The Cadillac-turned-Chevy Wage Increase Myth

The White House, in a post purporting to tell “The Truth on Health Care Reform and Taxes,” repeats a claim I’ve seen just about all defenders of the “They-Call-It-Cadillac-But-It’s-Really-A-Chevy Excise tax” make: that the tax will give workers a raise.

for the small sub-set of plans that are affected, the primary impact of this provision will be to increase workers’ wages. Getting a pay raise is not what most people would call a tax increase. Economists agree by taxing the highest cost plans this provision will lead insurance companies to be more efficient and provide quality care to consumers at lower prices (see this endorsement in a letter from a group of prominent economists – including three Nobel laureates and previous members of both Democratic and Republican administrations and this analysis by CBO 2009). Even a report commissioned by the insurance industry’s trade association acknowledged that: “[w]e expect employers to respond to the tax by restructuring their benefits to avoid it.” [PWC, 2009]. As a result, employers will be in a position to increase workers’ take home pay.

I was thrilled to see those three links, because I figured it meant the White House was providing some proof for this claim where I had seen none before.

Here’s what those links say.

Economists

The letter “from a group of prominent economists” says nothing about the excise tax; it only even uses the word “tax” once, and not in the context of funding the health care reform. This is the closest it comes to tying the mode of health care delivery to wages, but this passage says nothing about how you make the health care system more efficient:

A more efficient health care system would free up resources that could be used to produce other goods and services, and to invest in the future. That would promote economic growth and jobs, along with higher wages and living standards.

So the link to the economists doesn’t even support the Administration’s more general argument for the excise tax, much less its claim that the excise tax will result in higher wages for workers.

CBO

The CBO paper linked to prove this point likewise does not support the point. It does support several related claims, though, that may reveal what the Administration is really thinking about employer-provided care. Here’s what it says in its extended section on employer-based tax.

Nearly all analysts agree that the current tax treatment of employment-based health insurance—which exempts most payments for such insurance from both income and payroll taxes—dampens incentives for cost control because it is openended. Those incentives could be changed by restructuring the tax exclusion to encourage workers to join health plans with lower premiums; those lower premiums would arise through a combination of higher cost-sharing requirements and tighter management of benefits.

CBO’s Budget Options volume discusses a number of such changes. One option would replace the current tax exclusion with a refundable but more limited tax credit. Another option would limit the amount of health insurance premiums that could be excluded from income and payroll taxes to specific dollar amounts that represented the 75th percentile of premiums paid by or through employers.17 These approaches would change workers’ incentives about how much insurance to purchase and how much care to demand, and they would increase federal revenues by several hundred billion dollars over 10 years.

17 The dollar amounts in 2010 would be about $17,300 a year for family coverage and about $6,800 a year for individual coverage.

So a CBO report the Administration claims supports their excise tax claims actually argues simply that we need to move away from an employer-based delivery model.

PWC

Picture 169Finally, the post quotes from a PriceWaterhouseCoopers paper done for AHIP (and widely discredited as industry hack job). The Administration’s post doesn’t actually claim that this report supports their own claim that the Cadillac tax will raise workers’ wages. Rather, it suggests that employers will restructure benefits in response to the tax. Here’s the full context for the quote the Administration cites.

Although we expect employers to respond to the tax by restructuring their benefits to avoid it, we demonstrate the impact assuming it is applied. As the threshold is indexed to CPI-U which has generally been lower than medical trend, it is expected that many plans that currently have premium rates that are beneath the threshold will ultimately reach it.

That is, PWC is making the argument that the Cadillac tax will hit tons of plans, not that employers will succeed in avoiding the excise tax. In fact, the report goes further to note that by 2016, even the lowest acceptable plans, Bronze plans, will trigger the tax in metropolitan areas.

We estimate that in many metropolitan areas, which tend to have higher than average medical costs, the lowest option plan (Bronze Plan) would be considered a “Cadillac plan” as early as 2016. By 2016 at least one of the mandated plans will be considered a “Cadillac plan” and be subject to the 40 percent excise tax in 17 of 50 states.

PWC included that handy map, too, showing how many plans in the Northeast will trigger the tax by 2016 (the darkest red means even plans with a 65% actuarial value will trigger the tax; the report has maps for Florida and California, as well; note, though, I think the Senate has tweaked rates for higher markets since this report, so even assuming the AHIP report is correct, it’ll take longer for crappy insurance to be taxed).

In other words, the PWC study shows not what the Administration uses its quote to suggest–that employers will successfully avoid the Cadillac tax–but rather, that even the crappiest allowable plans in more expensive parts of the country will trigger the tax as early as 2016.

Other Sources

The Administration, then, can’t muster any support among 3 hand-picked reports for its claim that the Cadillac tax will lead to wage increases. Let’s take a look at how others “prove” this claim.

