Obama to Cut Budget

I agree in general that the government (i.e. Congress or the President) should not be directing research funding. I'm uncomfortable with earmarked funds being given to the NIH or NSF; I rather they be given X amount of money and a broad mandate, and the experts at the various organizations decide on disbursing the funds according to scientific merit and potential societal impact.

Yet I think it's very unlikely charities would be able to pull in ~$38 billion, which is the combined NIH and NSF budget (not including various other research budgets that help fund basic science, like quite a bit of DoD and DoE money). One of the largest research oriented charities I know of, the American Cancer Society, has a budget of about $1 billion a year, and a good chunk of that goes to advocacy and the like rather than research. You'll get another handful that are in the hundreds of millions range, and after that you fall off a very steep cliff. Furthermore, there's even less money available for non-medical research, even though non-medical breakthroughs have driven much of the technological innovation in the last 60 years (and much of our economic prosperity).

What about defense-related medical research? I work in regenerative medicine, something the US military is extremely interested in for obvious reasons. Our work rests on work done by mechanical engineers, polymer chemists, materials scientists, cell biologists, and more. How can you separate out 'relevant' research by your rubrics and 'non-relevant' research?

I think a simple solution is for the government to provide significant funding for early stage research, which can later be picked up by the private sector for development. The funding is competitively awarded on the basis of merit and potential impact, and the ramifications for society are sorted out later.


You say the government's role is to protect us against enemies, including internal ones. What more potent enemy is there than influenza or HIV? How much damage do the depredations of age do to our citizens and our prosperity? I guarantee you, disease has prematurely killed and crippled far more Americans than any external threat, and caused greater damage to our economy and way of life. Do we have a problem with Social Security? Well, let's make Americans in their 60s healthier by better medical technologies so they can work longer and need less of a safety net. Are our medical costs spiraling? Let's find innovative ways to forecast predispositions to various chronic conditions and personalize preventative medicine. Do we lose far too many sick days to influenza? Let the CDC track viral mutation trends and fund research to develop better, faster methods of producing vaccines.

There is a clear role for government here, and it's also cheap (and far more efficient than a balkanized private charity effort, each with their own criteria and priorities). There's no doubt that the real budget problems are in mandatory programs, which have been conspicuously avoided by both parties. Claiming that cutting $60 billion+ from discretionary spending is 'progress' - when some of those programs do a lot of good - is absurd and only relevant in context of the sad state of American politics.

given that their marketing budgets exceed their research budgets by far i think it's safe to say that the americans are probably bearing the costs of excessive marketing and greed more than of else

What is true for pharma isn't true for all of the biomedical industry (when was the last time you saw an ad for a CT machine?), and the data you cite is mischaracterized. IIRC I spent a few posts taking that claim apart back in the day. There's some truth to it, but less than you think.

Quote:

---

Originally Posted by wiggin

What is true for pharma isn't true for all of the biomedical industry (when was the last time you saw an ad for a CT machine?), and the data you cite is mischaracterized. IIRC I spent a few posts taking that claim apart back in the day. There's some truth to it, but less than you think.

---

We have some local and regional imaging centers doing the advertising "war". I can shop around for my mammogram, but that doesn't mean it's as competitive as it should or could be......

That's different. Plenty of private hospitals will advertise their services, and various diagnostic centers will do the same - these costs are local and not part of the manufacturer's costs. But the manufacturers of the products are hardly trying to do direct-to-consumer marketing of the benefits of device A over device B for finding problem C. Marketing there is limited almost entirely to physicians and administrators, and is not limited to the US.

(I have seen a few ads more about brand recognition than anything else - for example, GE had some ads talking about their fancy technology which included some bits about their scanners. But that hardly qualifies.)

Quote:

---

Originally Posted by wiggin

That's different. Plenty of private hospitals will advertise their services, and various diagnostic centers will do the same - these costs are local and not part of the manufacturer's costs. But the manufacturers of the products are hardly trying to do direct-to-consumer marketing of the benefits of device A over device B for finding problem C. Marketing there is limited almost entirely to physicians and administrators, and is not limited to the US.

