Obstacles to Health Care Reform: A Divided America

It is time, I think, to face the realpolitik of health care reform. That means asking a question few reformers dare to discuss:  How will we win the Congressional votes needed to pass serious health care reform?

The American Prospect’s Ezra Klein put this question on the table at the “Take Back America” conference last week.  A pragmatic progressive (in the best sense), Klein pulled no punches:  “There are so many people in this town [D.C.] who do such smart policy thinking,” he observed. But “what we don’t give enough thought to is the politics of reform. This is a political problem. Until we have the votes in the Senate, we can’t get anything done.”

Without the votes, Klein told reformers, “you don’t have a plan; you have a position.”

Some assume that, if we elect a progressive president, he will “put the votes together” to achieve reform. But the fact is that even an optimistic, charismatic JFK wasn’t able to persuade Congress to unite behind healthcare for the elderly in the early 1960s—a time when seniors were the poorest group in America. It was only after Kennedy was assassinated that a wily LBJ (who had grown up in Congress and knew where all of the bodies were buried on the Hill) was able to leverage a martyred president’s last wishes to help pass Medicare in 1965. The fact that LBJ had won by a landslide sealed the deal.

This time around, nailing the votes that would secure something like “Medicare for Everyone Who Wants It” will be much tougher. As I noted in my first post in this series, “Obstacles to Health Care Reform,” the lobbyists representing the for-profit health care industry enjoy enormous power. The money at stake in the health care industry has grown exponentially since 1965. And thanks to generous campaign contributions, the industry’s lobbyists wield great influence, even among liberal politicians.

Who can counter that kind of power?  Citizens who vote.  Lobbyists have
dollars, but a billion dollars won’t help a politician if his
constituency has made it clear that it won’t re-elect him unless he
passes a particular piece of legislation that voters want.

Nevertheless, any hope that pressure from voters will give Congressmen
the spine to stand up to the lobbyists turns on the assumption that
voters share common goals. With that assumption in mind, I decided to
take a hard look at where most voters stand on health care reform.
Polls show that the majority of Americans say that they want universal
healthcare—but drill a little deeper, and you’ll find that different
groups have very different priorities

Often, the pollsters break the differences out by political orientation. For example, a Kaiser tracking poll
released in October showed that 44 percent of Republican voters and 39
percent of Independents rated “reducing the cost of health care and
health insurance” as the health care issue that they would most like to
hear presidential candidates talk about. Only 21 percent of Republicans
and 30 percent of Independents put “covering the uninsured” at the top
of their list. By contrast, 44 percent of Democrats listed “covering
the uninsured” first.

These responses confirm what pollsters Greenberg Quinlan Rosner
discovered in November in a series of 14 surveys of eight battleground
House districts and six competitive Senate states. As I reported in
January, their polling showed that only 34 percent of Independents and
24 percent of Republicans saw the fact that “there are too many people
without coverage” as “one of the biggest problems” in our healthcare
system. And while Democrats saw health care as a “fundamental right,”
the majority of Republicans and Independents did not.

Then there is the question of who will pay for universal coverage. A Kaiser poll
released just last month shows that when asked whether they favor a new
health care plan that would cover “all or nearly all of the
uninsured—but would involve a substantial increase in spending” 66
percent of Democrats said they would be willing to pay higher taxes
while a mere 28 percent of Republican voters agreed.

Yet without a tax increase, we won’t be able to afford universal
coverage. Think about it: we are talking about insuring 47 million
uninsured Americans—many of whom haven’t seen a doctor for years. In
addition, we plan to offer millions of underinsured Americans
comprehensive health coverage. Many of them have put off getting the
health care they need. In both cases, there will be a lot of very
expensive catching up to do.

In addition, most reformers believe that the fees Medicaid pays doctors
and hospitals should be raised so that they equal Medicare
reimbursements.  Currently, in most states, Medicaid pays far less
than Medicare for exactly the same services. Everyone agrees that this
two-tier payment system is inequitable, but righting the wrong will be
costly. Medicaid is not a small program: in fiscal 2009, President
Bush’s budget projects that Medicaid will spend $218 billion.

Finally, reformers agree that we need healthcare technology—another
major outlay—and government will have to make a substantial
contribution.

Make no mistake: if we rebuild our broken system, there is money to be
saved down the road.  If we refuse to cover products and procedures
unless medical evidence shows they are safe and effective, we should
ultimately be able to achieve substantial savings—enough to make up for
the added costs of universal coverage.  We can also negotiate for
discounts on drugs and devices. But as Merrill Goozner has pointed out, in our wasteful system, volume is as much a problem as price:

“Drugs, which account for about 15 percent of total health care
spending, are just the tip of the iceberg,” Goozner wrote. “Last fall,
the Congressional Research Service published a sobering comparison of
U.S. health care spending patterns to the other 29 nations in the
Organization for Economic Cooperation and Development (OECD). Did you
know that our physicians order 587 coronary artery bypass graft
surgeries per 100,000 population compared to an OECD average of 352?
(The next highest country after the U.S. was Germany with 357, barely
above the average.) Did you know that we have 32 CT scanning machines
and 27 MRI machines per one million population compared to an OECD
average of 18.8 and 8.8, respectively?”

But the savings will not come in the first years of reform. It will
take time, for instance, to put together the research on the
“comparative effectiveness” of various products and treatments in order
to decide which ones to cover.  It will take years to weed out
unnecessary treatments and, at the same time, learn to do a better job
of managing chronic diseases and providing preventive care for the many
people who, today, receive too little care

At the outset, universal coverage will not be cheap. And you can be
sure that once the Presidential election narrows to a race between a
Republican and a Democrat, the Republican will make this point—over and
over again. If a progressive candidate tries to argue that universal
health care won’t cost us anything in the first few years, he will
seem, at best, terribly naive. There is a real danger that
conservatives could torpedo health care reform on the cost issue alone.

Keep in mind that, as last month’s
Kaiser poll makes clear, the relatively affluent taxpayers who,
inevitably, will bear most of the burden of paying for universal
coverage, are, by and large,  less than enthusiastic about reform.
Indeed, only 27 percent of those living in households earning over
$75,000 rated healthcare as one of the two most important issues in the
upcoming election. By contrast, 50 percent of those in households where
joint income equals less than $49,999 named health care as one of
their  two top concerns.

This makes sense. Wealthier Americans are not as concerned about health
care because the majority have employer-based coverage. Moreover, the
wealthier you are, the more likely it is that your employer covers all,
or most, of your premium.

According to a 2007 report
from the Employee Benefit Research Institute (EBRI),  a surprising 16
percent of all “higher-wage full-time workers” who participate in an
employer-based plan are not required to make any contribution to their
premiums. That’s right—their employer pays 100 percent of the cost. By
contrast, only 8 percent of “lower-wage workers” who are covered by an
employer-based plan get a free ride. (EBRI defines “higher-wage”
workers as those who earn more than $15 an hour, or over $60,000 a year
in a household where two adults are working full-time.)

Of course most employers ask workers to contribute, but once again the
more you make, the less you are asked to kick in. On average, EBRI
reports, a higher-paid worker chips in only 27 percent of the premium
for a family plan. Lower-paid workers are expected to cover 34 percent
of their premiums

And that’s if the lower-paid worker can afford the 34 percent—plus a
deductible and co-pays. Only 67 percent of lower-paid workers who have
access to an employer-sponsored plan participate. EBRI explains why:
“Data released by the Consumer Expenditure Survey indicate that lower
wage workers spend an average of $16,452 on food, housing, and
transportation, roughly 68 percent of their annual expenditures.
Spending on these necessities does not leave very much money for
discretionary expenses, such as health insurance.”

Overall, the Consumer Expenditure Survey shows that those on the top
rung of a five-rung income ladder spend only 3.6 percent of their
income on health care. (On that  top rung, the average age is 47, and
the average household grosses  $147,000.) On the second rung where the
average age is 42, and joint income totals $68,000, households lay out
just 5 percent of their income for medical expenses.

By contrast, on the bottom two rungs, households earning less than
$25,000 spend an average of 10 to 20 percent of their gross income on
health care. (One might assume that many of these low-income households
are made up of young singles—but in fact, the average age is 51 on the
bottom rung, and 52 one rung up from the bottom.) Bottom line: forty
percent of the population is forced to lay out significantly more than
it can afford to cover necessary medical expenses.

Clinging to the middle rung of that five-rung ladder, you will find
households earning $42,000 a year and spending 6 percent of gross
income on their health. Here, the average age is 47. Six percent is not
too bad—but many live in fear of slipping off that third rung. These
households are just barely part of the middle-class, and they know that
one lost job or one serious illness could spell disaster. Moreover,
many of these families are paying 6 percent of their income for health
insurance that leaves them seriously underinsured. If a family member
becomes sick, and they have to test that policy, it’s likely that
they’ll find that it is riddled with holes.

No wonder these lower-middle class households tend to be strongly in
favor of health care reform. They would feel much more secure if they
knew that they could always fall back on national health insurance.
Families on the top two rungs don’t worry as much about becoming
uninsured. That’s why they are more concerned about rising
out-of-pocket costs, and less concerned about universal coverage

As the spaces between the rungs on that income ladder widen, more and
more Americans see each other as one of “them”—not one of “us.”  And
this, says Princeton economist Uwe Reinhardt, is what makes health care
reform so much more difficult in the U.S. than in  countries such as
Finland, Canada, Belgium, the Netherlands, Switzerland, Sweden, France,
Denmark, Germany and Norway. In these largely middle-class countries,
the gap between the most affluent and the least affluent is much
narrower.
At the World Health Care Congress two weeks ago, Dr. Michael Wilks,
President of the Standing Committee of European Doctors, shared this
chart (click to enlarge):

Maths_2

Here, it’s clear: when it comes to income disparities, the U.S. is an
outlier. When you compare the incomes of the top 20 percent to the
bottom 20 percent in most developed countries, the ratio is less than
6:1 ; in the U.S. the ratio is roughly 9:1. (As the vertical axis
shows, math and literacy scores are also significantly higher in these
countries than in the U.S.)

Why do narrower income gaps make it easier to build a universal health
care system? In countries where most people are “middle class,” groups
living on different rungs of the income ladder still identify with each
other. Some earn more; some earn less—but they are not living in
different worlds. As Princeton economist Uwe Reinhardt put it at the
World Health Care Conference in Berlin earlier this month, in countries
like the Netherlands and France, there is more “solidarity.”

