Wait, which tax are they repealing?
You really need a sense of humor to read the news these days. Here’s Matt Yglesias, describing the Senate Majority leader:
Many more moderate House members, meanwhile, told themselves the real bill would be written by the Senate, which no doubt would be less harsh on Medicaid. Instead, McConnell opted to be harsher and has not softened it even slightly, even though he has hundreds of billions of dollars of flexibility.
Bizarrely, instead of addressing the issue, “McConnell has told several hesitant senators (including Portman and Sen. Shelley Moore Capito (R-W.Va.): The bill’s deepest Medicaid cuts are far into the future, and they’ll never go into effect anyway.”
McConnell made deep Medicaid cuts to please the GOP conservatives, knowing that none of this will ever go into effect. Yglesias has a nice graph showing the recent changes:
So they had to rescind one of the tax increases, and they chose the tax on medical devices over the tax on saving and investment? They chose to cut taxes on a massively subsidized industry instead of paring back taxes on savers who are already double taxed on the same income? Is this the modern GOP, or the AMA?
I recall that back during the campaign some Republicans convinced themselves that Trump was a supply-sider, pointing to his “support” of a 25% top tax rate, ending the extra Obamacare taxes on capital, ending the AMT, ending the estate taxes, etc., etc. A supply-side miracle bringing us 4% RGDP growth and tens of millions of jobs.
I can hardly wait!
PS. If it’s monetary policy you want, it’s over at Econlog.
PPS. So the Federal government will launch a $45 billion war on opioids. What could go wrong?
Tags:
14. July 2017 at 07:24
As a left-winger, I would be fine with a 100% free market healthcare experiment, as long as it comes with a generous wage subsidy guaranteeing a min $15/hour and and a $10k, in place of all other social welfare programs, including federal subsidized student loans, but except Social Security.
100% free market means just that. No healthcare-related tax subsidies, no FDA, no occupational licensing, no Medicaid, no Medicare, no prescription requirements, 100% free immigration for people with foreign medical degrees or foreign medical students, etc.
14. July 2017 at 07:25
That should have been a $10k/year guaranteed minimum income. Also, eliminate minimum wages.
14. July 2017 at 08:23
SF – when you say free market do you mean truly free – collusion/monopolies/etc allowed? Free also implies hospitals would not be required to treat patients that cannot pay. And that we would not control distribution of antibiotics. I am not ready for that experiment.
14. July 2017 at 08:34
Steve J,
Good question about emergency rooms. ERs would still not be allowed to refuse treatment, but they would be paid by patients. Every adult citizen would have the $10k guaranteed minimum income from which unpaid ER bills could be deducted. Parents would be responsible for paying for their children.
On the flip side, people would also have the option of borrowing against their future guaranteed income stream at an interest rate that reflects opportunity costs and the average life expectancy of citizens who borrow. So, someone who needs to fund large healthcare costs could borrow against future benefits. They could also borrow to start a business, etc. They would get less money in a lump sum than if they accepted what is essentially an annuity.
14. July 2017 at 08:34
Antibiotics could be rationed to control negative externalities regarding overuse.
14. July 2017 at 11:01
SF – the people currently covered by Medicare would be a problem. I expect life expectancy would be reduced in a free market. Would grandma blow her life savings on chemo for a few extra years? On the other hand the cost of chemo drugs would probably drop 90% when we can buy them outside the US.
14. July 2017 at 11:01
SF, I’m a right-winger and I have trouble with one size fits all programs. I worry it would encourage laziness among certain segments of the population while not being enough for others.
A basic income grant seems wasteful because plenty who don’t need any monetary assistance receive it, meaning either that those who do need help receive less or the costs of the program are exorbitant.
What about a single mother who can’t find a job and who has 3 kids? Her $10,000/yr would be less than half of the poverty level for her family, and there’s really no way she’d be able to afford any medical care. Presumably, there would be no food stamps, section 8 housing, or unemployment insurance.
What is a 77 year old retired waitress supposed to do for health care on a meager social security check and relatively tiny savings?
Conversely, consider two 19 year old friends with a lower middle class background. With $1,667/mo in tax-free income between them, why not rent a $650/mo two bedroom apartment and enjoy PlayStation and drinking cheap beer for an extended period?