(I have seen a few ads more about brand recognition than anything else - for example, GE had some ads talking about their fancy technology which included some bits about their scanners. But that hardly qualifies.)

---

Yeah, I've see the ads for the GE smart light. But if you're a self-pay patient, somehow the hospitals and diagnostic centers find you. Of course they're "local costs" but that's how self-insured patients shop, and they know it.

Quote:

---

Originally Posted by wiggin

What is true for pharma isn't true for all of the biomedical industry (when was the last time you saw an ad for a CT machine?)

---

I'll admit I didn't know that prices for CT-machines were artificially low in eg. the EU and thus subsidised by Americans (who are of course getting their CT-scans for little reason) :confused:

Quote:

---

and the data you cite is mischaracterized. IIRC I spent a few posts taking that claim apart back in the day. There's some truth to it, but less than you think.

---

I'm pretty sure the data wasn't so mischaracterised that you could call their research and "marketing" budgets anywhere close to equal, even when you start defining much of marketing as "education" :o but I'll admit I don't really remember what you said on this matter,

Quote:

---

Originally Posted by Aimless

I'll admit I didn't know that prices for CT-machines were artificially low in eg. the EU and thus subsidised by Americans (who are of course getting their CT-scans for little reason) :confused:

---

To be honest, I don't know; I was actually thinking more along the lines of implantable defibrillators and the like, which are priced higher in the US since there's little collective bargaining.

Quote:

---

I'm pretty sure the data wasn't so mischaracterised that you could call their research and "marketing" budgets anywhere close to equal, even when you start defining much of marketing as "education" :o but I'll admit I don't really remember what you said on this matter,

---

Not really interested in going through this again.

Quote:

---

Originally Posted by wiggin

Wait a second - you think the bulk of the NIH shouldn't exist?!

---

It's part and parcel of the far-right in the US to believe that no real good can come out of gummint research that couldn't be done better and faster by private research. It would be hilarious in a sad way if all the Pubbie cuts made it through, it'd basically be tantamount to the U.S. throwing their collective hands in the air and saying "science, not interested, rest of the world do it". While Chinese science has its problems, this move certainly wouldn't work against them.

Quote:

---

Originally Posted by wiggin

To be honest, I don't know; I was actually thinking more along the lines of implantable defibrillators and the like, which are priced higher in the US since there's little collective bargaining.

---

Yeah but I'm trying to figure out if the EU is twisting the manufacturers' arms to get the goods for less than a reasonable price and if the Americans really are somehow "subsidising" the implantable defibrillators of the Swedes.

Quote:

---

Originally Posted by Aimless

Yeah but I'm trying to figure out if the EU is twisting the manufacturers' arms to get the goods for less than a reasonable price and if the Americans really are somehow "subsidising" the implantable defibrillators of the Swedes.

---

I don't know about Sweden specifically, but there are collective bargaining agreements in place for most medical 'goods', not just drugs. The US by and large doesn't have these agreements (though smaller scale agreements exist for some largish insurers and the like, it's nothing compared to the bargaining power of, say, France). Pharma is just the highest profile (and probably biggest) example.

The free rider problem is a sticky one. Normally a price discrimination problem like the pharma one (and, to a lesser extent, other medical goods) leads to arbitrage opportunities, where people would buy in the cheap market in sell in the expensive market until prices equalized (this happens a little). But since prices are tightly controlled in the cheap market and there are rules against this arbitrage in the expensive market, the price differential is artificially maintained. If the barriers come down by prices are still controlled at the cheaper market levels, the industry stands to lose a lot of revenue, and potentially will stop development of high risk drugs given the cost/benefit analysis. More likely, they'll just be like other high fixed-cost industries (like airlines) that are perennially broke and needing taxpayer rescues. (BTW this free rider problem isn't a country-specific thing. Even inside the US there are those who pay a lot more for drugs than others. Medicare can't negotiate prices legally, so they might pay more than someone in a large HMO who bargained down the price, while someone with minimal/no insurance might pay a LOT more. This is unfair inside the US just as it is unfair internationally.)

