Trump tells House Republicans to find a ‘fair number’ on SALT

[crazed_hoosier2]

The SALT deduction cap is a catnip issue for me. I find it fascinating.

Capping the SALT deduction was a giant FU from the Republican designers of the TJCA sent to Dems and blue states in general. The cap applies to all taxpayers in all states, of course. But there are more taxpayers paying $10k+ in SALT in high-tax states than in low-tax states. And, not surprisingly, blue state politicians went apoplectic about it -- including most of the blue state Republicans. And they're the ones who are the subject of today's story. Trump will need their votes to extend the TCJA, so he's going to allow them to hike the cap.

The net effect of the cap is that it increases the tax disparities between high-tax states and low-tax states. Those disparities were already there, the SALT cap made them worse. And these states are already dealing with the headaches of higher-income people leaving for Florida and Texas.

When it comes to tax policy, we're used to hearing Democrats wail about Republicans cutting taxes for the rich. But many Dems want to get rid of the SALT cap altogether -- which would amount to.....a huge tax cut for the rich!

Per that linked Brookings piece, removing the cap altogether would amount to about $100B per year less tax revenues. Of that, a whopping 57% would redound to the top 1%. And 25% would redound to the top 0.1%.

So you have (mostly) Democrats pining for lower taxes for the rich and (mostly) Republicans pining for higher taxes on the rich....and I'd guess that it all has to do with pressures to bear at the state level -- which is fascinating.

 

[BadWakeboarder]

The SALT deduction cap is a catnip issue for me. I find it fascinating.

Capping the SALT deduction was a giant FU from the Republican designers of the TJCA sent to Dems and blue states in general. The cap applies to all taxpayers in all states, of course. But there are more taxpayers paying $10k+ in SALT in high-tax states than in low-tax states. And, not surprisingly, blue state politicians went apoplectic about it -- including most of the blue state Republicans. And they're the ones who are the subject of today's story. Trump will need their votes to extend the TCJA, so he's going to allow them to hike the cap.

The net effect of the cap is that it increases the tax disparities between high-tax states and low-tax states. Those disparities were already there, the SALT cap made them worse. And these states are already dealing with the headaches of higher-income people leaving for Florida and Texas.

When it comes to tax policy, we're used to hearing Democrats wail about Republicans cutting taxes for the rich. But many Dems want to get rid of the SALT cap altogether -- which would amount to.....a huge tax cut for the rich!

Per that linked Brookings piece, removing the cap altogether would amount to about $100B per year less tax revenues. Of that, a whopping 57% would redound to the top 1%. And 25% would redound to the top 0.1%.

So you have (mostly) Democrats pining for lower taxes for the rich and (mostly) Republicans pining for higher taxes on the rich....and I'd guess that it all has to do with pressures to bear at the state level -- which is fascinating.

The SALT cap offset most of whatever I gained from his caps. I pay a lot of property tax and I expect this get fixed.

 

[twenty02]

Who doesn't want free stuff? Elimination of SALT caps is free money for state coffers at the expense of the Federal govt. Of course every blue state politician, regardless of political stripe is going to advocate for free money from the Feds

 

[Digressions]

Who doesn't want free stuff? Elimination of SALT caps is free money for state coffers at the expense of the Federal govt. Of course every blue state politician, regardless of political stripe is going to advocate for free money from the Feds

Wasn't this also a result of the, "Mississippi: The Anus of America", argument? Where blue states were giving far more per capita to the fed's, while others were net takers? I haven't looked at the maps lately, so things may have changed.

 

[JamieDimonsBalls]

The SALT deduction cap is a catnip issue for me. I find it fascinating.

Capping the SALT deduction was a giant FU from the Republican designers of the TJCA sent to Dems and blue states in general. The cap applies to all taxpayers in all states, of course. But there are more taxpayers paying $10k+ in SALT in high-tax states than in low-tax states. And, not surprisingly, blue state politicians went apoplectic about it -- including most of the blue state Republicans. And they're the ones who are the subject of today's story. Trump will need their votes to extend the TCJA, so he's going to allow them to hike the cap.

The net effect of the cap is that it increases the tax disparities between high-tax states and low-tax states. Those disparities were already there, the SALT cap made them worse. And these states are already dealing with the headaches of higher-income people leaving for Florida and Texas.

