes annoying.) I don't think that part of the idea is terrible although it may not be very helpful overall.
Posted by: mkayser at Jun 9, 2007 2:32:17 PM
This idea is great because it has all the important economic effects of a free market system
Except, you know, freedom. For Christ's sake, just shut up.
- Josh
Posted by: Wild Pegasus at Jun 9, 2007 3:31:12 PM
I like James Ament's suggestion that we nail down what problem we are trying to solve first.
It might be a reasonable thought experiment to start from a "blank slate" of completely unregulated health care, and then step through each of the shortcomings that needs to be addressed.
One that I can think of is equity: many people would not be able to afford unregulated health care (whether because they have a condition that is inherently too expensive to treat, or because they are simply poor, or both). For many of us, this is A Bad Thing. Some people don't particularly care.
I guess the question is, on what principle do we base the idea that this situation needs redistribution? Well, one is simple utilitarianism -- basic health care is an important need. The marginal benefit of basic care for some poor dude is higher than the marginal benefit of a 4th Hummer for some rich dude, even though they may cost the same amount of money. So under this theory, the government is justified in redistributing some money in order to maximize aggregate utility. One question that comes out of this is, are we sure that redistribution specifically targeting *health care* is more helpful than plain-old redistribution to poor people? I would say yes, it is more important, because "poor sick people" have more severe disutilities than "poor people".
Another traditional government-intervention rationale is market failure. I am not sure to what degree an unregulated health care market would exhibit market failure. Some people might say "moral hazard", but I'm not sure whether it qualifies.
There is a lot more ground to cover that I won't try to touch on, but this sort of blank slate analysis would be helpful to see more often, I think.
Posted by: mkayser at Jun 9, 2007 4:18:40 PM
