Why Don’t Big Media Matt and Ezra Ever Use the Word “Profit”?

I got to this Matt Yglesias post and this Ezra Klein post via this Joke Line post (which sends you on a wild goose chase in search of this Ezra post) via this Lawyers Guns and Money post. I’ll return to Joke Line if I get a hankering to whack a piiñata.

But in the meantime, I’m wondering why Big Media Matt and Ezra don’t ever use the word, "profit"?

Both, you see, struggle to talk about how cool insurance companies are and how they could be the route to huge cost savings. Matt, apparently taking issue with this post (which never claimed identifying Liz Fowler’s role in the Max Tax was a "big scoop"), uses two farcical hypothetical examples to suggest that it’s not a bad thing for our public legislature to be proposing legislation written by private industry. First, he argues that a plan that uses public funds to improve bus routes would make both bus riders and bus drivers happier, which would be a good use of tax dollars.

Well, for starters you would want the buses to run more frequently. That would require, among other things, additional buses and additional bus drivers. That’s something the union representing bus drivers would like, and also something that companies that build buses would like. You could even imagine such a plan being hatched in close collaboration with the Transit Worker’s Union and the insidious forces of Big Bus. That, however, wouldn’t make the plan bad for New York City bus riders. It would be good for New York City bus riders. The city would be using tax dollars to give more buses to bus riders—it’s win-win for bus riders and bus drivers and bus makers all.

Note, first of all, how hilariously in-apt this analogy is. He’s talking about NY Transit–run by the public benefit corporation MTA and ultimately accountable to elected  officials (the private parts of which, though, have a history of paying bus workers less money for the same work). He’s talking about a highly regulated monopoly. So it’d be a great example to use if we were discussing implementing a government health service, or at the very least a public plan. But of course we’re not. So in Matt’s first analogy, he can avoid discussing whether "Big Bus" (as he calls it) would have objectives that might differ from those of both the riders and the workers, as well as the clout to piggyback those objectives on top of the plan to increase route frequency.

Then Matt–a 28-year old with a steady well-paying job and, AFAIK, no family–uses his own example as a stand-in for all potential consumers of health care.

Now think about health care. The Center for American Progress offers me some pretty good health insurance through CareFirst BlueCross BlueShield. That’s pretty good for CareFirst. If CAP dropped its health plan, CareFirst would lose money. We’d be sticking it to the insurance industry. On the other hand, I’d also lose my health insurance. Which would be kind of unfortunate for me. But say CAP did decide to stick it to CareFirst by dropping my insurance. Now as an uninsured American, I can live in one of two universes. In one universe, the one we live in, it’s just not feasible to buy comprehensive health insurance on the individual market. That’s bad for me. In another universe, the one Max Baucus wants us to live in, the government will regulate the individual insurance market in a way that ensures that purchasing comprehensive individual health insurance is possible. He’s also going to make sure that many people (I make too much money though, so not me) get financial assistance from the government in order to make it more possible to afford insurance.

There’s a lot that’s wrong with this analogy, too. The depiction of CAP as the agent in this equation, not CareFirst. The neglect of the scenario in which the newly unemployed person had to get insurance. The description of health insurance–and not health care–as the ultimate objective here. 

But most of all, Matt forgets to talk about the mandate. He simply doesn’t deal with the fact that the MaxTax requires middle class families totally unlike himself in terms of income and flexibility to spend up to 13% of their income for premiums that don’t guarantee, in exchange, that they won’t go deeply into debt if they have a significant–but not catastrophic–medical event. He’s not talking about the fact that the MaxTax requires people to pay far more to insure their family than to pay their federal and state taxes. He’s not talking about the fact that for some middle class families, the government is requiring an expense that is simply not affordable. He’s not talking about how little there is in this plan to limit the amount that the federal government and captive tax payers will pay to Liz Fowler’s former employer. He’s not talking about the huge incentives Liz Fowler’s former employer will have to game a proposed system that would, ultimately, weaken the few controls on Liz Fowler’s former employer that currently exist. 

Matt’s not talking about the fact that Liz Fowler’s plan requires participation but does not offer, in exchange, any limits on the profits the health insurance companies will get under the system. 

Now move onto Ezra. Ezra’s got a great little formula claiming to account for the only ways to control costs.