When it comes to tax policy, we're used to hearing Democrats wail about Republicans cutting taxes for the rich. But many Dems want to get rid of the SALT cap altogether -- which would amount to.....a huge tax cut for the rich!

Per that linked Brookings piece, removing the cap altogether would amount to about $100B per year less tax revenues. Of that, a whopping 57% would redound to the top 1%. And 25% would redound to the top 0.1%.

So you have (mostly) Democrats pining for lower taxes for the rich and (mostly) Republicans pining for higher taxes on the rich....and I'd guess that it all has to do with pressures to bear at the state level -- which is fascinating.

Sounds like I may benefit from a lift. Therefore...

Now, can he fix the mortgage interest limitation?

 

[crazed_hoosier2]

The SALT cap offset most of whatever I gained from his caps. I pay a lot of property tax and I expect this get fixed.

They’re talking about indexing the annual cap to inflation.

But this probably won’t ameliorate the blue state governors much. There aren’t all that many dollars at stake on the low end of this - and that’s all that would be impacted by hiking the cap to, say, $15k or something like that.

The average per capita dollar value for the Top 0.1% of taxpayers (which constitutes 25% of the entire haul) is $145k. The average for the Top 1% is $33k.

The governors can’t be all that worried about exempting lower dollar taxpayers. That’s not where the money is - and that’s what has to give them heartburn.

 

[JamieDimonsBalls]

Wasn't this also a result of the, "Mississippi: The Anus of America", argument? Where blue states were giving far more per capita to the fed's, while others were net takers? I haven't looked at the maps lately, so things may have changed.

I haven't seen any figures beyond 2021, but per capita, VA, KY and AK were top 3. AL, MS and LA were top 10.

Source:

Federal Aid by State 2024

worldpopulationreview.com

 

[twenty02]

They’re talking about indexing the annual cap to inflation.

But this probably won’t ameliorate the blue state governors much. There aren’t all that many dollars at stake on the low end of this - and that’s all that would be impacted by hiking the cap to, say, $15k or something like that.

The average per capita dollar value for the Top 0.1% of taxpayers (which constitutes 25% of the entire haul) is $145k. The average for the Top 1% is $33k.

The governors can’t be all that worried about exempting lower dollar taxpayers. That’s not where the money is - and that’s what has to give them heartburn.

The SALT caucus in the GOP has a lot of leverage. The default position is that the deduction cap goes away entirely after this year, and we go back to pre - 2017 tax policy.

 

[JamieDimonsBalls]

The SALT caucus in the GOP has a lot of leverage. The default position is that the deduction cap goes away entirely after this year, and we go back to pre - 2017 tax policy.

 

[UncleMark]

What is the fiscal/policy justification for the SaLT deduction to begin with? And if it's justified, why cap it at all? I'd be inclined to do away with it altogether, along with any number of deductions or caps scattered throughout the tax code.

 

[crazed_hoosier2]

The SALT caucus in the GOP has a lot of leverage. The default position is that the deduction cap goes away entirely after this year, and we go back to pre - 2017 tax policy.

They do. But in a House Majority of just 3 seats, everybody has a lot of leverage.

And one of those 3 seats is Thomas Massie - who is basically the modern day Ron Paul.

 

[crazed_hoosier2]

What is the fiscal/policy justification for the SaLT deduction to begin with? And if it's justified, why cap it at all? I'd be inclined to do away with it altogether, along with any number of deductions or caps scattered throughout the tax code.

I've long favored a Steve Forbes style flat tax on any and all forms of income with nothing more than a significantly higher standard deduction.

So I'm with you on this. But I'd guess that the original rationale for SALT is simply that we shouldn't have to also pay federal taxes on the dollars we paid out in state and local taxes. I don't know if I'd call that "justification." After all, what's the justification for anything in the tax code? It's all a matter of tradeoffs.

 

[Joe_Hoopsier]

I've long favored a Steve Forbes style flat tax on any and all forms of income with nothing more than a significantly higher standard deduction.

So I'm with you on this. But I'd guess that the original rationale for SALT is that we shouldn't pay federal taxes on the dollars we simply had to pay out in state and local taxes. I don't know if I'd call that "justification." After all, what's the justification for anything in the tax code? It's all a matter of tradeoffs.