When Nate Silver made the claim today…

Also, as the CBPP study notes, most of the reduction in premiums that the excise tax would facilitate would be passed back to the workers in the form of higher wages.

He linked to this CBPP study. The CBPP starts its discussion of the great deal this is for workers by committing the same error in citation that the White House piece does.

Contrary to some reports, the excise tax is unlikely to generate much of an increase in health insurance premiums. Although insurers will try to pass along the cost of the excise tax to consumers by raising the price of health coverage, analysts generally expect that health insurance providers, employers, and consumers will modify their behavior to avoid paying the tax. For example, even the recent, widely criticized report from the consulting firm Pricewaterhouse­Coopers, commissioned by the insurance industry’s trade association, admitted, “We expect employers to respond to the tax by restructuring their benefits to avoid it.”[10]

Then the report goes on to a Joint Committee on Taxation report.

Similarly, the JCT writes, “We expect that consumers will seek less costly policies that will reduce their exposure to the excise tax. Cost reductions could be achieved through several strategies, ranging from managed care plans and limited provider networks to more out-of-pocket cost sharing by consumers. When employers offer employees less costly plans, the employees will have less compensation in the form of non-taxable health care benefits and more in the form of [taxable] cash compensation.”

JCT projects that only 20 percent of the revenues from the proposal in 2014 will come from the excise tax itself, with the remaining 80 percent coming from additional income and payroll taxes on the increased cash compensation that workers will receive. By 2019, fully 83 percent of the additional revenues will come from taxes on higher wages and salaries, not the excise tax.[11]

Based on the JCT figures, the excise tax will reduce spending on employer-sponsored insurance in 2019 by an estimated nearly $74 billion, or about 6 percent — an impressive amount that indicates the measure would be successful in helping to “bend the curve” — and lead to a commensurate increase of nearly $74 billion in wages and other fringe benefits.[12]

Now, I haven’t been able to find the memorandum cited here online. I asked the author of this CBPP report to send it; tomorrow I’m going to try to get it from JCT. But here’s the sum total of what Thomas Barthold, the Chief of Staff, said to Joe Courtney about how this would work:

As you can see in the table, other than the first year, the percentage owing to excise taxes is declining over the period, as consumers shift away from higher cost health coverage towards increased wage benefits.

Apparently, Barthold believes that consumers–not their bosses–get to choose whether to pay the excise tax or get higher wages. Now, Barthold may have some reason for believing this to be the case, but he appears to not even have considered the possibility that employers will cut health care benefits, but keep wages the same.

Employer Surveys

Picture 173Which is awfully strange, because a lot of evidence suggests that’s what would happen. A Mercer survey of 465 employer health plan sponsors conducted in November found just 16% would pass on any savings to employees.

One argument that some have made in favor of the excise tax is that employers cutting benefits would return the savings to employees in the form of higher wages. However, less than a fifth of respondents (16 percent) say they would convert their cost savings into higher pay.

And Towers-Perrin did a survey in September, this of 433 human resource executives, that shows even fewer employers would share savings with employees.

Although costs are a sensitive business issue today, interestingly, when we asked survey participants how they would respond to various cost scenarios under health care reform, a significant number (ranging from just over a quarter to just over 30%) said they didn’t know what they would do.

But among the majority of respondents who did have an expected course of action, the response was very clear. Regardless of the specifics of reform legislation, these employers do not plan to absorb higher health benefit costs and would take a variet of actions to avoid doing so … Nearly all would reduce benefits. Some would cut jobs or salaries. And over a third (38%) would increase prices for customers.

Along similar lines, survey respondents who have a clear sense of action in mind (i.e., once again excluding those who gave “don’t know” responses) would not shield employees from any cost increases that reform might bring for them …. And if any savings were to result from reform, most employers would retain those savings in the business (Exhibit 12).

So to review:

  • 30% in the Towers-Perrin survey said if health reform increases employer costs, they would reduce employment
  • 86% in the Towers-Perrin survey said if health reform increases employee costs for health care, they would pass those costs on to employees
  • 9% in the Towers-Perrin survey and 16% in the Mercer survey say they would pass on any savings to employees in the form of wage increases

So employers are saying that the fundamental assumption that went into CBO’s and JCT’s calculations on the Cadillac tax are wrong. If the employers are right, it means that employees will get crappier health care–with more out of pocket expenses–but for the most part get no corresponding raise to help pay for those costs. Worse still, this means the revenue calculations will be wrong, because, while the government should be able to tax employers more (if the employers don’t find some other tax loophole), they won’t get any more taxes out of the workers.