As people frequently say, health-care reform won’t work if costs continue to shoot up and insurance becomes unaffordable. The cost of health insurance, however, is really another way of saying "the cost of health care." In the ’90s, insurers managed to hold costs down, as you can see in the Kaiser graph atop this post. But people hated them for it, as they perceived, not entirely inaccurately, that they were keeping costs down by making it harder to access care (which is to say, harder to give money to providers). So they stopped doing it and costs began to shoot back up.

Conversely, Medicare keeps costs down somewhat better than private insurers, though not as well as private insurers did in the ’90s, and they do it by paying providers less money. Providers hate them for it, and that’s why doctors and hospitals and drug companies and device manufacturers have been so aggressive in opposing a public plan able to use Medicare rates. It’s also why Medicare’s growth rate is totally unsustainable — Congress keeps delaying the cuts in doctor’s payments that the Medicare law requires.

If you want cost control, though, you’re going to have to follow through on one of these strategies, and that’s going to mean making providers and patients really angry. Both like the health system better when it’s got unlimited amounts of money flowing through it.

 Now, I’m really curious if Ezra has hard data to prove that the increase in the rate of cost increases came from more open access to care in the last several years.

But people hated them for it, as they perceived, not entirely inaccurately, that they were keeping costs down by making it harder to access care (which is to say, harder to give money to providers). So they stopped doing it and costs began to shoot back up.

I, for one, don’t know anyone who has more access to health care then they had in the 1990s. But maybe that’s because I live in MI. Maybe health care access really has gone up, in spite of the rising numbers of rescissions and outright denials of care. 

But skip that part and note how quickly Ezra conflates "health care" with "health insurance," thereby treating the "insurance" part as a mere pass-through that doesn’t affect cost. Note that Ezra doesn’t consider whether there’s something else–in addition to lower reimbursements to providers–that keeps Medicare’s costs (as opposed to rate of increase) lower. Note that Ezra doesn’t compare outcomes. 

Ezra claims that the only two ways to control costs are to limit access to care and/or to limit reimbursement to providers.

Because, I guess, it would be too radical an idea to limit reimbursement to insurers? Or too radical an idea to avoid paying the profit that insurers, as private companies, must charge, or paying the overhead required to make that profit?

Matt and Ezra both invent nice little stories where we shouldn’t worry or even pay attention to the role–and the profits–that the insurance companies are making here. 

But that doesn’t change the fact that insurance profits–and particularly the MaxTax unwillingness to even consider limiting them–are one of the things that makes the MaxTax fundamentally unaffordable and unworkable in terms of containing costs. 

Update: To be fair to Matt and Ezra, I am harping on their neglect of profit in this post. In other posts of theirs, they have dealt with profit (Matt hits it here, and here, for example and Ezra–in a post that pretty much makes the points I make here–here).

Update: Ezra has a very fair post on the role of profit in insurance here. Thanks, Ezra, for putting this out there. 

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51 replies
  1. druidity36 says:

    What’s wrong with HR676? Why is nobody talking about it? What if, after being scored, it looks like it will SAVE money rather than cost money?

    Am i missing something?

    • Nell says:

      What if, after being scored, [HR676] looks like it will SAVE money rather than cost money?

      It’s never going to be scored. The only person who can make that happen is Speaker Pelosi.

  2. behindthefall says:

    “Profit” There’s a hole-in-one. Let us shovel money into our investors’ wallets, and we’ll make sure that everybody else loses — no favorites.

  3. WilliamOckham says:

    Great, Matt Yglesias responds to a comment I made while rushing off to a meeting and it turns him into a babbling idiot. I usually have to be there in person to have that effect on people. His post is just a fact-free, inapposite (to say the least) hypothetical. Ezra Klein’s, on the other hand, is just flat wrong about so many things.

    Let’s start with this line: The cost of health insurance, however, is really another way of saying “the cost of health care.”

    This is wrong on a whole bunch of levels. The amount that an individual pays for health insurance is a fraction of her overall spending on health care. At a broader level, a substantial part of the cost of health insurance shouldn’t be considered part of health care costs. As ew points out, insurance company profit doesn’t improve anybody’s health and I would add that the insurance companies add a huge amount of overhead to the cost of health care, above and beyond their profits. More fundamentally, when you equate the cost of health care with the cost of health insurance you have locked yourself into a world-view that blinds you to the real possibilities of lowering costs and improving care (at the same time).

    • readerOfTeaLeaves says:

      Excellent points, every one.
      And clearly, neither Matt nor Ezra have a conceptual framework for ‘health care’ or ‘health insurance’ that seems to extend beyond visits to a doctor or E.R.

