Bacon's Rebellion

Democracy Thrives in Sunlight

Health Insurance as Driver of Income Inequality

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by

James A. Bacon
in , ,

Road to serfdom

If you want to address increasing income inequality in the United States, a good place to start would be to bring runaway health insurance costs under control. Health care costs — not globalization, automation or corporate greed — are the biggest driver in income inequality today, argue Mark J. Warshawsky and Andrew G. Biggs in the Wall Street Journal today. Warshawsky is a visiting scholar at George Mason University’s Mercatus Center.

Here’s what the usual media analysis doesn’t tell you about the growing income gap. If you compare total compensation — wages/salaries plus benefits — low-income workers actually fared better than high-income workers between 1999 and 2006. Citing Bureau of Labor Statistics data, Warshawsky and Biggs note:

For low-income workers, total pay and benefits rose by 41% from 1999 through 2006. But those workers’ wages increased only by 28%, barely outpacing inflation.  The reason: Employer costs for those workers health costs nearly doubled. …

Total compensation for [those earning $250,000 or more a year] rose by 36% from 1999 through 2006. That’s actually less than for low-income workers. But the one-percenters’ health costs rose from just 4% of compensation in 1999 to only 4.3% in 2006.

The authors do not explain why they cite data only through 2006 when data is available through June 2014. Whatever the reason, it appears that the cost of benefits continues to outpace wages/salaries. According to the BLS, for the quarter ending June 2014, “wages and salaries (which make up about 70 percent of compensation costs) increased 0.6%, and benefits (which make up the remaining 30 percent of compensation) increased 1.0 percent.

In other words, much if not most of the perceived increase in income inequality in recent years is an artifact of the tax code. Employer-paid health insurance is not taxable, thus not reported as income, while wages/salaries are taxable and reported as income. Eliminate the tax break for employer insurance and the growth in the wage gap disappears.

If we are sincere about wanting to reduce income inequality, the first place we should be looking is at inflation in health care costs. Here’s a real irony that Warshawsky and Biggs do not explore: Insofar as Obamacare shifts the cost of health care to employer-sponsored health insurance plans — I have a friend, a small business owner, whose health insurance is scheduled to go up 35% next year — it doesn’t just destroy job creation, it shifts compensation from taxable income to non-taxable health insurance, thus aggravating the reported income gap.

Meanwhile, the low interest rate policy of the Federal Reserve Board rewards the Top 1% by pushing up the price of stocks and bonds and punishes small savers by depressing interest rates. It is no accident that income inequality is worse under Obama than Bush. Perhaps Obama acolytes can cite the Warshawsky-Biggs research as evidence that the administration’s policies haven’t been as unfair to the poor as they seem to be.

— JAB

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34 responses to “Health Insurance as Driver of Income Inequality”

  1. larryg Avatar
    larryg

    I’ll have a lot more to say here, but I’ll start with this:

    What exactly justifies the Governments tax-free treatment of employer-provided health insurance while not giving folks who have to buy their own with taxed money ?

    keep in mind – that the rationale given for why employers would want to offer group insurance – is not a justifiable govt policy.. not when the govt forgoes a trillion dollars in taxes that would easily balance the budget, but the state of Va also does not get taxes and even more – Social Security and Medicare also do not get taxes from that income.

    so what exactly justifies the Federal Govt providing preferential tax treatment to some workers but not others? what national interest is served by doing that?

    And it’s more than taxes – it’s making access to insurance – mandatory for employees of some employers but not others and the benefits of pools and the same rate costs for some employees but not others…

    worse yet – workers of employers who do offer health insurance – cannot get the money instead to go out on the open market and buy what is better for them – OR use that money towards an HSA OR if two spouses have it at separate companies that one spouse can take the money and use it to buy down the deductibles and co-pays on the other spouse policy.

    ALL of this was in place BEFORE Obamacare and not one principled opponent of ObamaCare has suggested any reform to the existing system as a better alternative than ObamaCare.

    Our system was a cluster F BEFORE ObamaCare and fertile ground for those who would offer reforms different/better than ObamaCare and nothing was done before and now no real alternatives have been proposed – as real legislation. What we have are a bunch of “ideas” from different opponents of ObamaCare but the opponents themselves cannot agree among themselves as to an alternative that they’d all support – so what they do instead is blather on 40+ times about “repeal” without once providing a “Replace”.

    Uber-hypocrisy defines the folks who say this is a better way.. and you know having folks from George Mason talking about health care is laughable as the Mercatus Center is a bunch of libertarians – paid for by the Koch brothers who have no sincere interest at all in health insurance or inequity.