Employers Are Already Using Health Care Savings to Achieve Profitability

And there’s a good reason to believe the employers–and not the government–is right on this count. First, there’s anecdotal evidence everywhere. My husband’s company, for example, switched from a very good plan to a middling plan (we currently around $9,000 a year in COBRA premiums for the plan) a few years back–precisely the kind of change envisioned under the tax scheme. Not only did he not get a raise in response, but our share of the premiums went up anyway.

And more general reporting shows that, faced with the same challenge the excise tax will present (higher health care costs), employers have already been cutting benefits but using any savings for profits.

Two-thirds of big companies that cut health-care benefits don’t plan to restore them to pre-recession levels, they recently told consulting firm Watson Wyatt. When the firm asked companies that have trimmed retirement benefits when they expect to restore them, fewer than half said they would do so within a year, and 8% said they didn’t expect to ever.

Changes like these are reshaping employment in America, injecting uncertainty and delivering the jolting news that pay can go down as well as up. The changes are eroding two pillars of the late-20th-century employment relationship: employer-subsidized retirement benefits and employer-paid health care.

Even as Congress wrestles with how to extend health insurance to more Americans, and considers putting pressure on employers to offer coverage, some companies feel they have no choice but to pull back — dropping health plans or weighing such a move.

[snip]

The percentage of employers offering health-care benefits is 60% this year, down from 63% in 2008 and 69% in 2000, according to the Kaiser Family Foundation.

In a survey by Hewitt last winter, 19% of large employers said they planned to move away from directly sponsoring health-care benefits over the next five years.

In the meantime, workers’ share of health costs is headed up. For next year, 63% of employers that offer health coverage plan to increase employees’ share of the expense, according to a survey of 1,500 employers by another consulting firm, Mercer.

So recent years have shown in real world situations that employers faced with rising health care costs will cut benefits and use savings achieved in health care costs to achieve profitability. Employers say that’s not going to change with health care reform. Yet, for some reason, the Administration has premised much of its revenue plan for health care reform on just the opposite assumption. I guess if you believe we’re going to be in a bubble again by 2013, when the excise goes into effect, then you might be able to argue that a tight labor market will increase the numbers of workers who would get wages–but the WSJ’s sources, at least, believe this is a permanent change in the labor market.

The White House claims that if they tax your health care benefits, your wages will go up. But for the overwhelming majority of people, that’s simply not true.

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93 replies
  1. PJEvans says:

    In other words, they’re lying their tails off, because they know this bill is a humongous pile of crap.

    • emptywheel says:

      Because they really want to end employer-based coverage, but don’t want to face the political battle of saying that. Which is probably also why the Senate doesn’t mandate coverage for employers.

  2. earlofhuntingdon says:

    Many thanks for your routinely fine and quick research on disparate subjects.

    Higher employee costs are not the stuff of wage hikes. That is, except in Washington, where Villagers all charge cost/plus for their work.

    “Move away from an employer-based model.” Combine that with the travesty that is the Senate’s approach and you have gone beyond Medieval serfdom to the Dark Ages. No Henry II, no Charlemagne, no Roman emperor. Just chaos and a cashless society where the only way to enrich oneself was to steal from someone else. Sounds a lot like what the Senate and White House wants to enable insuresters and banksters to do to middle Americans.

    Pricewaterhouse Coopers, oddly, is probably correct here. Companies will keep themselves whole, while passing on increased costs to their employees. Certainly regarding this tax, and as much of “normal” premium increases as possible.

    And no, once an employer sheds an employee or a fraction of the expenses charged to that employee, it will most certainly not take on that cost again. Not.Gonna.Happen. This is post-Bush America, not the 1980’s, ’70’s or 60’s. The employers’ motto has shifted somewhat from the old “Employees are our most important asset”. The motto now is that they are our most expendable.

    Companies want out of the benefits business. Anything they can do to lessen their contribution or administrative cost they will do. That’s a trend to which this White House/Senate bill gives a resounding Bronx cheer.

    • emptywheel says:

      I think the way the PWC report ought to be read is, “we’ve recognized that the one area where you’ve set no minimum for coverage, set only an upward limit on employee contribution, not overall premium, and within those terms created an even more captive market is in employer-based health care, so that’s where we’re going to hike rates to offset other lower margin policies.”

      Which is what the plan pretty much sets up to happen.

      • earlofhuntingdon says:

        You have accountant-consultantspeak down pat.

        Like water running down hill, insurance practices will find the most direct route to profits, no matter the rocks, boulders, bridges and dams put in its path. That’s one reason even robust regulations – these are not – need to be combined with a robust regulator. The Dems and Obama are still selling Bush’s “Just trust us”. Their regulator is already on life-support and the work hasn’t begun.

        • emptywheel says:

          I was actually pretty decent at identifying these strategic weak points as a corporate employee.