      For instance, it doesn’t occur to either of them that health club or other physical activities are a ‘health care cost’, along with things like fruits, veggies, and dental checkups.

      Where to begin with the level of ignorance and misunderstanding shown by Matt and Ezra?
      Above and apart from the fact that they seem unable to distinguish a monopoly from a utility from a market.

      Yeesh!

      • LabDancer says:

        “Above and apart from the fact that they seem unable to distinguish a monopoly from a utility from a market.”

        That’s not only accurate, but it leads to, or should IMO, to the deeper problem with these two little insulated wonkies being seen as leading any sort of Charge! for progressives.

        [I’m with fearless leader on leaving Jokeline out of the debate entirely; his confrontation with the forces of Glennzilla have either caused his IQ to drop below the Mendoza line of centrists into somewhere in the area where dwell the Subfunctionals, like wingers and middle-to-low income earning Republican loyalists, assuming there’s a meaningful difference, or prove he’s simply a poseur; his inability to articulate the difference between single-payer & public-option is ambivalent on the distinction.]

        Markets: whatever their features, just “are”; if there’s a demand for something, there’s a market.

        Cutthroat, monopsony, monopoly: are each just market characterizations; stages maybe, or maybe points on a continuum, but still descriptions of how markets behave.

        Utility: cold-sounding word, but going to human values. If equal access to reasonable health care enforced under rule of law is regarded as essential to expression of democratic ideals — something that’s been accepted for decades in all other western democracies — then it’s analogous to water, electricity, sewage treatment, garbage & recycling, transit, education, food quality, etc: the range of baseline tools & services that government has to have & must exercise its full range of expression over, legislative, administrative & judicial.

        The argument against all this isn’t Darwinian, it’s Nordquistian. And that theory is, reduced to its essence, anti-democratic.

        • readerOfTeaLeaves says:

          The argument against all this isn’t Darwinian, it’s Nordquistian. And that theory is, reduced to its essence, anti-democratic.

          Agree that it is Nordquistian and profoundly anti-democratic. But then, I figure that he’s a lobbyist on behalf of global tax havens, drug lords, Russian oilgarchs, and whoever else wants to proclaim ‘Free Marketeering’ in their attempts to consume what they view as the big fat, golden calf of the planet: the US economy.

          Corporations by nature are profoundly anti-democratic.
          You may own 5 shares, I own 5,000. With money completely divorced from actual work, I become even wealthier by ‘investing’ my capital, while you have your five paltry little shareholder votes.

          So from my 5,000 share perspective, I wouldn’t give a rat’s ass what you think.

          This is not about healthier Americans; it’s about healthCo share profits on Wall Street, and it’s the farthest thing from democracy or ‘wellness’ that could be envisioned.

          But I’m sure that Matt and Ezra will explain why I’m wrong. [/s]

    • PJEvans says:

      The amount that an individual pays for health insurance is a fraction of her overall spending on health care. At a broader level, a substantial part of the cost of health insurance shouldn’t be considered part of health care costs.

      Maybe they’d get it if ‘health’ was replaced by ‘auto’. Although most states do a better job of regulating auto insurance than they do health insurance.

  4. klynn says:

    I, for one, don’t know anyone who has more access to health care then they had in the 1990s.

    Oh, he’s just taking advantage of the historical health insurance bankruptcies of the 1990’s.

    People had their shirts taken during such a time. Insurance co’s used the courts to get out of covering pre-approved procedures and then required you to pay your full hospital bills as well as continue to pay your premiums even though there was no coverage due to bankruptcy.

    WO,

    Great comments. Thank you. I especially agree with:

    More fundamentally, when you equate the cost of health care with the cost of health insurance you have locked yourself into a world-view that blinds you to the real possibilities of lowering costs and improving care (at the same time).

  5. TheraP says:

    Health Wealth care: forcing those healthy enough to labor to pay hard-earned money to rich investors!

    Forget about getting sick! Sick is not an option!

  6. Valley Girl says:

    Mandates- LKN2 raised an issue on some other threads that has been bothering me since the get-go- I’ve asked for some lawyerly types to weigh in on this at various sites/ threads, but nada.

    So, is it constitutional to require the purchase of health insurance?

    LKN2 recently posted an older article from the LA Times (slightly different context but the basic points are/ remain the same)

    Not so fast on the health insurance mandates

    Given the number of lawyerly types here, maybe someone can give an informed opinion. It’s something that has been niggling my brain for quite a while.

    Please?

    • masaccio says:

      Yes it is constitutional to require people to have insurance. The penalty is effectively a civil tax, not a criminal sentence.