14. July 2017 at 11:35
Like other emergency services (fire, police, etc.), ER access should be publicly funded, at the local level just as those other services are. I agree with leftist critics that free market considerations make quite a bit less sense with regards to emergency care, though with a baseline of public ERs, it wouldn’t be unreasonable for private ERs to be in existence for those willing to pay for access. The existence of the public ER would put competitive pressure on the private ERs to offer real value for the dollar.
From there, I would look at how much the federal government spends per capita, and break into 3 parts:
1: Health Spending Accounts. People would be given large sums of money in an account, based on their age and affordable spending for the government at each age (e.g. $375,000 for newborn, $200,000 for 65 year old), which they can spend on any health care that meets a basic review that ensures that, yes, this is actually health care being offered. Can include foreign providers. People’s own social networks would function as an insurance company – families and friends would have millions between them to help fund needed care. No more third party payment for the vast majority of care, the patient (or close relatives/friends) will be the payer.
2. Long term care subsidies for elderly/sick to keep costs reasonable.
3. Catastrophic care. Fixed % of GDP, perhaps 0.5%, with the federal government administering it. People may apply for catastrophic coverage after spending a very high amount (say, $250,000) on a single condition or having depleted all of their funds. Application is reviewed for reasonableness of treatment and available funds.
14. July 2017 at 11:35
But back to OT, I agree with Scott that the modern GOP makes no sense at all.
14. July 2017 at 11:52
This post is pure crap. And Sumner intends it as crap and flame bait. And that speaks poorly of commenters like myself.
Sumner and David Henderson post serious health care policy thoughts on econlog.
http://econlog.econlib.org/archives/2017/04/ezra_klein_on_t.html
http://econlog.econlib.org/archives/2017/05/avik_roy_on_gop.html
Sumner sounds pretty firmly in the conservative free market crowd of health care wonks who can’t seem to turn their ideas into reality.
14. July 2017 at 12:26
Justin D,
That’s why I call it a free market experiment. Anyone who thinks they know what’d happen is wrong.
I suspect prices world start to come way down.
On jobs,remember id eliminate the min wage, which should open up jobs.
14. July 2017 at 12:28
Virtually no Republican wants free market healthcare.
14. July 2017 at 13:16
Tons of Republicans want free market health care, or some version of that. Politically, it’s tricky.
Scott Sumner wants more free market health care as do his cobloggers on his more serious site, David Henderson and Caplan. Guys they cite like Avik Roy are fanatical about free market health care.
14. July 2017 at 19:02
Scott Sumner’s complaints are completely legitimate.
Even an intelligent layman, fairly well-versed in public policy, cannot follow the health care “debate” or policy-making apparatus in the U.S.
As usual, the nation’s largest health care system–the VA–is not even in the discussion. Our biggest health-care system is for former federal employees, housed in federal facilities, staffed by federal employees, includes zero co-payments, is free for life, and entirely paid for by income taxes levied on productive citizens.
The VA medical system is distilled communism, which is evidently how the right-wing thinks health care really should be provided.
Here is a partial post from Cato in 2014:
“After my blogpost yesterday about Department of Veterans Affairs spending, my research assistant Nick created the chart below on the number of VA employees. Wow, you don’t often see bureaucracies expand that rapidly! A 56 percent increase in just 13 years, from 219,000 to 341,000 employees. The VA has 100,000 new employees just since 2006.”
—30—
Egads, I say KISS–keep it simple stupid.
At this point, I say go with single-payer for everybody and cap outlays at 12% of GDP. Do not keep people alive past the expiration date.
Smokers and fatties must serve as hospital orderlies 200 hours a year for free, cleaning bedpans and mopping floors.
14. July 2017 at 20:06
To Benjamin Cole,
I’d think that VA employment is related to numbers of patients and suppose to increase after every war.
15. July 2017 at 06:31
Virtually the entire conservative movement’s been a scam for a very long time, and much the same was true of the libertarian movement. Apart from notable exceptions like current never Trump Republicans/conservatives and George Mason University-type libertarians, including Scott, many in each movement were motivated by forces other than a love of liberty and the belief that free markets make for a better world.
Much like the financial crisis exposed weak banks, the Trump phenomenon has exposed those with weak or even wicked integrity. Most at the top of the Republican Party may or may not be bigots, but most of them are willing to use bigotry to pursue their plutocratic agendas. It is clear they care nothing about any other class of people.
