Brad DeLong's Semi-Daily Journal: A Weblog

Serious question. Why does every conservative tend to think that markets work in everything? I think the rational actor model fails completely when it comes to health care because virtually no one knows enough to shop around. On what basis do you shop around for a doctor? If I buy a car I'm not happy with I choose a different one next time. The consequences of bad health care are a touch more serious. Some say that if more of the cost of health care is put onto the consumer they'll really understand it and be more careful. Really? Maybe they'll just wait too long and conditions that can be treated for less cost if caught early will only get worse and cost more. And maybe people will die because they waited that little bit too long. It's not like walking the aisles at Wal Mart, folks.

I work for a small company. It's reached the point to where every year there's a search for new insurance. In the end it doesn't matter. The rates from them all are jacked up to the point of unreason. They wanted a 43% increase.

How much overhead is it acceptable to shove onto every physician to process the paperwork that is generated by over 1200 insurance companies? And conservatives decry government bureaucracy? Maybe both a private system like the American one and purely government systems have both failed and we need to move beyond simplistic labels in search of some real solutions.

If you assume that Bush Jr. has a secret socialist agenda, all his actions make sense. Abolishing medical insurance subsidies for middle class people who have medical insurance pushes people into demanding a national health service once they realise that they aren't covered any more.

"Cost shifting: coverage for those who don't have health insurance is ultimately paid for by those who do, causing all kinds of financing and incentive problems. Thus there is very good reason to subsidize coverage to try to minimize the number of uninsured."

So, is the point of economic theory to add another 10 million workers to the number of uninsured? What madness. We can not afford Social Security. We can not afford Medicare. We can not afford Medicaid. We can not afford a tax subsidy for employer supported medical insurance. What are we becoming?

http://www.nytimes.com/2004/12/04/business/04calpers.html?pagewanted=all&position=

One State Talks About Shifting Out of Pensions
By MARY WILLIAMS WALSH

Just days after the president of a huge California pension fund was ousted, some California officials are proposing that the state get out of the pension business and give state and municipal workers a 401(k) plan instead.

Such a move would echo proposals by the Bush administration and some members of Congress to divert a portion of the Social Security payroll tax away from the federal trust fund and into individual savings accounts. Rather than paying retirees a pre-determined benefit based on a common formula, as Social Security now does, the administration is proposing to give workers the opportunity to manage some of their retirement money themselves.

On Monday, Dr. Keith S. Richman, a Republican member of the California Legislature, plans to introduce a bill that would begin the process of closing California's giant public pension funds to new employees, and giving public workers the 401(k) type of benefit in the future.

The bill is certain to run into resistance from the unions that represent various public employees in California and from Democratic politicians, who control both houses of the Legislature. Gov. Arnold Schwarzenegger declined, through a spokesman, to comment on the plan.

Dr. Richman says he is getting support from a number of county and local officials around the state, who are running into serious trouble making their required pension contributions.

'He has a lot of support,' said Chris Norby, an Orange County supervisor and delegate to the California State Association of Counties. 'If it doesn't get through the Legislature, he can put it on the ballot' in a future ballot initiative.

The push to change the way California provides state workers with retirement benefits follows the ouster this week of Sean Harrigan as president of the California Public Employees Retirement System, or Calpers, a $178 billion fund. Mr. Harrigan was removed amid complaints that he had used his position as a big institutional investor to advance causes favorable to organized labor. Mr. Harrigan, who is also a union official, was succeeded by Ron Alvarado, a Republican businessman, on the board of Calpers.

Mr. Alvarado said Thursday that he did not yet have an opinion on the 401(k) proposal. 'It never hurts to look at new ideas,' he said, 'but I have not dug into it sufficiently to make any pronouncement about how I would vote on that.'

The staff of Calpers, apparently seeking to throw cold water on such an idea, distributed data at a briefing yesterday that indicated that 401(k) plans were more profitable for the money managers who handle the accounts than pension funds are. A spokeswoman, Patricia K. Macht, also challenged what she called the 'myth' that the current system pays excessive pensions.

The average Calpers beneficiary retires at age 60, after 22 years of service, with a pension of $1,860 a month, she said. She called traditional pensions an important recruiting tool for cities and the state, which are not able to compete with private-sector employers on the basis of salary.

Thousands of companies in the private sector have replaced their traditional defined-benefit pension plans with 401(k) plans in the last two decades. The trend has drawn criticism from many actuaries and economists, who say pensions are a superior benefit, and from older workers, who tend to appreciate the advantages of pensions more keenly as they approach retirement. Traditional pensions shield retirees from investment risk and eliminate the possibility of outliving one's assets.

California would not be the first state to consider such a change. The state of Nebraska offered public employees the chance to opt out of its pension plan and go into a plan similar to a 401(k) in 1964.

Nebraska later found that from 1970 to 2000 - a period encompassing the longest bull market in history - the typical worker earned just 6 percent to 7 percent a year, on average. The pension plan, meanwhile, returned 11 percent a year. Nebraska is no longer letting new employees into the 401(k) plan because of the results.

Welcome to Bush-enomics and a sychophant media.
Did you expect otherwise after Rather's debacle?

Pensions? We can not afford pensions either, I suppose, at least not in California.

Still struggling with permissions, or is there some other reason why the site seems to flip between this template and the old one every time I visit?

Brad, sure it would be nice if the people who report on economic policy knew something about economics. But, aiming a bit lower, it would be nice if they knew something about how to understand and assess the reasons presented to them for decisions by extending those reasons to other cases and asking about those. For example: Why employer-provided health insurance but not the home mortgage deduction? You need to do this even if you believe that the reasons are well-meant. Even more so if there's any reason to believe they may not be.

I recall that one of the selling points of the 'ownership' of health care insurance was that individuals would be in the position to 'bargain' with health care providers for the best price.

Last year when I was laid off, I broke a tooth and needed to get it fixed. Calling the dental office that had treated me for 5 years I was in for quite a shock. When I told them that I was no longer covered by the not-all-that-generous plan I had been -- due to the lay off -- and inquired what the costs might be. I was somewhat rudely told that I'd have to prepay $250.00; (cash or credit card only, no checks) before the dentist would even see me, and that the cost of a diagnostic exam would be $100.00 and x-rays would be $150.00. There would be no treatment but I would be given a 'treatment plan'. All further treatment would also have to be prepaid (again in cash or credit card only). There was no bargaining, just a take it or leave it. I said no thanks and hung up. Calling around to a few other dental offices I was given the same story, pre-pay what ever they want before anyone will see you.