    1. NoVaShenandoah Avatar
      NoVaShenandoah

      A little clarification: the big health care premium benefit provided by employers is that the employer sometimes pays most of it. I know, as mine picks up 80% of the premium. True, the remaining 20% is paid in pre-tax dollars.

      Naturally, many who are beneficiaries of such an arrangement also tend to be opposed to the hand-out that the ACA (aka ObamaCare) represents to the unworthy minions. But then so did Scrooge before he was visited by the spirits!

      1. larryg Avatar
        larryg

        and the employer also does not pay FICA taxes or other taxes on the part they pay…

        the tax loss alone just for the Federal tax is a trillion dollars a year – the largest tax expenditure by far with the mortgage interest deduction coming in second.

        Imagine what would happen if those who had to buy their own – also got tax credits … federal and state – and FICA.

        1. NoVaShenandoah Avatar
          NoVaShenandoah

          larryg, I understand your frustration, but beware:

          If you try to raise my taxes, I’ll send the republicans after you;

          If you try to take my benefit away, I’ll send the Democrats and retirees after you.

          😉

          1. larryg Avatar
            larryg

            well.. I just thought if Jim – REALLY wanted to talk about inequities – he’d start with the current inequitable system…at least before he started his ramble about libertarian principles…

            😉

  2. Peter Galuszka Avatar
    Peter Galuszka

    Ridiculous,
    I am sure those low income workers are just skipping for joy knowing that their employer is picking up a bigger part of the health tab over which they have ABSOLUTELY NO CONTROL.They don’t get to choose their system unless they want to get another job. LOL.They just take what their boss gives them while their actual co pays go UP and what’s covered goes down (at least pre-ACA).

    Meanwhile, their REAL wages are barely keeping up with inflation.

    Total nonsense, brought to you by the usual echo chamber.

    1. larryg Avatar
      larryg

      some of the most important things for employer provided insurance are:

      1. – that you usually cannot be turned down for access to a policy
      2. – that you become part of a pool that spreads risk
      3. – that your premium is reduced as part of a pool whereas if you purchased
      insurance on the open market -you may well not be part of a pool and will be charged according to your individual risk.

      One might ask oneself, why people who do not have employer-provided do not get the same tax and access benefits of those who do have employer-provided.

      in terms of the govt creating winners and losers – employer-provided health insurance that favors big companies over small companies is a huge example.

      it’s not that ObamaCare made it bad – it’s that it was wrong to start with.

      why should bigger employers get the tax benefits that small employers cannot compete with?

      I’d guarantee you this. If you want to REPEAL something – REPEAL the Federal laws that give preferential tax and other treatment to big companies… as well as Federal and State and local agencies – and let EVERYONE have to buy their insurance on the open market – like the Conservatives claim is the “right” way – and see what would happen.

      For your own situation – think about what you would do – if you now have employer-provided and had to go find insurance on the “free market”.

      I bet we’d see a lot of panic from those who talk the talk about the free market but never have to walk-the-walk themselves.

  3. NoVaShenandoah Avatar
    NoVaShenandoah

    JAB notes that the “authors do not explain why they cite data only through 2006 when data is available through June 2014.” That is indeed an interesting question, especially since the increase in health care premiums has decreased noticeably since the ACA was passed.

    It will be interesting to learn of the explanation.

  4. DonR Avatar
    DonR

    Of all the things Obama doesn’t understand he doesn’t understand economics most of all.

    Interesting that income inequality has gotten worse under Obama than under Bush. I guess it wasn’t the “Bush tax cuts” after all.

    1. larryg Avatar
      larryg

      it has nothing to do with Obama.. other than he had the backbone to do SOMETHING whereas the GOP lacked the courage to do anything EVEN AFTER ObamaCare came to be – and the GOP hypocrites promised REPEAL and then did nothing.

      I give credit to Jim Bacon – he admits the system BEFORE ObamaCare was inequitable and unlike most critics of ObamaCare he actually thinks we should level the playing field.

      Just ask yourself one question Don – what if all small employers had access to a small business insurance pool that operated the same way as big employer plans in that everyone could get access, be part of a big pool, and pay pool rates..?

      when did you advocate that as part of your criticism of Obama and ObamaCare?

      we have stood by while an grossly inequitable system has continued .. done nothing.. then complained when the Dems did something – and EVEN THEN – STILL did not offer any real alternative because the opponents lack the backbone and cojones to step up and actually propose real reform.

      a pox on anyone who stood by and advocated nothing then became an opponent – and still offers nothing.

