All that money is pocketed by businesses run for profit. It's pocketed because it can be. It can be because untreated a sinus infection can kill you. Not a bad business to be in by the standards of business.
But it does not need to be as expensive as in the US i.e. twice as expensive as anywhere else and no better outcomes. Insurance companies are not the party that is benefiting the most. They make money and probably more than they should but this does not explain the difference. Most doctors are also not swimming in money. So where does it go?
One is Pharma companies who are then using that money to do marketing. So Pharma Marketing gets a share including doctors taking money from that source (another whole can of worms).
Larger hospital organizations and their management as one of the stronger buyers of services being able to push for high rates and low salaries.
Bill adjusters, debt collectors, partly working in insurance companies (where they contribute to insurance cost) to deal with the chaotic billing, payments and non-payments.
There are many, many who earn a good living who would not be able to get similar jobs in other advanced countries as these jobs simply do not exist. The US system is inefficient but there are powerful incentives for many to keep it going.
It is really important to separate access from payment. Otherwise small wounds will fester until it is too late or really expensive. A good compromise imho. is having some small access fee (in Germany we had a once per quarter 10 Euro fee on top of a 5€ per prescription fee. That was too much for low income and too much paperwork and the former was scrapped) as we know there is a huge difference between demand for free services and services that cost $0.01.
To provide healthcare you need doctors, who need money to pay rent and student loans. You need an office to put the doctors in. You need drugs and medical devices, and researchers to come up with them. You need lawyers to keep the doctors from conducting the Tuskegee Experiment. And nurses and lab techs and janitors etc.
That is all business stuff. Paying employees and managing offices etc. If you don't pay the employees enough then they get another job and quality of care suffers. If you pay them too much then costs get out of hand.
The way you determine how much is the right amount is by letting people choose how much to pay for it. If you have a runny nose and the doctor wants ten million dollars to see you for five minutes, you blow them off as unreasonable and get a different doctor. If you demand to see them for $10 and that isn't enough to cover their costs, they blow you off as unreasonable and get a different patient. Somewhere in the middle there is a price above what it costs and below what it's worth where you neither die of a sinus infection nor sell your first born to have it cured.
There are a lot of reasons this works poorly in the US. Low deductible employer-provided health plans making consumers price insensitive, lack of price transparency, an excessively burdensome FDA approval process that impairs competition between pharma companies, etc. But those are specific failings that could be addressed.
Switching to central planning just adds a new problem without solving the existing ones. If consumers pay nothing, not even actual cost, there is even less incentive to forego unnecessary procedures. Setting prices by committee is a sure way to either overpay (and waste money) or underpay (and get supply shortages). If drug companies still set prices then costs remain high, but if they can't charge the prices they do and still have to go through the same very expensive approval process, you stop getting new drugs. And then you add another trillion tax dollars to the budget which every campaign donor in the country will have a chance to divert a chunk of away from actual medicine and into their own pockets.
> All that money is pocketed by businesses run for profit.
The significant majority of that money typically goes to employees, not shareholders. The costs are too high, but it's not because the average medical practice is turning a huge profit, it's because the existing regulatory environment causes providing medicine to be unnecessarily labor intensive (i.e. inefficient).
In the UK for instance, we do not have access to the best drugs because they are too expensive.
A large part of US insurance expenditure goes to pharma...
Moreover, ban drug marketing if you like, but keep in mind two things. One, the marketing is primarily so "worthwhile" because of the price insensitivity. Patient requests equivalent but better-advertised drug even if it costs $75,000 more dollars, when they're not the one paying. So fix that and the marketing budgets drop along with drug prices. Two, marketing increases the number of "customers" by more than the cost of the marketing (or why do it?), and the extra money is what both encourages and pays for more R&D.
Then the question is, do you want to decide that amount for yourself, or have someone else deciding it for you?
But that's not a stick up, it's a lack of price transparency. So how about we get a price transparency law?
The "stick up" scenario is limited to emergency care, and there is an argument that emergency services should be provided by the city for that reason. But most healthcare is not emergency services, nor would having your city do that require any kind of national policy -- you can go implement that right now.