By contrast, in the U.S, Reinhardt pointed out, the divisions are much
sharper. “We have our fabulously wealthy ‘corporate aristocracy’—people
who are not part of the U.S. They don’t participate in American life
anymore; they have five homes all over the world.” Then we have a class
of very affluent families.
Most people would call them “rich.” They aren’t billionaires, and they
don’t have hundreds of millions of dollars socked away, but they live
in multi-million dollar homes, own second homes, and drive the most
expensive cars. Move down another rung or two and you find an entirely
different world of middle-class Americans. This group covers a wide
swathe of society ranging from those who are “comfortable” to those who
worry about making the mortgage, sending their children to college, and
paying off credit-card debt. Then finally, says Reinhardt, “America has
its very poor—these are the people who were in New Orleans when Katrina
hit, and who receive no services.”

When it comes to devising a health care system for everyone, Reinhardt
shocked some in his audience by suggesting that the U.S. is more like
China than Germany or the Netherlands.  “In China you have four
populations: the cosmopolitan wealthy; urban workers, who are more like
Europe’s middle class; urban migrant workers, who don’t even have a
mailing address, ( so how do you send them an insurance bill?); and
finally the rural poor.” The wealthiest Chinese can pay for their own
healthcare, says Reinhardt, “but the government will have to devise
different systems for each of the other three  groups ranging from
insurance to walk-in clinics.”

Following his lecture, I asked Reinhardt whether he thought that, if
we made a real commitment to healthcare reform, the U.S. could build a
system that provided high-quality affordable care for most Americans. I
pointed to Germany, where even though  affluent citizens (earning over
roughly $75,000 a year) have a choice between public-sector healthcare
and more expensive private insurance, the majority of wealthier Germans
pick the public system. It’s good enough that they are satisfied with
the quality of care. Couldn’t we do something similar in the U.S.?

Reinhardt didn’t hesitate: “No, never.”

Why not? I asked

“Because there is no social solidarity in the U.S.”

Once again, we’ve circled back to the notion that “the U.S. is different.” (See “Overcoming the Obstacles to Reform”)
And once again, that “difference” is not to our credit. Reinhardt is
predicting that we cannot—and will not—pull together to create and
finance a high-quality healthcare system for all Americans because we
don’t identify with each other.  Instead, we live in our separate pods,
defined, to a large degree, by how much we earn, and what we can afford
to buy.

But buying the argument that “Americans are different,” means accepting
the notion that we  are simply more selfish than the citizens of other
nations—that most of us believe that this is a dog-eat-dog world where
it’s “every man for himself.”

I’m not willing to accept that diagnosis.

Nevertheless, if we are going to face up to the “realpolitik” of health
care reform, we need to acknowledge that the voters who are least
concerned about universal coverage will be the ones who will be asked
to help fund it. Reformers need to find a way to convince these more
affluent voters that while we may be perched on different rungs of an
income ladder, when it comes to healthcare, we are not so different. We
all will grow old, and die. And even a very affluent family can be hit
by a medical and financial  catastrophe well beyond its control.
Moreover, if some of don’t have care, society as a whole suffers:
productivity declines and diseases are more likely to spread.

But worst of all, if we assent to the notion that “Americans are
different” we will be condemning ourselves to live in a nation of
strangers, a country divided against itself.

38 thoughts on “Obstacles to Health Care Reform: A Divided America

  1. You are creating a false linkage, improving health care for all and the need to raise taxes. This is a key “conservative” slight of hand.
    54% of the federal discretionary budget goes to militarism, yet when politicians talk about future squeezes on Medicare they never look at where the rest of the money is going. There is an 8% increase in next years budget for DoD. This makes it the highest level of military spending in decades. The US spends more on militarism than the rest of the world combined. We have 5% of the population.
    It is a mistake to look at health care in isolation. The issue is not the size of the pie, but how it gets sliced. There have been other empires that have impoverished themselves by being too expansive internationally: Rome, Britain and the USSR, for example.
    If you think the health lobbies have clout, just try to take some of the goodies away from the military sector.
    As for voters being able to influence policy, I’m working on a simple measure of how effective democracy is in a given country, (the first attempt is a new essay on my web site). One of the characteristics that seems the easiest to determine is the re-election rate. Legislators who consistently get re-elected are an indication that races are not really competitive. In addition winner-take-all elections disenfranchise minority groups (political, ethnic, or economic).
    By this standard the US doesn’t score very well. In most elections incumbents win over 90% of the time. Why should they listen to voters under these circumstances?
    I don’t see any real implementation plan for change emerging as yet. Perhaps if there is a big enough Dem majority in congress, and if enough of them are “progressive” then we may see some pressure on the president to take bold steps.
    I’m glad that someone (Klein) is at least asking the question. Now all we need are some real answers instead of the usual platitudes.

  2. Maggie,
    A few points in no particular order.
    First, regarding the cost of the Medicaid program, the $218 billion figure that you cited is the federal share only. As you know, Medicaid is jointly financed by the states and the federal government. The total program cost in the most recently completed fiscal year was something above $300 billion. At the same time, Senator Clinton estimates that her universal health insurance plan would cost $110 billion per year more than the current system, though she expects to finance half of that with savings from the likes of electronic records and comparative effectiveness research, though those savings are actually years away in all likelihood. Senator Obama estimates his plan would cost $50-$65 billion per year more than we are currently spending. Moreover, given the shortage of primary care doctors, suddenly telling 47 million previously uninsured people that they now have insurance will pour gasoline on the fire and drive costs up higher and faster than previously assuming they can find doctors to see them in the first place.
    Second, those middle class people who say they would be willing to pay higher taxes to finance universal insurance coverage didn’t say how much more they would be willing to pay. My understanding is that most people are only willing to pay a few hundred dollars more per year. What they really expect is that a small sliver of high income people can be forced to pay virtually the entire bill. It is unlikely to happen nor should it.
    Third, I’m a bit suspicious of the income distribution cutoffs you cite. There are many millions of low income elderly people, yet all of them are eligible for Medicare, and about 6 million of them are eligible for Medicaid as well (dual eligibles). Millions more tax returns are filed by or on behalf of children who may have minimal income from a part time job but must file a tax return to claim a refund. Millions more have enough investment income to require filing a tax return, but they also count as low income returns. I wonder what the distribution would look like if you just focused on the tax returns filed by people between 21 and 64 years old. I know there are plenty of people who legitimately cannot afford to buy health insurance or even cover their share of an employer’s plan, but I think the average or “typical” income of most families is higher than your numbers suggest.
    Finally, while income inequality is higher in the U.S. than elsewhere, so is upward mobility. I’ve been to the Scandinavian countries, and they look like pretty homogenous societies to me, and they have very small populations to boot. Even the much praised French haven’t exactly covered themselves in glory when it comes to assimilating immigrants into their society.
    If progressives really want universal health insurance to pass Congress, my advice is: don’t overreach. As a taxpayer, my perception is that there is lots of fraud in both the Medicare and Medicaid programs. There are huge regional differences in practice patterns as you have written about so well. Our legal system results in plenty of defensive medicine which drives up costs. We don’t know when to stop when it comes to end of life care. There is vast room for improvement in both cost and quality transparency, especially with respect to expensive surgeries and other hospital based procedures. Bottom line: give CMS the tools it needs to get better value for the money it is already spending and stand up to the trial lawyers by replacing the current jury based system for resolving medical disputes with health courts. High income people are not interested in having more of their income taxed away to support our current failed system. The value for money equation needs to be greatly enhanced. Once it is, if higher taxes are still needed, you will probably find a lot more support.

  3. Robert-
    I completely agree with you that we spend far too much of the nation’s capital on military adventures.
    But this is not something that is going to change in the near future. We are going to be paying for the war in Iraq for a long, long time.
    We can’t just bomb a country into the ground without contributing the money needed to rebuild it. (I hope we try to do this through the U.N.)
    Meanwhile the war has turned Iraq–and much of the Middle East– into a terrorist training camp.
    All of this will be very expensive.
    And I’m no looking at health care in isoltation. I’m looking at it in the context of an economy that is heading into a very deep recession. There will be so many needs that progressives need to fund:
    unemployment, education, care for children living in poverty . . .
    As for universal coverage and raising taxes–I really don’t see any other way to to cover all of the uninsured, the underinsured, fund Medicaid and SCHIP,fund electronic medical records . . .
    And given where we are now in terms of the war in Iraq and having made ourselves a target for terrorsts,I don’t see us taking that money out of DOD. (It’s quite possible that it might make sense to trim the DOD budget, but given today’s realpolitik, that is not going to happen. So there is really no point in talking about it.)
    Finally, what you say about how little power voters have rings true: “In most elections incumbents win over 90% of the time. Why should they listen to voters under these circumstances?”
    That said, let me repeat, I certainly am not giving up on health care reform. For one, I think that he share of the population that feels very insecure about its health care coverage will grow.
    And secondly, I do think that Americans are capable of thinking past their own little rung on the income ladder.

  4. Random replies:
    Barry Carol: Your remark:
    “Finally, while income inequality is higher in the U.S. than elsewhere, so is upward mobility. ” is just not borne out by actual statistics. Income mobility has declined sharply in the US over the past few decades. The idea that any poor kid can grow up to be a millionaire wasn’t true in the days of Horatio Alger and isn’t true now either. It is a libertarian axiom that there is something inherently desirable about beating out others and becoming king of the hill.
    In more equitable societies, where people have an adequate standard of living, they have found other goals in life than greed and naked ambition.
    Maggie:
    I think it is a mistake to associate the permanent militarism of the US with the current wars. I refer you to this CBO document:
    http://www.cbo.gov/budget/data/historical.pdf
    Look at the chart “Discretionary Outlays, 1968 to 2007, as a Percentage of Gross Domestic Product” and you will see that you really can’t tell from the defense column whether the US was engaged in a military action or which party was in the majority. Militarism is an unacknowledged fourth branch of government and sets its own priorities and budgets.
    For those who want to claim that the percent of the GDP devoted to “defense” (4-6%) isn’t a burden, especially when compared to the health sector, I, once again, claim conservative slight of hand. One only has to look at the calculations just released by Joseph Stiglitz, or this pie chart:
    http://www.warresisters.org/piechart.htm
    to see that there is a great deal of military spending being hidden in other areas.
    You feel that their isn’t the will to reform militarism and prefer to go after other areas (like cost containment) in health care, but I think this is a mistake. Militarism so distorts all our national priorities that to give it a pass means that reform of social programs is never going to be meaningful unless this is fixed.
    The wars are on everyone’s mind, but they are really just a blip when set beside the permanent military posture of the US. Waiting for the “right moment” to address militarism means it will never be tackled.
    I know none of the candidates are willing to address this, in fact they all favor increasing military spending, but it is never too early to educate the public as to where their money is really going.