Talking with friends about this it seems that this is the standard policy for doctors and dentists when you don’t have insurance. I guess that is the benefit of ownership.

A few weeks later I got a cheery postcard reminding me that I was due for my semi-annual cleaning and check up to "keep your smile bright!" and to call to book an appointment. Apparently, the office computer hadn't been told I no longer had insurance.

The Economic Report of the President argues, by the by, that a majority of uninsured persons are uninsured by *choice* -- either they have enough income to participate, but don't; were offered insurance through their employer, but declined; are young and healthy, and thus don't think they need insurance; or are citizens of other nations. (Why this last is germane is unclear, and citations were not provided in the copy I looked at.)

Needless to say, the report offers no proposals for reducing the actual cost of health care provision other than tort damages caps and the old "use of information technology" chimera. So, basically, their proposals come down to this: you'll pay for insurance out of pocket; the insurance will have higher deductibles; you'll get a tax credit to help pay for insurance (which is of debatable use to the low-income workers who need it); and your premiums will be deductible for tax purposes (see above caveat).

To summarize: more of your income will go to insurance costs and you'll pay for your doctor visits and tests out of pocket, but high-income earners will pay less tax. Hey, it's a floor topping *and* a dessert wax!

(Now, will someone tell me why line breaks don't work with the new MT install?)

Given that less and less people have been covered under employer provided health plans; and that those who are covered keep having a greater and greater portion of costs shifted to them as costs rise; and that costs have demonstrably risen faster when we've had a Republican as President than when we've had a Democrat as President.

Given those things, I can't see how anyone could argue that health care costs are spiraling out of control BECAUSE OF government subsidized employer sponsored health plans.

Why has this idea come up now? Is it a red herring, just sent up to suggest that the Bush White House is serious about deficit reduction? Is it an effort to shift the mentality that health care should be a basic right provided to all? Have conservative business leaders decided to bail out of health care given the continually rising costs, which they can't shift all of to employees?

"Why does every conservative tend to think that markets work in everything?"

Because they benefit from market monopolization. The least of their concerns is efficiency. They care about profit maximizing, industry consolidation, and rent seeking- which is all rational, of course, because they are the prime beneficiaries.

I'm as much of an economics fan as anyone. Or at least I'm a pretty big economics, fan, but I don't think we should be governed by economics textbooks. Granted, Mankiw's claim to be giving us a "textbook" proposal is wrong, but if it were true, I don't know how much credibility that would be in my eyes.

... the deduction unfairly subsidizes employees of some companies while encouraging overly generous health policies that focus on routine medical care.

In addition to all the problems Brad had discussed, The key problem I have with this is how they talk about 'routine medical care' like it's a bad thing.

Why wouldn't you want to subsidise primary healthcare? Prevention is the best cure. It is in fact much cheaper to buy routine healthcare and make sure your population is healthy (whereas in self-insured case, there's a strong possibility of adverse selection). Much cheaper than not providing routine medical care and wait for minor problems to become catasrophic. For example, my company provides subsidised gym membership and annual checkups as an integral part of the health insurance, in order to lower their overall medical bill. Believe me, the company has done their maths (Coase Theorem), unlike this clown show.

And how about this line? "I can say without equivocation: This president has been pretty heavily influenced by economic theory," said R. Glenn Hubbard.

And which economic theory is that, Glenn?

Social SECURITY. Where is the SECURITY of investing in LARGE corporations through a 401k. Bush is all about big business, he WANTS you to invest your money in big Corporations.

Put aside the fact that the WaPo reporter doesn't understand micro principles. What's really galling too is the anti-intellectual tone of the whole article. "Bush administration pursues egg-headed theories; sensible people disregard theory and focus only on empirical evidence." So what's with Peter Diamond lending credibility to this piece? And shouldn't the WP have given some equal time to somebody at Chicago, who would've said something intelligent, rather than the guy from AEI who got a paragraph to say something dumb at the end?

Americans with insurance have decided back in 1995 to let those without insurance die. This group choice was done very cynically after seeing the Harry and Louise ads that showed the insured people having fewer "choices" if we gave the uninsured help.

Ie: pure, simple, self centered greed.

Now the bats will come home to roost.

Dear Brad,

The Blog problems are being corrected, but we can no longer open a window to post and read a comment in a conversation. This will tie us up while we work, unlike the comment window we previously had. The posts take several minutes to clear and until the posts clear we can not work elsewhere. Thanks for all you do, even the experiments :)

Anne

"encouraging overly generous health policies that focus on routine medical care...."

Well, obviously, one of the major things wrong with the present state of affairs in this country is that we give the peons too much medical care--it only encourages them to get sick . . .

Um, Brad... the problem here isn't just the ignorance of WaPo reporter Weisman, it's also the bullshit of economist Mankiw. While he is a Bush admin flunky for a few more days, his day job is as one of your colleagues in academia. Criticize Weisman for not calling him on his bullshit, but make sure to criticize Mankiw for the bullshit in question.

"If you assume that Bush Jr. has a secret socialist agenda, all his actions make sense. Abolishing medical insurance subsidies for middle class people who have medical insurance pushes people into demanding a national health service once they realise that they aren't covered any more."

Question,

Is the proposal to eliminate tax deducations on employer provided insurance going to be coupled with expanded provisions to allow individual tax deducations on privately purchased insurance plans? I didn't think so.

Slightly OT, but I'd love for someone to explain how economics would adequately account for the environmental/exposure causes of health problems.

As a personal example, my family has had 3 cases of cancer (all at a relatively young age) and one case of Parkinsons. Only the Parkinsons has another apparent risk factor connected to something we did--it is incredibly likely that IBM's dumping and/or computers caused the three cancers (they fit IBM's cluster, too).

IBM did pay part of the first cancer as retiree benefits (although American Express paid the bulk). GE and an auto supplier paid the costs of the other two cancers. Under Bush's ideal world, we would pay the costs of all those cancers.

Now it seems to me, in the current system you have a transfer of payment from one corporation to another of the health problems its business practices caused. I assume this transfer (which is a natural byproduct of the job fluidity in this day and age) disincents corporations from following safe business practices. But if individuals have to pay these costs (or the cost of a refinery polluting nearby, or the cost of a factory releasing chemicals into the drinking water), then aren't you shifting all responsibility for the business practices of corporations onto individuals?