          And–though the “wonks” don’t think it adds to my credibility–I did work for company for 2 years the three biggest clients of which were huge pharma.

          Our other biggest segments were oil industry and DOD. ANd Pharma made the two others look ethically sound by comparison.

          • earlofhuntingdon says:

            Big Pharma made DoD and oil guys look ethical by comparison? Why am I not surprised. And I thought Fortune 50 industrialists were sometimes ruthless bastards.

            • emptywheel says:

              I should say what we did for them was least ethical. Big oil wouldn’t hire my side of the biz bc it involved allowing workers a stake in fixing safety. At the time, DOD was trying to learn how to do business with non-DOD economy.

              SO I was dealing with them on limited basis.

              Apparently (per my boss) we helped a very large Swiss Pharma company get a stomach medicine approved in spite of contrary results–that drug remains one of the companies biggest sellers.

              • earlofhuntingdon says:

                In my experience, allowing employee participation in any decision-making was considered anathema, though a lot of effort went into making it look the other way. Separately, it was always an ominous sign when small rooms were filled with consultant suits for days on end. Denials of what they were doing usually confirmed what they were doing.

          • Waccamaw says:

            Our other biggest segments were oil industry and DOD. ANd Pharma made the two others look ethically sound by comparison.

            Wow! Nice to know we have our very own Windell Potter (or whatever his name is). *g*

  3. MsAnnaNOLA says:

    Yep the article you quote proves that we need the public option more than anything. All those people whose companies are moving away from sponsoring healthcare are in fact haging their employees out to dry.

    They will only be able to get the most expensive coverage on the open markets from the oligopoly/monopoly insurance companies. These are the ones who are going to be able to charge whatever they want with no competition from a public option under the current proposal. NOTHING in this bill brings costs down. It is an abomination.

  4. earlofhuntingdon says:

    As you state clearly, this tax on full benefits plans is likely to hit many employers, especially those with a unionized workforce. It is a sub rosa attack on full benefits plans and unions, a thoroughly GOPish way to pretend to fund “reform” while undercutting those it is intended to benefit.

    Rather than reform the industry we rely on to make medical payments, or reform a medical system that too often treats what insurance covers rather than what ails you, our leaders want to cut health care as the way to cut health care costs. I once thought Rube Goldberg was the only guy who could draw up a plan like that.

  5. anwaya says:

    Why don’t I read newspapers any more?

    Because Marcy, and a few other bloggers, bring fact-based counterarguments to the daily flood of bullshit press releases, instead of uncritically republishing the aforesaid bullshit.

  6. readerOfTeaLeaves says:

    OT – gack!
    Gitchee left a question wayback on a thread some days ago about Rahm and his brother (said to be a ‘researcher’).
    I responded to Gitchee with what I’ve observed about ‘researchers’.
    Looks like not only am I ignorant about Rahm’s brother, Gitchee may want to check this comment and follow up…

    Painful lesson on my end.
    Apologies for not digging in further before making a comment of any sort about Rahm or his sibling, the doctor.

    Apologies, also, for the OT 8-0

    • perris says:

      klug is basing his opinion thinking it’s this bill or no bill and that is flawed at the surface

      therefore everything he says after that based on that flawed assumption

  7. perris says:

    for the small sub-set of plans that are affected, the primary impact of this provision will be to increase workers’ wages. Getting a pay raise is not what most people would call a tax increase

    marcy, it’s a sick joke at the face of it

    this is the same thing as the rediculous, obviously failed “trickle down economics”

    and EVERYONE knows “trickle down economics” is a gift to the wealthy

    salaries are not based on the cost of hiring they are based on what the market indicates the salary should be, or to put it bluntly, industry pays as low a salary to labor as they can get away with

    lowering their business costs would NEVER increase wages straight up

    PLUS the insurance provided by companies would cost FAR more if the indivdual had to buy that insurance as an individual

    business providing insurance is one of those examles where what is good for labor is also good for business

    but the gorilla in the room is the fact that obama actually used “trickle down” propaganda to promote his corporate gifts

    THAT’S what we have to focus on…obama is worse then bush light, he’s bush on steroids since he’s a democrat he can actually get away with republican talking points easier then a republican could

    obama’s explanaition is trickle down economics that’s what’s sick about it

  8. tzimisce says:

    If I did this sort of sloppy research in college I think I would at least make an “F” and at worst face discipline.

    • BoxTurtle says:

      If the goal was to properly research an issue, you would likely fail. If the goal was to muddy the waters sufficiently to prevent the average voter to realise what has actually happening, you’d get an A-.

      Boxturtle (The minus is because they’re not fooling the Wheelhouse)

      • emptywheel says:

        I was considered a hard grader by my students–largely because I was a hard-ass not just about sentence structure but also about the soundness of an argument. And yes, this wouldn’t have gotten a very good grade.