  5. Barry and Robert–
    Thanks for the comments.
    First, on the question of Upward Mobility–
    Robert is right. Over the past three or four decades, upward mobility in this country has stagnated.
    The NYT did a excellent long report on this a while back, which included this graphic:
    http://www.nytimes.com/packages/html/national/20050515_CLASS_GRAPHIC/index_03.html
    It shows mobility from one rung to another on a 5-rung ladder from 1988 to 1998. What it reveals is that if you were in thelower middle quintile in 1998, chances are much greater than you are still on that second rung–or have fallen to the first rung– than that you have moved up, even one rung, to the middle class.
    If you were in the middle (3rd rung) in ’88, chances
    are signifcantly greater than in 98, you are still stuck on that rung, or have fallen either one or two rungs –compared to the chances that you’ve move up one or two rungs.
    On the other hand, if you were on the top run in ’88, chances are much greater that you are still on the top rung in ’98 . . .
    The Times also showed that there was more mobilitiy in the 70s than in later decades. (And if I recall correctly, there was much more mobility in the 50s and 60s.)
    Finally, Barry, the Times reported that “What is most surprising is the comparison among countires. The U.S. with a more egalitarian tradition than many European countires does not have significantly more mobility. In fact, it has less than Scandanavian countires like Denmark and roughly the same amount of mobility as the U.K.”
    For full story see http://www.nytimes.com/2005/05/15/national/class/OVERVIEW-FINAL.html?_r=1&sq=class%20and
    Robert– I will come back to your second comment on militarism below, but first let me answer Barry’s earlier comments —
    Barry– Thanks for correcting the Medicaid number–I thought it looked low.
    You’re right, if we have universal coverage we’ll need more primary care docs to cover the formerly uninsured. Probably we’ll need to urge docs to hire nurse practioners to work with them–and we’ll need to set up clinics with two or three nurse practioners for every doc. Many universities now use nurse practitioners rather than doctors in their health services to see students . .
    Prices won’t have to go up unless we let the market set the price. If govt sets the fees or salaries for docs and nurses (as Medicare now sets the fees for docs) then the supply-demand equation won’t push salaries up. But salaries will have to be generous enough to attract people . . this is why I suggest forgiving med school loans for students who go into primary care, especially if they are willing to work where they are most needed for the first few years.
    On “typical income” in the U.S. — I don’t know what to say, except that these are BLS figures, and they square with all of the other income figures I see.
    You may find them hard to believe–but there it is.
    (Google “Consumer Expenditures” and “February 2007″)
    To answer your questions–income includes all income, including Medicare, etc. (see below.)
    And no, these are not children for whom someone filed a tax return. These are not individual taxpayers, these are entire Households earnings less than $25,000, etc. .
    Part of the point of this post is that people on different rungs of the ladder live in different worlds. I doubt that you know many people raising a family on less than, say, $45,000 a year–joint income including dividends, capital gains, papyments from the govt, etc.
    Yet half of the households in this country live on less than $47,000 joint.
    A household earning more than $85,000 joint is in the top quintile (top 20%) in terms of income.
    You assume Medicare income isn’t included. It is, along with Medicaid etc. In the consumer survey that I cite, showing the 5 rungs on the income ladder, income is defined as: wages and
    salaries; self-employment income; Social Security and
    private and government retirement income; interest,dividends, and rental and other property income;unemployment and workers’ compensation and veterans’benefits; public assistance, Supplemental Security Income,
    and Food Stamps; rent or meals or both as pay; and regular
    contributions for support, such as alimony and child-support payments.”
    In other words, every dollar that comes into the household is counted.
    And these are household incomes–including money earned or received by everyone in the household from age 14 up.
    And while you or I may not know them, 1/5 of all Americans live in households where the joint income (as defined above) is less than $10,000.
    Another 1/5 of all Americans live in households where the joint income is $25,500. (In each case this is total income, as defined above, before taxes.)
    Who are these people?
    In the lowest 20%, the average age of the person who owns or rents the home is 52. On average 1.4 people live in the household, and there are .4 children.
    (To me, this suggests a fair-number of single-parent households)
    There are also an average of .4 people over 65 in these bottom-rung households.
    (This suggests a fair number of households with one or two people over 65.
    How could people over 65 on social security have income of less than $10,000? For lots of people, social security equals only a few hundred dollars a month. As you know, it all depends on how much you earned when you were working (especially during the final years of your work-life.)
    Again, you and I don’t know many people whose social securiity checks are that low. Then again, we don’t know many people who worked, mainly part-time, sometimes full-time, as dish washers, gas station attendants, etc.)
    Meanwhile, someone is working in half of these households (.5 workers per household), and a surprising 42 percent own their own home (probably in inner cities or rural poor)
    How they spend their money also gives you a snapshot of who they are: First, they spend very little on entertainment ($891 a year) compared to the average household ($2400) or the wealthiest fifth ($5,000).
    But they spend a surprising amount on utilties (because they have no choice)–nearly $2,000 (or 1/5 of the average income in this group), versus $3,383 for the average household and $4,500 in the top 20%. (where peole have much,much larger homes.)
    Compared to folks higher up on the ladder, they spend very little on household furnishings, alcoholic beverages, or education. (The latter two facts suggest that most are not students or twenty-somethings.)
    When you get to the ‘typical” 3rd quintile (in the middle of the ladder) the average salary is $42,000, and the lower limit to make it onto this rung of the ladder is $33,000. These housholds have more kids (.7) and fewer people over 65 (.3) and more people working (1.4). They have two cars and an average of 2.5 peole live in the household. The average age of the person who owns or rents the home is 47, and 67 percent own their own home. The demographics make them sound like “average” Americans.
    The cost of housing takes a huge chunk out of their $42,000 average income–on average they spend over $13,000 a year.
    Utlities also take a chunk ($3,000) as does trasnportation ($7,500). They seem to spend quite a bit repairing their cars ($2,100) and very little on public transportation ($294 a year) which tells us that they don’t live in the suburbs and take a train into the city to work.
    They have relatively little left over for entertainment $1800, education $439 or alcoholic beverages ($364).
    In the top 20%, where people earn an average of $147,000 joint (and must earn $85,000, joint to make the cut)there are 3.2 people in the household, they have (.8 kids under 18–the largest number of any quintile) and only .2 people over 65.
    More people work in these housholds–2.1.
    They spend a lot more on entertainment ($5,000) education ($3000) and transportation ($15,700) including an outlay of over $7,000 annually to buy a car.
    Although they have only 2.1 workers, they have 2.9 cars. (Presumably they buy cars for their teen-agers?)
    While they spend $28,000 on housing, it’s not nearly as big a chunk of their $147,000 average income. So they can afford to spend twice as much as the average houshold on household furnishings and alcoholic beverages.
    The average age is 47 and 92 percent own their own homes.
    Robert–ON MILITARISM–
    I agree with you, but unfortunately, we are in a minority.
    Particularly if you talk to people under the age of 45 or 40, you find that even people who consider themselves “liberals” or “progressives” just aren’t anti-war.
    I belong to a very large group of progressive and liberal jouranlists, people who work for think
    tanks etc., and while they are like-minded on many issues, I find that attitudes toward war break down by generation.
    A suprising number of very intelligent, well-educated people under 40 were in favor of going into Iraq. They believed in weapons of mass destruction.
    Even after we had been in Iraq for a while, they continued to argue that we could “win it.” (Some think we could have “won” Vietnam.)
    They refer to people like me (a baby-boomer who remembers Vietnam and is generally anti-war, with a few exceptions) with some contempt (or at least condescension) as “peaceniks.” (They are young enough that, for them, the 50s and 60s seem to blur, and so they don’t really distinguish between the beatniks of the 1950s reading poetry in coffee-houses and the anti-war protesters of the 1960s.)
    Moreover, they think of the Gulf War as a “good war.” (When I think of the Gulf War, I think of the television picutres of us incinerating fleeing Iraqi troops.)
    I also think that the Gulf War helped fuel the anger that led to 9/11.
    (I’m not suggesting that we in any way “caused” 9/11–just that a diplomatic solution to Saddam’s invasion of Kuwait would have been much wiser. By the time the Gulf War was over, many people in the Middle East (not just Iraqis) were very angry with us.
    In any case, what I am getting at is that the number of people in this country who are unhappy about how much we spend on the military is much, much smaller than it used to be.
    That’s why I don’t think this is a fight you can win–at last not now. Maybe, after the dust settles, and it becomes apparent how much Iraq has cost us–and how much more it will cost–people Might be willing to take another look at the military budget.
    But I doubt it. Americans are genuinely afraid of terrorism. Why else would so many people stand quietly in those airport lines, taking off their shoes, etc.? They are convinced that only a strong (well-funded) military can save us.
    (I don’t believe that either airport security or a well-funded military can protect us against terrorists who are willing to kill themselves while killing us)
    Finally, it seems to me that if we are going to convince people that we spend too much of our money and our energy on military adventures, we need to point to the cost, not in terms of dollars, but in terms of lives.
    I’m thinking, not just of the lives lost in Iraq (n both sides), but of the many lives ruined. U.S. soliders are coming back with very serious mental problems.
    While I was in Germany, I talked to a U.S. army officer who spoke of how suicides are rising. “Soldiers in Iraq are just going into the latrine and using their weapons on themselves,” he told me. “These deaths are reported as ‘friendly fire” or “accidental firing.”
    Perhaps when the human cost of the war in Iraq becomes apparent, more Americans will question the militarism of the U.S.
    But I’m not convinced. The only way, I think, that you will get Americans to confront the ocst is if you institute a draft, with a lottery, and virtually no exemptions.
    It is only when people actually know the people who are going to war, and being killed and crippled in various ways, that they will understand the cost. The dollar amounts are too abstract. The names of people who live on a different rung of the ladder just don’t have an impact. They live, as I say in the post “in a completely different world.” Most people watching the war on television do not identify with them.
    Virtually none of the progressive journalists or think tank people in the group I mentioned know anyone who has gone to Iraq-or was in danger of going to Iraq. So the cost of war just isn’t real.
    Finally, containing health care costs isn’t just about saving money–its about saving lives. People are hurt by over-treatment– often, they unncessarily frightened (over-diagnosis of prostate cancer, etc.) put through unnecessary suffering (unnecessary treatments) or so over-medicated that they can’t enjoy their lives (partiuclarly older people on statins, etc.)