As the owner of a small business that employees
10 people earning between 25 and 50k per year I provide health insurance for my employees. If the tax deductability is dropped so will the insurance be. I will have no choice since at that point it becomes a matter of survival. Most of those employees will simply go without because they cannot afford the 350 to 500 per month to pay for the insurance. In the end they will become ill and recieve treatment at the public's expense.

Just another fine example of the utter stupidity
of this administration.

"If you assume that Bush Jr. has a secret socialist agenda, all his actions make sense. Abolishing medical insurance subsidies for middle class people who have medical insurance pushes people into demanding a national health service once they realise that they aren't covered any more."

By this logic, there are no capitalist agendas. Every actions is interpretable as either overtly socialist or "secretly" socialist.

Reverse the reasoning, and there are no socialist agendas, either.

DB.

http://www.nytimes.com/2004/11/20/national/20tennessee.html?

Once a Model, a Health Plan Is Endangered
By RICK LYMAN

NASHVILLE - A decade after Tennessee inaugurated a health care plan for the state's most vulnerable residents that was hailed as a model for the nation, the program is once more being held up as a model - of failure in an era of soaring medical costs and voters' aversion to higher taxes.

Today the plan, TennCare, which sought to improve health care for Medicaid recipients while covering those who fall through the federal program's cracks, is on the ropes.

Gov. Phil Bredesen, a conservative Democrat and former health maintenance organization entrepreneur, has threatened the program with extinction, saying that rising costs and generous benefits - TennCare consumes nearly a third of the state's $25 billion budget - make it unaffordable unless it can be radically restructured to save money and limit benefits.

In the coming year alone, the program faces a potential deficit of $650 million.

After more than a week of tense negotiations between the governor and advocates for TennCare's 1.3 million users - nearly a quarter of the state's population, including an estimated 430,000 who would not be covered by Medicaid if TennCare disappeared - the two sides decided to 'step back from the brink,' as Mr. Bredesen put it.

'Before I go down the road of taking 430,000 people off the rolls - more specifically, before I can face even one of them, individually, and tell them that it is over, that I can no longer help - I need to be clear in my own heart that I've done everything that I know how to do to solve this,' the governor said.

Rather than immediately kill TennCare, as he was poised to do, the governor agreed on Wednesday to one more round of talks after Thanksgiving, though he said saving the program was still a long shot.

In the meantime, TennCare's precarious future leaves those who depend on the program in a state of vigilance and dread.

'In this country, rich as it is, people shouldn't have to choose whether their child will live or die,' said Angela Ray, the mother of a severely ill 12-year-old girl in Lawrenceburg. 'It's amazing to me that it's come down to this.'

Her daughter, Jasmine, must take 20 extremely expensive medications every day to control the rare stew of chronic diseases, including Elephant Man Syndrome, that make it impossible for her to run and play. There are no doctors in Tennessee who can treat her, so her parents must frequently drive her to Birmingham, Ala., for care.

Soon, she may lose that care - out-of-state trips are covered by TennCare, but not by Medicaid - and possibly, her life.

Why should health care be singled out as different from other parts of employee compensation?
The question to ask every proponent of this is the next step to deny that all wages are a cost of doing business. If a firm decides to pay part of its employee compensation in the form of health insurance how can any true conserative
claim that it is the proper role of the government to deny the firm that alternative?

The free market came up with this structure,
why do they think their solution is better than
the free market solution. They will answer that it was govt regulation that created the structure, but all govt did was treat health insurance as just another form of employee compensation that was a cost of doing business.

Inept jurors and journalists = liars heaven.

1. Even if cost-sharing is good, couldn't Uncle Sam get more bang for his buck with a different method of subsidizing Americans' health care than the current one? Why only help people who are lucky and/or skilled to have a steady job?

2. How does adverse selection apply? How does knowing that 100 people work for IBM let you "manage the risk" of their healthcare better than if you don't know that?

3. Moral hazard. The current system makes it very hard for patients to see that they bear the cost of health care. Isn't this a better argument for eliminating the tax deduction?

4. Coase theorem doesn't apply - nobody would argue that the current system represents the informed mindful negotiation between employers and employees.

5. Transaction costs. Yup - transaction costs favor the status quo.

The reason you came to a different conclusion from Jonathan Weisman is not that he was snookered and you're not. The reason is that it is possible to pick and choose aspects of economic "theory" to support almost any policy decision you want.

Employers provide compensation partly in cash and partly in the form of health care. Doesn't economic theory say that fungible goods (like money) are the preferred form of compensation unless there is an extremely compelling reason for doing otherwise?

In the current system, the Federal government gives a subsidy to people who are relatively successful (have a steady job). Wouldn't the economic principle of DIMINISHING MARGINAL UTILITY suggest subsidies should help those who are relatively worse off?

Jim S: My hypothesis is that based on the findings of early economists and philosophers about how many groups dynamics are seemingly beyond the "direct" control of the individuals involved, broadly appealing ideologies formed around the concept of "letting things go" (laissez-faire in French) as an antidote to ever-present corruption and favor-dealing.

This was then bastardized into "if you want it to work, make it a market" as certain interest groups benefit from being the middlemen or secret riggers in said markets.

But then maybe this presentation is too charitable, and the formation of these ideologies was even more directly and purposely driven by those interest groups.

Dear Brad,

The problem with the comment system is the delays in posting tie up your computer, and make it impossible to have a conversation emerge as before. Of course, you know all this but I do miss the flow of comments for these are times of importance and yours is the finest Blog of all. "HELP."

Lise

Middle class pension and health care benefits are being attacked. The media portray the idea that we can really afford neither pensions nor health care benefits. So we find a growing consensus that Social Security benefits will have to be cut for the baby boomers, though the baby boomers have been paying to support grandparents and parents and themselves for 22 years. Not only can Social Security supposedly not be sustained, but pension obligations and risks must be shifted from business and public institutions to households. And health care benefits? Well, health care benefits are just too costly and must be called to question and curtailed for millions of workers for whom the loss of or rising cost of such benefits can be devastating.

This is economic theory? Duh.

“As the owner of a small business that employees
10 people earning between 25 and 50k per year I provide health insurance for my employees. If the tax deductability [sic] is dropped so will the insurance be.”