      1. DonR Avatar
        DonR

        Try reading what I wrote. My comment was in reference to Jim’s statement that income inequality os worse under Obama than it was under Bush. While Obamacare may have something to do with that it is generally a separate matter. During the 2008 election liberals consistently blamed the Bush tax cuts for income inequality. Those tax cuts expired and income inequality is worse under Obama than under Bush. Looks like the liberals were wrong AGAIN.

        1. larryg Avatar
          larryg

          Don – what in the DOODA does “under Obama” and “under Bush” actually mean since neither one of them can make changes to the economy?

          isn’t this just as disingenuous as saying we have the biggest deficit and debt under Obama since way back when – when the POTUS cannot spend a penny that Congress did not approve?

          be honest Don.. be truthful here.. what exactly did Obama himself without anyone else do – to increase the income inequity? truth guy.

  5. James A. Bacon Avatar
    James A. Bacon

    I regard the unequal tax treatment of medical benefits as one of the fundamental sources of dysfunction in the health care system. The highest priority of both Rs and Ds ought to be to equalize the tax benefit. Perhaps the best way (politically) would be to extend the tax benefit to everyone but cap the deduction at a level that would be revenue neutral. The next step would be to persuade companies to get out of the business of being a health-care intermediary. Ideally, employers would scrap their plans and convert the savings to higher wages-salaries for their employees. Then employees would buy directly from the insurers — no more middle man interposing their own needs.

    I was talking to a physician last night who said that insurance plans need to manage for the long term, not the one-year time horizon of the contracts that employers sign with insurers. Eliminating the employer as intermediary opens up the possibility of people signing long-term contracts (five years, say) with insurers, who then have incentives to invest in wellness and prevention.

  6. Steve Haner Avatar
    Steve Haner

    If the point is that employers are spending so much on benefits it is taking a toll on the raises they can offer, well, I can accept that. Most employees don’t know what their employers spend on that stuff, and they should.

    Another real problem is the unequal treatment of those with insurance and those without. I’ve had my own unpleasant health care experience this year, with lots of statements from the insurer, and the gap between what the providers charged and what the insurer actually paid is just amazing. But the patient who does not have health insurance is expected to at least try to cover the retail charge. That will create inequality – bankruptcy leaves you very unequal.

    And my out-of-pocket share came out of a new Health Savings Account we’ve set up this year. That means that my out-of-pocket dollars were pre-tax, in my case a discount of at least 33 percent. If I slip into a higher bracket for 2014, that gives me a deeper discount on those costs. Can the lower middle income family scrape up $5000 to put in an HSA, and if they do somehow, will they get the same big tax benefit? No.

    This whole system is truly screwed up. So while I get what Jim is saying, when I hear that health care costs are creating inequality — those are the things that come to my mind. Maybe not income inequality, but definitely wealth inequality.

    1. larryg Avatar
      larryg

      look on last years W2, box 12a “DD” which will tell you how much untaxed money your employer contributed to your health insurance.

      http://www.irs.gov/uac/Form-W-2-Reporting-of-Employer-Sponsored-Health-Coverage

      for many, it’s not a small amount – it can be 5, 10, 15K …or more if they have family coverage – it can amount to a thousand, or two thousand a month.

      think about if you had to pay 20% tax on that PLUS your share of the FICA tax 7.65% plus State income tax . you’d owe hundreds, thousands of dollars in additional taxes… you’d be taking home EVEN LESS …

      that’s the amount of subsidy you receive from the govt – and that write-off at the Federal level amount to about a trillion dollars in general revenues and about 800 million for FICA taxes.

      Imagine what would happen to the deficit if folks who paid out of pocket got a refundable credit for the taxes paid on money spent on health insurance – both Federal, State and FICA.

      to get some perspective on this – keep in mind that right now the US Treasury takes in about 1.5Trillion – TOTAL income taxes which is about 90% of the total revenues. Another 800 billion is FICA taxes which are earmarked for Social Security and not available for discretionary spending.

      to see these revenue numbers : google “Financial Statements of the United States Government for the Years Ended September 30, 2013, and 2012”

      and look at page 42:

      Individual income tax and tax
      withholdings ……………………………………….. 1,294.0
      Corporation income taxes …………………….. 270.4

      people often think we take in about 2.4 Trillion – and we do – but 900 billion is FICA taxes earmarked for Social Security, Medicare Part A and SS disability.