  9. TarheelDem says:

    As a result, employers will be in a position to increase workers’ take home pay.

    A similar assumption is behind the support for individual mandates. Having a large pool will put insurers in a position to lower premiums.

    The fallacy is thinking that because employers or insurers are in a position to do something good that means they will. It’s trust us writ large.

  10. mwfolsom says:

    Wow – all these Gov agency reports seems to have bought into the same idea – we have too much health insurance. Looks to me the Republicans have won. All we have to do cut the amount of health insurance Americans have and everything will be A OK!

  11. spanishinquisition says:

    So the admin is not only touting trickle down economics, but trickle down economics based on INCREASING taxes. That’s a real winner!

  12. cbl2 says:

    I’m guessin’ my raise will show up sometime soon after my cleaner water, clearer skies, and healthier forests

    Mornin’ All

  13. KarenM says:

    I work in an academic setting that is self-insured, and I chose personal choice for coverage. A big mistake for the coming year, since it may be one that gets hit with the MyBarackObama Tax. Unfortunately, there will not be an opportunity to change my selection until open enrollment in spring and it won’t take effect until summer.

    Those idiotic pundits might wish to interview a few people living in the real world more than several pay grades below their own… if they’d like to know what’s really likely.

    Given that raises in this economic environment are practically non-existent, I seriously doubt that TPTB will restructure benefits/payroll in order to increase our wages. In fact, if any of us in my area leaves, no one will be hired to replace us. Rather, the work will be divided among those who remain. We have heard this spelled out, explicitly.

  14. fatster says:

    O/T. This is way out of hand now. Can we rein it back in? Can we return to Geneva, Nuremberg now? Ever?

    CIA working with Palestinian security agents
    US agency co-operating with Palestinian counterparts who allegedly torture Hamas supporters in West Bank

    Link.

  15. yknoodled says:

    Paul is just plain wrong. This is bullshit, “with more than 30 million Americans gaining coverage”. Ain’t going to happen.

    The poor can’t even pay their mortgage, let alone throw in another two, three, or four hundred per month for health care. As they will be able to prove they can’t afford it, they will be “excused” from purchasing. Again, if they manage 10 million I will be surprised. Flush it twice so it doesn’t float back up.

  16. Sufilizard says:

    So let me get this straight. Their argument is that employers will save some money by signing us up for cheaper (probably crappier) plans and they will just give us all across-the-board pay raises since they’re now saving a little money on our insurance.

    Did the administration make any promises about the tooth fair leaving money under our pillows every night too?

  17. conniptionfit says:

    I am unclear about what the term “cadillac” means in real terms. I get that it means more expensive plans, but what does this so-called cadillac area cover that isn’t covered in other, lower priced plans? Can anyone help me out here?

    • emptywheel says:

      The plans that would immediately come under the tax are those that include dental, vision, a range of other kinds of coverage, big HSAs, no co-pays.

      But by 2016, more typical plans–the ones that cover 85% of costs and have reasonable co-pays and only offer medical–will be covered (which is why I say it’s a Cadillac that is really a Chevy. That’s particularly true in urban areas.

      • earlofhuntingdon says:

        Your metaphor is exactly right, because the plans this tax will affect provide the kinds of medical and dental benefits all Americans should have, but which now are available only to those who work for older, or traditionally unionized or beneficent employers, a shrinking employer base.

        As you say, this tax will shift more costs to employees. It will also lower expectations about what “quality” insurance plans can offer. The real issue is what level of medical and dental care should be available to all Americans and how do they collectively want to pay for and administer it.

        This legislative debate has put dividing the divorcing couple’s money ahead of who will keep and care for the kids. The reverse of normal practice. If we ever get to the important part, we’ll have to revisit these issues.

        My opposition to the Senate’s bill and this specific tax is based their making that much harder to do, because it empowers the parties that will oppose expanding access to health care because it takes money and power from their pockets.

  18. knowbuddhau says:

    Nice one, Boxturtle. As a baseball fan, I like the new meaning it gives to a pitch being “right in our Wheelhouse.” No offense intended, tzimisce.

    And thank you, ew, for busting these myths even as they’re being fired at us. The admirable sincerity of tzimisce’s faith in the words of our public servants is the ice dam holding back a continent of rage.

  19. aknarayan says:

    The Cadillac tax is directly supported by the economists who wrote to President Obama:

    Here is the passage that supports the Senate approach:

    “The Senate Finance Committee’s bill includes an excise tax on high-cost health insurance plans. Like any tax, the excise tax will raise federal revenues, but it has additional advantages for the health care system that are essential. The excise tax will help curtail the growth of private health insurance premiums by creating incentives to limit the costs of plans to a tax-free amount. In addition, as employers and health plans redesign their benefits to reduce health care premiums, cash wages will increase. Analysis of the Senate Finance Committee’s proposal suggests that the excise tax on high-cost insurance plans would increase workers’ take-home pay by more than $300 billion over the next decade. This provision offers the most promising approach to reducing private-sector health care costs while also giving a much needed raise to the tens of millions of Americans who receive insurance through their employers.”