The obvious problem here is that the market doesn't have a lot of competition for each product, especially early on in its sales. So without any price controls it's likely they'll charge as much as the market can bear, which is likely to be a lot (and far more than is needed to recoup costs). The issue is that price controls lead to price discrimination, and even if the controls are applied universally the big question is where they should be set. Estimating how much revenue is needed to recoup costs and provide a reasonable profit margin is fantastically difficult given the uncertainties of the industry, and I'm honestly not sure what solution would work best.

Interesting take GGT had on the budget cuts in the Wisconsin thread; Republicans (more than Democrats) acting as if they are dealing with fiscal policies where they are merely pandering to the extremist fringes of their support base.

Quote:

---

Originally Posted by Hazir

Interesting take GGT had on the budget cuts in the Wisconsin thread; Republicans (more than Democrats) acting as if they are dealing with fiscal policies where they are merely pandering to the extremist fringes of their support base.

---

I take it as a given that what politicians are doing is not what they say they're doing. They're always being fairly self-interested. I am reading a political economy book right now on US development during and after the Civil War and I read a passage which came back to me when I read GGT's post. The rising financial class was advocating for civil-service reform, among other measures, and it wasn't because it would be good for the country. They said that was why they were doing so, but that was only true insomuch as they felt that what was good for them must be good for the rest of the country. They were pushing for it because the political spoils system *amidst all its very real flaws* was making bureaucracies like the Treasury too responsive to populist outcry, too inclined to make what the financial class felt were near-sighted and poor decisions during financial crises.

The political motivation doesn't matter. At all. I don't care why someone is pushing budget cuts in Wisconsin. It needs to make them. I'm ambivalent about the approach they're taking, but I don't think it's flat-out wrong. People across the pond can preach all they want about unions in a theoretical environment, but here in the US, unions are sclerotic and the least-adaptive agents in the field and with the current problems *fiscal, unemployment, general economic malaise, etc* they're one of the biggest, if not the biggest, obstacles to effectively responding. And the public workers unions are, by their natures, among the largest and the hardest to work around.

The problem is that the 'why' usually influences the 'how'.

Of course political motivations matter. Especially when they're cloaked as "other things".

It's disingenuous of the GOP to focus on unions, with their least-adaptive and bureaucratic problems (inherent within their own ineffective, outdated organizational structure and hierarchy) and then say they're the biggest obstacle to work around.....for passing public budgets.

For all their talk about making a smaller and more efficient government, Republicans choosing to pick on educators and unions first looks more like that overreaching gummint they criticize. It's a ruse to distract from *their own interests* which are political and monetary.

Quote:

---

Originally Posted by GGT

Of course political motivations matter.

---

Why? Either you agree with the policy someone is trying to implement (and all the trade-offs, unintended consequences, etc that come along with whatever it is should it be enacted) or you don't, for your own reasons. The reasons that other person has are completely irrelevant. All those side-effects you may or may not be concerned about which are attendant on the policy will happen whether that other person is pure of heart or not. The benefits which made civil-service reform and the professionalization of the bureaucracy a good thing, a policy implemented by every advanced country were and would be there even though the forces pushing it were primarily interested in making the government less responsive to farmers complaining about how the country's fiscal policies were screwing them over.

Quote:

---

Originally Posted by LittleFuzzy

(and all the trade-offs, unintended consequences, etc that come along with whatever it is should it be enacted)

---

You don't know these things, which is why the majority votes blindly. I really like the idea of itemizing everything to be considered. I saw a David Brooks article recently that pushed the idea.

You mean referendums like in Switzerland?