      In a nutshell -the United States simply could not afford to provide the same tax benefits to those who have to buy their own insurance – we’d end up with zero revenues!

      The irony is that those who have employer-provided insurance – precisely because of government subsidies – are often heard to oppose a similar benefit for those without employer-provided because they believe they themselves are not getting a subsidy.

      and this is JUST the tax preferences,

      Federal Law – ALSO – MANDATES insurance companies that provide employer-provided insurance to accept all employees regardless of their health status (unlike those buying on the open market) AND the law also requires the insurer to charge the same rate to all insured for the same plan – unlike folks who buy on the open market who do not benefit from community-rated pool pricing.

      so – you can not fix this by giving the same benefit to those without employer-provided because the govt would go broke.

      so how do you fix it?

      Obamacare does it mostly by cutting some of the other tax expenditures – like how much money a person can put into an HSA – (and the rest is taxable) or taking the itemized deductions for health expenses from 7.5 to 10% of the amount that exceeds AGI. There are no general tax increases for Obamacare and none of it is funded directly from general revenues.

      so we have no shortage of critics of ObamaCare – but don’t you just love the fact that it’s the Govt that subsidizes employer-provided – not one opponent of ObamaCare has bothered to admit this much less advocate removing that subsidy.

  7. LifeOnTheFallLine Avatar
    LifeOnTheFallLine

    LOL at the assumption that employers would take that money and turn it into wages.

    It’s almost like this would all be simpler if we just had some sort of single payer system…

    1. larryg Avatar
      larryg

      The Feds currently provide 100% coverage for people 65 and over – with retirement incomes of up to 85K a year for about $150 a month with Medicare Advantage . (100.00 a month for 80% coverage with original Medicare). Original Medicare costs taxpayers about $5000 a year per insured and if they have Medicare Advantage – about 10,000 a year. Medicare advantage is even more heavily subsidized than original Medicare.

      The tax-free subsidy benefit that taxpayers provide for employer-provided can also be several thousand dollars per year

      think about the poor schmuck (prior to Obamacare) who makes 30-40K a year and does not have employer-provided insurance, and has to buy their own – non-pool insurance on the open market .. has to use fully taxed money to buy his insurance and gets no tax credits while those with employer-provided and seniors are swimming in subsidies.

      so we have a system where we have provided all the subsidies that we can afford to provide – but we’ve only provided it to about 1/2 of citizens and that 1/2 resents the idea of the other half getting subsidies.

      do we have one elected person who opposes ObamaCare, willing to tell the truth on employer-provided and medicare subsidies?

      Nope.

      the elected think that voters are largely ignorant about this – and – unfortunately they are correct… but box 12a, CODE DD on your W2 showing tax free compensation,does not lie and the US budget showing how much employer-provided costs in taxes lost and how much Medicare costs in spending – does not lie.

      nope.

    2. TooManyTaxes Avatar
      TooManyTaxes

      I agree on the likely non-transfer of cash to wage increases. We’ve entered a psychology where few, except for government workers, are viewed as entitled to raises. That’s simply a bad place to be.

      But I don’t think single payer is politically doable. By definition either the government cuts benefits for many (who have better coverage than the new, average single payer coverage) or impose crushing tax increases. The only time single payer can be instituted is when very few have coverage – like LBJ did with retired people with Medicare in the 1960s.

      And before Larry waives the bloody shirt of “fairness,” few things in life are equally distributed and that can be viewed as unfair. I have a deferred pension and a 401K. None of my three brothers do, likely because they started working a number of years after me. They are on the wrong side of the pension bubble. I had a client who stiff the Firm for almost $200K in legal fees, much of which were for services I performed or supervised. I took a big financial hit, while my colleagues who didn’t work for that client didn’t take a hit. Single payer isn’t going to happen. It would create too many losers.

      1. larryg Avatar
        larryg

        re: the bloody shirt of fairness…

        indeed – life itself is not fair

        but when the govt is the one deciding fairness and it’s not equal then you have inequity…

        if the govt is going to offer a benefit as fundamental as access to health care – then all citizens should be accorded an equal level of access…

        if you don’t want the govt providing access to health insurance – man up to it – for everyone.

        why should anyone have trouble with single-payer to start with if each person is free to add on to their benefit with their own dollars extra?

        Canadians come to this country right now when their single-payer won’t pay for what they want…

        Medicare is the same way – they don’t cover optical, dental, hearing nor nursing homes – people have to come up with extra money. In fact, Medicare, only average on pays about 51% of all your health care needs and seniors who make 85K a year in income – complain that it’s “unfair”.