Is there any question on double taxation on this topic? or is it all covered up within the system that it's not double taxation, since states take some and then the feds take some, and the state and the fed are not the same tax collector.
Gov elected hogs, ALWAYS eat at a full trough. They always use your money to grind their feed ! ALWAYS !!

 

[Spartans9312]

The SALT deduction cap is a catnip issue for me. I find it fascinating.

Capping the SALT deduction was a giant FU from the Republican designers of the TJCA sent to Dems and blue states in general. The cap applies to all taxpayers in all states, of course. But there are more taxpayers paying $10k+ in SALT in high-tax states than in low-tax states. And, not surprisingly, blue state politicians went apoplectic about it -- including most of the blue state Republicans. And they're the ones who are the subject of today's story. Trump will need their votes to extend the TCJA, so he's going to allow them to hike the cap.

The net effect of the cap is that it increases the tax disparities between high-tax states and low-tax states. Those disparities were already there, the SALT cap made them worse. And these states are already dealing with the headaches of higher-income people leaving for Florida and Texas.

When it comes to tax policy, we're used to hearing Democrats wail about Republicans cutting taxes for the rich. But many Dems want to get rid of the SALT cap altogether -- which would amount to.....a huge tax cut for the rich!

Per that linked Brookings piece, removing the cap altogether would amount to about $100B per year less tax revenues. Of that, a whopping 57% would redound to the top 1%. And 25% would redound to the top 0.1%.

So you have (mostly) Democrats pining for lower taxes for the rich and (mostly) Republicans pining for higher taxes on the rich....and I'd guess that it all has to do with pressures to bear at the state level -- which is fascinating.

Cut taxes, increase spending…should be good for the deficit

 

[crazed_hoosier2]

Cut taxes, increase spending…should be good for the deficit

The SALT cap was added as one of the tradeoffs in the TCJA.....kind of like getting rid of the "3 Martini Lunch" business deduction to get the reduced corporate income tax rate.

The total impact of the cap is roughly $100B/year, which makes it a near-trillion dollar item on its 10 year score (probably north of a trillion when factoring in growth). So it would be a pipedream to just scrap the cap altogether like many want.

Clearly, they're going to raise the cap in the upcoming bill -- and probably put it on some kind of a schedule. As I said above, that is almost just a pro forma move. There just aren't all that many dollars on the table down at the lower end. Raising the cap -- even if they double it -- doesn't solve the blue states' problem. Their problem is with the high income people.

It bears repeating: 57% of the money here falls to the top 1%. And they aren't going to be getting much of a break with the extension. But....they could if they moved. And that's the subtext of all of this and why I just find it so amusing.

 

[twenty02]

The SALT cap was added as one of the tradeoffs in the TCJA.....kind of like getting rid of the "3 Martini Lunch" business deduction to get the reduced corporate income tax rate.

The total impact of the cap is roughly $100B/year, which makes it a near-trillion dollar item on its 10 year score (probably north of a trillion when factoring in growth). So it would be a pipedream to just scrap the cap altogether like many want.

Clearly, they're going to raise the cap in the upcoming bill -- and probably put it on some kind of a schedule. As I said above, that is almost just a pro forma move. There just aren't all that many dollars on the table down at the lower end. Raising the cap -- even if they double it -- doesn't solve the blue states' problem. Their problem is with the high income people.

It bears repeating: 57% of the money here falls to the top 1%. And they aren't going to be getting much of a break with the extension. But....they could if they moved. And that's the subtext of all of this and why I just find it so amusing.

Their problem is based upon their high tax rates. Without SALT caps.. a state raises local taxes $1,000...... The taxpayer pays $650 more and the Fed Govt pays the other $350 in reduced revenue.

 

[crazed_hoosier2]

Cut taxes, increase spending…should be good for the deficit

Also, it seems like almost nobody gives a crap about the deficit and debt in DC. They're hardly even giving it lip service anymore...which is what the out of power party would usually do.

I'm all for the DOGE effort. But, let's face it, even the best outcome there would be little more than nibbling at the edges. Nobody wants to touch entitlements. They're the chief problem -- and they're also the third rail of politics.

We fool ourselves into thinking that there's a pain free option here. But there really isn't. The option we're most likely to choose (have the Fed expand the monetary base to "meet" the obligations, sparing the politicians from a willful act of seppuku) is probably the single most painful one.