It's the exact thing that works perfectly at the local level, because the stick up scenario itself is what prevents arbitrage. People in Houston can't vote to cut local emergency services and then go to the emergency room in Boston when they have a heart attack, because it's too far away.
Now add to that a field of experts, fused together by a lethal threat to their profession (lawsuits with expenses for life if you do damage) - forming a Wagonfort - and you get the perfect mess.
Yet the US medical system is a giant clusterfuck of burned money, and the US food system can provide food at some of the lowest prices in the developed world. US chicken is half what I have to pay in Europe.
Its not ethical business but ethics doesn't matter much these days (devil's advocate here); heck one can argue even legality doesn't matter, as for example Wells Fargo has been getting away with daylight theft that would put a single person in prison for one million years.
1. assume businesses cannot be ethical.
2. so, telling a business to be ethical is pointless
3. to encourage prosocial behavior amongst businesses, they must, therefore, be regulated
4. but, since businesses cannot be ethical, they can use their power to control regulation
how to stop this hellscape? is it possible that assuming businesses cannot possibly act ethically was a lie spread by said companies?
tldr; then what's the solution, assuming regulatory capture is a thing?
True, but isn't that the entire point of hdhps, to minimize unnecessary visits?
They still provide no additional cost annual physicals, so you'll get the required yearly screening.
Additionally, many offices have no cost phone or email advice.
I'm personally quite happy with my family HDHP - and it is nice to have additional retirement savings.
But you have to have a savings mindset; many people don't which is what leads to medical spending increases when a refund comes in.
Well, until you find out that you can only get the physical for free, and physicals are really not worth much. If you discuss anything at all with your doctor that is outside a routine physical, ask any questions, get any advice, and he codes it when he submits the bill -- it won't be free at all, it'll cost you a couple hundred bucks. So there is incentive not to bother.
HDHPs are a great deal for anyone who can set aside the
deductible’s value in cash. They are a bad default. But a good thing to consider if you can set aside some cash.
(The problem with HSA-compatible plans is they have a maximum deductible. They’re thus almost as expensive as non-HDHP plans.)
Relatedly, it seems like there's roughly some 'max' insurance expects you to pay each year, and you can decide whether to take the risk using a high deductible plan, and potentially not have many expenses, but lower premium, or have higher premium up front.
8 years ago, our HDHP was ... $280/month. It's now north of $800, and the deductible went up. Yes, we're a bit older, too but it's still a bit crazy.
$280/month, with high deductible, meant that, in a bad year, we might have $15k in expenses before the insurance covered everything else. Now, it's more like $10k per year in premiums, and another $10k+ before insurance really would kick in. Catastrophic need? It's fine - I don't want to have to face a $400k bill. Day to day? This stinks.
Many people had policies with $100k yearly limits, any serious condition and they basically didn't have insurance.
Because it means I get to choose between $500 a month with a $6,500 deductible, and HSA-compatibility, and $150 a month with a $8,000 deductible. The latter is a better fit for my risk profile.
Unfortunately, my experience, at least in my state, is such that none of the premium options are remotely affordable now. $2000/month with a $1000 deductible per year, or $1300/month with an $11000 deductible. Neither of these are anywhere near 'affordable' in my book.
The cost is spread amongst all tax payers and costs kept low.
I honestly don’t understand why not every single American is screaming for access to health services that are literally on their front lawn.
I cannot fathom this is any way shape or form.
The vocal minority of people who do not have health insurance through work, not receiving subsidies, not receiving Medicare, and not receiving Medicaid are the ones clamoring for universal healthcare. Just because they’re loud doesn’t mean they reflect the will of the masses.
Vocal minorities don’t win elections. They just get a lot of news coverage.
I wouldn’t assume that having coverage means you’re happy with the situation.
However, since my friends and family do not all have decent insurance and cannot cover their high deductibles if things go even slightly wrong, and since I personally was in a place not so long ago of delaying treatment on an ongoing health problem I've been having due to a lapse in coverage due to a job change, and since my loved ones have recently been in financial situations that disincentivize them from getting treatment to improve their quality of life, I would be happy to pay (ahem) higher taxes (what's a premium again?) in exchange for peace of mind regarding my future health and that of my loved ones.