        We say that Medicare has “death panels” when they won’t cover everything but when private sector insurance does the same exact thing – we call it the “free market” , and oh.. yes.. “unfair” and people start writing campaigns, petitions and penny jars at the 7-11’s to cover what the insurance company meanies won’t cover.

        but the most compelling reason to have single-payer is that we already do that. We pay for people who do not have insurance – and instead of paying for cost-effective primary care – we let them get their primary care at the ERs and we cover it.

        Our health care system is a mess.

        it only “works” for the people who have cadillac policies – policies that taxpayers subsidize.

        1. TooManyTaxes Avatar
          TooManyTaxes

          Larry, beyond your view that fairness requires the federal government to provide (relatively) equal access to health care to all Americans, where is the source of this principle? (I readily recognize that many other people feel the same way as you.) But rights must come from some place. I cannot walk into Giant and say “I have a right to food and walk out with two bags of groceries.” My wife and I couldn’t just bring our kids from Korea to the U.S. We had to follow federal rules and regulations.

          The Supreme Court has never held that there is a right to health care. The Constitution doesn’t mention health care.

          Sellars v. City of Gary, 453 F.3d 848 (7th Cir. 2006) held that the city could require a firefighter who retired early to pay all his health insurance premiums even though firefighters who retired later received premium assistance from the city. Didn’t violate equal protection as the firefighters were not similarly situated.

          Cooksey v. Schafer, 978 F.2d 1263 (8th Cir. 1992) rejecting an equal protection claim when a public mental hospital refused to admit plaintiff because he had no health insurance.

          Korab v. Fink (9th Cir. 2014) rejecting a claim that Hawaii had a obligation to extend Medicaid-like benefits to nonresident aliens. No violation of equal protection.

          I respect your view on fairness, but it’s not the law.

          1. larryg Avatar
            larryg

            ” Larry, beyond your view that fairness requires the federal government to provide (relatively) equal access to health care to all Americans, where is the source of this principle? ”

            the principle is that IF the govt IS going to intervene that it must be fair. It must adhere to some principle of equal protection.

            “(I readily recognize that many other people feel the same way as you.) But rights must come from some place. I cannot walk into Giant and say “I have a right to food and walk out with two bags of groceries.” My wife and I couldn’t just bring our kids from Korea to the U.S. We had to follow federal rules and regulations.”

            if your “right” came from the govt – then it has to be given fairly to all. We’re seeing that right now with marriages, right?

            “The Supreme Court has never held that there is a right to health care. The Constitution doesn’t mention health care.”

            no one said you had a right to health care. What they said was that if the govt decides to provide that right – it should be provided equally to all.

            “Sellars v. City of Gary, 453 F.3d 848 (7th Cir. 2006) held that the city could require a firefighter who retired early to pay all his health insurance premiums even though firefighters who retired later received premium assistance from the city. Didn’t violate equal protection as the firefighters were not similarly situated.”

            you’re dealing with in-the-weeds stuff here.. on a wider-scale – it’s fundamentally wrong for the govt to justify helping citizens – but doing so inequitably.

            we saw that with segregation where “separate but equal” was explicitly rejected because it was not true.

            “Cooksey v. Schafer, 978 F.2d 1263 (8th Cir. 1992) rejecting an equal protection claim when a public mental hospital refused to admit plaintiff because he had no health insurance.”

            wait.. it’s a publically-funded hospital?

            “Korab v. Fink (9th Cir. 2014) rejecting a claim that Hawaii had a obligation to extend Medicaid-like benefits to nonresident aliens. No violation of equal protection.”

            non-resident aliens are NOT U.S. citizens.

            I respect your view on fairness, but it’s not the law.

            the law runs behind sometimes.. but eventually it catches up.

            what I am saying is NOT that the govt is required t provide health care.

            what I am saying is that if it decides to help people with health care – it needs to be equitably provided.

            it’s just like marriage. If you are going to provide legal benefits to people who are married over people who are not – then you cannot discriminate. It took a long time but the law finally caught up…

            I’m not even advocating a change to the law.

            I’m pointing out the hypocrisy of those who benefit from govt subsidies advocating denial of equivalent subsidies to others. That’s morally wrong and it’s fundamentally in opposition to the basic tenets of America.

            Jim talks about the economic inequity of the COST of health care to those who cannot afford it but he totally skates by how the govt provides massive subsidies to people who are economically better off and denies it to people who are economically worse off. That’s the hypocrisy of those who claim that the govt is not responsible for helping those in the lower economic stratus – not because the govt should help them but because the govt is helping folks in the higher economic strata… already.

