Friday, April 24, 2009

The Ultimate Irony: A Sick Tax to Make Health Care Affordable

Say it ain't so.

But look for cash-strapped legislatures across the country to consider this latest tactic to feed from the Medicare National Bank: in Colorado, held to lower taxes by their self-imposed "Tax Payers Bill of Rights" (or so-called TABOR law enacted in 1992), legislatures have resorted to a "sick tax" cleverly disguised as a hospital fee added without line-item status to hospital bills:
The state House has passed HB 1293, a tax on sick people. The bill directs hospitals to add a “fee” of up to 5.5 percent on every patient’s bill, keeps the fee secret by prohibiting hospitals from listing it separately, and reimburses hospitals on the basis of what they say their costs are.

Those supporting HB 1293 pretend that this is a fee on hospitals. They say hospitals will pay this fee, something that can be true only if hospitals have large pots of surplus funds lying around.
As Linda Goreman, director of the Health Care Policy Center for the Independence Institute, a Golden-based libertarian think tank points out (pdf):
The ultimate irony in all this is that HB 1293’s sponsors upped the ante on their language perversion by claiming that the magic fee that increases the cost of private sector health care to the tune of $600,000,000 a year “makes health care more affordable.” They even named HB 1293 the “Colorado Healthcare Affordability Act.” For this legislature, bigger government and higher fees translates into more affordable living both for it and for its big business friends.

If it gets rewarded for its tax into fee prestidigitation and its “affordability” act, voters should expect the future to bring such affordability measures as income taxes transmuted into job privilege fees, increased sales taxes transmuted into transactions fees, and constitutional protections transmuted into therapeutic suggestions.
Hey, if they can do it to our cable and phone bills, why not hospital bills, too?

All in the name of making health care more "affordable."

Brilliant.

-Wes

h/t: Walter Olson, editor, Point of Law.

11 comments:

Ryan said...

The doublespeak is strong in Colorado.

doc said...

I am almost certain that here in good old NY State, home of every tax known to man, we already have that

J. Bowen said...

Did you hear about this story: http://bureaucrash.com/2009/04/01/who-is-health-care-regulation-protecting/?

Anonymous said...

As the link in the last comment suggest, our entire health program is held captive by the insurance industry...and yet conservatives do not want a national health plan. In fact, those without coverage go to emergency room; then the hopitals charge a fortune to those with coverage; then the rates go up again.

Anonymous said...

Depending on whether hospital rates are already near monopoly prices, this may not affect rates very much at all.

The typical patient at a hospital likely does not search for bargains before going. Rates are mostly negotiated with insurers, and here again, patients are more interested in coverage, coinsurance, and copays than they are rates paid to doctors; and, in any event, these contracted rates can change with very little notice to hospitals and none to patients. In other words, I doubt hospital prices have very much at all to do with market forces.

If rates are near monopoly prices, attempting to raise rates could possibly lead to businesses simply dropping insurance coverage for their employees or, if they are required by law to provide insurance, going out of business. That could lower demand for medicine, pushing prices lower again.

Maybe that would lead to shortages, but that seems far from certain. Medicine seems to be a highly competitive field; if some doctors decide lower salaries aren't worth it, it seems to me that there would many others eager to take their places.

DrWes said...

Anony 04:38-

"...this may not affect rates very much at all."5.5% to this doctor seems like one heck of a lot of money added to the coffers of state government administration directly from patients and their insurers. What are the patient's getting in return for this "fee/tax?" Certainly in the big scheme of things, like a $1 trillion dollar health care reform package, the amount is relatively small potatoes, But who are we kidding? Further, this "tax" is on hospital charges, not negotiated price concessions with insurers. Will patients be left with the residual tab in that circumstance? Most likely.

The typical patient at a hospital likely does not search for bargains before going.Who are you kidding? While this may have been the case in the past, with more and more uninsured the pressure for transparency is growing and patients are increasingly "shopping." Certainly, when patients receive emergent or "free" health care courtesy of the US government, the amount added will be (purposely) invisible, so we'll all be left to pay the 5.5% tab.

If rates are near monopoly prices, attempting to raise rates could possibly lead to businesses simply dropping insurance coverage for their employees or, if they are required by law to provide insurance, going out of business.Which is precisely why a government set of "plans" expanding Medicare will happen under our Democratic leadership (actually, it already has... more on this in a future post). When it comes to pass (and it will) employers will dump their policies faster than you can shake a stick and turn their employer-based insurance over to the government plan(s).

Medicine seems to be a highly competitive field; if some doctors decide lower salaries aren't worth it, it seems to me that there would many others eager to take their places.You, sir, are delusional to think that "many others" are eager to take their places. Look at primary care. Are people flocking to that field? Absolutely not. Why? They arent paid competetively for what they do. Spcialist fields are still preferred. But burnout is affecting specialists, too. Productivity requirements and salary concessions are negotiated by other third parties. Medicare limits on payments to doctors as a form of cost containment will only exacerbate the shortage as doctors increasingly exit the conventional Medicare model.

In summary, the health care reform agenda has a very big problem that no one has solved yet: what to do about the doctor shortage that already exists and is likely to grow. Massachusetts is a good example: people with insurance but no one to see them.

Others have discussed where health care policy pundits have to decide what they want: quick care, free care, quality care - pick any two. If health care "extenders" are what you mean by those "eager" to take doctors' place, well then, you're probably right. But is that what America wants?