  6. Correcting a typo in my last comment:
    Households on the bottom rung of the ladder don’t earn “less than $10,000”–they “average less than $10,000–i.e. they average around $9,600)
    And people on the next rung up “average around $25,000 . .. ”

  7. I think the notion that comprehensive health reform won’t happen because we don’t have social solidiarty is simplistic, but true. As we all learned in social studies – America is a nation made up of small groups.
    That’s why I think, along with the Republicans, that controlling costs is the way to “reform” health care.
    It will be a hard sell to get the better off to pay for extending coverage. For one thing there aren’t enough of them. If costs continue out-of-hand then it will be impossible.

  8. Maggie:
    I tend to look at things over a longer time period. The American population has been kept in a state of fear for the entire 20th Century.
    I don’t recall exactly what the threat from Spain was, but it was enough that we had to fight them in Cuba and the Philippines. Then we had the “Huns”, the “Japs”, the Nazis, fascists, various Red Menaces, socialists and anarchists. Then there was the USSR and the Chinese – especially brainwashing under Mao. The falling dominoes were supposed to affect us in some undefined way as well.
    When the USSR collapsed and China moved into consumerism we lost most of the reason for a conventional armed force. It didn’t take long for the new bogeymen to be found: Islamic “fundamentalists” and “terrorists” of various stripes.
    When looking objectively at this entire period of over a century, we can see the US mainland was never under a series threat, however the fear level generated was consistently disproportionate. Why did we need to have blackouts during WWII? Was there a single overflight by a Nazi bomber? Why did we put Japanese-Americans in detention camps? There was never a single instance of collaboration.
    The most series “terrorist” attacks in the US these days come from home-grown sources who shoot up schools, shopping malls and along highways. Yet we still don’t have meaningful gun screening policies. We have 40,000 or so highway deaths each year, yet refuse to deal meaningfully with vehicle safety.
    Hoping that attitudes will change when the Iraq situation dies down is not a good strategy. When one “threat” is removed it will be quickly replaced by another.
    I don’t have a solution to the permanent militarism fueled by fear-mongering, but it has to be addressed continually, and not postponed until the time is right.
    From my cynical view, it is not the fear that generates support for militarism, it is the unacknowledged understanding that Americans are consuming more than their fair share of the world’s resources and that the only way we can keep this up is by the use of force.
    As Pogo said: “We have met the enemy and he is us.”
    I don’t know what happens when the rest of the world starts to push back economically instead of militarily. Will we be able to continue to push the Arab states around when they own a chunk of Citibank?

  9. Ginger B.–
    Thanks for your comment. I agree, the lack of solidarity explanation seems simplistic, but it is true.
    However, just trying to contain costs won’t provide access for the millions of Americans who don’t have health care now.
    And, in truth, there is more than enough wealth in this country to provide healthcare for all.
    It’s true that in the 1950s and 1960s that wealth was not so concentrated in so few hands.
    Today, “In the United States the most-affluent 1% of the population holds more wealth than the entire bottom 90% combined, according to U.S. Federal Reserve.”
    This wasn’t always the case. In 1950, the richest 20 percent of Americans controlled 42.8 percent of wealth, the middle 20 percent controlled 17.4 percent, and the poorest controlled just 4.5 percent.
    In the 1950s, people didn’t live in separate worlds. For example, a fairly well-paid factory worker might well live in the same neighborhood as a doctor or dentist The doctor or dentist would live in the larger brick hosue on the corner, but their kids all went to the same schools.
    And bankers didn’t live in gated communities or exclusive suburbs that only the super-rich can afford.
    Then the gaps began to widen.
    In his book, New York Times reporter David Cay Johnston reports that between 1970 and 2000 average income for the top 13,400 households in America increased from $3.6 million to nearly $24 million. That’s a staggering 538% increase. At the same time, the average income for 90% of US households actually fell from $27,060 to $27,035
    Here’s another snapshot of the changes: A congressional budget office study shows that between 1979 and 1997, the after-tax incomes of the top 1 percent of families rose 157 percent, compared with only a 10 percent gain for families near the middle of the income distribution.
    . The trend toward the greater concentration of wealth by the rich has accelerated throughout the 1990s. While the relative income of the poorest families in the United States declined by 11.6 percent since 1980, the income of the richest group increased by 17.7 percent.
    How did this happen? Escalating CEO pay explains part of it. In the past, CEOs didn’t earn 10, 20 or 30 times what doctors earn; now they do.
    And corporate v.p.s etc. all haul home salaries that, when compared to middle-mangement are exorbitant or people in other professions are exorbitant. This chart shows what has happened just since 1990:
    The way we have cut taxes for the rich, while raising medicare, social scurity and other taxes for the middle class and working class also helps explain the change: “The major tax cuts of the past 25 years, the Reagan cuts in the 1980’s and the recent Bush cuts, were both heavily tilted toward the very well off. (Despite obfuscations, it remains true that more than half the Bush tax cut will eventually go to the top 1 percent of families.) The major tax increase over that period, the increase in payroll taxes in the 1980’s, fell most heavily on working-class families.”
    Consider capital gains taxes: Roughly 85% of stock market wealth is owned by 10% of American households and there is no logical reason why income from those investments (called “capital gains” by the tax code) should be taxed less than income from work. But the top tax rate on wages is 35% while the top tax rate on capital gains is only 15%. This rate structure gives the richest households enormous advantages without producing any obvious social benefit. If we reversed the favor – and let workers pay lower tax rates than investors – then working families would have greater opportunity to accumulate wealth.
    Moreover, in what some see as the “golden Age” of American society (the 50s and 60s when the gaps were much smaller, and there was much greater equality for most Americans –although only for white Americans) it’s worth noting that the tax code was very different:
    Historians point out that more people moved up into the middle class during the 1950s and 1960s – and American wealth was much less concentrated – when the top income tax rate was 91%, impacting salaries and capital gains equally.
    Today it is much, much harder for the middle class to move up, because we tax income derived from work so heavily–and tax wealth so lightly. In order to become richer, you have to be rich in the first place.
    Then there is the estate tax which can be a major source of revenue for healthcare. As Princeton economist Paul Krugman explains:
    “The estate tax is, overwhelmingly, a tax on the wealthy. In 1999, only the top 2 percent of estates paid any tax at all, and half the estate tax was paid by only 3,300 estates, 0.16 percent of the total, with a minimum value of $5 million and an average value of $17 million. A quarter of the tax was paid by just 467 estates worth more than $20 million. Tales of family farms and businesses broken up to pay the estate tax are basically rural legends; hardly any real examples have been found, despite diligent searching. ”
    Let’s do the arithmetic: 467 estates with a Minimum worth of $20 million equals estates worth, at a Minimum $9.2 billion–coming to probate every year. If you include the estates worth well more than $20 million, we’re probably talking about estates worth a total of 30, 40 billion or perhaps much more.
    Tas them at a 75% rate (only on amounts over, say 5 million) and you have raised perhaps $20 billion. An extra $20 billion a year could buy a lot of healthcare for a lot of uninsured children.
    No one really needs to inherit millions and millions of dollars. And in fact, it is bad for our society for so much wealth to be concentrated in the hands of relatively few famlies.
    Because wealth equals power. And when too few families hold too much of the nation’s wealth, they begin to control the political process.
    People like Warren Buffett understand this: long ago, he told his children that he was leaving all of his money to charity. Bill and Melida Gates also are doing a good job of distributing their wealth.
    Of course some people say that the very rich already carry an unfair share of the nation’s tax burden.
    Here is the truth: “In the year 2000 – at the height of the last economic boom and before the most recent round of tax cuts were enacted – IRS data shows that the richest 400 taxpayers paid 27% of their income in federal, state, and local taxes. On average, these 400 taxpayers each had taxable income of $151 million. All other taxpayers had average taxable income of only $34,600, and yet their tax burden was 40%. ”
    So the fact that wealth is concentrated in that top 1% doesn’t mean that there’s not enough wealth to tax in order to raise the money needed for healthcare reform. It simply means that fewer people are holding that wealth–all the more reason to tax them and use the money to help all of society.
    We do not want to wind up living in a plutocracy.
    This was not what some of the founding fathers had in mind. “Wise nations, James Madison argued, seek to ‘reduce extreme wealth towards a state of mediocrity [by which he means torward the median income], and raise extreme indigence towards a state of comfort[moving the poor up the ladder]

  10. Robert–
    The rest of the world is already beginning to push back.
    Central banks are losing faith in the dollar. They, and wealthy investors all around the world, are turning to gold as a safer haven for their money.
    It is only a matter of time until the Middle East begins pricing oil in another currency–probably Euros. At that point we will wind up paying $200 a barrel for oil.
    Perhaps this will make us take a second look at our military budget. Though I still think that a draft is the best way to make us think twice about going to war.

  11. Nice reply Barry
    I sometimes think these discussions would be simplified if everyone were required to create two pie charts every year: 1. How they would spend society’s money according to their own values
    2. How they would pay for all of it.
    I have similarly wondered why more journalists do not seem to view the current political stalemate in this country– with its ensuing culture of heavy government borrowing (thereby sticking it to the only group left in America without any significant political clout– the young)– as a symptom of a broader social stalemate within our country between the those who say ‘the rich should pay more’ (i.e. someone (anyone) else pay for this but me) and those who say “‘enough is enough’… I expect EVERYONE to carry their own weight a little more”.
    Krugman (or was it Brad DeLong?… sadly I didn’t save the link) had a wonderful piece the other day on how he saw the resiliency of the Soviet Union as a testament to how much people really do want to cooperate/help one another other (I couldn’t agree more), but only up to a point (again, I couldn’t agree more). For despite its flaws, the Soviet Union did last over 50 years. But at some level, the basic issue: “how much can the cooperative expect from anyone and how much can anyone take from the cooperative?” still arises. A society that uses resources in less productive ways than it’s competitors will eventually loose out over time. We all know how a few people supported many in the Eastern Block nations, and when the youth of East Germany were finally got a chance to flee to the west in search of better work (i.e. a smaller % of their labor went to support other non-productive members of society), the ‘productive’ youth left their country in droves and the entire system fell apart.
    When our young do wake up and realize they are stuck with a rather big bill, it will be interesting to see how they respond.
    When they are confronted with the same question we must all face: “how much can the cooperative expect from me”– my gut says they will refuse to pay it (just like the youth of Eastern Europe eventiually did)… But who knows, this may be the cynic in me and I freely admit I may get this is wrong.
    And Ginger, oddly enough, as a cynic, and someone who very much sees our healthcare system in terms of ‘follow the money’– I actually don’t agree with your statement “comprehensive health reform won’t happen because we don’t have social solidiarty is simplistic, but true”
    I just don’t think 1. the discussion has fully played itself out yet, and 2. we all agree yet on what meaningful healthcare reform really is, becuase we have not had a national values discussion…. no one wants to speak the complete truth, especially when it comes to morals (everyone only sees their own) and even fewer people publically want to make the tough choices we must all face.
    To ditto Feinman’s quote of Pogo: “we have met the enemy and he is us”

