401 k

Republicans are now talking about taxing your 401k plan contributions. This is the system that llows you to decrease your total income by contributing pre-tax money into a 401k plan for retirement. The present system is of greatest benefit to those who pay the most in taxes. A low wage earner cares little about a tax-free savings vehicle. Indeed, the 401k concept has been called a cruel hoax for the poor who don’t have anyting left over after rent and food to contribute. It’s not really tax-free, just tax-deferred, because you must eventually take the money out of that plan and pay taxes on it when you do. However, Republicans want that money NOW to finance tax breaks for the wealthy.
No concrete proposals yet, but an idea floated to test the waters. If there is no protest, it may become a law.
Under the present system, any contribution to a 401k decreases your taxable income and may push you down into a lower tax bracket. The net effect could reduce your total tax burden enough to almost compensate for your contribution, making it almost free money. When you add an employer match to the pot, it becomes, indeed, free money. But stay tuned, it may disappear.

Narrow Networks

Employers and insurers alike are narrowing choices for patients seeking healthcare. Employers argue that they are seeking more cost effective providers or those that demonstrate better “quality” (undefined). With narrow networks, insurers can get steeper discounts on care, as providers seek to be included in their plans. For the patient, there will be fewer choices when you need care. This can make decisions easier and may give you more leverage if the provider truly values inclusion in the network. However, it may also mean always going to the low cost provider who can’t get any business otherwise. A transparent selection process with objective metrics would go a long way toward easing patient anxiety. We went thru the low-cost provider era with HMOs many years ago, and the results were not good. Providers may be constrained from offering tests or procedures, because that would run their cost-profie up, resulting in exclusion from the network, regardless of any benefit to the patient. It aso erases the patient’s ability to take their business elsewhere–there is no othe rplace. At the moment, cost seems to be the driving force. Stay tuned.

Single Payer

Bernie Sanders has introduced a bill for single payer healthcare, and four other senators have signed on. Ths won’t make it a law, particularly in a Republican Congress, but it does suggest that this will be a Democratic platform issue in the 2020 elections. There’s a lot not to like about single payer systems, even tho almost every other country in the world has one. First, the government owns healthcare. All of it. Who pays the piper calls the tune, and the government will name the music. That means they will also define what sort of healthcare you can get. Many countries set a value on human life and then analyze any new drugs or procedures in therms of years of useful life added. If the new drug costs more than the life-years it provides, it wll not be allowed. Also when times get tough, and the budget must be cut, healthcare is an easy target. Lines get longer.
Still, we have not come up with another way to provide heatlchare for everyone. The primary goal of the Affordable Care Act was to make it possible for everyone to purchase health insurance and hence have access to healthcare. That has sort of worked, but Republican efforts have left millions stranded without access to healthcare.
That means a single payer system may be the only option left. It does work in most other countries, with some appologies. Patients who live with this system come to accept the long lines and restricted services, because they have never known anything different. Also, some systems allow the wealthy to purchase other health insurance or heathcare that the public system wouldn’t allow.
Interesting that Republican efforts to thwart the ACA may push the country into a single payer system funded by the federal government.

Market Concentration

Market Concentration is a new concept for healthcare. It means simply that if you get sick in this area, you have only one place to go for healthcare. One company owns the hospital and all the physician practices in the community. If you want healthcare, you go to them. There are many such communities. In fact, over 90% of the communities in the US could be described in this way. What does it mean? Well, for one thing, prices are higher. It’s a monopoly, and the provider can charge any price they want. There is little or no compettion. Second, the quality of care goes down. The provider (hospital or physician office) no longer has to pay attention to what customers think, patients have no place else to go.
How does this happen? The local communty hospital begins to have financial trouble. There is lots of money to be made in healthcare, but you have to know what you’re doing. At one time, everyone made money without really trying. Those days are gone. Corporate healhcare organizations get lower prices on supples, but they also know how to manage the processes of care to maximize profits. So a corporate entity (or frequently a university hosptal) will offer to purchase the local hospital. The allure is appealing. “Gee, we could have the University of Anywhere running our hospital.” Why would the Univrsity want to do that? Well, to make money, of course. They will make money off your hospital, and they will also use it as a feeder for their specialty clinics at the Gand Mecca in the next town. If someone in your community needs highly speicialized care, that’s where they will go.
Healthcare will become more expensive because of a lack of compeition. Heath insurance will also become more expensive, because insurance companies lack bargaining power in a comunity with a monopoly hospital.
The new monopoly hospital will then begin buying out local physician practices. Eventually, there will be no independent practitioners. Everyone will work in the Medical Office building next to the hospital.
As patients, we cannot affect this process. The US Congress needs to strangthen the rules on competition and antitrust. That seems unlikely to happen, given the mind set of the current administration. Maybe someday