Your response was too swift to be addressed to me. But if it was then no, legislators need to use their staff to itemize the trade-offs and unintended consequences of their vote. Party politics pretty much eliminate this here in the U.S. of A. We prefer to catalog ideology over consequences.

Quote:

---

Originally Posted by Being

You don't know these things, which is why the majority votes blindly.

---

Neither do pretty much any of those legislators.

Quote:

---

Originally Posted by LittleFuzzy

Neither do pretty much any of those legislators.

---

It'd be nice to hear what you think of the second and third sentences of that post.

Quote:

---

Originally Posted by LittleFuzzy

Why? Either you agree with the policy someone is trying to implement (and all the trade-offs, unintended consequences, etc that come along with whatever it is should it be enacted) or you don't, for your own reasons. The reasons that other person has are completely irrelevant. All those side-effects you may or may not be concerned about which are attendant on the policy will happen whether that other person is pure of heart or not. The benefits which made civil-service reform and the professionalization of the bureaucracy a good thing, a policy implemented by every advanced country were and would be there even though the forces pushing it were primarily interested in making the government less responsive to farmers complaining about how the country's fiscal policies were screwing them over.

---

It's not about being 'pure of heart', but whether the politicking obfuscates. The real reasons do matter....like defunding Planned Parenthood isn't really about responsible spending, but an effort to appease the pro-lifers. If it was really about saving federal dollars, they'd fund PP more generously, as a way to reduce unintended pregnancies. Birth control and education are far less expensive than women and children using welfare.

Everyone agrees we need to make some budget changes. This is the kind of thing that's irritating. Shared sacrifice my foot:

Quote:

---

General Electric, the nation’s largest corporation, had a very good year in 2010.


But Nobody Pays That

A Lobbying Powerhouse

Articles in this series will examine efforts by businesses to lower their taxes and the debate over how to improve the tax system.



The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

That may be hard to fathom for the millions of American business owners and households now preparing their own returns, but low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.

Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.’s giant tax department, led by a bespectacled, bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. Indeed, the company’s slogan “Imagination at Work” fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.

---

Quote:

---

Such strategies, as well as changes in tax laws that encouraged some businesses and professionals to file as individuals, have pushed down the corporate share of the nation’s tax receipts — from 30 percent of all federal revenue in the mid-1950s to 6.6 percent in 2009.

---

http://www.nytimes.com/2011/03/25/bu...x.html?_r=1&hp

Did they have to pay payroll taxes? (Employer SS) Unemployment Insurance? Property taxes? And of course eventually anyone who owns part of GE and gets that money (dividends, sale of stock) will have to pay taxes on those earnings.

Just curious, but most tax rebates here are taxes you already paid, but it turns out you didn't have to pay them in the end. It is weird if a company like GE doesn't pay taxes, I know for a (99%) certainty do pay them here (for GE healthcare). And I know 100% certain they do pay pallrox taxes here from my colleagues. But keep in mind that a big portion of GE employees are not located in the US (but do pay payroll taxes and SS insurance etc at local value)

@Lewk: you do realise a lot of those people who have to pay taxes on those earnings are not in the USA and do not pay any US taxes, right?

Quote:

---

Originally Posted by Flixy

@Lewk: you do realise a lot of those people who have to pay taxes on those earnings are not in the USA and do not pay any US taxes, right?

---

So? And Americans may have to pay income tax on income from foreign sources as well.

And I forgot to add sales tax. They order lunch for employees, oh yeah don't forget your sales tax....

Tax on income is NOT the only form of tax, that is all I was saying.

Lewk, did you read the whole article? :bored:

Anyone else think the whole process is being done backward?

Why aren't our legislators on budget committees starting from bare necessities and mandatory basics, things that have to be funded, then working their way down?

Our budgeting process has become too complex for any real prioritization to be imposed on it. No one's made an effort since the 1990s.