          2. TooManyTaxes Avatar
            TooManyTaxes

            Larry, the law is not such that, if the government provides access (directly or indirectly) to some people, it must do so to all in a comparable manner. An alien, legal or illegal, has the right to a Miranda warning. But he/she may not have a right to any health care. Federal law sets the age for Medicare eligibility at 65. There are probably people at age 60 that need it more than some at 85. But there is a rational basis for the federal government to decide that people 65 and older are treated differently than people 64 and younger. Unless we are dealing with a fundamental right decreed by the Constitutional or dealing with a discrimination based on a suspect, all Uncle Sam and the states need do is treat similarly situated people equally. There is no right to health care. If there was why did Congress pass the ACA? And people with and without insurance does not create a suspect class.

            The vast majority of equal protection claims are quickly dismissed. The feds set standards for health care related issues all the time and those standards are rarely challenged successfully in court. Medicaid income and asset limits. Medicare age limits. The non-deductibility for many plastic surgery expenses. Greater coverage for medical than for dental expenses.

            If your view of equal protection were the law, the nation would have gone under years ago. Uncle Sam doesn’t have to be equal to all.

            And just for the record, SCOTUS’ denial of cert on the gay marriage cases (which I would probably have supported had I been on the court) doesn’t mean anything beyond the fact that there were not four justices willing to hear the cases. The court may well still hear gay marriage cases in the future. Personally, I’m content because the Supreme Court followed standard procedures to process the cases and looking forward to seeing bans on plural marriages be struck down as well.

          3. larryg Avatar
            larryg

            ” Larry, the law is not such that, if the government provides access (directly or indirectly) to some people, it must do so to all in a comparable manner. ”

            many court cases usually get resolved in equal access.

            “An alien, legal or illegal, has the right to a Miranda warning. But he/she may not have a right to any health care. ”

            anyone who is not a citizen is subject to less than what citizens are entitled to. you cannot treat citizens as if they were aliens.

            “Federal law sets the age for Medicare eligibility at 65. There are probably people at age 60 that need it more than some at 85. But there is a rational basis for the federal government to decide that people 65 and older are treated differently than people 64 and younger. ”

            but all people who are 65 are have equal access.

            “Unless we are dealing with a fundamental right decreed by the Constitutional or dealing with a discrimination based on a suspect, all Uncle Sam and the states need do is treat similarly situated people equally. There is no right to health care. If there was why did Congress pass the ACA? And people with and without insurance does not create a suspect class.”

            no one has said there is a right to health care. what is said is that if the govt is going to provide help to people for health care – it cannot be done inequitably. We’re seeing the result of that right now in marriage.

            “The vast majority of equal protection claims are quickly dismissed. The feds set standards for health care related issues all the time and those standards are rarely challenged successfully in court. Medicaid income and asset limits. Medicare age limits. The non-deductibility for many plastic surgery expenses. Greater coverage for medical than for dental expenses.”

            you can have rules once access is provided.. the question is – is the access equitable?

            “If your view of equal protection were the law, the nation would have gone under years ago. Uncle Sam doesn’t have to be equal to all.”

            he does not. he can be and is quite arbitrary.. but he has to protect equal access.

            “And just for the record, SCOTUS’ denial of cert on the gay marriage cases (which I would probably have supported had I been on the court) doesn’t mean anything beyond the fact that there were not four justices willing to hear the cases. The court may well still hear gay marriage cases in the future. Personally, I’m content because the Supreme Court followed standard procedures to process the cases and looking forward to seeing bans on plural marriages be struck down as well.”

            the net result is you can’t practically go back.. we’ve crossed the rubicon …and this is just one more case where the equal protection clause DID cause massive changes to what was accepted as “ok”.

            again, I’m not arguing that the govt should provide health care. I’m arguing that if it provides tax and policy benefits for health care – it has to be logical not irrational .. and the law for employer-provided is clearly biased against people – more and more in the modern world – who do not have employer-provided. It’s not only a legal issue – it’s a moral one where we have people who enjoy that benefit – and yet they oppose others receiving equivalent treatment. That’s a illegitimate position – and over time – it fails just as slavery and marriage have. Ultimately – it’s not SCOTUS – people vote and if there is real inequity – elections cause changes – and should.