    Here is the full letter:

    http://economix.blogs.nytimes.com/2009/11/17/economists-letter-to-obama-on-health-care-reform/

    • emptywheel says:

      Those are two different letters with two different set of signatories. Also the longer one seems to be based on the same JCT analysis which is in turn based on assumptions rather than analysis of what has already occurred as employers lower health care costs and what employers say they’re going to do if their health care costs go down.

  20. SueTheRedWA says:

    Looks like you missed something. When employees get older and their medical expenses go up, companies look really hard for ways to get rid of them. Not only, will the workers receive less health care coverage, but the older ones will probably be forced out of their job.

    Just a win/win/win for the Democrats. People will have to pay more out of pocket for health care, not cost-contaiment, and older employees will lose their jobs, before they are eligible for Medicare. Can’t think of a better way to grow the Republican party.

    • bmaz says:

      Odd and idiosyncratic cars, but completely delightful for front-wheelers. There was a time when the police in the mountain ski areas I frequented when I was in grad school in Boulder all used them as police cars because they were so good in the snow.

      • earlofhuntingdon says:

        I had one and enjoyed it, even the quirky key between the seats. What I didn’t like were the mandatory summer “performance” tires that would slip on a quarter inch of snow, requiring the premature expense of new or winter tires.

        News of Saab’s demise may be premature. The Chinese remain interested in some form of cooperation. Knowing the secrets of GM as much as Toyota, they are not likely to buy assets or the business at a premium, though they would like a much larger presence in Europe.

        Still, Saab is suffering from more than its own problems. GM’s change of management and chaotic change of culture, for one, a culture that looks down on manufacturing and cars and prefers paper and money, as if they themselves were sufficient to create value.

        Excess capacity and “Opelization” contributed to Saab’s poor prospects. But GM for too long took Europe for granted, as a safe international training ground for American execs and as a source of technology for global expansion. Now it’s cutting loose whatever, I suspect, Goldman can’t make enough money or political capital on. I imagine the teams that are running these deals are also suffering from exhaustion and worry about their own futures with such a chaotic, unattached and uncommitted new management team.

      • fatster says:

        Neat, quirky cars, yep. But I also noticed in those high-temp/high-humidity Deep South summers that the manual gear-shift tended to stick. Not so much a car for the tropics (though surely they improved that over the decades).

      • earlofhuntingdon says:

        The sale of Saab is not going through. Not surprising, given the complexity and short time line GM artificially imposed on itself. GM is going through with selling [some of] Saab’s hard assets and technology to Beijing Automotive, original partner on the Beijing Jeep deal. One wonders whether that’s simply the preferred deal. Now back to our regularly scheduled programming.

        • earlofhuntingdon says:

          Implied by this article in the Guardian, a major stumbling block in GM’s half-hearted attempt to sell Saab was that it wasn’t possible to disentangle Saab cars from the Opel technology that had become their core. Now that GM has decided to keep Opel, that matters, most especially to the Chinese.

          Beijing Automotive, with whom Chrysler partnered in Beijing Jeep and a competitor of SAIC, GM’s now majority partner in Shanghai, may buy some of Saab’s equipment and technology.

  21. behindthefall says:

    The first quote under the “Economists” heading:

    A more efficient health care system would free up resources that could be used to produce other goods and services, and to invest in the future. That would promote economic growth and jobs, along with higher wages and living standards.

    (These people write in code, and I need an interpreter.) What is “a more efficient health care system”? When I read that, I think, “one in which the profit-seeking middleman has been eliminated, that is, one without health insurance companies”. Is that what the authors had in the back of their minds, too? We’ve been hearing this “more efficient” line for decades, at least as far back as the heyday of the HMOs, and just what it might mean has never been clear. See more patients per hour? Use less paper? Run fewer tests? Prescribe fewer drugs? Get smarter? The only biggie I can think of is remove the single greatest headache in hospitals and private practices which, as far as I can make out, is the insurance coverage tangle.

    Have the economists seen the light but just not summoned up the courage to say so?

    • aknarayan says:

      Efficient is a vague term but my sense is that refers to 1) reducing medical errors 2) reducing unnecessary tests and procedures 3) providing treatments that are based on evidence

      Both of the health reform bills take important first steps towards addressing many of these problems

      • Hugh says:

        All of the things you mention have to do with establishing best practices standards. Best practices standards are not a cure all but would be a good first step both to re-educate some physicians and eliminate a lot of medico-legal driven medicine.