I don't think so.

randian said...

in Colorado, held to lower taxes by their self-imposed "Tax Payers Bill of Rights" Wasn't TABOR gutted in the last round of Democrat election victories?

Sparky said...

We've had a similar thing in New York for years. The tax is added to hospital bills that are covered by private insurance - driving up the cost of the insurance. The patient doesn't see it because the bill goes to the insurance company

In NY the "reason" is to keep New York City hospitals open - in a glutted market. The pretense is that they're "teaching" hospitals, serving a vital medical education purpose.

The real reason is to please the all powerful hospital workers union - keeping thousand and thousands of orderlies, cooks, etc working, and paying union dues. When people complain about costs, the union whores in the NY legislature, and the unions themselves blame the "greedy" insurance companies for the costs.

In a rather weird coincidence, the employers, hospitals, take the side of the union, because all the highly paid management wan to keep their cushy jobs too.

Any time there is even a hint of any health care cost containment, multimillion dollar ad campaigns - all scare - start. These are funded by the union AND the hospitals.

Anonymous said...

anon 04:38 here again.

"'...this may not affect rates very much at all.' Will patients be left with the residual tab in that circumstance? Most likely."

maybe. But my point is that the loss need not fall entirely on their shoulders; there is certainly room for adjustment in the profit and operating expenses of both insurance companies and hospitals.

"'The typical patient at a hospital likely does not search for bargains before going.' Who are you kidding? While this may have been the case in the past, with more and more uninsured the pressure for transparency is growing and patients are increasingly shopping."

I genuinely wonder just how these patients are shopping. I'm uninsured and recently broke a bone. At the hospital, no one could even give me a ballpark estimate of how much I would be charged until after I was treated. Contractors continued to send bills directly to my house long after we'd paid the hospital in full. None of the parties had any idea how much the others were charging me; I spent weeks just dealing with the dizzying bureaucracy within the hospital after some back-and-forth about whether discounts were authorized.

Maybe the typical patient has discovered something I haven't? Without evidence, however, I am skeptical that market pressure for transparency will ever be sufficient to force that transparency. (Insurance seems even worse; consumers are only allowed to view summaries, and not their actual policies, until after they've applied and agreed to pay for their first month.)

In short, the market for health care seems highly inefficient, and the burden of increased taxes and costs will not necessarily fall entirely on consumers.

J. Bowen said...

I genuinely wonder just how these patients are shopping. I'm uninsured and recently broke a bone. At the hospital, no one could even give me a ballpark estimate of how much I would be charged until after I was treated. Contractors continued to send bills directly to my house long after we'd paid the hospital in full. None of the parties had any idea how much the others were charging me; I spent weeks just dealing with the dizzying bureaucracy within the hospital after some back-and-forth about whether discounts were authorized.

Maybe the typical patient has discovered something I haven't?
Your experience is your own fault. In most cases, a broken bone is not life threatening. You could have spent a few minutes or hours calling around to different doctors to get quotes for your care. There were probably many doctors in your area that could have treated a broken leg for far less than what you were charged for going to a hospital. You could have called around and tried to negotiate a rate with a doctor. Do you know how I know? I've done it.

I had what I thought was a broken bone some months ago and did just that. I started with the nearby hospital. After being shuffled around to different departments without ever having received a quote, I finally gave up and started calling doctor's office. A few said that they didn't have any time to see me. Some didn't have a readily-available price list. Most did have a readily-available price list and were willing to see me immediately - for an extra fee. Of those who were, most were willing to negotiate the price if I paid in cash. I finally settled on an urgent care clinic that charged a flat fee for certain services (I still didn't know the extent of the injury or what would need to be done). I walked right in and sat only as long as it took me to fill out my paperwork. I was prepped by the nurse, had an x-ray taken, was seen by the doctor, and had my x-ray seen by the radiologist...all for the low, low rate (as compared to the going rate in the area) of $150 (had I actually had a broken bone and needed it to be reset and put in a cast I would have been charged more). All in all, I had a good experience.

Prior to that, I'd had a vasectomy. Because I'm effectively uninsured (I have VA coverage, but, after having been there a couple times for the disability process, I'm never going there again unless I'm forced to), I had to shop around for an affordable, yet qualified, urologist. I went through the same process that I just described. I called several urologists, asked for stats on "failed" vasectomies and vasectomies where there were significant side effects (important questions to ask before letting any urologist hack away), tried to negotiate rates (they weren't as willing to negotiate for what is essentially an elective surgery), and finally settled on one that I thought I could trust for the price that I was willing to pay (I would have felt more comfortable with one that charged far more as he had much better stats, but he simply charged too much).

Between the two instances, I called nearly two dozen clinics. I gained some pretty good insight into the local clinics, the prices of certain kinds of health care, and how to shop for health care. I've learned that going to the hospital for non-life threatening problems just isn't necessary and that I'm much better off if I take my care into my own hands.

Anonymous said...

Anon 04:38 here again. I'm not asking whether my experience was my fault or not. (It wasn't.) I'm simply pointing out that I think most medical care, especially emergency care, is provided in an inefficient market. And because this is so, large economic rents are extracted from patients. I see no reason to believe that they will absorb all of the losses whenever taxes or demand go up.