And the health of people that I do not even know.
What do you suggest we do?
> I honestly don’t understand why not every single American is screaming for access to health services that are literally on their front lawn.
You think we aren't?
You think it matters?
A good test of a country's quality of healthcare is where people that don't have to worry about money go to get treated....that's currently the US.
It has problems, but sacrificing quality for nationalization is not the solution.
If you have any kind of moderate condition in the USA you are likely screwed. Of course our system protects against catastrophic incidents and helps with basic checkups but everything in between is not covered by most plans.
Do you think $500 a month is cheap? That's insane - that's about a quarter of my entire income tax in the UK.
> It has problems, but sacrificing quality for nationalization is not the solution.
But both life expectancy is lower and infant mortality is higher in the US than in the UK.
What quality do you think you'd be sacrificing? I'm getting better life expectancy and infant mortality than you are, and I'm paying a lot less than you are.
It is a bad thing that tax withholding is one of the few ways Americans can have savings. When you live check to check this can be your only option.
If Uncle Sam can save a lump-sum for you by deducting from your paycheck, you could have done the same (in fact, better) with a bit of resolve and a bank account.
I would say that for most Americans who are cash poor, they intentionally do not optimize their taxes to break even, but rather to ensure they never end up owing the government money at the end of the year.
The rationale for this is pretty simple. Even if you're poor, $50 a month in extra income isn't going to make or break you, but an unexpected bill for $600 in April can really mess you up. On the other hand, just going with max withholdings and discovering in April that you get $600 back from the government is a nice bonus.
It's not the "optimal" decision from a finance perspective, but for a lot of people it works better in real life.
Most people end up with some mix of side income and tax breaks that are hard to predict in advance. If you’re wealthy and you’re off by $500, so what. But if you’re poor and you were off by $500, it can be devastating.
So again, I think it’s rational behavior for some whose life is optimized around avoiding cash flow surprises than optimized amount maximizing return on capital.
I understand that it may seem so. But, when there is millions of Americans in that situation then it is a systemic problem not a personal one.
There is a lot of on-line resources about this topic. e.g. https://www.google.com/search?q=the+cost+of+being+poor
I realize that in many cases the land was technically owned by the gentry but I am talking about the day to day reality.
It seems to me that the social contract implicit in the industrial revolution was that average people gave up some independence (e.g. by being managed in factories rather than being artisans or farmers) in exchange for material prosperity. Now that the material prosperity side of that bargain is breaking down, it's understandable that people are upset.
I don't think the fact that peasants supported themselves through farming is directly relevant since we are talking about where people live not how they work. That is, the fact that they also used their land for their livelihood does not change the fact that they also lived there.
The industrial revolution was a weird time. Our ability to make stuff vastly outstripped population growth. And there was an entire continent (North America) that excess Europeans and Americans could move to. That process is done. Now we’re back to the perpetual grind.
I'm dreading the day that homes are just owned by your employer so you can keep the slaves working for you forever.
Support for the AMA, support for the insurance corporations, local regressive housing policies. This didn't come from some evil lizard overlord.
It came from your friends and neighbours who have arrayed themselves against you. If you don't want to draw battle lines with them, fine, but right now you're fighting shadows.
Firstly, I am an anarchist. I don't vote for anyone. Secondly, anyone, be they politician or just voter, who is trying to enact these thoroughly horrific laws and policies is just flat out telling us how to live our lives while processing it.
I have not had a lease in 3 years. I can't afford anything. So that's where I'm coming from.
Also the website does not permit downvoting responses so you know it wasn't me who voted your newer response down. So you can then conclude it's also possible that people disagree with your original post and that the voting was by someone else.
Single-resident dwellings are the exception throughout human history.
Not that I necessarily disagree with you - I'm still figuring out how exactly to think about this issue.
I can imagine a utopian city where everyone lives in dorms and uses public dining and bath facilities. In that thought experiment, it's hard to feel like anyone's rights are being trampled.