Why don’t you simply pass through the extra cost as an increase in your employee’s premiums? Lets say you pay $600 per month per employee and the employees now pay (say) $100 per month as co-pay. So if you lose the tax deduction as a business expense and you are in the 20% tax bracket then you can pass the $100 you lose to the employees. They can shelter their insurance premiums so they will pay something like $80 per month extra. Don’t you think that your employees would rather pay $80 to keep their insurance?

I have to wonder, why are so many people keen on the idea of Health Savings Accounts? Isn't the whole idea behind insurance to share the risk? Perhaps there's some way that they would deal with adverse selection over time, but maybe not. And even if it did, how much pain and suffering would happen, and for how long would it continue?

Weisman just needs to get an opposing point of view. After all, if there is so much pressure to try and be balanced in the media, why not actually do it?

Dear dear Brad,

The conversation is so missed. Technology is having it revenge on us, I guess. Oh dear.

I worry about conflicts between point 4 (Coase) on one hand, and 1 (cut down on the uninsured) and 5 (transaction costs) on the other.

1 and 4 are only in conflict if it is also assumed that simply letting people who cannot pay suffer and die is unacceptable. I don't think GWB makes this assumption, and I know, from their public statements, that Heratige/Cato don't. I admit that leaving people to die makes me squeamish, even if I assume it will never be me. I do not so assume.

As to 1 and 5, contracts are made within an institutional structure. Move to single-payer, for instance, and the contracts will change. Churning coverage is rational for the individuals who do it (not necessarily for the entities they represent) within the current system.

On a related topic, the whole "Medicaid is unaffordable" refrain simply avoids the question of "If medicaid dosen't pay, who will."
Absent an answer, we're back to dying cheaply.

In theory there is some room for maneuver in the waste we have now. In practice, I think it's politically impossible for anything real to happen in the short term.

Finally, point 2 (adverse selection) is not getting enough attention here. It essentially kills the alternative of paying people more, eliminating the health care tax break, and letting people buy their own insurance. Mr. Mankiw knows this perfectly well, of course, but it makes a poor sound byte, so the administration isn't worried about it. Our host has wondered what motivates smart people to allow their names to be put on things like this. I wish I knew.

... Tennessee’s tax burden [is] among the lowest ... [at about] 8.5% of income, ... 47th nationally,

http://www.taxfoundation.org/tennessee/statelocal-tn.html

... yearly individual income tax [collections are] $35 per person ...

http://www.taxfoundation.org/individualincometaxrates.html

... corporate tax [is] flat rate of 6.5% ... 10th lowest.

http://www.taxfoundation.org/corporateincometaxrates.html

... 6% general sales or use tax [is] above the national median of 5%. ...

http://www.taxfoundation.org/variousrates.html

Deb Frisch wrote, "Why only help people who are lucky and/or skilled to have a steady job?"

I agree. The current system is nutty in that sense: in aggregate, the system helps the people less likely to need it.

"How does adverse selection apply? How does knowing that 100 people work for IBM let you 'manage the risk' of their healthcare better than if you don't know that?"

Because the larger the groups that get insured, the harder it is for healthy individuals to self-select out of the insurance pool.

Of course, nationalized health insurance is the best in this sense---no one can select out.

lise wrote, "The problem with the comment system is the delays in posting tie up your computer, and make it impossible to have a conversation emerge as before."

The way I deal with this is to open up an additional copy of the page.

Of course, it does make me wonder what's wrong with Movable Type. I've seen this same problem on other MT 'blogs, some of which have much lower traffic than BDL'S SDJ, so it can't be just a traffic issue.

New problem: I can't create blank lines. So everything I type is running into one big long paragraph, making things harder to read.

Notice that when a sound economic theorist is needed you can count on Kevin "Dow 36,000" Hassett for a source, especially if that includes laughing at liberal economists who are still waiting for Dow 12,000.

Anne (et al),

A temp work around until Brad works out the kinks: Right click on "Comments" and select "Open In New Window" and post comments from there.

“On what basis do you shop around for a doctor?”

To some extent you can shop for a doctor unless you live in a poorly served rural area. I agree that the medical system has a long way to go before it achieves a reasonable amount of transparency, but you can shop around. The problem seems to be that a lot of people for some reason are afraid to dump a doctor that performs poorly for them. A lot of people seem to get intimidated by doctors. If you can get over these hang ups you can shop around. If you need some kind of surgery get several opinions from people in big med centers like UCLA, The Cleveland Clinic, The Mayo Clinic, Johns Hopkins etc. Insist on getting your questions answered, and get educate yourself before you go. And yes you can factor in price. For example Mayo Clinic seems a lot cheaper than Stanford. Look for mistakes. For example if you are getting a blood test that requires fasting, make sure at least two people asked you if you fasted. If not then their quality control is poor. For example I had a lipid panel workup at California Pacific Medical Center and no asked if I fasted. I asked the technician before she drew the blood, “aren’t
t you going to ask me if a fasted?” Passing the buck, she blamed the front desk for not asking. I’m taking my business elsewhere.

Dubblblind

I love you :)

I that that economic theory (or maybe just economics) has some interesting things to say about health care. See my last column:

November 18, 2004
ECONOMIC SCENE
Competition and Incentives May Help Control Health Care Costs
By HAL R. VARIAN

HEALTH care just keeps getting more expensive. According to the Stanford economist Victor R. Fuchs, health care expenditures by the elderly are growing 2 to 3 percent more rapidly than their spending on other goods. If this trend continues, by 2020 health spending by or on behalf of the elderly will exceed their spending on all other goods and services.

As the economist Herbert Stein cogently put it, "If something cannot go on forever, it will stop." What can be done to stop, or at least slow, the rapid growth in health care spending?

It has been argued, with considerable justification, that a significant part of the increase in health care expense is a result of improved quality. The real issue is not simply reducing spending on health care, but reducing it while still maintaining an appropriate quality.

Economists have two magic potions to control prices and improve quality: competition and incentives. How can these elixirs be best administered to the health care industry?

This question has preoccupied the Stanford economist Alain C. Enthoven for decades. In a recent book that he edited with Laura A. Tollen, "Toward a 21st Century Health System" (Jossey-Bass, 2004), he provides an outline of an answer.

Start with competition. For better or worse, most Americans receive health care benefits through their employers. The problem is that employers do not have much incentive to offer their employees choice in health care plans.

Offering three or four health care plans imposes administrative burdens on employers. A large employer might be able to handle these extra administrative costs, but small employers find it more economical to offer a single plan. In 1997, only 23 percent of insured employees were offered a choice of plans.

