Much has been made in progressive circles about how fundamentally unfair the excise tax is to working families. The arguments against it tend to either emphasize
- The fact that unions traded wages for lavish benefits packages in collective bargaining making it unfair therefore to tax their benefits
or
- How the excise tax will lead to higher deductables and less generous benefits as plans are structured to avoid the excise tax.
At the outset let it be known that I agree with both points. But sometimes something that is fundamentally unfair, is also excellent policy. That's what I hope to demonstrate
The excise tax will do two things:
- It will help fund health care reform.
- It will help bend the cost curve in a way that a tax on wealthy american's income cannot. And it will simultaneously help improve the quality of care in this country.
Since an income tax increase would also accomplish point number 1 let me expand on point number 2. To understand the point you need to get an assumption out of your head. So repeat after me:
MORE CARE DOES NOT EQUAL BETTER CARE
Don't take my word for it though.
As the abstract of this study indicates, reasearchers have found that increased medicare spending did not lead to better outcomes in patients being treated for AMI.
We examine Medicare costs and survival gains for acute myocardial infarction (AMI) during 1986–2002. As David Cutler and Mark McClellan did in earlier work, we find that overall gains in post-AMI survival more than justified the increases in costs during this period. Since 1996, however, survival gains have stagnated, while spending has continued to increase. We also consider changes in spending and outcomes at the regional level. Regions experiencing the largest spending gains were not those realizing the greatest improvements in survival. Factors yielding the greatest benefits to health were not the factors that drove up costs, and vice versa.
Skinner JS, Staiger DO, Fisher ES. Is technological change in medicine always worth it? The case of acute myocardial infarction. Health Aff (Millwood) 2006;25:w34-w47.
Or this study as summarized (by another researcher using it's findings) in the forthcoming issue of the New England Journal of Medicine which finds:
Using clinical vignettes to present standardized patient care scenarios to physicians throughout the country, the researchers found that physicians in high- and low-spending regions were about equally likely to recommend specific clinical interventions when the supporting evidence was strong. Those in higher-spending regions, however, were much more likely than those in lower-spending regions to recommend discretionary services, such as referral to a subspecialist for typical gastroesophageal reflux or stable angina or, in another vignette, hospital admission for an 85-year-old patient with an exacerbation of end-stage congestive heart failure. And they were three times as likely to admit the latter patient directly to an intensive care unit and 30% less likely to discuss palliative care with the patient and family. Differences in the propensity to intervene in such gray areas of decision making were highly correlated with regional differences in per capita spending.
These studies are just parts of the overall body of research that has led leading scholars to conclude that more care, and more costly care does not equal better care. The same logic applies to generous health care plans which authorize more care, and more expensive care than standard packages.
Now you might be saying, all research aside so what, so you get a little too much care, how could that possibly hurt? It does. There is also a human cost to overcare that anyone with any form of an anxiety disorder can appreciate. The stress of admission to the hospital that isn't called for, the dangers of pursuing treatment options with side effects when it's unclear if they are really needed or not (see anti-depressants for a case study), and the anxiety involved in worrying about one's diagnosis that overcare tends to produce are all parts of this human factor.
The bottom line is that not only are generous health plans which provide coverage for everything under the sun untenably expensive, but the bulk of research indicates that they do not lead to better outcomes, and in fact could lead to worse outcomes.So it seems like a no brainer therefore to put a tax on such plans to discourage americans from enrolling in these plans that cost too much and don't provide any additional health benefit, and again, may be harmful.
Now it just so happens that some of the people hit by this excise tax will be working class people and yes it will hit them hard in the form of higher deductables and less generous benefits packages.
But their can't be real reform if we don't start trying to find ways to decrease the cost of care and increase the quality of outcomes. As we all know the united states spends the most on healthcare, and gets very little in return for it's dollars comparatively to other countries.
People might not like the fact that their deductable will go up from 500 to 1000 (just an off the top of the head example). But having higher deductables and having some economic restraints on the kind of care you can get is a good thing. It's what helps keep costs low. Eventually it is what will improve the quality of care we get and reduce wait times for procedures because only those who need them will be getting them.
In this case it's the good guys in part who have to take the fall for the team. But make no mistake about it, it is a fall for the team and a policy that makes a whole lot of sense.
NOTE: I want to tax upper income americans too...but just think in the context of hcr...the excise tax is a good idea...