Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : A US National Health Care System? -- Ignore unavailable to you. Want to Upgrade?

To: Lane3 who wrote (10480)	10/15/2009 5:34:14 PM
From: Lane3	Respond to of 42652

This piece goes on to describe actual state scenarios. I'm not posting the whole thing. Regional inequities in health care reform Posted on October 15th, 2009 by kbh in featured, health Regional inequities in health care reform In the pending health care bills, low-income individuals and families who buy health insurance outside employment will get large government subsidies. Those subsidies vary by locale. This represents a significant implicit policy decision with enormous distributional and political consequences. I don’t think most Members or their constituents have focused on this. I think they should. Let’s start with the Knights, a family of four with adults age 40. The family has $44,000 of income, putting them at twice the poverty line for a family of that size. The Knights do not get health insurance through their employer. The Knight family lives in Las Vegas. Their friends the Ford family are identical in every way, except they live in Portland, Maine. They, too, make $44,000 of income, but it doesn’t go quite as far as the Knights’ $44K, because it costs almost 6% more to live in Portland than in Las Vegas, according to CNN.com’s cost-of-living calculator. Utility costs are much higher in Portland, and food prices are 2% higher in Portland. Suppose we are designing a new national program to subsidize food for modest-income families. We have a range of choices. 1. At one extreme, both families get the same subsidy amount. 2. At the other extreme, both families pay the same net amount for groceries, meaning the Ford family gets a bigger subsidy, since groceries cost more in Portland. Which is fair? In a system of locally-elected representatives, your answer probably depends on where you live. I can construct legitimate arguments for either extreme, or for a midpoint policy such as the Ford family getting a 2% bigger subsidy than the Knights. Now what if people in Portland eat 5% more than people in Las Vegas? If we go with approach (2), should the Ford family get a subsidy that accounts for the higher prices in Maine and their greater food consumption? Should the two families pay the same amount for groceries if they’re eating different amounts? Again, there’s no objectively right answer. My personal preference is to favor approach (1). Different federal spending programs take each extreme approach and many variants in between. Some adjust for regional variations; others do not. Now let’s look at what the Baucus bill does for the new low-income subsidies to purchase health insurance outside of employment. Here is the key sentence from the conceptual description of the Senate Finance Committee-reported bill (labeled as page 27, it’s page 30 of the PDF). The premium credit amount would be tied to the second lowest-cost silver plan in the area where the individual resides. This is approach (2) (and it becomes clear it’s the extreme when you study the details). If you live in an area with relatively inexpensive health plans, low- and moderate-income people in your area will receive smaller government subsidies than their similarly-situated identical twins who live in relatively high-cost areas. A “health plan” is not a commodity like “a gallon of milk.” A health plan in Las Vegas is quite different from one in Portland. While the overall cost-of-living in Portland is higher, health care spending is much higher in Las Vegas. This higher health spending is a function of different prices and different usage of medical care. Atul Gawande wrote a much-discussed article on this topic in The New Yorker, “The Cost Conundrum: What a Texas town can teach us about health care.” There are wide geographic dispersions in medical care spending, and it cannot all be explained by different prices. While I disagree with Gawande’s policy conclusions, I recommend the article. Since insurance premiums ultimately reflect the cost of medical care used, insurance premiums too will vary widely from one area to the next. This brings us to the effects of the policy decision in the new health care bills. We are fortunate have a calculator created by the (liberal) Kaiser Family Foundation to do most of the hard work for us. The Kaiser calculator makes a simplifying assumption that premiums in high-cost areas will be 20% higher than in average areas, and premiums in low-cost area will be 20% lower than in average areas. That seems like a reasonable assumption to illustrate the conceptual point. I have chosen Las Vegas and Portland because they represent high-cost and low-cost areas respectively. Using Kaiser’s assumption, I will assume that a typical health insurance premium costs one-third less in low-cost Portland than in high-cost Las Vegas (1 – (80%/120%)) = 1/3. Note that while the overall cost-of-living in Portland is higher than in Las Vegas, per-person health spending is much lower in Portland in part because of differences in medical care usage. Under the Baucus/Senate Finance Committee bill, both the Ford family and the Knight family will pay only $3,070 for family health insurance after netting out their new government subsidy. That’s an incredible deal for either family. It also represents approach (2) described above. Both families pay the same amount, post-subsidy, for health insurance. Since (using Kaiser’s assumption) health insurance costs 1/3 less in Portland than in Las Vegas, under the Baucus bill the Knights in Vegas will get a $6,365 subsidy, while the Fords in Portland will get a $3,220 subsidy, 49% less than the Knights. (The Kaiser calculator gives me these subsidy amounts.) Is this fair? One family, living in a higher-cost area, gets a subsidy twice as large as the other because of differences in medical care usage in their local markets? keithhennessey.com

To: Lane3 who wrote (10480)	10/15/2009 8:28:33 PM
From: John Koligman	Read Replies (1) \| Respond to of 42652

Well thanks for the link, but as you know one of my hot buttons IS executive and bankster-gangster compensation, and here this guy says 'Well, that's where the action is, BUT I don't know why'!! LOL!! Does he know about 'buddy boards', or enormous option grants, or options that 'magically' get repriced when the CEO screws up and his company's stock tanks? Or 'golden coffins' where a CEO's estate gets a big payout if he croaks?? So much for that. "Let’s glance at CEO pay as a final example. Changes in executive compensation are almost certainly behind the dramatically disproportionate income gains in the top one percent of the distribution. After all the scholarly tweaks to the income datasets and the Consumer Price Index are done, that’s where the action remains. So why did those changes occur? I really don’t know why, but the story matters."