The Republican plan today is impressive, and kudos to Rep. Ryan for trying to keep the discussion high-level, optimistic and not blaming the past on any one party. I'm glad they went out-of-the-gate with a full-bore and radical proposal. Will it get passed tomorrow? No. Ever? Who knows. But escalating the discussion of the big issues is critical.

In the short-term, I'm slightly concerned about shut-down.

Dread, the current proposed budget cuts by the Republican party aren't big enough to fix our fiscal picture (in fact they're completely irrelevant for it) but are big enough to derail a recovery and hurt a lot of important programs in the process. It's a symptom of the dysfunctional political environment that both parties are willing to shut down the government over this, but I place most of the blame on the Republicans for this one. It's absolutely criminal that people are saying this budget proposal is even remotely meaningful for addressing our fiscal situation. I can't believe you were taken in by the rhetoric.

I have issues with the Democrats as well - notably, that they are too leery of making substantive entitlement reform - but on this particular budget the Republicans are at fault.

I've only started reading details over the past few hours. The bulk of my praise has been about the rhetoric, but I've been happy with the skimming I've done so far. Care to summarize what concerns you the most?

Major concerns:

1) Non-(defense, healthcare, interest, social security) spending is supposed to be cut in half in a decade, with zero explanation of how that's going to happen. Good luck doing that without eviscerating important programs. It's a large portion of his deficit reductions that has little substantiation in an actual plan and is short-sighted to boot.

2) Revenues are magically expected to remain pretty high coupled with pretty steep tax cuts, but there's little detailed analysis. (The CBO analysis released today of a slightly earlier version of Ryan's proposal just accepted his projections for revenue path when we know it's nonsense).

3) Healthcare costs don't really go down, they actually go up and are shifted to the consumer. Sure, government costs drop some (though not as much as you might think), but it shifts a huge amount of risk and an even larger amount of costs to the consumer. While this may technically reduce the deficit, it's an awful way to do it. Comprehensive reform that drops overall costs (and thus the government's share of it) is the way to go. I also don't get why he wants to repeal the health insurance exchange part of PPACA.

4) There's a lot of obfuscation and lies. Not anything new for Congress, but for someone promoting themselves as realistic and hard-headed, not exactly encouraging. For example: they cite the Heritage Center's rather ridiculous projections on job growth with the plan. They extrapolate a one-year budget and compare it with a multi-decade plan in terms of deficit reduction. For more hyperbole, look at page 7 of Ryan's proposal. It's not a very constructive approach for dealing with the very real problems we face. Also, while the approach stabilizes spending as a percentage of GDP for a few decades (something very laudable), the real savings don't start showing up until the late 30s, which is so far into the future as to be a meaningless projection.




To be honest, the only thing I really like is some of the reforms in the budgetary process, like mandatory spending caps. While I didn't like it entirely, I feel that Bowles-Simpson was far better and much more realistic politically.

Leaving the healthcare issue aside (it's just too hairy), I do agree defense spending must be cut (if that's what you're saying). But it's pretty clear that the intent is to open up a conversation about cutting social security and medicare costs.

As for the revenue picture, the gist seems to be focused on simplifying the tax code, removing deductions/loopholes and collapsing brackets to raise revenue (instead of raising rates).

Having read a bit more between work bursts, you're right that it's not very specific. But I think that's also the point, it's meant to be a conversation starter and signal that everything should be up for discussion [except, apparently, defense spending].

Oh, I forgot! He ignores Social Security. It's a pretty easy fix, but he doesn't even touch it.

I'm not actually specifically saying defense spending must be cut. Oh, it'll need to drop some and there's lots of reforms that can be done to push that through (not least of which is keeping Congress from voting down increases in Tricare premiums or giving soldiers outsized raises during recessions, along with long-overdue reforms in procurement), but you know that I'm generally pretty hawkish on defense spending.