  12. Red Baron–
    See my long reply to Ginger.
    I do think about how we can pay for health care reform, a better public education system, etc.
    And because I wrote extensively about taxes, income and inequality while I was at Barron’s, I realize that the very wealthy do not pay their fair share of taxes.
    As I noted in my reply to Ginger: “In the year 2000 – at the height of the last economic boom and before the most recent round of tax cuts for the rich were enacted – IRS data shows that the richest 400 taxpayers paid 27% of their income in federal, state, and local taxes. On average, these 400 taxpayers each had taxable income of $151 million. All other taxpayers had average taxable income of only $34,600, and yet their tax burden was 40%. ”
    You might say– but 400 famlies cannot support the entire health care system! The truth is that the top 1 percent of the nation’s families control more wealth than the bottom 90 percent. The money is there–albeit concentrated in fewer hands. Which is all the more reason to tax it. Concentrated is not good for the political process.
    I’m old enough to remember that it wasn’t always this way. Like Paul Krugman, I was a child in the 1950s, and remember when the wealthy and the working class lived in the same neiborhood, though the doctor lived in the bigger brick house on the corner.
    (Krugman wrote about this in the NYT magazine a few years ago, some of my comments to Ginger quote his article.)
    Most people don’t realizes that gack in the 1950s, the top marginal rate (paid by the richest people) was 91% both on earned income and on capital gains. That made it harder for a few very rich families to accumulate a large amount of the nation’s wealth.
    Today, thanks to Reagan’s tax cuts (and the fact that as the rich have become much richer, they have gained much more political power), the wealth pay only a 15% tax on capital gains (down from 91%) and the top tax on earned income is 35% (down from 91%)
    Meanwhile, the middle class and working class pay much higher taxes than they once did–especially FICA payroll taxes (for Social Security and Medicare).
    So yes, the rich can pay far more in taxes.
    The reason that most European countires are mainly middle class is because they do tax accumulated wealth–and use that money to provide better public education (see math and literacy scores on the graph in my post) healthcare, and public trasnportation –not ot mention spending money to keep their public spaces clean. (In Germany I marveled at how clean the train station was in Berlin–absolutely no litter on the train platform, the bathrooms spotless . . )
    And while one might argue that we have more poverty and less solidarity because we have a more diverse society, while I was in Germany I learned that 15% of the population is non-German. One third of the non-Germans are from Turkey–a very different culture.
    Obviously everyone doesn’t get along perfectly (think skinheads) but they do provide a social safety net for everyone. See Niko’s post on German healthcare. Look at the maternity leave. . .
    That’s solidarity.

  13. Maggie,
    I think several of your taxation comments are wrong.
    First, in the 1950’s, the top marginal tax rate of 91% applied to ordinary income only, not capital gains. The top capital gains rate at that time was 25%. Moreover, high income people who were nominally subject to the 91% top rate, had plenty of tax shelter opportunities available to them, especially in oil, natural gas, and real estate where they could borrow money on a non-recourse basis and get writeoffs of 4 to 5 times the amount they actually invested. So, even if their money invested in, say, oil exploration paid back nothing, their tax savings often materially exceeded the amount they invested.
    Second, there is a logical reason to tax capital gains at a lower rate when there is a progressive income tax structure. The original justification behind the preferential capital gains rate was intended to insure that someone who built a business over 20, 30 or 40 years and then sold it as he approached retirement was not treated for tax purposes as though the entire gain were earned in a single year instead of over decades. If we had a flat rate or a comparatively low top rate, like the 28% rate that prevailed for a couple of years after the 1986 Tax Reform Act passed, it would be acceptable to tax all income the same as we did at that time. Alternatively, if there were an alternative maximum tax that limited one’s liability to, perhaps, 30% of gross income from all sources with no deductions for anything except maybe a standard deduction equal to the poverty level of income, a preferential capital gains rate would not be necessary under those circumstances either. I’ve said numerous times that I think the current 15% capital gains rate is too low, and I believe 28% would probably be more appropriate. I also think an alternative maximum tax rate of 30% would make for good policy.
    Third, you lump all high income people into the same pot for tax purposes. The fact is that there are plenty of people on Wall Street, corporate executives and others who earn the bulk of their income from salary and bonus which is taxed as ordinary income, is subject to the Medicare tax on the entire amount, and is subject to the Social Security payroll tax on the first $102K (for 2008). With respect to incentive stock options, the price difference between the market price when exercised and the strike price of the option is treated as ordinary income for tax purposes, not capital gains.
    Fourth, with respect to the estate tax, Warren Buffett, Bill Gates and many other ultra wealthy people avoid the estate tax by donating their wealth to charity, either through the formation of a foundation or by making direct bequests. Raising the estate tax rate to 75% (on estates over $5 million) as you suggest will most likely increase this trend. While that may well be a good thing, it will not result in additional revenue that the federal government can use to pay for healthcare or anything else. Personally, I view donations to charity as a voluntary tax where the donor gets to choose the beneficiaries. I think those charitable contributions should be added to the taxes these people pay to calculate their effective total tax burden.
    Finally, I have trouble understanding how you arrived at the 40% combined federal, state and local tax burden paid by people earning $34,000 on average. Families at that income level most likely pay little federal or state income taxes. They pay 7.65% in payroll taxes (with their employer paying an equal amount). If you count the employer’s share as well (which is appropriate), you also have to count it as income. They may pay 4%-5% of their income in state sales and gasoline taxes, and, if they are renting their housing and assuming 20% of their rent is effectively property taxes, that suggests 6%-8% of income for property taxes. I still come up well short of 40% of total income for taxes. 25%-30% sounds closer to the mark to me.

  14. Maggie,
    Without disagreeing with your facts, or even how you come to your conclusion from those facts, still I come to different conclusions from the same data– If it is any help, I tend to look at things thru the lens of econophysics.
    You mentioned Taleb’s Fooled by Randomness the other day (in fact claiming him a friend, something I am quite impressed with by the way, as I would love to chat with him, being a big fan of his works as well as the works of many of the people he quotes in his books such as Mandelbrot, Hume, Popper, etc…).
    Anyway I read your posting and come away with a very similar message to Taleb’s Fooled by Randomness: ‘yes’ I see your point, ‘yes’ I see your point again… but only sometimes do I ‘yes’ agree with your conclusions. And sometimes ‘no’, I do not agree the things are related the way you seem to imply they are– I see a different ‘structure’ in your numbers. There is a lot of inductive reasoning in this blog that passes as science (I am midway thru the Dartmouth WebPages so I still can’t comment but it still holds true in what I have read)—yet I intend no insult with that statement as most of us (myself included) are guilty of this.
    These discussions are further made tough because there are so many threads on the table and one subject invariably leads into another making this a little like holding water in one’s hand (are you sure you don’t see the fractal of this? Is seems so clear to me- dependence, scalability?).
    Anyway the discussions are yet further made more difficult by the problem of ‘frame of reference’– whose point of view is the issue being frames from. There are clearly many frames of reference on this blog—patient, physician, policy writer, national ‘pocket book’ economist, personal patient economist, medical student, urban, suburban, rural, etc… the list goes on and on. And each of these has many ‘sub’ frames of reference such as the rural physician vs. urban physician, the healthy patient vs. the sick patient, etc…
    But I always say in life you have to choose sides, so hear is mine: make healthcare less expensive for consumers with similar ‘outcomes’ at the same cost.
    My agenda is not lowering income inequality (I buy the econophysics arguments/models that suggest fractal wealth distributions are fundamental to any social network no matter what you… I give a link of one model (called Sugarscape) to cut and paste in to your browser http://www.technologyreview.com/Biotech/11541/ (how do I leave active inks in the comments section of this blog?).
    I do see how frustration over inequality leads many people to question social cohesion (I am even aware of studies suggesting a genetic tendency within all of us to want to reduce in equality—99.99999% of our evolution as a species occurred in small bands on the savannah where such inequality would have meant our end– http://www.physorg.com/news95613629.html ). But while I wish there were an afterlife, yet my wish for one does not make it so. We do not live in the small tribal bands we came from anymore. We live in a massive world economy of which I am simply a drop in the ocean.
    And as societies get larger, if it is to hold together, it needs to face its illusions. I wish more people would read sugarscape above. The research came out of the Brooking’s institution, not a hotbed of conservative values.
    America has been around 230 years. Saying that the 10-20 years between 1950 and 1970 was the magical moment that all today should be benchmarked against is absurd. Why not also benchmark personal healthcare spending today against 1960? You can do it from CMS’s own website (pg. 11) Today everyone expects someone else to pay for healthcare (usually the governement or third party payors), during the time of your mythinc 1950’s past, consumers paid more than 55% of their healthcare expenditures out of their own pocket ( http://www.cms.hhs.gov/TheChartSeries/downloads/Chartbook_2007_pdf.pdf ).
    And to just skip over the ‘if you were white’ comment when refering to the 1950’s as your benchmark of equality is write over huge details. I have many friends that would take a exception to that statement.
    And you are forgetting what I am sure you already know– capital is making a killing and labor is suffering right now because we are in the midst one of the most significant trends even seen in human history: the massive increase in the world’s labor supply (>35%) in the matter of just a few short years as China, India and the rest of the developing world become increasingly integrated into the world’s economy. This MASSIVE change in the balance between capital and labor (in the direction of capital) has come with a tremendous increase on the return on capital: labor has flooded the market. Read just about anything in the economist to remind you of this, or books like Friedman’s ‘The World is Flat’ if you prefer.
    Better yet, look at any rural hospital in America today and you will see MASSIVE numbers of foreign born/foreign educated physicians with last names like Patel (and this is now just as true at top hospitals like The Brigham and Hopkins). These foreign born/educated physicians entering the US market are doing so at much lower educational expenses than US students. Further they are entering the job market where US born physicians are simply unwilling to practice. This has had a tremendous impact on what rural communities have needed to pay their physicians in order to entice them to live in their rural communities.
    And as I am sure you know, what is true in medicine is even truer for almost every other career in America.
    AND all these issues are completely independent of the question “how much can anyone ask from the collective”?
    This comment thread is getting long so I will continue in another comment to finish my point (if that is ‘OK’?)