And so only the mentally infirm, misinformed, and nastiest, aggrieved and often bigoted among us support Republicans, constantly setting them selves up for a fall and constantly whining about being ripped off. Yet, despite the most deplorable (yes, I know) voting records in US history, they always want to point the finger at left-wingers and minorities and blame others for what in their twisted view is a fallen country. They assumed liberals would bring the country down and they’re bringing the country down to prove it!
15. July 2017 at 12:19
Good stuff by Pedro Nicolaci da Costa:
“The Fed just edged a step closer to recognizing a a major policy misstep”
http://www.businessinsider.com/fed-may-pause-rate-hikes-if-inflation-weakness-persists-2017-7
15. July 2017 at 14:59
Scott,
I think it’s pretty complicated for most Republicans, including the plutocrats like the Koch brothers or Mercers. From what I can tell, the Koch brothers have true libertarian beliefs which I had myself at one time.
But IMO, the conservative mindset also really attracts a ton of grifters and utterly terrible people. Trump is a terrible person in so many ways, mainly shown by his personal dealings way before politics. Gingrich and Cruz are also just terrible. Gingrich will be held responsible more than anyone else for the deterioration of American politics.
The left-wing has its equivalents with some union bosses and some local-level Democratic politicians. Republicans rightly point out the excesses of Illinois, California, NY, etc. It’s not “left-wing” in any real sense for an NYC transit worker to get $150k+ in compensation with fairly valued pensions included.
Is there a solution? The biggest part is completely reforming the electoral system away from an entrenched two-party system. Otherwise, the incentives will continue to deteriorate the functioning of democracy.
15. July 2017 at 15:01
[I submitted the same comment under the wrong email address. That can be deleted.]
Scott,
I think it’s pretty complicated for most Republicans, including the plutocrats like the Koch brothers or Mercers. From what I can tell, the Koch brothers have true libertarian beliefs which I had myself at one time.
But IMO, the conservative mindset also really attracts a ton of grifters and utterly terrible people. Trump is a terrible person in so many ways, mainly shown by his personal dealings way before politics. Gingrich and Cruz are also just terrible. Gingrich will be held responsible more than anyone else for the deterioration of American politics.
The left-wing has its equivalents with some union bosses and some local-level Democratic politicians. Republicans rightly point out the excesses of Illinois, California, NY, etc. It’s not “left-wing” in any real sense for an NYC transit worker to get $150k+ in compensation with fairly valued pensions included.
Is there a solution? The biggest part is completely reforming the electoral system away from an entrenched two-party system. Otherwise, the incentives will continue to deteriorate the functioning of democracy.
16. July 2017 at 07:02
Here;s the grown-up explanation of what’s going on in congress right now;
https://www.forbes.com/sites/daviddavenport/2017/07/13/win-or-lose-the-affordable-care-act-has-federalized-health-care-forever/#1138b3e81f2b
————-quote———–
…this is what President Obama’s Affordable Care Act accomplished: it forever changed the debate by making health care policy a legitimate matter of federal concern. Today Republicans and Democrats no longer argue whether federal health care regulation and design are legitimate; instead they argue the details of federal policy. The questions are not whether, but how much. The debates are about how many people have coverage, whether preexisting conditions must be covered by law, the proper scope of coverage, and so on.
This is the primary problem conservatives now confront in trying to cut Obamacare down to size. They would like to repeal it, and try to return things to the pre-Obamacare days, but most of them understand that politically they can’t realistically turn back the clock. They cannot repeal if they do not also replace. And when they replace, they would like to make greater use of private insurance, spend less on Medicaid, and eliminate mandates, but Obamacare made the debate about how many millions of people are left uncovered by health insurance, so that becomes fatal to many of the Republicans’ plans.
Even though Obamacare did not literally federalize the delivery of health care, it did federalize it in the crucial sense that the federal government is now in charge of making the important policy decisions about it. It is no longer the states or the doctors or the private health insurers interacting with patients and consumers that are deciding the scope of required health care. It is Mitch McConnell and Ted Cruz and maybe Chuck Schumer. This is boiling the frog federalizing: first we lower the legitimacy barrier to federal action, then we put the feds in charge of the key policy decisions, and, ultimately, we are likely to end up with federal delivery of health care. This was all accomplished in a stunningly brief period of time, and all triggered by a party-line vote on Obamacare.
————endquote———
Jonathan Gruber’s Revenge.
16. July 2017 at 15:38
“this is what President Obama’s Affordable Care Act accomplished: it forever changed the debate by making health care policy a legitimate matter of federal concern.”