No, what needs to be cut is entitlement spending, but Paul Ryan is doing it the wrong way. He ignores low-hanging fruit (like Social Security), and his solution for Medicaid is to shift all of the costs to states, while his solution for Medicare shifts all of the costs to individuals. That's stupid and not helpful for the underlying problem, which is rising healthcare costs. Sure, it might improve the budget deficit but at a staggering cost to our citizens. Meanwhile, he throws out the baby with the bathwater on things like Obamacare, I assume because of partisan politics.

Meanwhile, his cuts on other spending includes a lot of mandatory and discretionary programs that do a lot of good. While I don't doubt reforms are needed in these programs, the size of the cuts he's intending (50% in the next decade) means there's going to have to be huge cuts in real services with little discussion of which those will be. All Ryan is doing is shifting the deficit and risk from the government to individuals. The purpose of government should be to reduce those risks, not ignore them (or increase them). Granted, our current system just has the government assuming all of those risks and costs, but the appropriate solution isn't to pass the buck but to come up with clever policy that mitigates the risk while keeping costs for everyone down.

As for tax law, I agree he's claimed his tax cuts are revenue neutral due to closing various loopholes. Without more details it's hard to know if he's right, but I think that in general taxes are low enough right now. Closing the loopholes should be done, but extra revenues should go towards our deficit. I'd prefer that income and corporate taxes be lowered through the imposition of a consumption tax, and that in general deficit reduction should be funded about 30-35% by increased revenues.

I'm okay with a conversation starter (though this is obviously flawed in that it ignores large portions of our budget), but we're three months into a budget impasse and don't have time to fuck around with conversations. Furthermore, Bowles-Simpson was a far more realistic scenario (though I'll grant they ignored how Medicare costs would be controlled as well).

We need serious people to solve this problem, and as far as I can tell, Ryan isn't offering any serious suggestions.

Reading it more, you're right that Social Security is entirely missing from this.

Medicaid- I don't think his Medicaid idea shifts costs to the states any more than our current setup does. Right now state budgets are crumbling beneath Medicaid obligations. The block-grant program injects a bit of much-needed flexibility into the system.

Medicare- It's a phased introduction of new programs that could shift more costs to individuals, but that's not totally clear. I ultimately believe we need to first get ourselves to acknowledge that the government simply can't have an open-ended eldercare funding mandate for the next generation of retirees. We're going to have to admit that we can't fund it all and decouple the problems (hope that makes sense).

Quote:

---

That's stupid and not helpful for the underlying problem, which is rising healthcare costs.

---

Wiggin do you think the government providing so many dollars to the health care industry (Obama Care/Medicare) inflates or deflates the cost of health care?

Quote:

---

Originally Posted by Dreadnaught

Medicaid- I don't think his Medicaid idea shifts costs to the states any more than our current setup does. Right now state budgets are crumbling beneath Medicaid obligations. The block-grant program injects a bit of much-needed flexibility into the system.

---

Currently, the federal government pays up to 50% of Medicaid costs (the actual percentage is adjusted on the basis of per-capita income in the state in question, I believe). This means that federal spending on Medicaid roughly rises with healthcare inflation. Yet under the block grant system, the amounts of the block grants are only supposed to rise with overall inflation and state population. This is going to rise much slower than healthcare inflation, so the effective federal contribution will drop more and more, leaving states with more risk and higher costs.

That being said, I do like the idea of giving states more flexibility in administering their Medicaid programs and in finding unique efficiencies and the like. One of the great things about our odd federal/state government is that we have 50 different incubators for policies and ideas, so allowing greater autonomy in setting Medicaid policy might not be a bad thing.

Quote:

---

Medicare- It's a phased introduction of new programs that could shift more costs to individuals, but that's not totally clear. I ultimately believe we need to first get ourselves to acknowledge that the government simply can't have an open-ended eldercare funding mandate for the next generation of retirees. We're going to have to admit that we can't fund it all and decouple the problems (hope that makes sense).