But competition cannot be effective unless there is choice of competing providers. What policies could be used to offer more choice?

What is needed is experimentation with, and competition among, different ways of delivering health care: prepaid group practices, health maintenance organizations, traditional preferred providers, and other ways not yet thought of. The key is to give consumers a choice among different delivery systems, not just minor variations on a single theme.

Mr. Enthoven argues that the most promising solution is a health care "exchange" like the California Public Employees' Retirement System, or Calpers. Calpers arranges coverage for over 1.3 million public employees, retirees and dependents for 2,400 different employers in California.

Such exchanges standardize business rules, facilitate comparisons among plans, and expedite enrollment decisions, billings and payments. BENU Washington is a new exchange aimed at companies with 100 to 1,000 employees, allowing these relatively small companies to offer a much wider range of plans.

Such exchanges could help businesses control the administrative costs of offering a number of health care plans. But there is still the issue of providing appropriate incentives to the individuals who must choose the plan most suited to their needs.

To provide the right incentives, individuals who choose the low-cost plans should be able to capture most of the benefits from such choices. Otherwise, they would have no incentive to economize.

Current practices offer perverse incentives. Employers often cover some fixed fraction of the cost of each plan. As Mr. Enthoven points out, "If the employer pays 80 percent of the premium, no matter the cost, the employee only keeps 20 percent of the possible savings from choosing an economical plan."

Mr. Enthoven argues that it would be better to have the employer cover the entire cost of the low-price plan, and let the employees who choose higher-priced plans cover the additional costs themselves.

Now that it is possible for employees to pay health care costs using pretax dollars, there are no adverse tax consequences to such an arrangement.

Plans of this sort are offered by Calpers, Stanford University and other employers. In many cases employees choose the less-costly options and capture the savings from doing so. But nationwide fewer than 5 percent of insured workers are offered both choice and the ability to retain savings from economical choices.

More choice and better incentives should help control health care expenses. But offering more choice in plans is not entirely risk-free.

One problem that providers face is what economists call "adverse selection." This means that workers who need more-expensive health care because of existing conditions will want to choose more comprehensive plans. This leads to higher costs for such plans, making the premiums even more expensive.

Mr. Enthoven advocates "risk adjustment" to control for adverse selection. This is a type of statistical procedure that estimates the likely cost of subscribers based on age, location, sex and so on, allowing insurers to predict the cost of those who sign up. Premiums can then be adjusted to reflect actual costs related to different health risks associated with different populations.

Such a system is not perfect - there are certainly incentives for insurers to exaggerate the likely costs. Presumably some oversight would be required to make such a system work. The current system certainly has its share of such problems as well, so this should not be a decisive factor.

Mr. Enthoven is a big fan of prepaid group practices like Kaiser Permanente. Such organizations offer both health care services (doctors, clinicians, labs and hospitals) and insurance services (financing, benefit plans and customer services) in one package. Prepaid group practices are well established on the West Coast, and in certain other areas, but there are many regions of the country where they are simply not available.

One attraction of providing more choice, and better incentives, is that it would reduce entry costs for new providers like prepaid practices.

The start-up costs for such plans easily exceed $100 million. It can take years to develop a strong reputation among doctors and potential subscribers. Yet once such reputations have been developed in a region, prepaid group practices have created large and loyal followings. Indeed, many health economists view such plans as providing models for cost-effective health care.

But regardless of how one feels about these plans, it seems clear that more choice, more competition and stronger incentives would be good medicine for the health care industry.

I am not sure I understand the complete financial impact of eliminating the employer's deduction for health benefits, but the result seems to me less people with health insurance, a reduced number of informed insured's, and the likelihood that those with chronic ailments will be less likely to obtain coverage.

Is anyone going to just come out and state the obvious? This is transparent class warfare, specifically designed to privitize risks onto the middle class and working poor while the socialization of risks for the socially powerful continues unabated.

Individualizing risk makes for great labour discipline.

I think that would be control click on a Mac.

Another problem with the current system is that it fails to fully allow for the new employment paradigm wherein changing jobs and careers is expected.

November 1, 2004

States Are Battling Against Wal-Mart Over Health Care
By REED ABELSON

In the national debate over what to do about the growing number of working people with little or no health insurance, no other company may be taking more heat than the country's largest employer, Wal-Mart Stores.

The company, despite its popularity with consumers, has grown accustomed to being accused of crushing Main Street merchants with its sprawling stores and low prices and of driving down wages for workers across the retail industry. And more than a million former and current female Wal-Mart employees are part of a sex discrimination lawsuit that the company is fighting.

Now, Wal-Mart finds itself under attack for what critics see as its miserly approach to employee health care, which they say is forcing too many of its workers and their families into state insurance programs or making them rely on charity care by hospitals.

Wal-Mart vigorously defends its health care policies, saying it offers affordable coverage for all employees.

The company says it has no way of knowing how many of its employees, whom it calls associates, or their families are insured under state programs. The larger issue of whether companies can and should absorb the soaring cost of health care is a national issue, said Susan Chambers, the executive vice president who oversees benefits at Wal-Mart. "You can't solve it for the 1.2 million associates if you can't solve it for the country.''

A survey by Georgia officials found that more than 10,000 children of Wal-Mart employees were in the state's health program for children at an annual cost of nearly $10 million to taxpayers. A North Carolina hospital found that 31 percent of 1,900 patients who described themselves as Wal-Mart employees were on Medicaid, while an additional 16 percent had no insurance at all.

And backers of a measure that will be on California's ballot tomorrow, which would force big employers like Wal-Mart to either provide affordable health insurance to their workers or pay into a state insurance pool, say Wal-Mart employees without company insurance are costing California's state health care programs an estimated $32 million a year.

Meanwhile, in Washington State, where the insurance commissioner is pushing the legislature to adopt a law similar to the one on the California ballot, companies that struggle to compete with Wal-Mart while insuring most of their own workers have become openly critical.

"Socially, we're engaged in a race to the bottom," said Craig Cole, the chief executive of Brown & Cole Stores, a supermarket chain that employs about 2,000 workers in Washington and adjoining states and pays for insurance coverage for about 95 percent of its employees. "Do we want to allow competition based on exploitation of the work force?" he asked.

http://www.nytimes.com/2004/11/01/business/01health.html?ex=1103288935&ei=1&en=38301a54a7105645

Note:

California voters defeated the proposed law that would have required employers of more than 200 to provide health care coverage to the workers.