  15. Barry–
    Could you give URL’s for your numbers/
    I realize I didnt’ give as many URLs as I usually do in my last post. (I working from home) And I’m going to double-check the nubmers in that post–though I’m very confident about my sources.
    But if you could give me your URL’s that would help. I would very much like to nail these numbers
    down.
    Thanks, maggie

  16. Maggie,
    While I wrote my taxation comment based primarily from accumulated knowledge gathered over a long time period, the following two URL’s give the longer term history of both ordinary income and capital gains taxation including rates at various points in time in our history.
    http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#History_of_top_rates
    http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States
    Regarding the combined federal, state, and local tax burden incurred at various points along the income distribution, the definition of income needs to be clearly spelled out. Discussions on this subject may attempt to assign corporate taxes to individuals either as consumers or employees, and this is a somewhat controversial subject. The value of fringe benefits (especially health insurance and pension benefits) may or may not be included in income. The same is true for government benefits like Medicare, food stamps and housing vouchers as well as Social Security and other transfer payments. At the same time, many of the working poor pay negative income taxes because they receive payments under the Earned Income Tax Credit which was originally established to offset some or all of the employee portion of payroll taxes for low income workers. The bottom line is that discussions of the incidence of the tax burden across the income distribution can easily wind up comparing apples and oranges unless we are clear and precise in both our definition of income and what counts as taxes and how they are allocated across the income spectrum.
    When most people think about their total tax burden, they are thinking primarily of federal and state income taxes, the employee’s share of payroll taxes, local property taxes (including the portion of rent that is effectively the property tax nominally paid by the landlord), sales, gasoline and tobacco taxes, etc. People generally do not think of the employer’s share of payroll taxes or any portion of corporate income, property and capital gains taxes as paid by the individual, though economists will have a different view. Individuals also generally do not include the value of fringe benefits (which can be significant) in their income. Under this definition, my own personal family total tax burden over my and my wife’s entire working lifetime (1969 to the present) is approximately 37%. For individual years, it has been as high as 41% and never less than the low 30’s. Since I’m a bit of a data hound, I have our taxes broken down by year in great deal going back to 1969 so I can speak quite definitively at the personal taxation level. We would qualify as high income (by national standards) in most of those years though we live modestly. Our tax burden is comparatively high because most of our income is from salary and bonus, not capital gains and dividends, and there are plenty of people like us.

  17. Nice posting Barry
    🙂
    Maggie, does this change your prior response to my original comment?
    Or does your basic argument still hold– the rich should pay for the rest because no one else can afford to do it and America needs to spend more money to get what you believe to be an ideal system? I know you have a plan to ‘recoup savings’ once the initial investments are made.
    By the way, Britian’s NICE would likely be warmly accepted by many conservatives in this country.
    They take the fairest approach I have ever seen a country take around healthcare, and because of this fairness, NICE has tremendous social buy in, all grumbling to the contrary.
    The English governement simply tells NICE how much they are allowed to spend. Within that budget, NICE decides how to maximize life/health (for the record, HMO’s tried this and were blocked since people seem to trust governement decisions makers around healthcare issues who do not have a profit motive more than they trust private decision makers with one– an odd social paradox since their physicians often have a profit motive and yet most people do trust their physicians even knowing this (whether this is a good idea or not we can debate) and most people do not fear leaving their money in private bank with profit motives).
    Anyway, since NICE can’t choose how much they spend, they just make the most honest decision they can based on the cash at hand.
    And the real issue stays where it always should, in the political arena. Since this always was a national values discussion.
    This is where fractals plays out with the moral questions: “How much do I owe the collective? How much can I ever maximally take from the collective?”.
    5% of patients represent about 50% of all costs (and this has a lot more to do with mental illness than it does with age, a dirty little secret most people don’t want to address and which I won’t get into here– but I have the numbers).
    At a certain point, most ‘healthy’ people realize ‘the odds are’ they will never recoup anything but a very small % of the money they put into the healthcare system.
    As they intuitively come to realize this they are faced with the dilemma ‘should I stay or should I go?’ And it is the healthy that are required for the system to work. Since they are healthy, they are ‘cash flow positive’ to the system. If everyone were sick, it would collapse.
    So IF the collective asks ‘too much’ from each healthy member, they MAY decide ‘to go’. If the collective only asks ‘a reasonable amount’ (big room for agreement/disagreement in that statement I realize), most healthy decide to ‘stay’.
    And try to fund the system by saying some of the healthy (the healthy and poor) will only pay a small ‘resonable’ amount but the rich and healthy need to pay a whole lot more (both as a % and as an absolute amount) and the system is faced with the same dilemma– will the rich ‘stay’ or will they ‘go?’
    And yet the rich’s resources are just as important to the system as the healthy are to it as well. You need them to fund the system just as much as you need the healthy to not dip into it.
    You may beleive the rich have more than you, and therefore should pay more (both as % and absolute amount), but the rich see themselves as members of the collective like everyone else, and to the extent the collective asks significantly more from them in every imaginable way than it does from others in the collective, the rich will also come to reject the collective on the same grounds as the over burdened healthy– all attempts at making them feel guilty about their decision notwithstanding.
    So Britian says ‘the collective demands 7%’. Everything on top of that you can pay for yourself. There is significant social buy in becasue of this (it is not very much). And whether that number should be 7%, 15% or 20%, (the righful domain of politics) I think conservatives will have no trouble discussing “how much do we owe the collective/how much can the collective demand from me/how much is the maximum anyone can ask from the collective?”
    In fact, it is just my hunch, but I think Liberals will have a whole lot more trouble with England’s system in this country than conservatives– precisely because of the element– people get to buy healthcare ‘on top’ of what the collective offers as a basic plan. Liberals issues are more about inequality itself, than whether the system treats everyone the same. They care more about results of inequality, than what the method to achieve those results is.

  18. Maggie,
    A couple of follow-up points.
    One significant component of income that economists and tax policy people often include when defining income very broadly is imputed rental income from home ownership. This means that for those who own their house of condo, if it would command, say, $2,500 per month as a rental, economists would add $30,000 per year to your income from, in effect, renting your home to yourself. This is nowhere to be found in IRS data, however, because it has never been considered taxable income, though there have always been proposals to include it, at least in part, when the subject of tax reform is debated. Approximately 67% of U.S. households own their home.
    I have also often made the point in other forums that elderly people, as long as they are reasonably healthy, can support a comfortable middle class lifestyle on a far lower income than a young family can because the elderly often own their home debt free, their children are grown and on their own, and, if they are retired, they no longer have job related expenses like commutation.
    There is no doubt that income inequality is greater now than it was 30, 40 or 50 years ago, but it’s a more complicated subject than it appears. As you know, the U.S. had huge advantages in the 1950’s and into the 1960’s because Europe and Japan had to rebuild their economies after massive damage suffered during World War II. Our auto and steel industries in particular dominated their respective markets. Strong unions and complacent managements drove up wages, and we eventually started to price ourselves out of the market as foreign competitors developed better products at lower prices. At the same time, the 1950’s was, of course, not a good time if you were an African American, especially in the South. I also don’t think any of us would like to go back to 1950’s healthcare even at 1950’s prices, so there has been a lot of progress.
    Another important cause of rising inequality is the tremendous increase in stock prices since the 1950’s. Back then, people still feared that we would slip back into the depression that preceded World War II so price earnings ratios were very low and dividend yields were high. The slow economic growth and high inflation that we suffered through from 1973-1982 also wreaked havoc on stock prices. Indeed from 1966-1982, stock prices made no net progress in nominal dollar terms and declined significantly in real, inflation adjusted terms. Since the wealthiest 10% of Americans control about 85% of stock market wealth (based on late 1990’s data), weak stock prices disproportionately hurt the wealthy and therefore tend to reduce inequality. At the same time, the unemployment rate approached 10% in 1982 which I don’t think is an environment that most Americans would like to see return anytime soon.
    Finally, the European social safety net models based on much higher levels of taxation than prevail here are creaking because of the aging of their populations and rising pension benefit obligations. The bottom line is that income, taxation and inequality are all complicated subjects that involve a myriad of tradeoffs and potential unintended consequences. Can we improve upon our current system? I think we can. Should we embrace the European approach? My answer is no.

  19. Barry and Red Baron —
    Thanks for your comemnts.
    Barry– The links you sent are from Wikipedia. As you probably know Wikipedia is not concerned a solid source of information.
    Anyone can contribute information to a Wikipedia post. The contributors are anonymous. And there is no professional editorial review.
    As a result, while Wikipedia posts can be interesting, they also can be a mixed bag of true and false information. I don’t know any professional journalist who would use Wikipedia as a source for a story.
    To go back to the facts about taxes:
    From 1945 to 1965, the top income tax rate was 91 percent. These were good years for the economy, and there was far more social solidarity The gaps between rich and poor that exist today were nearly so much of a problem.
    You say that the in the 1950s and 1960s the wealthy didn’t really pay such high taxes–they used tax shelters.
    The truth is that ,during that time many corporations and SOME very wealthy people used tax shelters to try to avoid taxes. Many of them got into trouble doing that
    . And many others were unwilling to use the sleazy accounants who would sell potentiallly illegal tax shelters. (At one point, I wrote quite a bit about tax shelters, and met some of those acoountants–they included the biggest accounting firms. I also interviewed IRS auditors who dealt with them.
    In many cases accountants sold shelters they knew the IRS would not approve and just hoped not to get audited.
    A great many wealthy people did not play that game.
    For what it is worth, while at the height of his movie career Ronald Reagan paid the full 91% on his income. This is one reason why he wanted to slash taxes when he became presient.
    You’re right–the top capital gains rate was never 91%. But it was 76% (during WW I). It was 25% in the 50s and 60s but then went to 39% in the 1970s–much higher than it is today.
    And Barry, you and I know that the capital gains tax has been kept low in recent years, not to protect people who sell small businesses (a separate provision could be made for that capital gain, just as we have a separate provision for the capital gain realized when a homeowner sells his house) but to protect the enormous wealth accumulated by relatively few households during the stock market from 1981-2000.
    As I noted (and you ignored) roughly 85 percent of the nation’s stock market wealth is owned by 10 percent of the nation’s families.
    You also ignore facts like these: “In his book, New York Times reporter David Cay Johnston reports that between 1970 and 2000 average income for the top 13,400 households in America increased from $3.6 million to nearly $24 million. That’s a staggering 538% increase. At the same time, the average income for 90% of US households actually fell from $27,060 to $27,035″
    And you ignore the fact that there is much less upward mobility in the U.S. today than there was in the 1950s and 1960s.
    Finally, you seem to misunderstand what I meant when I wrote:
    In the year 2000 – at the height of the last economic boom and before the most recent round of tax cuts were enacted – IRS data shows that the richest 400 taxpayers paid 27% of their income in federal, state, and local taxes. On average, these 400 taxpayers each had taxable income of $151 million. All other taxpayers had average taxable income of only $34,600, and yet their tax burden was 40%. ”
    “All other taxpayers” means everyone who is not one of the 400 richest tax-payers. Those other taxpayers include many who earned more than $34,600, but their average income turns out to be $34,600 and they paid 40% in federal income tax, social security tax and state and local tax. I did not do this calculation–it comes from the IRS.
    And what it shows is that the very rich do not pay more tax than the rest of us, they pay less.
    Red Baron–
    No, I’m afraid Barry’s comments don’t persuade me. As I indicate above, I’m afraid he ignores most of the argument, and misunderstands in a couple of crucial places.
    In response to your comment:
    You write: “for the record, HMO’s tried this and were blocked since people seem to trust governement decisions makers around healthcare issues who do not have a profit motive more than they trust private decision makers”
    I’d suggest you do some reading about the history of HMOs in the 1990s. Most were for-profit and unlike NICE they made their decisions about what to cover based on the Price of the care in question, not based on the Quality of the Care. NICE asks about price only after considering quality and effectiveness, and price has to be way out of line with effectivness for NICE to decide not to cover.
    Take a look at Money-Driven Medicine (avialable, used, on Amazon at a low price) and you will find that even some insurers realized that they had no business trying to make decisions about quality and medical ethics. They don’t have the political or moral standing to do this.
    Also NICE is not working with whatever amount of money “happens to be at hand.” The National Health Service has been increasing the amount avaiable every year in recent years–see my first reply to Barry.
    Finally you write: “5% of patients represent about 50% of all costs (and this has a lot more to do with mental illness than it does with age, a dirty little secret most people don’t want to address and which I won’t get into here . . .”
    This is one of the nastier things anyone has ever written on this blog–Probably you didn’t intend it that way, but you seem to suggest that if we could just get rid of the mentally ill we wouldn’t have such problems. . .
    As you know, another society that placed freedom for some ahead of equality for all, had the same idea.
    The truth is this: 80% of our health care costs are created by the 20% of the population suffering from 5 chrnoic illnesses. These include diabetes, congestive heart failure and yes depression.
    In many cases these diseases get much worse as you get older.