        • earlofhuntingdon says:

          In the context of these bills, health care improvements are also an afterthought. These bills are designed to enhance the insuresters role as the sole administrators of medical payments (other than already established government programs such as Medicare).

          Health care improvements most certainly need addressing. My hope was that that would happen in round two. Now that the ring is so bloodied from round one, round two may be a long interval away. As in the Dardanelles campaign, lengthy delays and long telegraphed moves simply make it easier for those defending to improve their defenses.

      • behindthefall says:

        You say:

        Efficient is a vague term but my sense is that refers to 1) reducing medical errors 2) reducing unnecessary tests and procedures 3) providing treatments that are based on evidence

        Both of the health reform bills take important first steps towards addressing many of these problems

        I don’t understand how the medical profession is expected to snap its fingers and implement points 1, 2, or 3.

        Half of medicine may be healing the patient, but the other half is trying to do no harm, in other words, trying to reduce errors. Nifty legislation that can help do that. Most physicians are working very hard all day to avoid mistakes.

        Reducing unnecessary tests — It’s very nice to imagine running just that one telling test that settles all the questions, but we have a diagnostic tradition that requires objectively demonstrable measurements before it can move, unlike, perhaps, Eastern medicine. What’s an unnecessary test? Fewer check marks on a blood work request? Does reducing the cost of the lab work ordered compensate for the added uncertainty in the diagnostician’s mind and possible consequences for the patient. (And even the loss in time, effort, and money resulting from a malpractice suit if something important got missed.)

        Treatments based on evidence – The knots of 2 or 3 physicians standing in the halls of the hospital hashing out their next moves are most likely citing percentage-outcomes and likelihoods out to 3 significant figures, citing and counter-citing references. Docs barely move unless they have a citeable justification.

        I’m sorry, but although these points sound good, they amount to saying, “Docs, do what you’re doing; just do it better, faster, and cheaper.” (What’s that old line: you can have any 2 of the preceding, but not 3?)

  22. fatster says:

    OK judge to hear arguments Friday on imposing a temporary injunction on the insane (Repug) idea of posting information on-line about women who’ve had abortions. (Wait’ll you read what one politician, a Todd Lamb, said the purpose of the abomination is.)

  23. masaccio says:

    The law of supply and demand tells us that when unemployment is high, employers can easily cut wages. There are more people in need of work than there are jobs. Why would employers as a group pass savings on to employees? Maybe in the weird world of econometric models, that parallel universe that dwells in gigantic computers, but not out here in make-a-buck land.

    • emptywheel says:

      Yeah, I do think in a different job market, those savings (if there were any, which I doubt) would be passed on. And the job market may change by the time the excise tax would go into effect. But as I said, the experts on employment practices say that this period reflects a radical change and there will be no going back to that employment model.

  24. marcos says:

    I just helped a dear friend through end stage leukemia.

    He was on disability for the last year of his life.

    As a retiree of the City and County of San Francisco, he had the same “Cadillac” health plan that my partner, a current employee and I have.

    But the cost per person is north of $900/mo, qualifying it as a taxable “Cadillac” plan.

    Under this bill, it seems that he would have been taxed the last year of his life for our insurance, which is as good as it gets for working people, out of his disability!

    Can’t we just raise corporate taxes by 2%, bulk up Medicare to a real system of comprehensive coverage, and be done with it?

    Of course not, the permanent government that gave away our manufacturing base, that has enslaved us to their military fantasies and is now threatening to cut life essential entitlements and shift costs to individuals hates Americans.

  25. jang says:

    Emptywheel, I have enjoyed reading your excellent blog for years and am delighted and amazed at your abilities..and get great pleasure from reading all contributions.. so my 2cents.

    First of all, the proposed Health Care Coverage plans seem to lump all health care into one gigantic basket.. then mandate very expensive coverage which seems very wrong to me. But, that doesn’t have to be the only way to envision coverage…

    In Ontario, payment for health care is more or less divided into two parts, one government run and the other available through purchase of private insurance.

    1. Gov’t Run: OHIP, Ontario Health Insurance Plan, covers basic hospitalization, visits to physicians, lab work etc and I think runs about $900.00 a year, for higher income individuals. There is also a premium for people making higher salaries, [but nothing like Emptywheel’s calculations].
    Note: Separately, the over 65 age seniors have a govt run health plan.

    2. For under 65 age group, the private coverage is available to be purchased by the individual for coverage, if desired, of prescriptions, dental coverage and other insurances eg long term disability etc.