Great explanation except for the cost shifting deal is backwards. Those who don't have insurance pay for the discounts that insurance gets.

Here's a proposal: Nobody gets a discount. Everybody pays the same price. Why do the large an wealthy pay less than the small and not wealthy?

Employer-provided health plans do not place as much emphasis on preventive care (at least for adults) as the Washington Post suggests. Many private employers cover only $250 of the cost of a routine physical. It is true that many employer-provided health plans provide "well-child care," including routine vaccinations.

However, if the Bush Administration wants to try an experiment, let them start with doing this for White House employees, including President Bush and Vice President Cheney, say for the next four years. Let's see if White House economists do a good job of shopping for their medical care before we try this on a broader level.

“As the owner of a small business that employees
10 people earning between 25 and 50k per year I provide health insurance for my employees. If the tax deductability [sic] is dropped so will the insurance be.”

If you drop the cost of insurance because it is not deductable, will you increase salaries which continue to be deductable to allow your employees to buy their own health insurance?

I think Lorenzo nailed it:

"Is anyone going to just come out and state the obvious? This is transparent class warfare, specifically designed to privitize risks onto the middle class and working poor while the socialization of risks for the socially powerful continues unabated.

Individualizing risk makes for great labour discipline."

Posted by: Lorenzo at December 5, 2004 02:32 PM

http://www.nytimes.com/2004/11/01/business/01health.html

Wal-Mart has...been running a television ad nationally that features a Wal-Mart worker whose company health insurance covered his toddler son's treatments for life-threatening liver disease. "Without Wal-Mart,'' the father says, "I don't know that he would have made it."

But critics say the reality for too many Wal-Mart workers and their families is no insurance - either because they are unable to meet the company's eligibility requirements or because they cannot afford monthly premiums as high as $264 a month for family coverage on an $8-an-hour cashier's wage. Wal-Mart says its employees make $10 an hour on average.

Countering Wal-Mart's television ad, a California group...has begun publicizing the case of a former Wal-Mart employee, Marco Guillen, who says he twice missed the company's annual enrollment deadline for health insurance. The first time, he said, was because he was confused about his eligibility. The second time, he said, was because he was in a coma after being in a car accident. His medical bills were about $1 million, he said, and were paid by the state's Medi-Cal version of Medicaid.

Wal-Mart declined to discuss the specifics of the case, saying that doing so would violate Mr. Guillen's rights under the federal laws governing patient privacy.

The company says it spent about $1.3 billion of its $256 billion in revenue last year on employee health care to insure about 537,000 people, or about 45 percent of its work force. Wal-Mart says that 23 percent of its employees are not eligible for coverage, but that it covers 58 percent of those who are.

That compares with an insured rate of 96 percent of eligible full-time or part-time employees of Costco Wholesale, the discount retailer that is Wal-Mart's closest competitor nationwide. Costco employees - most of whom are not represented by a union - become eligible for health insurance after three months working full time, or six months part time.

At Wal-Mart, which has no union employees, many who work full time must wait six months to become eligible. Part-time workers are not eligible for at least two years. Because of turnover, some employees never work long enough to become eligible.

If there is any place where Wal-Mart's labor costs find support, it is Wall Street, where Costco has taken a drubbing from analysts who say its labor costs are too high. Costco's pretax profit margin is only 2.7 percent of revenue, less than half Wal-Mart's margin of 5.5 percent.

Wal-Mart now asks employees to pay 33 percent of the company's cost of providing insurance, but says it plans to reduce that to 30 percent. So far, Costco has resisted pressure to increase employees' share of health care premiums beyond a planned target of 8 percent in 2007, reasoning that too many of their workers would be forced to drop coverage.

"From the very beginning of time, the founders here felt you have to pay a living wage and provide benefits," said Richard Galanti, the chief financial officer of Costco, which is based in Issaquah, Wash.

Wal-Mart finds itself up against a national tradition of providing health insurance to workers that took root during World War II, when wages were frozen and many companies offered health benefits in lieu of higher pay. After the war, unions at many big manufacturers also demanded generous benefits, and workers of all stripes throughout corporate America came to expect health insurance as a right of employment.

But in recent years, as global competition has become more intense, as organized labor has lost some of its clout and as medical costs have spiraled upward, employers have become increasingly unwilling to shoulder the cost of coverage. In 1987, only a quarter of the people working for large companies did not have insurance. By 2001, that figure had increased to about a third, according to a recent study by the Commonwealth Fund, a New York nonprofit group dedicated to health care research. Industry experts assume the percentage of working uninsured has continued to grow.

Other data indicate that of the 45 million people without health insurance in this country, nearly 70 percent are working full time or are the dependents of full-time workers.

"Because the larger the groups that get insured, the harder it is for healthy individuals to self-select out of the insurance pool.

Of course, nationalized health insurance is the best in this sense---no one can select out."

... and why is this a good thing?

Jim S,

As I am watching "Arrested Development," I am reading over the comments others made.

You raise an interesting point. I've got a lot more to learn about health care economics, but when Brad said that this is an area where the free market doesn't work that well, it looks as if he hit the nail on the head. I've read and thought about this, and the more I do, the more fustrated I become.

But your point about conservatives is missing something. If I understand most of them correctly - and I think I do - it's not that they think the market works without any problems. It's that they usually think the proposed solutions, which usually involve government intervention, can make the situation worse.

I'm no authority on the matter, but even I, someone who believes there is a case for government intervention in significant ways, acknowledge that government has to be very careful when making policy. But I am sure you can agree with that, too.

http://www.nytimes.com/2004/11/01/business/01health.html

Although Wal-Mart officials flatly deny it, some Wal-Mart employees say they are encouraged to turn to public health care assistance. When Wal-Mart hired Samantha Caizza, a single mother of three, as a cashier at its Chehalis, Wash., store last November, she says she was told by a personnel manager "to get ahold of the state" for coverage for her children.

Unlike many Wal-Mart workers, Ms. Caizza was willing to talk to a reporter about her experience because she was fired in June - for reasons she said had to do with union organizing activities. Wal-Mart said it could not comment on her case.

The company hands out instructions to its employees to help them to apply to social service agencies, which Wal-Mart says is simply part of the service they provide employees who need to have their income verified for any number of reasons.

Many employees say they simply cannot afford the health plans being offered. Ms. Caizza, for example, worked about 32 hours a week, making $8 an hour. Full-time employees make about $1,200 a month on those wages, meaning the $133 to $264 they are asked to pay for family coverage may not be within their reach. And even the cheapest plans come with a hefty out-of-pocket price for employees, where they may be on the hook for as much as $13,000 in medical costs for their families.