 

[twenty02]

Also, it seems like almost nobody gives a crap about the deficit and debt in DC. They're hardly even giving it lip service anymore...which is what the out of power party would usually do.

I'm all for the DOGE effort. But, let's face it, even the best outcome there would be little more than nibbling at the edges. Nobody wants to touch entitlements. They're problem -- and they're also the third rail of politics.

We fool ourselves into thinking that there's a pain free option here. But there really isn't. The option we're most likely to choose (have the Fed expand the monetary base to "meet" the obligations, sparing the politicians from a willful act of seppuku) is probably the single most painful one.

The latest push by the House is a big cut to Medicaid. Once rubber meets road on the one, you'll likely get a lot of defections from Medicaid dependent states in Appalachia and deep South.

 

[Digressions]

The latest push by the House is a big cut to Medicaid. Once rubber meets road on the one, you'll likely get a lot of defections from Medicaid dependent states in Appalachia and deep South.

That will be interesting politically. Those states don't always take the money. It will depend what/if anything is attached to it. And how steep the cut.

 

[snarlcakes]

Also, it seems like almost nobody gives a crap about the deficit and debt in DC. They're hardly even giving it lip service anymore...which is what the out of power party would usually do.

I'm all for the DOGE effort. But, let's face it, even the best outcome there would be little more than nibbling at the edges. Nobody wants to touch entitlements. They're problem -- and they're also the third rail of politics.

We fool ourselves into thinking that there's a pain free option here. But there really isn't. The option we're most likely to choose (have the Fed expand the monetary base to "meet" the obligations, sparing the politicians from a willful act of seppuku) is probably the single most painful one.

Crazed, they printing.

 

[twenty02]

That will be interesting politically. Those states don't always take the money. It will depend what/if anything is attached to it. And how steep the cut.

WV, KY, Arkansas, Louisiana, Mississippi are some of the highest Medicaid recipients per capita

 

[Digressions]

Also, it seems like almost nobody gives a crap about the deficit and debt in DC. They're hardly even giving it lip service anymore...which is what the out of power party would usually do.

I'm all for the DOGE effort. But, let's face it, even the best outcome there would be little more than nibbling at the edges. Nobody wants to touch entitlements. They're problem -- and they're also the third rail of politics.

We fool ourselves into thinking that there's a pain free option here. But there really isn't. The option we're most likely to choose (have the Fed expand the monetary base to "meet" the obligations, sparing the politicians from a willful act of seppuku) is probably the single most painful one.

The least painful way is to reverse how the fee for service schedule is calculated. It's been CPI+1 (or ~3%) since 1965. Make it CPI -1 for awhile. Make sure the language includes private insurance ( which has been attached to Medicare anyway) and that it stays attached to Medicare.

 

[Spartans9312]

Crazed, they printing.

Burning on interest

 

[crazed_hoosier2]

Their problem is based upon their high tax rates. Without SALT caps.. a state raises local taxes $1,000...... The taxpayer pays $650 more and the Fed Govt pays the other $350 in reduced revenue.

Oh yes, I get it.

The least painful way is to reverse how the fee for service schedule is calculated. It's been CPI+1 (or ~3%) since 1965. Make it CPI -1 for awhile. Make sure the language includes private insurance ( which has been attached to Medicare anyway) and that it stays attached to Medicare.

Maybe.

But I’m sure that would result in some level of tighter supply. And I’ve always been very skeptical of American consumers’ willingness to tolerate much of that…especially in our current culture of instancy. People don’t have the patience to wait in a drive-thru lane for 5 minutes to get a hamburger.

As it stands, private insurance already subsidizes public insurance to a troubling degree. And this seems very likely to exacerbate that.

 

[Digressions]

Oh yes, I get it.



Maybe.

But I’m sure that would result in some level of tighter supply. And I’ve always been very skeptical of American consumers’ willingness to tolerate much of that…especially in our current culture of instancy. People don’t have the patience to wait in a drive-thru lane for 5 minutes to get a hamburger.

As it stands, private insurance already subsidizes public insurance to a troubling degree. And this seems very likely to exacerbate that.

Why would people be waiting in line? Prices would nominally be higher this year than last. Were they waiting in line this year? 10 years ago?