      • bmaz says:

        Well, I would certainly defer to you on this and, ultimately, I think you are probably correct. That said, I thought the contemplation was to make it recoverable through the IRS, and I think there better be some pretty bright thought put into how such a tax is appropriate when it is simultaneously a penalty provision. Clearly it is a straight assessment of some nature and is intended to be administered per se without a due process consideration. There are a lot of pitfalls available.

    • SparklestheIguana says:

      Auto insurance is mandatory in some/many states. (No idea how many.) Has there been a constitutional challenge to that?

      • bmaz says:

        Apples and oranges. A citizen does not have to have auto insurance if he does not own/drive a car, an activity which is a privilege. There is no mandatory penalty if you choose not too; with healthcare, there is.

        • PJEvans says:

          A lot of people drive without insurance. (Was involved, peripherally, in an accident a couple of months back. Everyone handed over insurance information to the nice policeman – but a couple of weeks later one of the insurance companies said, nope, we don’t cover that person.)

  7. DWBartoo says:

    Ugh!

    Greedings.

    Profit, good.

    Much profit, better.

    Excessive (how much is ever “enough” …?) profit, greatest good.

    Good for big people.

    Ouch!

    Pain, not good.

    More pain, even more, not good.

    Excessive pain, absolute most, not good.

    Not good for little people … but what are they gonna do?

    Gosh, if there is even a wee, tiny, remote ‘connection’ between these two, very separate and distinct things, it sure is hard to fathom, ain’t it?

    How much money the little people feelin’?

    How much pain the big people feelin’?

    Thanks, EW, for sharing the “pain” of honesty wid dem wat deserves it.

    Of course, we mustn’t expect any shame to be felt or expressed, or even an acknowledgment that shame might be warranted … for attitudes or behavior whose purpose is deceit and manipulation are above such mundane considerations.

    These capitalist lackeys whom you mention may not be the big people, themselves,but it is always useful to remind them that they are expendable and only worth what pittance they’d charge to rat out their best friend. (What does their best friend think along those lines?)

    Such is the honor among thieves, that the next blatant high ‘bidder’ whose pathologies appeal, will command all due respect and loyalty …

    (We might consider Cheney a fine example of the “type”, both in bidness and in gummint. Truly we are blessed with many of his ilk, in this manifold flowering of the American Dream, coming as it does at the sniveling end of empire, but during this pregnant pause before whatever New World Order is birthed or … hatched.)

  8. WilliamOckham says:

    Just to follow up on the point I was making above. Private insurers pay for just over 1/3 of health care costs in the U.S. The government pays for just over 1/2. The rest is covered by private funds (out of pocket expenses and charity care for the most part).

    • DWBartoo says:

      Seconding, ROTL.

      Excellent “follow up” @9, as well.

      Thank you, WO, [always on “point” and always “knockin’ ‘em outta the park” (mixed metaphors, a specialty of mine …)].

      DW

  9. Nell says:

    Here, via “a TPM reader”* is the political calculus that dooms us to a crap bill:

    It would leave the present system intact in most of its essentials, thus assuaging the fears of the vast bulk of the electorate. One substantial group of voters – those for whom the subsidies render health insurance more affordable – would be fairly pleased. A smaller group, mandated to buy coverage it can scarcely afford, would be discontent, but mostly because the Republicans had thwarted Democratic efforts to help it – and, in cold political terms, this isn’t a constituency likely to defect. And the public at large would see that Obama had promised health care reform, and then delivered it, with few painful trade-offs or compromises. A fairly clear-cut political victory.

    No, the problem is that such an arrangement would deliver a political victory, but fail to achieve most major policy goals. It wouldn’t do much to rein in costs, to improve the quality of care, or to provide a greater sense of security. It’s politically feasible, and a political triumph, precisely because of its modest aims and feeble provisions.

    The policy wonk in me wants to get this right, because the costs of half-way measures are crippling. But the political handicapper in me is whispering that a half-way measure will actually be better than an honest bill come the midterms. It’s a depressing thought, but with a silver lining.

    That “silver lining” is a tell that the reader has employer-paid health insurance that he can afford.

    *JMM’s practice of anonymizing chosen feedback means caveat lector), because it’s a handy way to publicize agendas without many fingerprints. For all we know, the reader is a Hill staffer.

  10. readerOfTeaLeaves says:

    If my neighbor gets a new diamond ring, no ‘diamondness’ comes my way as a result.
    If my friend gets a new car, I am not likely to get ‘carness’ as a result.
    If a co-worker gets a new pair of shoes, I’m not going to get ’shoeness’ as a result.