"While I was working there, I couldn't afford it for my children," said Beverly Winston, another former employee, who says she turned to state-subsidized coverage for her children while working at Wal-Mart in Renton, Wash., in the late 1990's. Ms. Winston is among the group of women around the nation now suing the company for sex discrimination.

Interestingly, a friend of mine is an upper manager in a multimedia software firm that is seriously considering moving to Canada (probably Alberta) because they're tired of "being in the health care business" (as he puts it), doling out huge sums of time and money to insurance companies, lawyers, and HR people - all at the expense of their core business. Its ironic of course that businesses would consider moving to a country with socialized medicine, but it makes a great deal of sense with respect to the bottom line. Canada has plenty of highly skilled designers and programmers, the same rate of corporate taxes as America (in addition to allowing its private sector to do what they do, rather than requiring them to be in the health care business in addition to what they do), and a government who isn't constantly demagoging them (their primary product is video games.)

liberal: I'm not exactly sure which method of comment entry you use. As Dubblblind suggests, I'm opening comments in a separate tab/window. I also see a long paragraph in the preview, but it comes out OK when submitted. That is, in the window where you type the paragraphs show, not in the preview, but in the final post.

anne, lise: I'm not sure exactly what you are referring to by "the conversation is missed". Do I figure correctly you mean the "review" delay until comments show up (in which case I agree)?

Perhaps when Mankiw refers to something being a "textbook" argument he's not referring to textbooks in general, just his own (poorly written) textbook.

It might be helpful to discuss these various proposals to change the tax system with all the other "suggested" changes, including eliminating the state and local tax deductions, health care savings accounts, a national sales tax and a value-added tax. Something tells me that almost nothing good will come of this "reform". Just look at the "reform" done to Medicare that these guys think was such a good idea. They even had to lie about the actual cost in order to get it passed.

mike: Well, while what is a good thing or not is often in the eye of the beholder, you may think you are a healthy specimen, but the shit can hit you as well. It just takes a small accident, some ongoing low-intensity substance or radiation exposure that you are not aware of right now (are you driving or walking on roads? what about exhaust fumes?), or just bad luck. You may have less control over your health in let's say 10-20 years than you think. Now you don't want to contribute to paing the bills of others, who is going to pay yours should you get sick?

But then, maybe your jurisdiction or mortgage lender don't require fire insurance, and you think your house won't burn and you don't carry one. Let those suckers pay who can't keep their house from catching fire.

It's one of those things where, just to illustrate the general idea, with 90% likelihood you save $50K over some period, and with 10% likelihood you're on the hook for a half-million.

Thanks, Lorenzo.

Yes, the conversation is much delayed by the lag in posting time which can be hours long. This is a difficult issue for Brad, for the website must be protected against malicious comments. Alas, all will be well. At least I now know how to post in a window. Thanks for all the technical advice.

Checking in once again from one of the more naïve sub-sectors of the Gamma Quadrant, should not physical and mental health considered a public good like clean air and clean water? Does not the entire population benefit from every single individual's being (basically) healthy? Applying market logic to the dispensation of health care implies choice and tradeoffs—but to my knowledge no one can choose illness, not of free will at least. Would not mandating coverage for everyone compel a search for cost savings and elimination of stupid wastage among health providers as clean water and clean air legislation has among polluters?

Now in line with the plans the Administration is making for the air, the water and the land of America, I believe...oh wait..hmmm..oh dear me..nevermind.

This is all part of the bush* plan to "save" social security.

Too many people are living too long. OK, cut health care. Let's start with this flu vacine,the young ones that are useful will survive OK and we can always get our shots. Now we eliminate health insurance. Oh yeah, let's have a war, it'll distract them and get rid of abunch of them too. We can even make a lot of money on that too.

I agree with REA. We can't expect reporters to debate economists on economic theory. Thats the job of folks like Brad. I noticed that Brad passed up the opportunity to attack Mankiw's exploitation of economic theory to defend the adminstration's policies. Instead he chose to show how much smarter he was than the Post reporter. I don't expect Brad to take on Mankiw even though Mankiw has been more of a seller of Bush's policies than a contributor. The reason, unfortunately, is that Mankiw is a higly respected economist who probably used very sound economic reasoning to defend his position. Brad does not want to attack economic theory. He wants to show that economic theory can be used to arrive at alternative conclusions.

mike wrote, " 'Of course, nationalized health insurance is the best in this sense---no one can select out.' ... and why is this a good thing?"

If you have to ask that question, you don't understand insurance, adverse selection, "death spirals," etc.

The one theory that you use to say that there is a justification for removing the tax deduction is moral hazard. Under this theory, doctors have an incentive to overtreat as they know the insurance company will pick up the tab.

But much of the moral hazard has already been engineered out by the insurers. A recent study I did for the Navy (which has a medical system with NO COPAYS and is generous to the point of being silly) showed that small increases in copays actually has a large effect of changing PATIENT behavior (they start to balk at so many tests and prescriptions). Add that to the insurers already monitoring doctor activities via referals, formularies, etc. and I think the moral hazard issue becomes minimal to say the least.

What a shame we have an administration that is this bad. And shame on Mankiw for not knowing better.

http://www.nytimes.com/2004/12/06/business/businessspecial2/06universal.html?pagewanted=all&position=

The Disparate Consensus on Health Care for All
By STEVE LOHR

IN Washington, the phrase "universal coverage" is rarely mentioned as the way to provide health insurance for the 45 million uninsured Americans. It evokes memories of the Clinton administration's sobering failure to forge a national health care plan. Yet among health care experts there is a surprising consensus that the United States must inevitably adopt some kind of universal coverage.

"Politically, it's like the electrified third rail on the subway - no one wants to touch it," said Margaret O'Kane, president of the National Committee on Quality Assurance, an independent group that seeks to improve the quality of health care.

But health care experts contend that the issue must be addressed. Their policy proposals vary widely, and the proponents of universal coverage are as different as Dr. William W. McGuire, chief executive of one of the nation's largest health insurers, and Dr. David Himmelstein of the Harvard Medical School, who recommends eliminating big insurers like Dr. McGuire's company, the UnitedHealth Group.