How long has private insurance been subsidizing public insurance? Is the problem getting better, or worse?

Is it possible that the negotiations between private and providers are based on the negotiations between the public and providers?

The providers are receiving CPI +1 +.25. The problem in healthcare is that of compounding interest. Graph it out.

 

[crazed_hoosier2]

Why would people be waiting in line? Prices would nominally be higher this year than last. Were they waiting in line this year? 10 years ago?

How long has private insurance been subsidizing public insurance? Is the problem getting better, or worse?

Is it possible that the negotiations between private and providers are based on the negotiations between the public and providers?

The providers are receiving CPI +1 +.25. The problem in healthcare is that of compounding interest. Graph it out.

“There are no solutions. There are only tradeoffs.”

Given that this is indisputably true, I’m curious to know what you think would be the tradeoff for this approach.

If your answer is nothing, revisit the maxim. We get ourselves into so much trouble for thinking we can overcome it. As such, we convince ourselves that we can make this or that change without any negative impact (aka unintended consequences) on the other side of the ledger.

 

[Digressions]

“There are no solutions. There are only tradeoffs.”

Given that this is indisputably true, I’m curious to know what you think would be the tradeoff for this approach.

If your answer is nothing, revisit the maxim. We get ourselves into so much trouble for thinking we can overcome it. As such, we convince ourselves that we can make this or that change without any negative impact (aka unintended consequences) on the other side of the ledger.

Agreed. By any measure healthare costs have grown faster than any other sector since 1965. The key to that growth is the way Medicare costs are calculated. And how other costs are based off of that number. In the aggregate, Medicare rises at a rate of cpi +1 per year (one caveat: I'm not sure healthcare costs were allowed to grow at that pace over the last 5 years, given the higher rates of inflation).

So, the tradeoff is that the growth in the healthcare sector will have to slow. I'll see if I can find some better charts than this one.

https://www.aei.org/wp-content/uploads/2014/06/Conover_5.1a.JPG

First, figure out how prices are derived. It becomes evident pretty quickly that it is not a true market. There are price controls. It just so happens that the controls are in the providers favor, and have been since 1965.

Second, look at the growth and understand we've known it isn't sustainable for 40+ years. NHEs in '65 were 5% of GDP. 17.6% in '23. GDP!

Let's just use some common sense. What raw material/goods that are marketed outside of the health industry can explain those rising costs? Titanium, cotton, plastic, copper? And the key is outside the artificially inflated healthcare market.

Sorry for any grammar and rambling.

 

[crazed_hoosier2]

Agreed. By any measure healthare costs have grown faster than any other sector since 1965. The key to that growth is the way Medicare costs are calculated. And how other costs are based off of that number. In the aggregate, Medicare rises at a rate of cpi +1 per year (one caveat: I'm not sure healthcare costs were allowed to grow at that pace over the last 5 years, given the higher rates of inflation).

So, the tradeoff is that the growth in the healthcare sector will have to slow. I'll see if I can find some better charts than this one.

https://www.aei.org/wp-content/uploads/2014/06/Conover_5.1a.JPG

First, figure out how prices are derived. It becomes evident pretty quickly that it is not a true market. There are price controls. It just so happens that the controls are in the providers favor, and have been since 1965.

Second, look at the growth and understand we've known it isn't sustainable for 40+ years. NHEs in '65 were 5% of GDP. 17.6% in '23. GDP!

Let's just use some common sense. What raw material/goods that are marketed outside of the health industry can explain those rising costs? Titanium, cotton, plastic, copper? And the key is outside the artificially inflated healthcare market.

Sorry for any grammar and rambling.

The single biggest reason healthcare costs have skyrocketed is that the consumer and the primary payer are usually two different parties.

When they’re the same party - and they aren’t directly competing for resources with the kind with a third party payer - prices have acted the way they normally do.

The common example for this is LASIK. It’s almost always paid for out of pocket and it is typically performed in a private facility separate and distinct from facilities where third party pay services are commonly provided.

Oh, and I strongly disagree with you that the only tradeoff you’re facing by simply tempering the growth of Medicare reimbursement rates is with the financial performance of the healthcare sector.

That would probably happen too, of course. But that’s not the tradeoff that should make us think hard about this approach.

You’re highlighting what I think is a common problem in examining these kinds of problems. We think we can get the things we want without any negative unintended consequences for us.