    But if my neighbor is sick, I’m quite likely exposed to ’sickness’ as a result.

    Diamonds, cars, and shoes can be obtained in markets.

    But when is the last time that anyone here went to the store for ‘a quarter pound of sick’?
    Never.
    And when is the last time anyone here picked up ‘a pound of wellness’ at their local shops?
    Never.

    Matt and Ezra can’t even distinguish between goods and services that are readily exchanged within markets, and those things in life that do NOT lend themselves to market exchange.

    Apart from their other economic confusions, Matt and Ezra can’t even seem to distinguish between those things in life that can be readily exchanged within markets: diamonds, cars, and shoes — and those things (wellness, health care programs, medical research) that are better provided via something closer to a utility.

    Their ignorance is a chilling specter to behold.

  11. Hmmm says:

    In most civilized countries it is forbidden to operate a health insurance business for profit. What with the overwhelming incentives for perverse public policy, bad to disastrous heath outcomes, and all.

  12. orionATL says:

    rip, slash, shred, stomp.

    me thinks it is not a good thing to piss ew off.

    what pisses me off about the articles is that these two guys seem to be going soft in their rhetoric – could there be any possible any connection to their working for media corporations, media corporations with political connections. the soft rhetoric comes in the guise of being sensible about the current politics of health insurance reform.

    i’ve made that mistake before.

    right now i’d rather see liberal commentators challenge the conventional political thinking, save the reasonableness for later.

    as wo points out, we already have a great deal of public involvement in health insurance – directly as in medicare and medicaid and, indirectly, as in va hospitals and clinics, amer-indian health services, state and local health clinics, dod health services.

    as an aside, for a really unsettling view of american health care costs read david goldhill’s article in sept “atlantic” magazine. don’t be put off by the lurid title, that’s just the “human interest” hook that seems de rigueur for factual writing these days.

  13. fatster says:

    You’ll love this. From talkingpointsmemo.com:

    09.09.09 — 11:21AM // recommend (29)

    A PRIMARY CAN DO FUNNY THINGS TO PEOPLE
    Tweet from Sen. Arlen Specter (D-PA): “This U.S. Senator is going to tell him (the President) emphatically that we need the public option.”

    –Josh Marshall

  14. earlofhuntingdon says:

    Matt and Ezra seem caught in the same self-referencing bind that capitalism-is-wonderful-don’t-regulate-it macro-economists found themselves after the latest depression. (The topic of Paul Krugman’s comments in the NYT Magazine last weekend.)

    The for-profit model is deemed to work so well, they can’t compute supplanting it or its overt regulation in order to achieve an overwhelmingly important public good – the creation of a system that allows fifty to a hundred million more Americans to obtain affordable access to health care. Any thoughts to the contrary are deemed impractical or Not Serious, a self-fulfilling prophecy they help propagate.

    Improving access to and the affordability of health care is abundantly possible. In varying degrees, every other industrialized economy in the world accomplishes it.

    If it’s not politically possible here, it’s not because too few Americans want and need it. It’s because an extremely profitable industry has so insinuated itself into the levers of government that it can prevent necessary and rational reforms a large majority of citizens want. As with the banksters, that lobbyist cash-induced lack of accountability is tyrannical and monopolistic, not capitalistic.

    This directly implicates a case now before the Sup. Ct. that bmaz commented on yesterday. It involves the question of what political and social rights – e.g., freedom of speech and the freedom to buy political influence as if the cash used was “speech” – ought the law allow a corporation? A citizen has responsibilities in exchange for her and his rights. Under present law (which we could change), a corporation’s principle duty is to maximize its profits. That difference alone mandates that a corporation should have fewer speech and other rights than citizens.

    Chief Justice Roberts, contra his claims during his confirmation hearing, is more activist than the late Justice Brennan. He is happy to overturn settled precedent if it promotes his social and economic agenda. His court can be relied upon to give corporations any powers they want under the claim that “it’s good for business”. Which makes it all the more important that Mr. Obama’s next Sup. Ct. pick be well to the left of Justice Sotomayor, which would only put her or him closer to what used to be called the center.

    • bobschacht says:

      …capitalism-is-wonderful-don’t-regulate-it…

      This is an unsubstantiated *belief* of Goopers. It is good to remind them of the Great Depression (a prime example of unregulated capitalism), and the Great Meltdown of September, 2008. Dozens of other examples could, and should be cited to swat down this myth whenever it pops up.