Pretty hard to read past this. Health care policy WASN’T a federal concern before ACA? Medicare, Medicaid, tax-deductibility of employer health insurance, indigent ER care, HIPAA and COBRA are all federal policies.
The “original sin” of American health care policy dates back to two policies in the 1940’s. The employer health insurance model put off tough questions of pre-existing conditions while also providing a massive subsidy for all health care.
The second policy is the Hill-Burton Act, where the Federal government invested in hospitals. Indigent ER care was required for decades in exchange for the investment. EMTALA in the 80’s was brought about in part by these promises ending.
https://en.wikipedia.org/wiki/Hill%E2%80%93Burton_Act
Even from the 1940’s, the federal policies put off tough questions about pre-existing conditions, universal coverage, price-setting, etc. Health care providers used the framework to dramatically increase their revenues, both with per-unit costs and with overtreatment.
A true free-market system would probably be quickly overturned in practice. Leaving it to the states is also fairly unworkable in my opinion. There is less elasticity for federal taxation than state taxation. People can easily move states for taxes than move to a different country. In any case, federalism is typically a dodge. Anybody who says “it should be left to the states” should be asked “okay, what should the states do?”
16. July 2017 at 16:20
“They chose to cut taxes on a massively subsidized industry instead of paring back taxes on savers who are already double taxed on the same income? Is this the modern GOP, or the AMA?”
I agree; Sumner. Portman, Murkowski, and McConnell are scum.
17. July 2017 at 02:13
OT:
China Q2 GDP up 6.9% and Korea’s stock market up 22.4% YOY.
17. July 2017 at 06:51
@Matthew Waters,
The first half of your post was excellent.
“okay, what should the states do?”
Come on, there is no shortage of great policy ideas. Earlier in this thread, I linked some great ideas from Scott Sumner on his serious blog. Avik Roy, Yuval Levin, and all the free market health care wonks have great policy ideas too. Politically, they can’t try them out at the federal level, because the political left is too good at blocking anything like that. At the state level, free market policies have a more realistic chance. And other states would have a chance to try more left wing ideas.
Federalism is a great idea for health care. And it is a political dodge, not an ideological dodge.
17. July 2017 at 15:58
“So the Federal government will launch a $45 billion war on opioids. What could go wrong?”
The state already waged a war against deflation, with central banks, and look how bad that went, and yet you support that.
18. July 2017 at 08:12
This is offtopic but figured I would post. A while back I feel like I recall Prof. Sumner talking about a detailed post another blogger wrote related to “OPM”/Other people’s money. Maybe I am imagining things but I’ve tried searching for it but can’t find it.
Anybody know what I’m talking about or am I losing it?
18. July 2017 at 10:00
What I can’t understand is why the entire savings aren’t going to deficit reduction. How can the conservatives justify this?
18. July 2017 at 15:07
@Massimo Heitor
I didn’t say that all conservatives or libertarians, everywhere, don’t have ideas on policy.
I had a very limited critique of when “it should be left to the states” is used. Often, it’s for an otherwise unpalatable policy such as Medicaid cuts and the unpalatable policy isn’t embraced head-on. Basically southerners (I am one) used “states’ rights” as such a dodge for slavery and then segregation.
I’m familiar with Avik Roy. I think he gives too much credit to health care consumers in the real world, but he’s on a FAR better track than most conservatives. Starting with the fact that health care is massively subsidized to begin with is far better than how Republicans typically talk about the health care issue.
I would even respect a truly libertarian view of health care, to the point of not requiring ER care, not having COBRA or HIPAA, not even having Medicare.
But the GOP, as it exists, is not even in the same universe as the right-wing intellectuals. Either pure repeal of Obamacare or the BRCA would only be a minor step towards a libertarian policy on health care. Both malpractice reforms and “selling across state lines” actually OVERRIDE federalist decisions made by the states. The impact of those two policies is not meaningful anyway.
18. July 2017 at 15:11
“What I can’t understand is why the entire savings aren’t going to deficit reduction. How can the conservatives justify this?’
The going theory was McConnell wanted a slush fund for Alaska, Maine, and other states with moderates. The bill had to be scored as not adding to the deficit under reconciliation, so some sort of taxes had to be raised to make such a slush fund.
It is interesting that the corporate taxes are still eliminated while the income and cap gain taxes remain. One argument for eliminating those policies is they specifically targeted health care companies while personal taxes were not health care policy. But the power of health care company lobbying is hard not to think of.