The economic questions are: what is that cost doing to our productivity and profitability as we compete globally?
You can think it creates a huge number of high paying jobs.
You can think it increases are production costs.
The case for either is buried somewhere no one looks.
We have at least three people (I think: bj, davenport, ptheland) specifically saying that when they think about the economics at a personal level, they see the attachment of health insurance to particular employment situation (eg, corp vs small biz or no employment FIRE) as reducing their set of possible economic decisions.
Add me to the list: that makes 4 experienced, informed people saying it reduces their specific economic opportunities (anecdote, but not irrelevant).
Set aside amount and exact method of funding for healthcare at 18% gdp.
And consider:
It’s an economic (and math) truism that reducing the possible set of economic opportunities, such as free flow of labor and capital (such as in international trade), reduces total economic output (makes us poorer in aggregate than we would otherwise be).
Tying healthcare to a particular type of employment is a similar reduction in the economic opportunity set for labor.
It makes us poorer.
You still don’t get it. All these other first-world nations with universal health care are paying LESS overall for health care than we do. So it’s not just changing how that 18% gets collected. It’s also collecting much less than 18% in the first place.
How is this not a win? How is having virtually everyone covered not a win? How is an end to medical bankruptcies not a win?
And yes ML, you are correct that I am saying that big-corp health insurance is limiting my set of possible economic decisions. And I know several more exactly like me.
How, exactly, does it reduce your specific economic opportunities?
Most jobs in the U.S. offer health care coverage. More than 75%. I suspect that a very large proportion of the ones that don’t are jobs you’re probably not contemplating. That’s just a suspicion based on the fact that you’re a somewhat regular contributor on an investing website, which means you’re probably not looking to leave your current employment to go work at an entry-level fast food job.
Are you talking about self-employment or FIRE specifically? I can see that as a more plausible scenario, but I think that people make a fundamental error when thinking about what switching to a universal health care system involves. They think about it as “What could I do if I didn’t have to pay for health insurance?” rather than “What could I do if I were forced to pay for health insurance even if I were self-employed or retired?” Because universal health care doesn’t involve you being relieved from these costs - it just means that the costs get borne by you wherever you’re going. If the job you want to switch to doesn’t pay you enough money for you to be able to take it and pay for your own health care and cover your expenses today, it’s not especially likely to do so in a different system.
As I’ve discussed on this topic in other threads, I don’t believe that switching how we provide health insurance will have any impact on how much we collect - except perhaps to have us collect more than 18%, rather than less. But that’s a whole 'nother conversation…
Of course not from all of them, but for some it would certainly make a difference. I am a case in point. Not perfect, of course, but I hope the story tells the, uh, story.
I was employed at Westinghouse with a sweet job, big bucks, generous benefits. We got a new CEO and I survived. He only lasted a couple years, and we got a newer CEO and I did not. I like to say “We did not laugh at the same jokes”, but the reality is a distinct personality clash. Him being on top, I left, but with a modest package, which included health care for a year (and COBRA after that.)
During that time I started two distinct businesses, neither wildly successful, but neither abject failures either. My urge to do this was not enough to move me off the Westinghouse job, but when that happened I took a couple ideas I had been thinking about and implemented them. I’m sure there are people “trapped” in a dead end job who “think about” doing their own thing (whatever that is) but can’t because of health insurance. (Obviously salary/savings is also an issue.)
I would agree that this wouldn’t help every single 1 in 4 but I bet it would help a lot of people who are simply “trapped” by the modern jungle gym of what we call health care in this country. I wasn’t “trapped” nor “highly motivated to move”, but I bet there are lots who are, and who can’t.
If you dig below the surface you will find that our health care professionals earn significantly more than they do in other countries, doctors especially. I can’t speak to the internals of hospital billing and other charges (some ridiculous, like $18 for an aspirin) but I know doctors often make 2, 3, even 4 or more times the annual wage as they do elsewhere, and that’s gotta be a huge part of it.
Again, if you are “trapped” in a dead end job and are “thinking about” doing your thing and deciding not to because of health insurance costs, then a change in the health care system to one similar to Europe is not especially likely to result in a different conclusion. In that new system, you’re still going to have to pay for your health insurance, either through VAT taxes or SE payroll taxes or both. The amount you pay is not likely to be materially less (and may be more) than you would have to pay if you switched jobs today (there’s just not that much difference between individual plan costs and group plan costs any more):
You’re not “trapped” by the structure of the health care system (at least not today). You’re “trapped” by the fact that your current job has higher total compensation than the one you are considering, and you can’t afford to take that pay cut. That doesn’t change if you change the health care system.