      Bob in AZ

  15. JimWhite says:

    Ezra responds. (h/t Marcy’s tweet)

    Not a good start: “Marci”? Really? Bad form, Ezzerd.

    What the profit motive does do is create an incentive for cruel practices such as rescission and risk selection. Those practices, it’s important to note, almost certainly save the system money in the aggregate.

    I’m not buying that one. Kicking individuals out of coverage for particular plans both increases the profit margin for that plan AND increases costs for everyone because those excluded still have to get care somehow–most often from the emergency room at a much higher cost structure. Cover everyone within the same plan at the same price list (single payer) and the costs drop immediately when the emergency rooms are only used for real emergencies and everyone gets the preventive care they deserve.

    • brendanx says:

      Kicking individuals out of coverage for particular plans both increases the profit margin for that plan AND increases costs for everyone because those excluded still have to get care somehow

      Jesus Christ. He doesn’t understand that much? He thinks the expense just vanishes once they’re off the insurance company rolls? Maybe in drop-dead Republican world.

      These two smarty-pants are too cute by half.

    • WilliamOckham says:

      Now Klein’s ignorance is really showing. His discussion of inefficiency is truly pathetic. The administrative costs of the insurers is the least important part of the overall inefficiency they impose on health care. They impose enormous burdens on providers and patients to deal with their impenetrable red tape. Go ask your family doctor how many people they have on staff who do nothing but deal with those yahoos. Btw, Medicare is completely different. The patient and provider have very minimal paperwork. My wife (who is a family physician) believes that she might actually be coming out head with Medicare, even though their reimbursement rates are lower than most of the private insurers, simply because she can send the claims electronically and know they will be paid and paid promptly.

      [Time for me to go home and open up my brand new XBOX Beatles Rock Band box and introduce the kids to my childhood in a virtual sense.]

      • readerOfTeaLeaves says:

        Go ask your family doctor how many people they have on staff who do nothing but deal with those yahoos.

        I was picking up an Rx at my local pharmacy for a family member and got to chatting with the pharmacist, who — and I’m not going to be precisely accurate here, but I’m in the general range — that when they fill out an Rx, they have to figure out how to charge the customer based on something like 1500+ health care plans (!).

        How creating that level of complexity and confusion and ‘pseudo choice’ ‘adds value’ to medical services escapes me entirely.

        Hope your kids have a great time in the ’60s.

  16. brendanx says:

    With Yglesias, at least, you sure whacked a pinata. That smirking “Big Bus” analogy was really sophomoric.

  17. WilliamOckham says:

    Let’s take the next line of Klein’s post:

    In the ’90s, insurers managed to hold costs down, as you can see in the Kaiser graph atop this post.

    I’m not exactly sure how Klein came to that conclusion. All through the ’90’s, health care costs continued to rise faster than the inflation rate. Using the same data that Klein’s graph uses (from the the government via Kaiser Family Foundation), here’s annual per capita health care expenditures (which is the appropriate measure):

    1970 $356
    1980 $1100
    1990 $2814
    2000 $4789
    2007 $7421

    In percentage terms, the ’90s were marginally better than the ’80s, but on a straight per capita basis, annual expenditures went by $1714 between 1980 and 1990 and by $1975 from 1990 to 2000. Of course, during the Bush era, costs have skyrocketed.

  18. emptywheel says:

    FWIW, I think Ezra’s follow-up is fair, though I disagree with some of it. It simply overestimates how much a captive state will be able to regulate industries and assumes past levels of profit will maintain once the insurers get a captive industry.

    Here are two Scarecrow posts that treat the issues Ezra brings up.

    That said, I think Ezra is engaging in good faith and making a careful argument, which I don’t think he did in his first post.

  19. Sara says:

    I have been mulling this over (and consulting my Library on such things) ever since Baucus came out with his plan to tax the most expensive and most comprehensive plans, and have strengthened my first reaction to it, namely, I think it is unconstitutional.

    We got lots of bright eyed lawyers here who have far better legal training than I ever got in an American History and Constitutional Law Seminar — but what hit me between they eyes is that the form of his proposal is essentially the same as was declared unconstitutional in Jan, 1936, in the case US v. Butler, that threw out the finance mechanism behind the first AAA, the Agricultural Adjustment Act, which taxed food and fiber processers, or the middlemen, so as to finance the program of restricting farm production so as to bring supply and demand into better alignment. The court used several grounds to throw out the First AAA, one of which was this notion of a narrowly focused tax — eventually they came around on some other matters, narrowing the US v. Butler decision, but by that time the Congress had passed the second AAA, which put supply/demand efforts not on a narrowly tailored tax, but on General Revenue.