Vermont is facing unintended consequences right now. On one hand, they’re congratulating themselves for having the highest percentage of insured residents in the country. On the other hand, most of their hospital systems are losing money, their largest insurer is staving off insolvency, and their supply can’t match their demand…resulting in (you guessed it) queues for services.

Do you think they gave any thought to these prospects when they embarked on their well-intentioned quest to get universal coverage? If they did, I’d bet it was cursory at best.

Two pull-quotes from this piece that suggest they didn’t…

“Vermont is seen as the most progressive state, so how is health care here so screwed up?”​

​

Rising health costs are a problem across the country, but Vermont’s situation surprises health experts because virtually all its residents have insurance and the state regulates care and coverage prices.​

​

They wouldn’t be surprised if they would listen to people who think more along my lines. But, what’s the likelihood of that? People who think like me will never tell them what they want to hear.

It’s the “health experts” who tell them what they want to hear. And they’ll keep getting these kinds of “screwed up” results until they face up to the bounds of economic reality.

 

[Digressions]

The single biggest reason healthcare costs have skyrocketed is that the consumer and the primary payer are usually two different parties.

When they’re the same party - and they aren’t directly competing for resources with the kind with a third party payer - prices have acted the way they normally do.

The common example for this is LASIK. It’s almost always paid for out of pocket and it is typically performed in a private facility separate and distinct from facilities where third party pay services are commonly provided.

Oh, and I strongly disagree with you that the only tradeoff you’re facing by simply tempering the growth of Medicare reimbursement rates is with the financial performance of the healthcare sector.

That would probably happen too, of course. But that’s not the tradeoff that should make us think hard about this approach.

You’re highlighting what I think is a common problem in examining these kinds of problems. We think we can get the things we want without any negative unintended consequences for us.

Vermont is facing unintended consequences right now. On one hand, they’re congratulating themselves for having the highest percentage of insured residents in the country. On the other hand, most of their hospital systems are losing money, their largest insurer is staving off insolvency, and their supply can’t match their demand…resulting in (you guessed it) queues for services.

Do you think they gave any thought to these prospects when they embarked on their well-intentioned quest to get universal coverage? If they did, I’d bet it was cursory at best.

Two pull-quotes from this piece that suggest they didn’t…

“Vermont is seen as the most progressive state, so how is health care here so screwed up?”​

​

Rising health costs are a problem across the country, but Vermont’s situation surprises health experts because virtually all its residents have insurance and the state regulates care and coverage prices.​

​

They wouldn’t be surprised if they would listen to people who think more along my lines. But, what’s the likelihood of that? People who think like me will never tell them what they want to hear.

It’s the “health experts” who tell them what they want to hear. And they’ll keep getting these kinds of “screwed up” results until they face up to the bounds of economic reality.

I agree. If there were not third parties, the dynamic would be different. Prices would be lower...undoubtedly.

Can you explain how health services are priced?

I agree with your law of unintended consequences, but I would argue that that is what we're dealing with now. Isn't setting up a system that results in 1% above cpi in perpetuity doomed to fail? Compounding interest for 60 years grows at a growing rate, just like the NHE chart. If you don't bend the cost curve sky's the limit, correct?

I'm not sure why/how you think demand would be shifted if the FFS (apropos) schedule is adjusted. It's adjusted higher every year. How has that changed demand? There were two times, that I'm aware of, that the cost curve was bent. Once, in the 90's when single-payer was being debated, and when the ACA was being debated. Magical. How was demand affected then?

To digress, I wonder what are healthcare system would look like without third parties? I'm guessing less demand and more personal bankruptcies.

 

[Spartans9312]

I agree. If there were not third parties, the dynamic would be different. Prices would be lower...undoubtedly.

Can you explain how health services are priced?

I agree with your law of unintended consequences, but I would argue that that is what we're dealing with now. Isn't setting up a system that results in 1% above cpi in perpetuity doomed to fail? Compounding interest for 60 years grows at a growing rate, just like the NHE chart. If you don't bend the cost curve sky's the limit, correct?

I'm not sure why/how you think demand would be shifted if the FFS (apropos) schedule is adjusted. It's adjusted higher every year. How has that changed demand? There were two times, that I'm aware of, that the cost curve was bent. Once, in the 90's when single-payer was being debated, and when the ACA was being debated. Magical. How was demand affected then?