Again, I think that people often frame the question as “What could I do if I didn’t have to pay for healthcare,” and not “What could I do if I had to pay roughly the same amount for healthcare as I would for an individual market plan today, but through sales taxes and/or payroll taxes?” The latter question is the one that would fit any possible health care system, but it leads to very different answers than the former question…which is just wishful thinking.
It’s far more complicated of issue. Doctors in the US spend far greater sums on their education. Across the board, skilled professions in countries where GDP is higher per capita, the salaries are higher as well. In some fields, the salaries are 50-80% higher in the US.
You can of course try to cap salaries and costs, which has some other unintended consequences. For example, in Canada, it tends to show up in some key areas.
In the US, we are already facing a less severe but still noticeable shortage of General Practitioners. Medical students are evaluating the cost of school and then choosing higher paying positions in other more specialized fields.
@albaby1 is correct. It’s a huge leap to assume that the perceived cost savings isn’t offset by higher tax rates at the lower income rates and higher vat or sales taxes paid in these other countries.
Of course, what goes completely unsaid is that in many European countries the public benefit models are becoming completely unsustainable. Great Britain finds itself near a point where it probably cannot continue on the present course.
Lastly, despite our lack of a public safety net with the exception of the poor or elderly, the US has and maintains a culture of risk takers that is very different than many countries in Europe. There is certainly no evidence to suggest that job risk taking has increased in these countries because they have health coverage through the GOVT.
I realize there people in the US with outsized medical needs that maintaining coverage is a necessity. It limits their job mobility or creative pursuits. But, I have to assume this is a small portion of the population. If someone really has a passion and a project worth pursuing , he or she will find a way to do it. The reality is the govt is not there to solve every problem. There are problems that simply are. Individuals need to anticipate, prepare and take steps to protect themselves as best they can.
So? That leaves 25% that don’t, not a small number.
Of the subtypes of health insurance coverage, employment-based insurance was the most common, covering 53.8 percent of the population for some or all of the calendar year, followed by Medicare (19.1 percent), Medicaid (17.6 percent), direct-purchase coverage (10.7 percent), TRICARE (2.8 percent), and VA and CHAMPVA coverage (1.2 percent).
It’s math.
It’s not different than free trade and movement of labor and capital versus reducing that movement and how that affects total economic output.
Consider the set of all possible employment opportunities (”eo’s”)= EO.
For each “eo” in the set EO there will be some value (salary, benefits, hours, wfh, etc).
Now divide the EO set into two subsets, “eo’s” with and without healthcare:
The best value “eo” from the big set, EO, will always be better (and at worst equal) than the best value “eo” from either of the smaller sets (because the big set contains both small sets).
Yes, but the opportunity set is larger. More opportunities lead to more optimal outcomes.
I would like to add an anecdote about a hospital surgery and recovery I recently had. Emergency room, acute appendicitis, surgery six hours after admission, four days recovery. 82 specific indiduals, “saw” me. Absurd top line bill of 155k, reduced to 50k, mostly for the surgeon and anesthesiologist. Every other person billed my case somewhere. That is one of the reasons we spend 18% on average or less healthcare.
I have high deductible plan g, paid about 1600 all in for that surgery.
Jk
Yes.
There are plenty of hands grabbing that 18% of gdp.
Each one is an opportunity for improvement: more healthcare value per dollar.
People with no insurance go to the emergency room.
That’s an expensive way to deliver care.
Let’s provide a more efficient delivery model for these people - chip away at that 18% of gdp.
Here’s another economic opportunity;
You can’t do this type of analysis, though, to answer the question under discussion. If you change the health care system, you change all the EO’s. They will adjust their employment terms to reflect the new system. Nearly all of those changes will end up preserving their relative position in terms of which is “better” or “equal” to other options.
That’s the point. If you switch to a national system, you’ll have to fund it with either VAT (or similar consumption tax) and/or a payroll tax (like FICA, paid no matter how small the employer or self-employed). Once you do that, all the EOh and EOu end up maintaining roughly the same level of “better” or “equal” or “worse” relative to each other that they had before. The naming convention and the distinction that caused you to divide them into different sets disappears, but their comparative attractiveness does not change all that much.
The job you decided not to switch to because it didn’t have healthcare becomes the job you decide not to switch to because it pays too much less than your current job. You don’t actually gain many new opportunities that you didn’t have before. They’re all still available to you (you always technically had the ability to make the switch to the job with no health care but couldn’t afford it), but they’re all still undesirable for the same reason (you still can’t afford the switch, because you’ll have to pay for your healthcare through taxes).