    It strikes me that Baucus’s tax on expensive health plans in order to finance “reform” is quite parallel to narrowly taxing middlemen and processers so as to finance payments to farmers for excess crop reductions.

    Has anyone else thought through the constitutional implications of some of the suggestions Baucus has thrown out on the table? Particularly this one? I am just curious. But it also seems to me it might be a good tactic to raise the “constitutional” issue in opposition to some notions

    I think if you need to raise revenue, the best practice would be simply to make Employer furnished Health Care Taxable income, and then provide a universal “tax credit” that would minimize the tax on modest to middling plans.

    • bmaz says:

      Sara, I am a little out of my league on tax law, but by my simplistic understanding, there is a problem if there is a discriminatory animus, and there is a clear targeted group here that would appear to be discriminated against. I think it is going to depend on how the tax is described and we really do not have that exact language for that yet, so it is hard to tell. The key would appear to be how it is related to an individual’s income under the 16th. But, again, this is free tax law help and worth not a cent more than paid for here. In shorth though, I think your concerns here are certainly germane.

  20. orionATL says:

    sara @35

    yours is an very interesting and unique take on matters (as usual).

    my response on reading it a couple of times was to become worried (o.k., maybe a little paranoid)

    just suppose, as seems to be the case,

    that the baucus bill was written by a staff member who had, until very recently, been a health industry lobbyist.

    would those k-street sharks make such an error as you point out innocently?

    suppose lobbying pals haley barbour and tom daschle, some weeks ago, were sitting around a table in a k-street brothel, eating chinese take-out brought in by, of course, one of the secretaries,

    and strategizing – on how to manipulate the congress they once served in but are now well-paid to subvert.

    suppose someone came up with the idea of using the “taxing” you write about as a delayed time-bomb to kill the whole “health insurance reform” ex post facto (in the u.s. supreme court of republican operative john roberts).

    • Sara says:

      “suppose lobbying pals haley barbour and tom daschle, some weeks ago, were sitting around a table in a k-street brothel, eating chinese take-out brought in by, of course, one of the secretaries,

      and strategizing – on how to manipulate the congress they once served in but are now well-paid to subvert.

      suppose someone came up with the idea of using the “taxing” you write about as a delayed time-bomb to kill the whole “health insurance reform” ex post facto (in the u.s. supreme court of republican operative john roberts).”

      Yea, I thought about it being intentional as one possibility, but I also don’t give all that many people credit for knowing why the first AAA was declared Unconstitutional, given the state of teaching most American History these days — even though one of the more famous WPA Plays was called “Triple A Plowed Under” — and it ran to packed houses for about 6 months back in 1936 on Broadway. I guess what I would like to know is whether US v. Butler has been recently cited either in a Court Decision or in a significant brief, and how it has been treated.

      But it is a profoundly important decision, because the Second AAA, which passed Congress very quickly after the Court Decision in early 36, because it was the heart and soul of FDR (and Henry Wallace’s Farm Program, and planting season was starting) is really the source for now nearly 75 years of Farm Support Programs, which have led to the Corporatization of Agriculture, Monoculture, shooting up cows and chickens with anti-biotics to the point they hardly work on humans anymore, — because by disestablishing what FDR intended as a temporary program to bring supply and demand into harmony, and thus a program which could easily be terminated by simply eliminating the producer’s tax — became a permanent program with all the oodles of Farm Subsidies and all. The Second AAA shifted the financing of the program to General Revenue, which is where the Farm Program is today. The Supreme Court reviewed Second AAA a year later, and agreed it was Constitutional.

      Anyhow, if those with more legal resources than I have, and can review the cases around this, see this problem with Baucus’s provision for raising revenue — I think it ought to be raised before the ink gets dry on his Committee Report.

      By the way, I heard on MPR tonight that Tom Harkin is giving up his chairmanship of Senate Ag. so as to take Ted Kennedy’s Chairmanship on Health, Education, Labor and Pensions. Great move by the Senate Leadership. I bet Tom Harkin knows all about the string of constitutional challenges to the First and Second AAA. He might be just the person to critique Baucus’s approach given this background.

  21. fatster says:

    O/T, or please humor me.

    Some good news for a change. (Yeah, I know they’ll pull us down with them, but I’ll take what solace I can get.)