---

You mentioned something like this in EyeKhan's thread as well. If I understand it, you feel that we should first solve our deficit problem by promising less, and then try to make costs rise slower. I have two major concerns with this approach. First, it doesn't make very much sense. Essentially, Ryan has a goal in mind (e.g. X deficit and Y debt-to-GDP at year Z), and he tailored his policies to match. Ignoring policy actions that can drop the cost of programs without reducing benefits means that he has to slash benefits far more than necessary, meaning he's screwing people over more. Also, if the government manages to control deficits in this manner, it has no incentive to develop further policy initiatives to reduce costs, since most of the risk and cost is being borne by others.

Secondly, I feel like this is wasting a crisis. Healthcare cost growth is the real problem here. Oh, sure, part of the issue is our aging population, but Social Security is a good example of a program whose deficit issues are driven by aging, and the fix there is much simpler since costs only rise with either wage growth or CPI (depending on what we end up adopting in the future). But with healthcare, someone is going to be paying a lot more for services that simply shouldn't cost that much, and the wrong approach is to slash benefits first and then think about fixing the real problem.

I don't doubt that Americans are going to have to realize there are no free lunches and that certain levels of benefits (such as Bush's unfunded prescription drug benefit) are simply going to be cut or modified. Yet a large portion of the savings can be found through efficiencies and policy changes, not through slashing benefits willy-nilly. Promoting one solution while ignoring another is about as stupid as trying to do deficit reduction just by cutting programs and not by raising more revenue.

I feel like Ryan isn't thinking like a statesman, but rather like an accountant. There are plenty of ways to fix our long-term budget problems, yes, and his solution may do the trick. But the cost to public welfare (and the economy) of following his proposals is unnecessarily high. It speaks to slavish adherence to a specific political philosophy rather than a measured approach to complex issues.


All of this aside, I do want to acknowledge that Democratic Congressmen haven't done much better; they haven't offered a reasonable alternative to dealing with our long-term fiscal issues, particularly wrt Medicare and Medicaid. There have been some half-hearted suggestions by some Democrats about a public option, which may reduce costs, but it's not politically feasible and did not feature in the Obamacare legislation. Just as I have serious problems with Ryan's plan addressing the deficit without addressing healthcare costs, I have serious problems with PPACA addressing some of the access issues while largely ignoring healthcare costs.

Quote:

---

Originally Posted by Lewk

Wiggin do you think the government providing so many dollars to the health care industry (Obama Care/Medicare) inflates or deflates the cost of health care?

---

It can go either way, depending on your assumptions of the alternatives. Regardless, I'm basing my critique of Ryan's plan on a CBO projection he asked them to carry out, which shows healthcare costs increasing, but the US government's share of the costs dropping dramatically.

My point is this. Obama care will allow more people to be insured, hell it requires it. This will *raise* the cost of health care for everyone. An increase in the demand for health care will logically raise the price of it. If someone is forced to pay for health insurance (since they will not have the option w/o paying a fine to do without) they might as well USE that coverage when otherwise they would be content with alternatives.

The biggest problem with health insurance is that it creates an intermediary between the service and the cost of said service. If people price shopped their doctors (like they do for laser eye surgery which is typically not fully covered) we would actually get some competition in the price range. Pay for an expensive test if there is only a 1% chance you might have issue X or decide to put it off. Well if insurance is going to pay for the bulk of it people will go for the test. If they shouldered that additional cost then they would think twice.

Now I'm not saying health insurance has no place but it really should be for catastrophic events and regular check ups/easier to deal with diseases should be out of pocket. Its like buying car insurance for the purpose of oil changes, brake pads and inflating tires. Car insurance is for damage/loss to or of the vehicle not maintenance.

Quote:

---

Originally Posted by Lewkowski

My point is this. Obama care will allow more people to be insured, hell it requires it. This will *raise* the cost of health care for everyone. An increase in the demand for health care will logically raise the price of it. If someone is forced to pay for health insurance (since they will not have the option w/o paying a fine to do without) they might as well USE that coverage when otherwise they would be content with alternatives.

