Health Care

VAT Tax Redux, New Proposal, and Barone’s piece in SF Examiner

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This lonnnnng post was prompted by an email linking Michael Barone’s latest SF Examiner piece, which asks Republicans “Now what?” after assuming some strong gains in November.  I have a few ideas on the “now what?” question, and I can’t think of a better place to post them than on this excellent blog.

First, I can’t thank you all enough for the excellent commentary and critiques on my recent “Swapping a VAT for failing income tax is Good Policy” post a week or so ago.  I’ve commented on many of your ideas, and I think you’ve changed my mind on a thing or two, which you will notice below.

I wanted to follow up that post with another proposal that fixes the primary problem with going to consumption taxes, which is their impact on the working poor and middle class. One benefit of a consumption-based tax regime is that it captures money from every transaction, making every one a part of the solution to our fiscal mess.  It is also far more stable than a highly skewed progressive system that only taxes the rich. (Social Security notwithstanding)

The most difficult political and policy problem preventing the adoption of a consumption based tax system is that it places a “burden” on the working poor and middle class. (burden being interpreted both in policy and political terms)

Simply put, in a consumption tax system, the lower end of the earning spectrum pays a much greater share of their income in taxes than the rich.  Many will argue that this is “unfair.”  Leaving that argument aside, it is fair to say that this problem MUST be resolved before any politician is going to risk moving the entire system away from income taxes.

I propose such a solution in this post, beginning with my answer to Barone’s “Now What?”

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Paying for Health Care

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I have found a lot of confused thinking on the right lately regarding how to pay for health care. The left is hopeless but items like this, complaining about the FDA taking Avastin off label for stage four breast cancer don’t get to the heart of the matter. What is the right process to figure out whether you’re going to undergo a medical treatment?

Even if you are independently wealthy and have no insurance to complicate things you would not limit your consideration of treatment to just the medical discussion with your doctor. Your financial team would come into play as questions of bankruptcy, how much this is going to impact your estate, etc. are going to affect your decision. And in that discussion, if your sole heir starts getting creepy and talking down all the expensive treatments, you have a problem.

Putting insurance into the equation doesn’t change the conversation. It just adds a large cast of characters to the discussion and some extra money that you don’t control. The possibility of somebody going creepy and acting in their own best interests but not yours is still there. In fact, the more distant the 3rd parties, the more likely it’s going to happen. Add in the government and the chance explodes.

The FDA and Medicare are acting like the creepy heir on the make and there are a lot of people who sense it without being able to articulate it. Nobody can *prove* anything, but the vibe is not good.

A Nexus Between Academic Medicine and Government

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The Wall Street Journal has one more article on the effect of Obamacare on doctors. A couple of interesting statements bring up some comments on an excellent medical blog I read.

First the WSJ points about Obamacare.

The act will reinforce the worst features of existing third-party payment arrangements in both the private and public sectors — arrangements that already compromise the professional independence and integrity of the medical profession.

Doctors will find themselves subject to more, not less, government regulation and oversight. Moreover, they will become increasingly dependent on unreliable government reimbursement for medical services. Medicare and Medicaid payment, including irrational government payment updates, are preserved (though shaved) and expanded to larger portions of the population.

The Act creates even more bureaucracies with authority over the kinds of health benefits, medical treatments and procedures that Americans get through public and private health insurance. The new law provides no serious relief for tort liability. Not surprisingly, various surveys reveal deep dissatisfaction and demoralization among medical professionals.

I’ve been posting about this for a couple of years and it is no surprise.

Now here is where it gets interesting.

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Mini-Book Review — Ridley — The Rational Optimist

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Ridley, Matt, The Rational Optimist: How Prosperity Evolves, Harper Collins, New York, 2010. 438 pp.

Matt Ridley is a well-known British science writer who, in recent years, has specialized in writing books for the general public on new research in biology … evolutionary biology, genomics, plus a biography of Francis Crick, co-discoverer of DNA.

For well over a decade I’ve enjoyed his books and been very impressed with the quality of his writing, so “on spec” I put a library hold on Ridley’s latest without paying much attention to what it was about. That decision turned out to be a wonderful piece of serendipity. I’ve been reading about European “trading republics” (ancient and modern) for a few years, and trying to assemble an amateur theory about how economic dynamism and technological innovation follow, or are reinforced by, republican values. Whether Athens, Rome, Venice, Genoa, Antwerp, Amsterdam, London, Liverpool, Glasgow, Boston, or New York and Montreal, trade under republican regimes creates massive relative wealth and huge leaps in human knowledge and standards of living.

Now Matt Ridley looks at the innate human capacity for “exchange” … and how that unique capacity affected the course of prehistory, the introduction of agriculture and “civilization,” and more latterly, the shape of the industrial revolution and the modern world. Underlying the politics of republicanism, and individual freedom, we can see the human appetite for exchange creates persistent economic advantage. Trade flows from comparative advantage, in the words of David Ricardo, and comparative advantage relentlessly rewards more specialized use of the natural environment … from the labor of humans carrying sea shells inland for trade 80,000 years ago, to the labor of domesticated horse and sheep and dogs largely for human benefit, to the use of vast quantities of ancient vegetable matter (in the form of petrochemicals), to extend the efforts of humans out of all proportion. Our species is most prosperous when most specialized, when most dependent on the differentiated talents of thousands of others. We now can live lives like the Sun King, without a retinue of thousands.

In this book I have tried to build on both Adam Smith and Charles Darwin: to interpret human society as the product of a long history of what the philosopher Dan Dennett calls ‘bubble-up’ evolution through natural selection among cultural rather than genetic variations, and as an emergent order generated by an invisible hand of individual transactions, not the product of a top-down determinism. I have tried to show that, just as sex made biological evolution cumulative, so exchange made cultural evolution cumulative and intelligence collective, and that there is therefore an inexorable tide in the affairs of men and women discernible beneath the chaos of their actions. A flood tide, not an ebb tide. p. 350

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Medicare optouts

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I subscribe to a physician only web site that has a lot of political items in the mix. It has over 100,000 members, well over, I believe. The subject of dropping out of Medicare, and sometimes from all insurance, is a frequent subject. I thought it might be interesting to see the comments (some of them) to one such post.

I am opting out of Medicare

Last week I stopped seeing new Medicare patients. Today, I decided to opt-out completely. The sign in my waiting area reads:

Dear patients,

As of October 1, 2010, I will no longer accept Medicare insurance due to the harassment and cuts in payments by the federal government. My fees are very reasonable – please feel free to discuss them with me personally. I would love to continue to care for my Medicare patients, just without the federal government telling me how do my job or how much to get paid.

This is just the beginning of the healthcare reform. Please thank your elected representatives and think carefully how you vote in November.

Yours,

EndocrineMD

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