    OK, I’m a retired Ontario pharmacist but the point is that there are rules here to what the government will cover in prescription costs.. and it is often related to the same rules that apply to the plan for seniors I don’t know the Medicare plan rules, but I imagine they would be similar]

    Santa should bring Obama an Ontario Drug schedule complete with the exceptions and regulations. One thing is for sure, I think Obama has been deluded by the thought of sugar plum fairies of cost rebates from the drug lobby…

    The Ontario gov’t is very fussy about the cost of medication it will cover at all… but it seems Obama is OK with spreading the cost of drug coverage out by mandating all Americans to pay for it on a sliding scale….

    I think the next step should be to allow 55-64 yr olds to buy into the Medicare health care drug coverage… and at remove those costs from the mandate.

      • BoxTurtle says:

        Obama does not WANT an excuse, he wants to avoid military confrontation with Iran.

        I think Iran is testing him, to see how far they can push him. You can make a case that a hard pushback from Obama would prevent future incidents like this.

        Boxturtle (Current reaction seems decidedly low key)

    • bobschacht says:

      I wouldn’t worry about this oilfield “seizure.” Its in disputed territory anyway, and as the article points out, periodically flip flops between sides.

      Bob in AZ

  26. Becca says:

    The health insurance benefits tax in the current HCR (aka ‘Health Insurance Corporation Giveaway Act’) is not indexed to insurance premium inflation? Or even to general U.S. economy inflation numbers?

    That says everything.

    Just like the AMT, only it’ll kick in faster and harder…

  27. fatster says:

    O/T. Yemen

    US air raids kill 63 civilians in Yemen
    “Yemen’s Houthi fighters say scores of civilians, including many children, have been killed in US air-raids in the southeast of the war-stricken Arab country. ”

    Link.

  28. klynn says:

    EW, I’ve been gone all day and I am just catching up. This post, My BarackObamaTax and Health Care On The Road To Neofeudalism should be an award winning series. Would appreciate Olberman or Rachel to pick up on your thinking.

    I do not know of anyone plotting these facts out.

    Thank you for your efforts above and beyond.

  29. Gitcheegumee says:

    O/T

    Feds: Arrests in Africa link al-Qaida and drugs‎ – 3 hours ago
    The arrests mark the first time US authorities have captured and charged al-Qaida suspects in a drug trafficking plot in Africa. …The Associated Press – 379 related articles »

    NOTE: A long and extremely interesting piece.

  30. Gitcheegumee says:

    @78

    Indeed it is. Thanks,fatster. There’s a lot of interesting detail there.

    I know that either rotl or Leen was recently posting about Viktor Bout, who is mentioned in this piece,

  31. marc says:

    Where I live cops, teachers and firefighter, are the only ones who still have “Cadillac” health plans. Private sector unions are dead as dodo birds. Health care plans will be cut and wages will rise……..in your dreams.

  32. Leen says:

    Schumer: We’ve Reached Agreement With Nelson
    Brian Beutler | December 19, 2009, 9:01AM

    Sen. Chuck Schumer (D-NY) just told reporters that he and Senate Majority Leader Harry Reid shook hands last night at 10:30 p.m. with Sen. Ben Nelson (D-NE) on an agreement that he would vote for cloture on health care reform, on the basis of the abortion language in the manager’s amendment.

    For those of you who understand legislative language, the text of the abortion amendment is below the fold.

    Sounds like they’ve got 60.
    http://tpmdc.talkingpointsmemo.com/2009/12/schumer-weve-reached-agreement-with-nelson.php?ref=tn

    • fatster says:

      And the battles continue over a woman’s right to make decisions about the health care of her body, including her womb. Women have to fight tooth and nail for their rights. Has always been so and continues. Such a deal.

  33. fatster says:

    He who couldn’t resist Big Pharma, says:

    Congress must resist health insurance lobby: Obama

    And his exhortation is confined to one or two points, too.

    Link.

  34. vincent162 says:

    My wife and I are in our mid fifties and have two college age daughters. My monthly premium is $1400+ a month with $4000 single / $8000 family deductibles. A Cadillac plan? … not really. I always thought that the reason for insurance was to prevent catastrophic loss from sending you to the poor house. As much as I pay my policy still wouldn’t do that.

  35. fatster says:

    O/T:

    Torture claims by British resident are given credence by American judge
    A recently declassified legal opinion from a US district judge reinforces Binyam Mohamed’s claim that he was tortured

    Link.

  36. prostratedragon says:

    OT (On the continuing shroud over last year’s crisis involving AIG and its counterparties, and the decision to bail them out):

    If this happens, it’ll be right in the Wheelhouse:

    OpEd on AIG: Show Us the E-Mail, by Eliot Spitzer, Frank Partnoy and William Black writing in the NY Times:

    Before releasing its regulatory clutches, the government should insist that the company immediately make these materials public. By putting the evidence online, the government could establish a new form of “open source” investigation.

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