  20. P.S.–
    For anyone interested in good numbers on wealth and taxes (and implicity, where we might get the money to seed national health reform) here are some excellent sources:
    The Tax Policy Center (www.taxpolicycenter.org) provides a wealth of tax statistics and analysis.
    The Center on Budget and Policy Priorities (www.cbpp.org) goes beyond taxes to look at issues of budget priorities and economic development.
    Citizens for Tax Justice (www.ctj.org) advocates for poor and middle-income families.
    Responsible Wealth (www.responsiblewealth.org) is the advocacy organization headed by Bill Gates Senior and Chuck Collins.
    United for a Fair Economy (www.ufenet.org) is a group working to preserve democracy from the corrupting influences of concentrated wealth.
    Perfectly Legal: The Covert Campaign to Rig our Tax System to Benefit the Super Rich—and Cheat Everybody Else, by David Cay Johnston, Penguin Books, 2004.
    Wealth and Our Commonwealth: Why Americans Should Tax Accumulated Fortunes, by William H. Gates Sr. and Chuck Collins, Beacon Press, 2003.
    America: Who Really Pays the Taxes, by Donald L Barlett and James B Steele, Simon and Schuster, 1994.
    Fuzzy Math: The Essential Guide to the Bush Tax Plan, by Paul Krugman, W.W. Norton Company, 2001.
    The Great American Tax Dodge: How Spiraling Fraud and Avoidance are Killing Fairness, Destroying the Income Tax and Costing You, by Donald L Barlett and James B Steele, Little, Brown,and Company, 2000.
    One fact I forgot to mention: while there aren’t as many tax shelters as there used to be, tax fraud is alive and well. And in general, tax fraud is practiced by those who stand to benefit most–the very wealthy.

    “If tax dodging were a business, it would be the nation’s largest corporation,” say journalists Barlett and Steele. (See their book cited above.) “The current $311 billion tax gap is the equivalent of the total income taxes paid annually by all individuals and families earning less than $75,000.
    If we simply collected taxes that cheaters are withholding from the system, we would have enough to give a free college education to every child in America, or to provide health insurance for small business employees, or to cut social security taxes in half. It amounts to more money than we spent for Medicare in 2003, almost as much as the Defense budget, and almost enough to pay last year’s deficit.

  21. Are the wealthy paying their fair share of federal taxes?
    I would summarize my answer as follows:
    1. Income from wages, interest and rent is already being taxed at a fair share rate. The 39.6% top rate that was in effect during the Clinton administration was originally sold in 1993 as a permanent top rate of 36% plus a temporary 10% (3.6 percentage points) surcharge until our fiscal house was restored to order. The current top rate is 35%. Another percentage point increase back to 36% would be OK with me.
    2. The tax rate on qualified dividends and capital gains is too low. Dividends should go back to being taxed as ordinary income. I never bought into the double taxation argument as I think that over the long term, corporate taxes of all sorts wind up being built into the price of the product or service being sold. Over the long term, after tax returns to shareholders need to at least cover the weighted average cost of capital in order to have a viable and sustainable business model. The current capital gains rate is way too low and should be raised back to 28% which was the rate following passage of the 1986 Tax Reform Act.
    3. The maximum wage base to which Social Security payroll taxes apply (currently $102,000) could be raised to $150-$160K in order to get us back to having the tax apply to 90% of all wages which was the case in the mid to late 1980’s. Going beyond that would be inappropriate, in my opinion.
    4. The top estate tax rate should be no higher than the top ordinary income tax rate with an exemption of $3.5 million ($7.0 million for couples). Alternatively, taxable bequests beyond the exempt amount could be treated as ordinary income to the beneficiary which would essentially convert the estate tax to an inheritance tax. The treatment of gifts to charities would remain the same either way.
    I think economic prosperity needs to be widely shared, but I don’t believe in very high marginal tax rates. As a matter of principle, I don’t think anyone, no matter how wealthy, should have to cut the government in as their senior partner – meaning a total tax burden (federal, state and local) of greater than 50%.

  22. Maggie, thanks for your ‘diplomatic’ reply. You are absolutely right, I do sound very nasty when I re-read what I wrote. In no way do I want to imply we ‘get rid of the mentally ill’ (but I will remind you, this is exactly what Liberal Sweden did– check out their 50+ year history of forced sterilization of their mentally ill and mentally retarded). I would NEVER agree with such an idea.
    Please understand when I am not a physician (75% of my time), I am a number cruncher for a very large group of physicians– in fact I am in this role precisley because I have a tendency to ‘objectify’ people/things went I talk numbers in a way that gets to the bottom of issues very quickly… the corollary is I can sound offensive when I do talk with numbers to people who do not know me… please make no mistake, I always fall back to my values once I understand the ‘truth’ of an issue (if there is such a thing).
    AND the truth of the healthcare cost issue (at least as I analyze it) makes me stick with my numbers… in fact may be saying the same thing: 1% of patients represent 25% costs, 5% represent 50% and 20 % represent 80% (can’t you see the emerging fractal pattern? (technically the pattern follows a hysteresis curve– but it is close enough to fractal (exponential)modeling at the 50% level to conceptially understand the issue — fractals are a lot easier to understand because of their scalability– than hysterisis curves are.
    Anyway, those same 5 chronic illness you mentioned (only 1 in your 5 is a mental health illness) follow fractal scalability patterns (as I have been alluding to in other comments) and mental illness SEEMS to be the big link.
    You have to look at your data to the next higher level: within the ‘expensive’ chronically ill, there are a very small % of patients who represent the majority of the expenses paid by the system for those chronic illnesses.
    So as an example, look at ED visits (it hoold true for a variety of other illnesses/parts of the system, but I have more data on ED’s so that is what I use): 4% of patients represent approximately 50% of all ED visits. If you look at those 4% patients and ask the question ‘what have they got?’, you will find they have your big 4 chronic illness, but they ALSO have mental illness. It is the combo of mental illness with chronic medical illness that leads to EXTREME costs.
    Just think about something like morbid obesity– it has very strong correlations with diabetes, hypertension, congestive heart failure AND mental illness (depression, anxiety, and the always tricky ‘personality disorder’).
    If you have CHF (congestive heart failure) AND a mental illness, you are dramatically more expensive to the system than if you just have CHF or just have mental illness alone.
    And when you look across the board of chronic illness, you will find thsi pattern always holds true: a few % of the chronically ill represent the lions share of the costs of those chronic illnesses and those small % have multiple illness of which 1 is ususally (but not always) a mental illness.
    I am not making this up, go back to your own data. There are lots of published articles onjust this issue, particularly in the ED literature.
    So you do the math, if you spend another $100 on our current heathcare system, $25 of it will go to 1 patient (and $12.50 of that $25 will actually go to around 0.01 patients) and less than $20 will be split by 80 patients. This means ON AVERAGE, UNLESS you ration spending on extreme spenders, the majority of a society will not ever benefit from the money they spend.
    So look at what England does– if you establish the simple boundry “I will only pay so much per year of life extended” (based on a total budget) you quickly come up to the realization that certain combinations of illness do not get funding.
    And you don’t need to even put mental illness in the mix, it shows up anyway (I realize there is a chicken and the egg issue): suppose you want to decide whether you will fund vascular disease surgery, you might for diabetes but not for diabetes AND severe renal disease. And when you look at these patients with both, you will see a very high proportion with mental illness, addiction issues (smoking is an addiction, though not technically a ‘mental illness’ by our definitions in society (like heroin or cocaine might be considered), etc… you will see this if you peel away the onion.
    You do the math, this is a mathematic fact, run the numbers yourself.
    It is the ‘ugliness’ of what this means that is too difficult for most people to address.
    Now you are absolutely correct to say ‘the money is better spent away from the acute care system’ (much cheaper), but it actually ends up with the same math in the end.