To digress, I wonder what are healthcare system would look like without third parties? I'm guessing less demand and more personal bankruptcies.

Without third parties the cost reduces drastically. These drug companies want to sell products. Practitioners want paid. Water will find its level….

 

[crazed_hoosier2]

I agree. If there were not third parties, the dynamic would be different. Prices would be lower...undoubtedly.

Can you explain how health services are priced?

I agree with your law of unintended consequences, but I would argue that that is what we're dealing with now. Isn't setting up a system that results in 1% above cpi in perpetuity doomed to fail? Compounding interest for 60 years grows at a growing rate, just like the NHE chart. If you don't bend the cost curve sky's the limit, correct?

I'm not sure why/how you think demand would be shifted if the FFS (apropos) schedule is adjusted. It's adjusted higher every year. How has that changed demand? There were two times, that I'm aware of, that the cost curve was bent. Once, in the 90's when single-payer was being debated, and when the ACA was being debated. Magical. How was demand affected then?

To digress, I wonder what are healthcare system would look like without third parties? I'm guessing less demand and more personal bankruptcies.

It’s not the demand curve I have in mind. It’s the supply curve. It will pull back if they were to do this.

Providers are sucking wind as it is with public insurance.

This is why folks in Vermont are scratching their heads and wondering how their situation could’ve happened. Their biggest insurer is going broke, two-thirds of their hospitals are in the red, and they have a poor level of service anyway.

“…Vermont’s situation surprises health experts because virtually all its residents have insurance and the state regulates care and coverage prices.”

Put shortly: They didn’t like what the invisible hand had to say about healthcare, so they decided to ignore it so as to affect the outcome they wanted instead, and now it’s punching them in the mouth.

But they apparently can’t figure out who’s punching them. Because the hand is invisible.

If providers nationwide are already struggling with public insurance reimbursement rates (and they are), how can you think that reducing them won’t have any negative consequences except to bottom lines in the healthcare sector?

 

[Digressions]

It’s not the demand curve I have in mind. It’s the supply curve. It will pull back if they were to do this.

Providers are sucking wind as it is with public insurance.

This is why folks in Vermont are scratching their heads and wondering how their situation could’ve happened. Their biggest insurer is going broke, two-thirds of their hospitals are in the red, and they have a poor level of service anyway.

“…Vermont’s situation surprises health experts because virtually all its residents have insurance and the state regulates care and coverage prices.”

Put shortly: They didn’t like what the invisible hand had to say about healthcare, so they decided to ignore it so as to affect the outcome they wanted instead, and now it’s punching them in the mouth.

But they apparently can’t figure out who’s punching them. Because the hand is invisible.

If providers nationwide are already struggling with public insurance reimbursement rates (and they are), how can you think that reducing them won’t have any negative consequences except to bottom lines in the healthcare sector?

Again, can you explain how procedures are priced?

 

[crazed_hoosier2]

I agree. If there were not third parties, the dynamic would be different. Prices would be lower...undoubtedly.

Can you explain how health services are priced?

I agree with your law of unintended consequences, but I would argue that that is what we're dealing with now. Isn't setting up a system that results in 1% above cpi in perpetuity doomed to fail? Compounding interest for 60 years grows at a growing rate, just like the NHE chart. If you don't bend the cost curve sky's the limit, correct?

I'm not sure why/how you think demand would be shifted if the FFS (apropos) schedule is adjusted. It's adjusted higher every year. How has that changed demand? There were two times, that I'm aware of, that the cost curve was bent. Once, in the 90's when single-payer was being debated, and when the ACA was being debated. Magical. How was demand affected then?

To digress, I wonder what are healthcare system would look like without third parties? I'm guessing less demand and more personal bankruptcies.

Also, I really can’t give you much visibility into how healthcare services are priced. It’s a mystery to me to

It seems that it doesn’t amount to much more than “take it or leave it” to the providers. I don’t know how much they individually sit down with the United Healthcares of the world every year and negotiate prices.

It would be interesting to learn more about how they’re derived.

Also, I agree that we’re already suffering from unintended consequences (I’m not a defender of it, BTW). It’s been the story for American healthcare ever since the late 60s and early 70s.