Well, that’s all a big speculation.
As things are today, EO is the bigger opportunity set than EOh.
How we can do better, everyone agrees is a challenge, but we should try.
18%
Not really.
Your current job pays you salary X and a health benefit Y. The value of your compensation is X + Y.
Dreamjob pays you salary Z. You can’t afford to switch from a salary of X + Y to only earning Z, because once you pay for health care you don’t have enough money left over for your other needs. You can afford to live on X, but you can’t afford to live on Z - Y (the health care will generally cost about the same in the individual market if you work at Dreamjob).
Switching to a new health care system is unlikely to change this relationship. If it’s paid through a payroll tax, your take home pay at Oldjob remains the same - they pay you X + Y, where the Y is the cost of the payroll tax, and you take home X. But over at Dreamjob, they pay you Z and your take home pay is now Z - Y. Which we’ve established you can’t live on. So you still can’t go to Dreamjob.
The same analysis holds with a VAT. Your Oldjob will pay you X + Y in salary and you’ll pay about Y in higher taxes, so you end up with net pay of X again; meanwhile, Dreamjob pays you Z but you have to pay your health care VAT and end up with Z - Y. Which again you can’t afford to live on, so you can’t switch.
Most of these “I’m kept from switching to a better job” type imaginings involve assuming that health care costs go away in a national system, rather than recognizing that they’ll take the form of unavoidable payroll taxes like FICA (which apply even to self-employed people) or a VAT. Which when implemented will make the “better job” just as unattainable, for most folks, as the current situation.
You are making up specific “eo’s” which may or may not be true, and work for your argument.
But you don’t know the exact makeup of all eo’s now or in any hypothetical future scenario (that you choose to design).
EO is the bigger set. Odds are, in a large country with many varied opportunities, EO will have a higher value job than EOh.
Let’s take one of your chosen hypothetical futures:
Maybe, maybe not.
That’s your guess on a complex future scenario.
Let’s optimize the 18% to deliver higher value per dollar.
More opportunity yields higher value.
That’s fundamental to math and economics.
Just like free trade yields higher total economic output.
Look, we know at least one thing from the initial scenario:
You can afford to work for your current job because health care is paid for, but you cannot switch to DreamJob because you cannot afford to pay for healthcare on that salary.
That last, bolded part does not change if you switch to a national health care system. People sometimes think it does, because they mistakenly think that under a national health care system they won’t have to pay for their health care. But that’s not true. They’ll still have to pay for their healthcare. It will just be paid for through either a payroll tax or a VAT or some combination thereof.
So if you can’t afford to switch jobs under the current system because you can’t make enough money to pay for your own health care, you probably won’t be able to afford to switch jobs under the new system, where you’ll still need to make enough money to pay for the taxes to pay for your own health care.
There’s a lot to unpack there, but it’s an argument that’s been well-trod on these boards already. Suffice it to say I don’t think it’s politically possible to impose the kind of economic pain that “optimizing” the 18% would require under our political system.
Are you of the opinion that we should not try to optimize the 18%?
Of course it does. The 25% of workers would switch to a job they like instead of soldiering on in a job they hate for the health insurance. That would make both them and their former employer more productive.
intercst
Not at all. I’m simply skeptical that the federal government has the capacity to do that. The reason we pay 18% is because we pay 18% - we pay more for our healthcare services. Our prices for healthcare services are vastly higher than in other countries.
But we’re not going to do anything about that, because we haven’t done anything about that. About 55% of our health insurance expenditures are in the public programs, and we haven’t reduced those costs. We spend twice as much as other countries per enrollee in our Medicare system as other countries do on their seniors.
The reason we don’t cut health care spending is because every dollar of healthcare expense is someone’s dollar of income. And reducing people’s income is very unpopular among the people whose income is being reduced. That’s why the Medicare “doc fix” just kept happening, over and over again, until we gave up on restraining that program by limiting our spending. Our system is very good at registering the opinion of small numbers of people who are intensely affected by a potential change.
I think if we had Medicare for All, the special interest group that would form from all of the doctors and nurses and hospitals and other medical providers coming together would be like nothing we’ve ever seen. And it would never let the Congress take an axe to health care spending.
No, it doesn’t. If they can’t switch to the job they like now, they won’t be able to under a system of national health insurance. Because they can’t afford the job they like, and that doesn’t change under a national health insurance system.