---

In principle you are right, though the overall increase in demand is probably small. The objective of requiring coverage for everyone is to solve the problem of insurance companies rejecting people with pre-existing conditions, and to spread the risk around.

Quote:

---

The biggest problem with health insurance is that it creates an intermediary between the service and the cost of said service. If people price shopped their doctors (like they do for laser eye surgery which is typically not fully covered) we would actually get some competition in the price range. Pay for an expensive test if there is only a 1% chance you might have issue X or decide to put it off. Well if insurance is going to pay for the bulk of it people will go for the test. If they shouldered that additional cost then they would think twice.

---

You can still do price shopping even with insurance - most people have some sort of deductible, and there are lots of ways to make people 'feel' some of the cost of a procedure so they economize. Also, coverage 'in-network' is effectively price shopping, since the insurance company negotiates a reduced rate in-network. Regardless, this is the same problem whether insurance is private or public, and I don't think we should get rid of private insurance. Insurance exists to spread risk around, not to lower costs.

Quote:

---

Now I'm not saying health insurance has no place but it really should be for catastrophic events and regular check ups/easier to deal with diseases should be out of pocket. Its like buying car insurance for the purpose of oil changes, brake pads and inflating tires. Car insurance is for damage/loss to or of the vehicle not maintenance.

---

Actually that's a pretty bad idea - covering regular check-ups (and even exempting them from a deductible) is a way to reduce long-term healthcare costs by improving preventative medicine. The analogy to car insurance is flawed; no one really uses their comprehensive auto coverage to deal with catastrophic breakdown of the car's systems when they've ignored regular maintenance; car insurance is used to protect against collisions and liability, mostly.

Quote:

---

Originally Posted by wiggin

In principle you are right, though the overall increase in demand is probably small. The objective of requiring coverage for everyone is to solve the problem of insurance companies rejecting people with pre-existing conditions, and to spread the risk around.


You can still do price shopping even with insurance - most people have some sort of deductible, and there are lots of ways to make people 'feel' some of the cost of a procedure so they economize. Also, coverage 'in-network' is effectively price shopping, since the insurance company negotiates a reduced rate in-network. Regardless, this is the same problem whether insurance is private or public, and I don't think we should get rid of private insurance. Insurance exists to spread risk around, not to lower costs.


Actually that's a pretty bad idea - covering regular check-ups (and even exempting them from a deductible) is a way to reduce long-term healthcare costs by improving preventative medicine. The analogy to car insurance is flawed; no one really uses their comprehensive auto coverage to deal with catastrophic breakdown of the car's systems when they've ignored regular maintenance; car insurance is used to protect against collisions and liability, mostly.

---

More people then just those with pre-existing conditions are now going to get health insurance. ObamaCare mandated it or they pay a fine/tax whatever. This creates an economic incentive to get health insurance that was not there before.

And plenty of people "price shop" by going to in-network doctors but that doesn't change how the doctors get paid. There aren't really many tiered levels of service. If I want a steak I can go to my local grocery store, a chilies or an expensive restaurant. Because the patient doesn't pay the bulk of the costs the patient is always going to to prefer the expensive restaurant.

Yes car insurance doesn't cover maintenance. Why should health insurance cover basic maintenance? If you don't change your oil, its your own damn fault when your car bellies up. Hell if you want o mandate catastrophic care insurance only kicks in if you regularly maintenance your vehicle (your body) (kinda like how some car warranties work) with yearly check ups I'm all for that too. Health Insurance should be for catastrophic issues because people can't afford to have those occur and still stay solvent. Regular check ups? Yeah people can afford that on their own. Costs of tests? Let the person use their own pocket book to do this.

I believe we would have a system like that if the government had not skewed the entire market for decades (employer based health insurance due to tax advantages), medicare and of course with the latest debacle.