Whatever their differences, they do agree that moving toward universal coverage would surely save lives and maybe dollars as well. A report this year by the Institute of Medicine of the National Academy of Sciences found that the uninsured are sick more often than the insured and likely to die younger, resulting in an estimated 18,000 additional deaths a year.

The uninsured receive medical care, but often when it is most expensive - acute care at hospitals after emergencies instead of regular checkups and other preventive care. And the uninsured pay only 35 percent of their own medical bills, according to the Institute of Medicine report. Most of the rest is paid by taxpayers through subsidies to hospitals and clinics.

Any plan for universal coverage must answer at least three basic questions: Will the move to national coverage follow an incremental, step-by-step path or require drastic change? What role will the government play? What should be covered under a universal system?

Dr. Himmelstein, an associate professor at the Harvard Medical School, advocates a fairly sweeping overhaul of health care in America by moving to a single-payer system run by the government. The nation, he said, can no longer afford the costs of bureaucracy in the American system.

Dr. Himmelstein was a co-author of a study last year, published in The New England Journal of Medicine, that found that administrative costs represented 31 percent of total health care spending in the United States, about double the proportion in Canada, which has a single-payer system.

The culprits, in Dr. Himmelstein's view, are all the middlemen - chiefly insurers - tussling with doctors, hospitals and nursing homes over bills and reimbursements. "Health care has become a spectator sport with this huge, costly bureaucracy watching over us," he said.

About one million of the workers in the system, Dr. Himmelstein said, are doing unneeded administrative work that could be eliminated. The savings from moving to a single-payer system, he estimated, would be roughly $375 billion a year. "That allows you to cover everyone," he said.

The single payer, Dr. Himmelstein suggested, would be a pumped-up Medicare with greater buying power to bargain hard with suppliers like pharmaceutical makers, to control drug costs.

Not surprisingly, Dr. McGuire of UnitedHealth opposes the single-payer formula. "The key issue is not who is paying, but what you are paying for," he said. "I think we should have mandatory insurance. It should be based on the concept of an essential benefit. Guided by medical science, we should decide what is essential and provide it."

The essential package, Dr. McGuire said, should cover hospital care. It should also promote healthy lifestyles and cover preventive care so that people with high blood pressure or high cholesterol, for example, would be less likely to develop heart disease, which is not only debilitating for the patient but also costly to treat.

Preventive care need not be expensive, Dr. McGuire said. For example, there are low-cost generic drugs that are equally effective in most cases - statins for lowering cholesterol and beta blockers for high blood pressure - that cost pennies per pill instead of the dollars charged for brand-name drugs still covered by patents.

If a person is employed, his or her employer would have to pay for the essential benefit, according to Dr. Maguire. Self-employed people, or others who are financially able, would pay for their own insurance, and for everyone else, the obligation would fall to the federal government or the states.

The thorny issue in an essential benefit program is what is covered and what is not. Shoulder surgery to ease the pain when swinging a golf club or impotence pills should not be considered essential, said Dr. Reed Tuckson, a senior vice president for medical care advancement at UnitedHealth. "For this to be affordable to society, we need to make some hard decisions about what is essential," Dr. Tuckson noted.

Making health insurance affordable is crucial in any universal coverage plan. Eighty percent of the uninsured are members of working families. But either their employers do not offer health insurance or they find their share of the employers' plans too expensive.

The Bush administration and conservatives say the way to cover the uninsured is to make insurance affordable mainly through tax subsidies for companies, especially small businesses, and encouraging them to offer high-deductible insurance plans that cost employers less. Individuals, under this approach, are encouraged to set up tax-free health savings accounts to pay for more of their own care.

In discussing the Wal Mart case it is important to remember that they have something like 60% annual employee turnover. That is how they can get such low total insurance costs since at any time about half of their employees have not been around long enough to qualify.

Don B wrote, "A recent study I did for the Navy (which has a medical system with NO COPAYS and is generous to the point of being silly) showed that small increases in copays actually has a large effect of changing PATIENT behavior (they start to balk at so many tests and prescriptions). Add that to the insurers already monitoring doctor activities via referals, formularies, etc. and I think the moral hazard issue becomes minimal to say the least."

I don't think you can say either way. The provision of medicine is simply irrational. Neither patients *nor* doctors are able to make rational cost-benefit decisions.

People like to focus on insurance, but I think medical provision itself (doctors, hospitals, etc) are at least as much of a problem. No one seems to talk about that, though.

"2. Adverse selection: markets in which one party knows much more about the value of the deal than the other are markets that work badly."

I know little about the intricacies of health insureance and don't have the time or inclination to become an expert. Therefore, if I have to a) purchase my own insurance or b) shop around for doctors, then I am "the other" party. That's the incentive for group insurance. And that's the incentive for the large insurers to take us all on, one at a time.

Liberal said "I don't think you can say either way. The provision of medicine is simply irrational. Neither patients *nor* doctors are able to make rational cost-benefit decisions."

Yes, very true. I think most countries with 'socialised medicine' i.e. everyone else except the US have tried to deal with this problem with a scoresheet approach i.e. you have to earn a certain mark for a certain test/operations to be performed. The system is written as a sort of cost/benefit decision.

Don B: Did you look into whether people were under-consuming tests and subscription before or are they over-consuming?

amos, I think that most of us are just like you. I was buying my own insurance for a while some years back. With the current system I might find myself doing it again since I'm speculating on the possibility of striking out on my own in the future. I never thought I had the expertise but did the best I could.

Brian, I think that the conservative dislike of government involvement has reached the point of pathology. I had two relatives who were terminally ill at the same time, my mother and my mother-in-law. My mother-in-law's chemo was quite effective for a while and she outlived my mother by about 10 months. My mother was on Medicare/Medicaid (after we had to sell her house when she went into a nursing home for an unrelated condition). My mother-in-law was too young for those programs and we paid for her private insurance. The government bureaucrats were polite, helpful and understanding. The private insurance ones screwed up the life insurance paper work and were none of the above. I always remember that when I hear conservatives spout anecdotes about the horrors of government solutions. Experiences vary.

I think what we might need is a quasi-governmental agency with a relationship to the government akin to what the USPS currently has. This would serve the role of a non-profit insurer available to all with a sliding fee based on ability to pay. A strong emphasis on preventative care delivered by health care professionals below the doctor level would be encouraged. There would also be a system of omsbudsmen and Congressional oversight. Whether businesses would be involved in terms of subsidizing employees ability to pay is open to discussion though I would tend to say yes. But it would be much simpler than what the current system does to them.