Practically speaking… at the moment the health system in the US, insofar as it exists, it set up on the basis that your employer will pay for your health insurance. If every employer in the US simply decided that from now on the money they paid to subsidize employee health insurance was to go to their shareholders instead, and people would only have health insurance if they could afford to buy an individual plan, then the US would suddenly face a health care crisis the like of which it’s never seen: not just 45 million people without health insurance, but probably more like 250 million. The whole health “system” would crumble into bankruptcy.
Wal Mart’s moral obligation to provide health insurance for all its employees arises from the fact that it makes its profits from a system which assumes that all major employers do so. If all major employees imitated its business model, the system would collapse and kill hundreds of thousands.
This was in response to a story Rivka had published earlier about Wal-Mart’s paying many of its employees so little they cannot afford Wal-Mart’s health insurance plan:
So imagine my surprise when someone came into my office today who has a full-time job. She works 40 hours a week at Wal-Mart. Like many of their employees, she can’t afford their health insurance plan. Even if she could, they wouldn’t cover her HIV care because it’s a pre-existing condition. It isn’t even about paying for the drugs, which are expensive – she qualifies for the state AIDS Drug Assistance Program, which picks up all of her prescriptions for her. Wal-Mart won’t pay for office visits to an HIV specialist, and they won’t pay for the blood tests she needs to monitor her condition.
So you, the federal taxpayer, will be paying for her medical care. Today you also gave her $40 worth of food vouchers, because after she pays her rent (which eats more than half her wages, and she lives in a slum) there’s not a lot left over to buy food. I’m sure you’re glad to do it, right? You don’t want her to die.
And you don’t want Walmart’s $8 billion profits and 21.6% return on shareholder’s equity to drop, the way it probably would if the public weren’t picking up the cost of keeping Wal-Mart associates and their children alive. You wouldn’t want any members of the Walton family to drop off the list of the richest people in the world. (Imagine if only four of them were in the top ten.)
Now, four years on, McCain wants to use the Wal-Mart model of health care for all the 71% of Americans with health insurance () who are insured via their employers. Douglas Holtz-Eakin, chief policy adviser for McCain, calculates that over 10 years, the US government will get $3.6 trillion increased revenue from taxing employer-provided health insurance (cite).
To understand this, I use the UK model of national health insurance (figures in US dollars): Supposing you earn $2400 a month, and your employee contributions to health insurance are 11%. (That’s the UK’s national insurance rate, covering health and other benefits.) So you pay $264 a month for your health insurance.
Under the current US system, that $264 is not taxed: it gets taken off your pay before tax, and goes to the employer’s health insurance company whole and entire, along with whatever contribution your employer makes, which contribution is also not taxed: so assuming that your employer matches your contributions to your health insurance (also the rule in the UK system) your health insurance company gets $528 per month to cover you.
Under the system McCain proposes, that $264 will be taxed: $39.6 (federal tax at 15%, at least) will be deducted from it. Furthermore, your employer’s contribution to your health insurance will be also taxed. So unless your employer is willing to increase what they pay, you will need to find about $80 more each month to get the same level of health insurance as before, which is in theory going to be paid for by a tax credit at the end of the year. That’s fine if you have the kind of cash flow that can easily compensate for $80 less each month with a tax credit that will hopefully equate to everything you paid out before: $2500 tax credit voucher if you’re an individual, $5000 if you’ve got family. (And issues about which families will be recognised as entitled to the double tax credit voucher, in states that don’t recognise same-sex couples and their children as “family”?)
Joe Biden described this healthcare plan in the VP debate:
Now, with regard to the — to the health care plan, you know, it’s with one hand you giveth, the other you take it. You know how Barack Obama — excuse me, do you know how John McCain pays for his $5,000 tax credit you’re going to get, a family will get?
He taxes as income every one of you out there, every one of you listening who has a health care plan through your employer. That’s how he raises $3.6 trillion, on your — taxing your health care benefit to give you a $5,000 plan, which his Web site points out will go straight to the insurance company.
And then you’re going to have to replace a $12,000 — that’s the average cost of the plan you get through your employer — it costs $12,000. You’re going to have to pay — replace a $12,000 plan, because 20 million of you are going to be dropped. Twenty million of you will be dropped.
So you’re going to have to place — replace a $12,000 plan with a $5,000 check you just give to the insurance company. I call that the “Ultimate Bridge to Nowhere.
(I see I wildly underestimated the cost of US health insurance. In the UK we pay far less and get better health care, but that’s just how it is.)
Ace of Spaces reports this as (via): “Biden falsely said McCain will raise taxes on people’s health insurance coverage — they get a tax credit to offset any tax hike. Independent fact checkers have confirmed this attack is false.” (This is number 7 in a list of “14 Biden lies”.)