Taxes

No one likes to pay taxes. Well, that’s not entirely true. Some, like my father, don’t mind taxes. His location even had a separate school tax that he was happy to pay, even tho he had no kids in school. “Good schools run my property values up,” he said. Perhaps it would be better to say that most people would smile if their taxes went down a bit. So, how would that go? We had that experience locally a few years ago and nationally in the past year. First, there is a trickle down with tax revenue. Money sent to the State trickles down to the counties. If state taxes are lowered, there is less trickle down money for the county, so the county cuts back on services. Teachers get laid off. Art and music programs in the schools are cancelled. Employees in the county government are laid off. I called the county offices and the county executive answered the phone. Lots of services that touch lots of county residents just aren’t there anymore. The overall quality of life suffers.
There is a point, of course where citizens don’t want to pay for this or that and ask their representatives to take it out of the budget. These days, representatives generally don’t listen to constituents, but that’s the way it’s supposed to work. Some representatives don’t hold town halls or refuse to meet with constituents. That’s one of the problems with gerrymandering-election to office is assured for the party candidate, so there’s no need to campaign or pay attention to constituents.
There was a question in the Post recently about living with only SS income. SS benefits varied between about $500 and $1,000 a month. Most had free or subsidized housing. Note that not having a mortgage doesn’t make housing free. You still have to pay real estate taxes, and that’s the primary source of revenue at the county level. An increase of $100 in real estate taxes would be a serious blow to someone with $800 a month in SS benefits. For others, it would not be noticed.
There is this myth that lowering taxes stimulates the economy, but quite the opposite is the case. Economies thrive when governments spend money. Too much of this, however, leads to inflation, so governments need to have a mechanism for taking money off the table. One mechanism is higher taxes on the wealthy.
Lowering corporate taxes might induce companies to bring money back to the US, but they won’t spend it. No company will build a new factory unless/until there is demand for the products they would make. Just having money won’t induce any company to build a new factory or hire more employees.

Student Loans

Senator Mark WArner has just sent out a message about student debt, noting that 44 million Americans have student loan debt of $1.4 trillion. This may be the elephant in the room with respect to higher education, making it inaccessible to the majority of Americans. Senator Warner (and others) proposes relief at the Federal level to reduce the burden of this debt on individuals. Today, many students graduate with a large debt from their education, but are unable to find a job to pay it back. There are many negative factors about these loans, and Republicans in Congress are working to make the situation worse.

The proper approach, however, is to look also at the root cause of this problem. A University education has become increasingly expensive. Costs have risen much faster than inflation for many years. One of the root causes is that there are no constraints on costs. The student loan system allows colleges to raise costs above what normal people can afford by invoking loans to pay the difference. This is wrong. Part of the bame goes to universities that provide increasingly luxurious accommodations and surroundings for students. One reason for these seductive surroundings is a competition for students. Colleges must fll their freshman classes. We might also look at productivity of professors. What about the administration? Do we really need a Dean for Left Handed Students?

Perhaps Congress should provide some financial relief for the burden of student debt. Ultimately, however, the cost of higher education must be reasonable. There are, today, colleges that provide excellent education at an affordable price. Go there. Pick a school that doesn’t have a football team or doesn’t charge admission to games. Let admission counselors know that cost is important to you and that a student loan is not an acceptable option.

When I graduated, the president of our univesity told the graduating class that half the cost of our education came from tuition. The balance came from alumni gifts. There were no loans. Ahhh, the good ol’ days.

Medical Tourism

Here’s another approach to reducing healthcare costs: Medical Tourism. Have your big operation done overseas. Costs are much lower, enabling you to bring your spouse along for a little vacation while you are recovering from surgery. The surgeons have frequently been trained in the US and are certified by US specialty boards. Some of the hospitals are managed by US companies.

This option appeals most to those without any insurance, because it’s usually the cheapest way to have surgery. If you do have insurance, check to be sure they will pay the bill. Many will, because the costs are lower than any US hospital.

But be careful. This is one of those situations where it goes well when it goes well. Hospitals overseas generally don’t have the same quality control procedures in place. Medical staff are not organized as they are in the US, so if you have a complaint, there may be no one to talk to. In the US, a nurse has a masters degree in nursing. In many countries, a nurse has only a high school diploma.

Still, it’s a viable option if price is important to you. Check out the Medical Tourism web site or show up at their convention in Los Angeles in October.

The CDC has a page about medical tourism, which lists other things to think about and links to other resources. The main reasons for US patients going overseas are cosmetic surgery, dentistry, and heart surgery.