    Income Gap Shrinks in Slump at the Expense of the Wealthy
    BY BOB DAVIS AND ROBERT FRANK
    SEPTEMBER 10, 2009

    “The deepest downturn in the U.S. economy since the Great Depression may finally shrink the gap between the very best-off Americans and everyone else.

    “If so, it won’t be by lifting up the bottom. It will be by pulling down the top.

    “Over the past 30 years, chief executives, Wall Street bankers and traders, law-firm partners and such amassed ever-greater incomes, while the incomes of factory workers, teachers, office managers and others in the middle grew much more slowly. In 2007, the top 1% of U.S. families accounted for 23.5% of all personal income in the U.S., according to economists . . . “

    Link.

  22. visionbrkr says:

    Now, I’m really curious if Ezra has hard data to prove that the increase in the rate of cost increases came from more open access to care in the last several years.

    Are you serious? So wait costs are going up and people with insurance are getting LESS care?

    See below for an example of the truth. Go into radiology. There’s plenty of money there.

    http://radiology.rsna.org/cont…..gures-only

    At least have some semblance of the truth in your posts please, otherwise you’re left a left wing schill.

    Medicare’s fraud and abuse >>>> Insurers profits.

    Fix medicare first and then we can talk single payer.

    • bmaz says:

      I don’t know whether to call your comment pure crap or a bad joke. You have the temerity to wander in from the cold, spew a link about freaking radiologists, completely impertinent and inapplicable to the discussion, and then bray like a wounded cat about the author here not having facts and being a shill?? Right back at ya moron.

    • emptywheel says:

      Sorry, how does WORKLOAD of radiologists over a period that dosen’t cover most of the period in question (the last five years) prove that access has gone up? Particularly for a field that is 1) one of the few improvements in preventative care (increasing mammos) and 2) in the same area subject to significant malpractice exposure and therefore less lucrative than others?

      All you’ve shown is that for a period that doesn’t address this period one specialty has, at an individual level, gotten busier. But it doesn’t explain why. Is it because Congress has passed laws requiring mammos? Is it because MRIs are so easy to get (they’re not, as someone medically required to get them). Is it because there are fewer radiologists bc of some market failure?

      Now, contrary to you insinuation that asking for proof equates to not showing any semblance of truth in a post, a response to a request for proof that does not, in fact, prove anything related, is not very helpful.

      I’m happy to believe that radiology is an area where access has gone up, and easily believe it’s one driver of costs. But your link doesn’t prove that in the least, nor does an increase in the use of radiology prove an increase in access overall.

  23. Sara says:

    EW, Access as a concept is a fairly loaded and very inexact measure for Health Care. It shifts the burden to the individual to request specific services, as opposed to a focus on System designed to find and isolate those likely to benefit from a particular service. The only good measure is essentially demographic — given a particular population, and the probability that a sub-group of individuals within that population likely would benefit from particular health care proceedures, what part of that population actually is screened for that, and if recommended, actually receives the proceedure?

    Listening to a report on how the Student Health Service at the U of MN is dealing with H1N1 will give you an idea. First, all fee paying students at the University are members of the Boynton Health Service, — Health Care fees are part of tuition. All students are being “sampled” for the virus, but only one in 50 samples are being cultured. The point is to keep looking for any mutation in the virus. Students are all being interviewed with the purpose of identifying those with higher risk factors. Those with Asthma, or the Pregnant, etc., get special monitoring, Otherwise they are being given a thermometer, and told to stay in their rooms till their temp is normal for 24 hours. They are prescribed Tylenol and Cough Medicine, and are being told to expect to stay in for about five days. First week of school Boynton was seeing an average of 40 patients per day, this week it is apparently 120 per day. They have an internet connection to graph their progress and ask additional questions, or report complications. Thus far, only two have been put in the health service in-patient ward. This is a System’s approach to a particular known and characterized demographic, and given what is known about H1N1, it seems to be delivering and targeting appropriate service levels to all who need services. The whole thing is designed around a demographic and a particular infection. Whether it is good or not has nothing at all to do with access — all students have access. The quality of the service will be determined by outcomes, essentially how many potential complications were identified and properly addressed, how few persons in the whole demographic have unsatisfactory outcomes. And since it is a system, it clearly can produce economies. I think most of this is being run by nurses and a few technicians. Because it is a system, any new information about the behavior of the virus immediately goes into the feed-back loop, and thus the system is self-modifying based on a specialized information stream.

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