  23. Barry–
    As you know this isn’t a blog about taxes; it’s a blog about healthcare.
    My only point was that since, according to the Federal Reserve “In the United States the most-affluent 1% of the population holds more wealth than the entire bottom 90% combined,” that tells us where we could find the tax money to seed health reform.
    Ginger had suggested that there are “too few” really wealthy people to fund health reform. The fact that they are so few means that wealth is concentrated in the hands of relatively few famlies–a dangerous situation, politically—all the more reason to increase taxes at the very top. (That concentration of wealth helps to explain how one family managed to occupy the White House for three terms and the Governor’s Mansion in two different states over a period of about 15 years.)
    Plutocracies are not compatible with democracies.
    And when too few control too much wealth and power, we are not likely to have the “social solidarity” needed for health care reform.
    As the chart in my post shows, the U.S. is an outlier when compared to every other developed nation in the world when it comes to income inequality–and when it comes to not have universal health care for all of our citizens. Princeton economist Uwe Reinhardt suggests that these two facts are related.
    We got into the subject of taxes only because I was explaining how the gaps between poor, middle-class, upper-middle-class and super-wealthy became so wide. Thanks to tax breaks for the very rich, tax fraud, a cap on how much of a very wealthy person’s income is taxes for Social Security, and the fact that the very rich began to have an enormous amount of political power (through enormous campaign sometimes illegal campaing contributions) wealth became concentrated at the top.
    This also happened in the 1920s–until the excesses and greed of that Gilded Age brought the whole system to the point of collapse–the Great Depression.
    Then came the reforms of the 1930s. When we emerge from the Great Recession that we are now entering, I suspect we’ll see more reforms bringing more equality to the nation–and hopefully universal health care will be one of them.

  24. You mention, accurately, that there are more CT and MRI exams here. I don’t disagree that is true in the absolute, and also that many such exams are unneeded. While MRIs are generally harmless (although the gadolinium contrast for some exams carries a risk), there is a statistically significant increased risk of cancer from CT.
    Now, would I hesitate to have an appropriate CT? Absolutely not! What I’d like to see is some distribution of CTs by size and population density of their service areas. This would enter into a more complex evaluation of quality-adjusted years saved by CT, followed by thrombolysis in myocardial infarction and thromboembolic stroke, and, more of a challenge, interventional radiology for cerebral hemorrhage and possibly intravascular aneurysm repair. I suspect bringing some of these techniques to more rural areas will take teleradiology, which I think could be reasonable for intravascular procedures.
    Another consideration is the comparison of utility of imaging modality price vs. effect on clinical decisionmaking. Ultrasound is getting cheaper and cheaper; there are now ultrasound transducers that plug into normal PC’s. Again especially in situations where it’s a long distance to surgeons, training paramedics in the Focused Assessment with Sonography for Trauma (FAST) method could indicate when air evacuation is appropriate, when an emergency physician needs to be heroic, and when the case can be handled by a local surgeon. Ultrasound is not quite as good as CT in evaluation of abdominal pain, but it’s far cheaper, significantly effective, and often a good prescreen for CT — and, as opposed to CT, can be in an ambulance. Might need remote image tranmission.
    My suspicion is that we have too high a density of advanced imaging in urban areas, and not enough in lightly populated areas. On my trauma and critical care mailing list, there’s a well-understood acronym, VOMIT: Victim Of Modern Imaging Technology. VOMIT refers to treating the image and not the patient. The imaging is sometimes defensive medicine and sometimes easier than a detailed history and physical.

  25. Meaningful, sustainable healthcare reform entails profound social change. It will not happen without significant citizen engagement, indeed a social movement. Failing to appreciate the long arc of social change we rely on insufficient strategies to change our deeply embedded health care system. The conventional modality of lobbying for reform needs to be supplemented with dialogue among the general public about the social/moral foundations of our healthcarefuture. Such dialogue begins to reveal our shared vulnerability to illness and injury and to build the solidarity for genuine reform. See http://www.outhealthcarefuture.org and http://www.visionandvoice.org, for two “turn-key” tools to help the public begin that dialogue.

  26. Ann–
    You wrote: “Failing to appreciate the long arc of social change we rely on insufficient strategies to change our deeply embedded health care system. The conventional modality of lobbying for reform needs to be supplemented with dialogue among the general public about the social/moral foundations of our healthcarefuture.”
    I think you are right.
    But I also am not sure that the majority of the public wants to engage in that dialogue. When so many people say that they do not believe that healthcare is a basic human right, we are talking about trying to talk across a pretty big gulf.
    Sometimes govenrment has to lead–and is ahead of the people. (The “New Deal” is an example. At one point, FDR became the most hated president in U.S. History.
    Many wealthy Americans felt that he was a “traitor to his class.”)
    The civil rights legislation of the 1960s is another example. While there was certainly grass-roots support for civil rights, the movement was too small and had little power. It took a court ruling (Brown vs.) and a president willing to send in the National Guard.
    If he have the leadership in the White House and in Congress, I think we could pass real national health reform over the next eight years, with strong support from some parts of the public— but there will still be a great deal of dissent.
    Though if it is done right, and works, 10 or 15 years later, it will be accepted, just as Social Security and Medicare were accepted. (I’m afraid we still haven’t gotten to quite that level of acceptace with Civil Rights.)

  27. Ann–
    You wrote: “Failing to appreciate the long arc of social change we rely on insufficient strategies to change our deeply embedded health care system. The conventional modality of lobbying for reform needs to be supplemented with dialogue among the general public about the social/moral foundations of our healthcarefuture.”
    I think you are right.
    But I also am not sure that the majority of the public wants to engage in that dialogue. When so many people say that they do not believe that healthcare is a basic human right, we are talking about trying to talk across a pretty big gulf.
    Sometimes govenrment has to lead–and is ahead of the people. (The “New Deal” is an example. At one point, FDR became the most hated president in U.S. History.
    Many wealthy Americans felt that he was a “traitor to his class.”)
    The civil rights legislation of the 1960s is another example. While there was certainly grass-roots support for civil rights, the movement was too small and had little power. It took a court ruling (Brown vs.) and a president willing to send in the National Guard.
    If he have the leadership in the White House and in Congress, I think we could pass real national health reform over the next eight years, with strong support from some parts of the public— but there will still be a great deal of dissent.
    Though if it is done right, and works, 10 or 15 years later, it will be accepted, just as Social Security and Medicare were accepted. (I’m afraid we still haven’t gotten to quite that level of acceptace with Civil Rights.)

  28. Comments on Obstacles to Health Care Reform
    It is probably true that the ultimate obstacle to comprehensive healthcare reform in America lies in our general lack of social solidarity as noted by Uwe Reinhardt in your article on the obstacles to healthcare reform. But that is true of reform efforts in other areas of our social fabric, not least of which is the need to address the increasing concentration of wealth in this country. It may be too much to hope for, but it is possible that this upcoming national election will at once remove a most divisive national polity and replace it with one that is more inclined to govern from consensus than fear.
    In the meantime, it might be worthwhile for healthcare reformers of every stripe to devote themselves to clarifying the terms of the debate. Voltaire is famous for having said, “If you wish to converse with me, first define your terms.” One of those terms most in need of definition has to do with who pays for health care. This is all the more relevant because only three weeks ago you posted a piece by Niko Kavounis (Guess Who Foots America’s Health Care Bill?) that summarized an article by Dr. Ezkiel Emanuel and Prof. Victor Fuchs (Who Really Pays for Health Care?) in the Journal of the American Medical Association, 5 March 2008 on this very subject.
    The thrust of their argument is, as Uwe Reinhardt put it not too long ago, “in the end, it is the individual who pays for healthcare.” It is true that “wealthier Americans are not as concerned about health care because the majority has employer-based coverage. Moreover, the wealthier you are, the more likely it is that your employer covers all, or most, of your premium.” Well, yes and no. In this instance, the wealthier you are the more you can afford to forego wages in lieu of employer-based coverage as part of what is probably a generous compensation package. The advantage that employer-based health insurance brings to the table is the purchasing power that enables employers to negotiate better rates than an individual could do in the market place. This service comes at a cost, of course; something like 20 per cent of the value of the health insurance benefit goes to the pay for the employer’s cost of administering the program.
    This may seem like splitting hairs, but it is important to be very clear about who pays for healthcare in this country as the reform debate moves forward. To an employer, the health insurance benefit is a labor expense, like wages or vacation pay. A major contributor to stagnating wages over the past decades has been the rising cost of the health insurance benefit inside the total compensation package. It is different from other labor-related expenses in that its value to the worker is not taxed, a major benefit to the haves over the have nots. Most significantly, the health insurance benefit is not a gift from the employer paid for, let’s say, out of shareholder dividends. Where it is offered, it is a part of a compensation package the allocation of which is agreed to by both parties.
    In a similar vein, we also talk about government provided health insurance as if the government magically generated its own purchasing power. The ultimate source of the government’s purchasing power is the taxpayer, current and/or future. This is true for government employees as well as for those who receive health insurance through an entitlement program such as Medicare or Medicaid. And as in the private sector, the health benefit, uncontrolled and overpowering as it is, tends to drive out other government programs, such as education, particularly higher education, in times of budgetary constraint.
    Why does this matter? Most policy experts, after all, are aware of the reality even as they revert to short hand terminology to describe what is happening. It matters because the myth of “shared responsibility” – employers, government and citizens in this together – is a major impediment to fresh thinking about fundamental and comprehensive healthcare reform. As long as the voting public believes that it is getting something for nothing from their employers and/or the government, there is very little incentive for them to demand change. It is only after the general public realizes that it has been footing the bill for a healthcare system over which it has had next to no say that it will begin to demonstrate the social solidarity that will demand it work in its best interests.

  29. Bill–
    I agree entirely.
    At this point, if you include not just Medicare, Medicaid, SCHIP and the VA, but what taxpayers spend to buy private insurance for government employees and the cost of giving private-sector employees insurance without taxing the value of the benefit, taxpayers foot more than half of our health care bill.
    Some people say they don’t want a govt sponsored health care system, but the fact is we already have a govt-supported health care system, although most of the important decisions (what medicines to develop, who to cover, where to build hospitals) are made, not by taxpayers, or their representatives, but by the private sector.
    You are right that, in the end, indivduals pay for health care, but right now, the greatest burden falls on the poor, the working poor and the lower middle-class.
    If you are uninsured, you will pay a higher rate for care in an ER, or at hospital than you would if you had group insurance–and you will pay it out of pocket.
    And, as you point out, untaxed employer-based health care is much more valuable to employees in the highest tax brackets.

  30. PNHP zealotry

    Physicians for a National Health Plan is a group of radical left-leaning doctors in favor of single-payer health care. As progressive blogger Ezra Klein writes, they are opposed to any measure that isn’t single-payer:

  31. I don’t see any real implementation plan for change emerging as yet. Perhaps if there is a big enough Dem majority in congress, and if enough of them are “progressive” then we may see some pressure on the president to take bold steps.

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