          4. TooManyTaxes Avatar
            TooManyTaxes

            Larry, the standard for most equal protection questions is: does the government have a rational basis for its discrimination? It does not need to treat people with employer-provided insurance the same as it does people without. It does not need to treat homeowners the same as it does renters. It does not need to treat people who live in states with income taxes the same as it does people who live in states only with sales taxes. It can decide to offer funding to states who expand Medicaid to people with $40 K in income, but not a dime for those that expand it to $41 K. Things can be very unfair in the eyes of many, but not unconstitutional.

          5. larryg Avatar
            larryg

            TMT – do you think the word “rational” is subjective?

            Again – I’m not arguing legal.. I’m arguing the fairness of the laws.

            Unfair laws ultimately get changed – either by legislators or the SCOTUS.

            We cannot have a rational discussion about health care for people who do not have employer-provided by saying it’s the status quo and cannot change – especially if we have folks who have employer-provided but oppose providing others without it – a fair equivalent.

            it’s the height of hypocrisy to enjoy favored govt subsidies and preferences and at the same time – oppose anything equivalent for others..

            it’s morally bankrupt.

          6. TooManyTaxes Avatar
            TooManyTaxes

            Larry, I understand you are arguing fairness mostly, but you are also claiming the government has a duty – presumably a constitutional or legal one – to treat everyone equally on health care. I respect your fairness argument. But there is no constitutional or legal argument. That’s my only point.

            The Supreme Court has explained this test as the government’s decision must be upheld so long as “there is any conceivable state of facts that could provide a rational basis for the classification.” That’s pretty loose.

            You can make a policy argument based on fairness, but not a legal or constitutional one.

          7. larryg Avatar
            larryg

            ” Larry, I understand you are arguing fairness mostly, but you are also claiming the government has a duty – presumably a constitutional or legal one – to treat everyone equally on health care. I respect your fairness argument. But there is no constitutional or legal argument. That’s my only point.”

            if the govt is going to help people on something as fundamental as health care – it has to be equitable or else you’ll end up with not only political upheaval – but ultimately disaster because of all the other programs that the govt creates to take care of those who don’t have access to insurance.

            that’s dumb economically and it’s the reason why we pay twice as much for health care as any other country in the world – and still have lower life expectancies.

            so it’s not only immoral – it’s economically stupid.

            “The Supreme Court has explained this test as the government’s decision must be upheld so long as “there is any conceivable state of facts that could provide a rational basis for the classification.” That’s pretty loose.”

            and it’s totally subjective

            “You can make a policy argument based on fairness, but not a legal or constitutional one.”

            see above. economically stupid should not be our policy.

            but you still did not answer the question.

            why should we not expand Medicare to people who are 50?

            what the rationale for saying the govt should not do that?

          8. larryg Avatar
            larryg

            so tell me why we cannot expand Medicare to younger folks.. what the reason?

            would it be un-constitutional or illegal?

            your position could be sustainable even if morally repugnant if we did not have EMTALA, MedicAid and other taxpayer-supported medical care for those who do not have employer-provided but since we do have these programs – and they are NOT cost-effective – and they do exist – what is your alternative?

            just continue to pay higher and higher taxes for higher and higher health care costs so we go from twice as much as other countries to three times?

            you simply cannot hide in your cave on this TMT – it’s going to adversely affect you personally as well as the economic vitality of the country if you fail to find solutions.

  8. larryg Avatar
    larryg

    re: ” “Federal law sets the age for Medicare eligibility at 65. There are probably people at age 60 that need it more than some at 85. But there is a rational basis for the federal government to decide that people 65 and older are treated differently than people 64 and younger. ”

    TMT – what’s the argument against making it for people who are 60 or 55?

    1. TooManyTaxes Avatar
      TooManyTaxes

      Larry, I cannot answer this one beyond repeating the then tradition that people at 65 are no longer able to work in many circumstances and it had a base in the Social Security Act. I suppose actuaries also found 65 to be an affordable age for Medicare based on life expectancies and tax rates. Why can kids buy cigarettes at 18, but not beer until they are 21? Yet no one would argue that distinction is unconstitutional.

      1. TooManyTaxes Avatar
        TooManyTaxes

        The rational for not expanding Medicare to people at age 50 is likely several factors: many people have insurance at that age; many are still working and can afford premiums; the cost to the federal budget would likely be great; taxes would need to be raised; etc.

        People make the argument that unreimbursed ER costs passed on to taxpayers and premium payers are higher than the costs for expanding Medicaid. But they refuse to require the alleged savings to be passed along to taxpayers and premium payers. This reluctance leads me to believe either the Democrats have worked out a deal with the insurance companies to give them a windfall in exchange for their support for expanding Medicaid or there are no savings — or both.