Well, it’s true, while John McCain’s advisor says explicitly that the tax hike on health care insurance payments will raise $3.6 trillion, John McCain’s website makes no mention of tax hikes, the McCain campaign has made clear in media interviews that the plan is to raise trillions by making what your employer pays for your health care a taxable benefit, not an untaxed benefit. I don’t know how Ace’s “independent fact checkers” could have missed the news stories about this back in April and May and June (via): I’d suggest Ace fire them and hire ones who actually know how to use google, but I gathered by googling that this list of “Biden lies” is not even original to Ace, though the funnysite I was looking at for current Republican lies linked to Ace as the originator.
The current American health care system is the worst in the developed world (WHO ranks it at 37*): it’s even worse than health care systems in some developing countries. And it’s more expensive than any other health care system in the world.
McCain’s plan is to make American health care worse than it already is – to throw more and more Americans out of the pool of people who receive health care via their employer’s insurance plans, while giving them a tax break for choosing their own personal insurance plan. Ezra Klein explains why this is not revenue neutral, while Publius at Obsidian Wings points out that this plan just assumes individuals have exactly the same bargaining power as corporations do.
It appears, judging by this much-memed list of “lies”, that the only way Republican wonks can now think of campaigning for McCain is to flatly lie about about what his policies actually are.
*International stats on health care systems below the cut
WHO’s system is to rank health care systems by 8 measures: I’m not going to deal with all of them (you can see them all here). The big one I’m skipping is responsiveness, which measures how well user expectations of the non-medical aspects of their health care are met: the US scores 1 on this, and shares with 35 other countries a fairly good level of distribution of responsiveness. Responsiveness, as you can see by the distribution, while important as to how people feel about their health care system, doesn’t necessarily have a lot to do with how well a national health care system performs or how expensive it is.
DALE (Disability Adjusted Life Expectancy) is “the expected number of years to be lived in what might be termed the equivalent of ‘full health’.” “To calculate DALE, the years of ill-health are weighted according to severity and subtracted from the expected overall life expectancy to give the equivalent years of healthy life.” cite The US’s DALE rank is 24. The UK’s DALE rank is 14. (Andorra, Australia, Austria, Belgium, Canada, France, Finland, Greece, Germany, Israel, Italy, Luxembourg, Malta, Monaco, the Netherlands, Norway, Spain, Sweden, Switzerland, also all do better than the US.)
On distribution of health care, the US is 32: the UK is 2. (Andorra, Australia, Austria, Belgium, Canada, Chile, Cyprus, Czech Republic, Denmark, France, Finland, Greece, Germany, Iceland, Ireland, Israel, Italy, Luxembourg, Malta, the Netherlands, New Zealand, Norway, Poland, Spain, Sweden, Switzerland, also all do better than the US: Chile is the only country in the world that does better than the UK on distribution.)
On fairness of financial contribution, the US is ranked 54-55 (equally with Fiji). (WHO measures this by reckoning a system is absolutely fair if the burden of total health payment for each household is the same. So the measurement requires (a) how much the household spends for health services and (b) how much is the household’s effective income above subsistence.)
Colombia is ranked at 1. Luxembourg is ranked at 2. Andorra, Austria, Australian, Bangladesh, Belgium, Canada, Cuba, Denmark, Dijbouti, Finland, France, Germany, Greece, Guyana, India, Ireland, Israel, Italy, Japan, Kiribati, Kuwait, Libyan Arab Jamahiriya, the Maldives, Malta, the Marshall Islands, Micronesia, Monaco, Nauru, the Netherlands, New Zealand, Niue, Norway, Palau, Saudi Arabia, the Solomon Islands, Spain, Sweden, Switzerland, Tuvalu, Tanzania, Uruguay, all have fairer systems of financial contribution to health care than the US and Fiji.
Fiji, by the way, has a DALE health level of 106 and ranks at 71 in distribution: it ranks 87 in health expenditure per capita in international dollars, and it is ranked at 96 in overall health care system performance.
The UK is ranked 8-11, equal with Japan and Norway on fairness. We are 26th in the world on health expenditure per capita in international dollars. And we are 18th in the world on health care performance over all.
Norway is about the same as the UK on DALE (15) and almost as good as the UK on distribution (4). They do better than the UK overall (Norway’s WHO rank is 11, ours is 18). Norway is 16th in the world on health expenditure per capita in international dollars.
Japan is best in the world on DALE, between the UK and Norway on distribution (3) and slightly better than Norway on overall performance (10). Japan is 13th in the world on health expenditure per capita in international dollars.
The US is first in the world on health expenditure per capita in international dollars. No other country pays more on health. Yet on overall perfomance, the US is 37th. (Andorra, Australia, Austria, Belgium, Canada, Chile, Colombia, Cyprus, Denmark, Dominica, France, Finland, Germany, Greece, Iceland, Ireland, Italy, Japan, Luxembourg, Malta, Monaco, Morroco, the Netherlands, Norway, Oman, Portugal, San Marino, Saudi Arabia, Singapore, Spain, Sweden, Switzerland, and United Arab Emirates, all do better overall.)
Fifty-three countries in the world – including all of the countries that have DALE levels higher than in the US, and all of the countries that distribute their health care resources more successfully than in the US – manage to distribute the burden of paying for health care more fairly than in the US. And all of those countries pay less per capita for health care than the US does.