And it's not clear that sharing a flat with another person has to be a worse arrangement than that.
PS: Did you really feel that anyone would find that answer helpful? Or was it just a veiled rendition of "clearly, if you disagree with me then you are a priori too morally bankrupt to have this conversation"? The latter attitude is poor approach to dealing with people who might otherwise be persuaded to your way of thinking.
There are plenty of places in the US where a teller making $15/hr could have their own apartment.
That's what we expect; we only aspire to better things.
The disadvantaged need to step up their bargaining game. When have you ever heard of a businessperson say, “I can’t ask for this benefit, I haven’t done anything to deserve it?” Their whole ethos is to always ask for more to maximize profits and they’ve been quite successful over the years, clearly.
Imagine if the lower income earners rose up to meet the challenge posed by the profiteers.
Which to the greater point - what should the lifestyle expectation be on entry level jobs?
Why should anyone have the right to their own place?
Asking from a point of genuine curiosity. Had not thought about that much until now.
I would suggest that of the two possible hypotheses, the one where the system itself doesn't let them do anything else, might be the one more worth examining than the one that betrays a complete lack of empathy with your fellow citizens.
My personal experience is that many middle class people has little control. But, the effect on them is small. That clothes that they do not need or that extra vacations are not going to make them poor.
But, I am sure that in very extreme cases like gambling addiction middle class people can become poor.
It’s not but it’s a lot easier for many people if they don’t realize they have the money.
> If withholding is less, what’s stopping people from saving the reduction?
Reality. It’s no different then walking around town with a couples $20 bills vs walking around with your pockets empty. Sure you could just not spend any of it but it’s a hell of a lot easier if you don’t even have the option.
Not having cash on hand and being forced to make due with less is surprisingly effective.
I see why you reason like this as the reality seems counter-intuitive. The cause is poverty the effect is harder times taking economic sound decisions. Not the other way around.
One of the many articles about the topic: https://newrepublic.com/article/122887/poor-people-dont-have...
And I would be thrilled to pay more taxes if it meant I could go back to college or have health insurance without risking a lifetime of debt either way.
You guys pay top 3 in the world in taxes towards healthcare, and just as much out of pocket, making it almost 2x as expensive for individuals than for example the nordic countries.
As a comparison 1 year max coverage for all visits and procedures after which you pay $0 is about $125 and another $125 for meds in the nordics. That's with the same $ amount of taxes per capita to healthcare.
U.S. health care spending grew 3.9 percent in 2017, reaching $3.5 trillion or $10,739 per person.
That exceeds tax federal income tax revenue by about $2 trillion
The us govt already spends so much on healthcare.
Down with the AMA. Probably the organization with the most blood on its hands in peacetime America.
And that really doesn't matter because healthcare is so distorted it's tough to even argue that it's a free market at all.
A large population of Americans do not have much savings. Could be bad money management, low paying jobs, bad luck (health issues) etc.
HSA contributions are:
* Deducted from your paycheck and skip all taxes
* Allowed to earn interest, tax-free
* Carried from year to year
* Tax-free when used on health expenses
* Flexible amount
FSA contributions are:
* Not able to accrue interest
* "use it or lose it" per year
* Fixed Amount
Meanwhile, in the real world where the left-hand side of the Bell curve exists, and where many people have poor impulse control, that actually is the solution to some people's inability to save.
Heck, as a student I worked in a union shop where this was actually baked into the collective agreement because of past experience of people not being able to save.
It shouldn't necessarily be mandatory, and there are ways to adjust one's withholding taxes, but it isn't all-bad.
The point of the article was that people are waiting for their large refunds and are deferring health care until they get those refunds. My point is that many of those people won't actually be getting a return and won't be able to afford the health care that they need.
That's why most people choose impound accounts when they get a mortgage. Because they literally can not budget money for the bi-annual property tax bill, so they have the bank take the money every month.
It's also why teachers are offered a 10 check plan or 12 check plan. They get the same money, but most of them choose the 12 check plan, just so they don't have to remember to save money to live in the summer.