      2. larryg Avatar
        larryg

        re: ” Larry, I cannot answer this one beyond repeating the then tradition that people at 65 are no longer able to work in many circumstances and it had a base in the Social Security Act. I suppose actuaries also found 65 to be an affordable age for Medicare based on life expectancies and tax rates. Why can kids buy cigarettes at 18, but not beer until they are 21? Yet no one would argue that distinction is unconstitutional.”

        yes. the question is in the same terms as you say – that employer-provided is provided by the govt. why can’t they do the same with other govt-supplied health care if it is not illegal or unconstitutional?

        employer-provided is not in the Constitution so apparently it can be provided without being “un-constitutional” , right?

        1. TooManyTaxes Avatar
          TooManyTaxes

          Larry, Congress could do the very things that you suggest. Virtually everything you have suggested about health care reform could be enacted into law. But Congress has not chosen to do this. I suspect a lot of it has to do with the cost. Who is going to pay the additional taxes to expand coverage as you suggest? I suspect that, if Congress limited the deductibility of expensive health care plans or taxed employer-paid benefits above a certain point to expand coverage, some Representatives and Senators would be defeated in primary and general elections. Even labor unions are adamantly opposed to this because their members generally have good tax-free health insurance and don’t want to lose it – even as labor calls for expanding coverage. Don’t me; don’t tax thee; tax the fellow behind the tree. Notice, for example, that neither Mark Warner nor Ed Gillespie are calling for limits on tax free insurance.

          You are frustrated because politicians are not going to piss off a large segment of their constituents to expand access to health coverage in a manner you believe would be more fair. So go lobby. Form a group. Persuade voters they should be willing to give up something to expand coverage.

          1. larryg Avatar
            larryg

            ” Larry, Congress could do the very things that you suggest. Virtually everything you have suggested about health care reform could be enacted into law. But Congress has not chosen to do this. I suspect a lot of it has to do with the cost. ”

            if you give others the same financial benefits that some already get?

            “Who is going to pay the additional taxes to expand coverage as you suggest?”

            who pays right now to provide those with employer-provided with a tax exemption? Doesn’t everyone else have to pay more taxes to make up for the loss of that tax?

            “I suspect that, if Congress limited the deductibility of expensive health care plans or taxed employer-paid benefits above a certain point to expand coverage, some Representatives and Senators would be defeated in primary and general elections. ”

            have you looked at the changes to the tax code right now – to pay for ObamaCare? do you know how ObamaCare is funded?

            do you itemize your taxes? have you noticed that the medical deductions have changed from 7.5% to 10% of AGI? How did that happen? How about the removal of OTC drugs from HSA’s? there are about a dozen more. Are you aware of what they are and how they affect your taxes? How many others know? How about when they decide to increase the age for social security ? How about when they charge more for Medicare? How about when they cut 700 million from Medicare Advantage subsidies?

            “Even labor unions are adamantly opposed to this because their members generally have good tax-free health insurance and don’t want to lose it – even as labor calls for expanding coverage. Don’t me; don’t tax thee; tax the fellow behind the tree. Notice, for example, that neither Mark Warner nor Ed Gillespie are calling for limits on tax free insurance.”

            yup.. but Warner supports providing equitable benefits to those without while Gillespie does not and pretends that there are no existing subsidies to employer-provided even as he talks about “market-based” insurance for those who are not subsidized by the govt. I call that hypocrisy.

            “You are frustrated because politicians are not going to piss off a large segment of their constituents to expand access to health coverage in a manner you believe would be more fair. So go lobby. Form a group. Persuade voters they should be willing to give up something to expand coverage.”

            no, I’m frustrated because we have a system that treats people unfairly on health care and we have hypocrites who are willing to defend it instead of honestly dealing with it for everyone – and especially so when are are already paying for people who don’t have it – that’s not only dishonest – it’s economically stupid.

            I’m not frustrated – I’m calling it out . I’m pointing out the specifics and forcing people to accept the facts – the reality that we have a grotesquely and profoundly unfair system that damages people, damages families and damages the country , the economy. Employers are no longer hiring because of the cost of health care – and they are losing in head-to-head competition with companies from other countries who do not have health care costs embedded in the costs of their services and products.

            we are screwing ourselves. Health care costs go UP when you have to pay ER costs for people who don’t have insurance and need primary care.

            this current system – is not sustainable.

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