That happens to be the period when two things happened:

A) The government got heavily involved in healthcare finance

B) Healthcare prices started diverging from CPI and heading to the sky.

But I’m sure that’s just a coincidence.

 

[crazed_hoosier2]

Again, can you explain how procedures are priced?

Read my last post. I have no idea where the prices come from.

I just know that we think we can’t apply normal economic rules to healthcare…because buying triple bypasses isn’t the same as buying broccoli.

While I understand where this sentiment comes from, the underlying message (just ignore the invisible hand, it’s standing in the way of universal care) seems really foolhardy.

 

[Spartans9312]

Again, can you explain how procedures are priced?

They are priced based on the contract that is available thru a third party. Eliminate the third party and the cost goes down

 

[twenty02]

They are priced based on the contract that is available thru a third party. Eliminate the third party and the cost goes down

There is no major economy healthcare system in the world that doesn't have third party payers.

The cost drivers of out of control healthcare costs in the US vs other countries is the very high compensation of HC providers in the US.

Germany has roughly 2x as many doctors per capita as the US. A doctor in the US makes roughly 4x what a German doctor makes due to intentional Dr shortages created by the Doc lobby.

Doctors like money and they aren't going to give it up

Every other discussion is moot and pointless

 

[twenty02]

It’s not the demand curve I have in mind. It’s the supply curve. It will pull back if they were to do this.

Providers are sucking wind as it is with public insurance.

This is why folks in Vermont are scratching their heads and wondering how their situation could’ve happened. Their biggest insurer is going broke, two-thirds of their hospitals are in the red, and they have a poor level of service anyway.

“…Vermont’s situation surprises health experts because virtually all its residents have insurance and the state regulates care and coverage prices.”

Put shortly: They didn’t like what the invisible hand had to say about healthcare, so they decided to ignore it so as to affect the outcome they wanted instead, and now it’s punching them in the mouth.

But they apparently can’t figure out who’s punching them. Because the hand is invisible.

If providers nationwide are already struggling with public insurance reimbursement rates (and they are), how can you think that reducing them won’t have any negative consequences except to bottom lines in the healthcare sector?

Providers aren't sucking wind. Maybe the hospitals are, but only because they have to pay salaries that have grown exponentially over many decades, due to shortages of actual HC workers.

 

[Spartans9312]

There is no major economy healthcare system in the world that doesn't have third party payers.

The cost drivers of out of control healthcare costs in the US vs other countries is the very high compensation of HC providers in the US.

Germany has roughly 2x as many doctors per capita as the US. A doctor in the US makes roughly 4x what a German doctor makes due to intentional Dr shortages created by the Doc lobby.

Doctors like money and they aren't going to give it up

Every other discussion is moot and pointless

That doesn’t address the statement. We are required to charge U&C to everyone. That is why you see the scam that is goodrx take hold. Everything is based on a contract with a third party. If you walk in and say you do not have insurance then I am supposed to charge you U&C. I can’t say I can do that for $5 when I’m sending a claim for $13.99 to Anthem…even though Anthem is only paying $4.50 for the claim.

Most physicians are employees now. Very few are running their own practice. They are making the sand salary regardless if they see 10 people or 30 people a day. Most will choose to see 10. Your point about the Doc lobby is correct.

 

[twenty02]

That doesn’t address the statement. We are required to charge U&C to everyone. That is why you see the scam that is goodrx take hold. Everything is based on a contract with a third party. If you walk in and say you do not have insurance then I am supposed to charge you U&C. I can’t say I can do that for $5 when I’m sending a claim for $13.99 to Anthem…even though Anthem is only paying $4.50 for the claim.

Most physicians are employees now. Very few are running their own practice. They are making the sand salary regardless if they see 10 people or 30 people a day. Most will choose to see 10. Your point about the Doc lobby is correct.

Prescription drugs are a different animal, for sure.

I'm sure everyone has noticed how difficult it is to get a DR appointment today vs a couple decades ago.

 

[Spartans9312]

Prescription drugs are a different animal, for sure.

I'm sure everyone has noticed how difficult it is to get a DR appointment today vs a couple decades ago.

The big ticket items are the outlier. We need some semblance of contract with hospitals and physicians for emergency surgeries and emergent situations that require hospital stay.

We do not need third party for much of anything else