That's why the banks offer those "save your pennies" plans. Every time you make a debt card charge, they round up to the nearest dollar and then put the rest in a savings account for you. Because people are that bad at budgeting.
Can you imagine most of the people you know having the ability to set aside 20% of their check each month and not spending it ever?
I don't think this comes down to just individual discipline/budgeting either. If you rejiggled things to that people who live paycheck to paycheck suddenly have non-zero amounts of money in their accounts for most of the year, I bet you'd suddenly see cost-of-living prices/rent adjust upwards so that they're living paycheck to paycheck again, except then they're fucked when taxes are due. Landlords etc aren't gonna leave money on the table.
Wonder how many teachers understand that the net financial effect amounts to a zero-interest loan from themselves back to the school district?
I like the comment lotsofpulp made below: "The solution to people’s inability to save is not for the government to hold their money hostage."
And if you don't believe me on the reducing-sticker-shock part, here's a quote from the Treasury: "it... greatly reduced the taxpayer's awareness of the amount of tax being collected, i.e. it reduced the transparency of the tax, which made it easier to raise taxes in the future."
It is indeed a very underhanded way to con citizens into putting up with stupidly high taxes.
Oh, and for what it's worth, it hits lower incomes harder because they are less likely to hire tax advisors, fancy accountants, etc. to make sense of it all for them. Maybe we would end up with lower taxes on our poorest, too, if they realized how much they were being robbed.
In seriousness, a steady flow instead of a lump sum has benefits for both sides of the transaction.
For example, I shudder to imagine what shopping sprees politicians might engage in, were they bequeathed with the nation's entire yearly budget in one day!
The USG has more flexibility with spending relative to liquid resources than pretty much any entity in the world. I can assure that having tax receipts directly in the bank has nothing to do with the way we spend and would have even less to do with the psychology of our representatives
This is an incredibly bizarre response to someone making the case that you have a factually inaccurate model of the way policy works. On the other hand, I appreciate your comment in that the psychology on display here is another data point in helping me understand the psychology of how an ostensibly voter-driven government can be so consistently stupid and backwards: If people's response to "you're misunderstanding how this works" is effectively "my opinion is as important as any fact"
Your case was basically "trust me, I'm right".
I like taxes being withheld from my paycheck. Dealing with taxes can be incredibly confusing, and it's super easy to screw up. If I could choose between taxes being withheld and making payments on my own, I'd seriously consider having the money withheld.
I'm glad you prefer it. With that said, it ought to be a choice for those who prefer it, not a mandatory procedure. This is especially true in that it makes the taxpayer less likely to realize just how much he is paying. Quote from the Treasury: "it... greatly reduced the taxpayer's awareness of the amount of tax being collected, i.e. it reduced the transparency of the tax, which made it easier to raise taxes in the future."
People pay way too much, and breaking it up into little payments makes them less likely to realize this. It's the same reason salesmen offer it for expensive purchases (cars, iPhones): low payments of $100-$400/mo are much more appealing than a big check all at once.
Maybe you'd have the foresight to get a 6-month CD, then pay your tax with the money at the end of that period (and pocket the interest), but the majority of your compatriots would have long since spent it -- whether on healthcare or a holiday in Vegas, either way it's gone.
I don't understand this claim. Why wouldn't be the baseline be to pay tax on taxable events as they happen (ie per paycheck)? This seems completely reasonable to me.
I don't even see how it softens the psychological blow: again, the baseline of "every time I get paid, I lose X amount of taxes" seems like a pretty reasonable visceral signal of how much you're paying.
Same reason payment plans are offered for cars and iphones. Technically, many people are payed by the hour; should they have to immediately pay tax? Yearly taxes were the norm for a long time, and helped keep resentment of taxes high. It also led to a drastically reduced paperwork burden, which was cheaper for the government, businesses, and consumers.
Sorry, that may have been unclear. I don't doubt the psychological effect is greater when it happens in a lump sum. I'm saying that it's just as easy to say that people overestimate their taxes when they pay in a lump sum and accurately estimate them (at a per-paycheck level): there's nothing about once a year that's special and justifies privileging it.
> Technically, many people are payed by the hour; should they have to immediately pay tax?
No, they're not. Their pay is measured by the hour, but they are _paid_ on different schedules (eg once every two weeks), at which point they're debited for the tax (in that they receive net pay). I don't see how anything else wouldn't be the reverse of having a large refund: ie, an interest-free loan from the government to the taxpayer.
> It also led to a drastically reduced paperwork burden, which was cheaper for the government, businesses, and consumers.
This is belied in the part you elided from the quote you pulled. from the same sentence:
> "This greatly eased the collection of the tax for both the taxpayer and the Bureau of Internal Revenue. However, it also greatly reduced the taxpayer's awareness of the amount of tax being collected, i.e. it reduced the transparency of the tax, which made it easier to raise taxes in the future"
Also, I'm not making the claim that there's no pragmatic argument for annual payments (though I personally disagree). My complaint was that part of your argument rested on treating annual payments as arbitrarily natural and measuring the downsides of withholding from that flawed perspective.
If the majority of the country were constantly being hounded by government tax collectors for being past-due, there would be very little political support for raising taxes in the future.
Right now it's an imaginary percentage the vast majority have no clue of. Ask 10 people in various social circles in your life what their all-in tax rate is. Almost zero will know, and those that think they know are often wildly wrong.
For reference, the average American taxpayer pays over $10k in taxes (https://www.usatoday.com/story/money/personalfinance/2017/10...), which is roughly a 14% rate by the same source. How crazy is that? Americans will be much more willing to push for massive tax cuts after they realize that $10k is being stolen from them every year.
Suppose that the state and the federal government each had a 55% tax rate. Then you would make $1 and owe $1.10. You would owe more in taxes than you make, so you would quit your job.
Of course, there is a simple way for the states to fix this -- move the taxes to the business side. Instead of having state income tax, have payroll tax paid by the employer. Then the employer can still deduct them from its federal taxes. This also improves eligibility for people in your state for various need-based federal programs, because nominal wages will be lower by the amount of the tax when determining eligibility for federal assistance. And it gives everyone a de facto raise until wages adjust to the shifted tax burden.
Assume for now that we accept the federal government is entitled to raise money for its programs by taxing people's incomes (yes, some people might disagree, but that's a different discussion). Why should a state be allowed to reduce the federal government's take, and therefore shift the burden of paying for federal services to other states, by choosing to increase its own local tax?
So you remove this pressure valve and skew those numbers to an even wider margin and you have, I would say justifiable, consternation about what we are doing here when the people who have been paying the bills are asked to pay more.
Arguably, it would make more sense to allow a deduction on state income tax for federal tax paid. That way the federal tax -- which (in theory, at least) pays for services that benefit all states -- is imposed consistently across all the states. Individual states can then decide how much to tax their citizens to pay for the state's local services, without skewing how the federal tax burden is applied.
Because a state can often do a more effective job of using the money than the federal government.
> and therefore shift the burden of paying for federal services to other states
If you look at the states with high enough income taxes for this to all be relevant, they tend to be "donor" states that pay a lot more to the federal government than they get back.
It might be a good idea to even that all out, but eliminating the local and state tax deduction doesn't help.
That's just a general argument for preferring local taxation and services over federal ones. I don't think it follows that states should be able to undermine federal taxation by increasing their own taxes. If you believe the federal government should be smaller, and state/local governments bigger, then make that case directly and argue for an overall reduction in federal taxation.
This isn't an argument agains the system, unless the rate actually is 110%.
I've never seen anyone who doesn't personally benefit from the SALT deduction argue for it.
Rich, high income states will subsidize poor low income states.
Why it so happens that the rich, high income states these days are liberal with high taxes and the poor ones the opposite, is an interesting question without an obvious answer.
So 7% is quite a bit.
This change was about Trump's desire to hurt residents of blue, high tax coastal states. To minimize this as something that only affects the .1% is rationalizing his terrible tax policy.
Rationing access to healthcare is not the answer.