Stephanie knows something about health care. We can assume she had some input.
Alla Semenova and Stephanie Kelton
An Introduction to the Health Care Crisis in America: How Did We Get Here? — September 2007
Stephanie Kelton | Associate Professor of Economics, University of Missouri-Kansas City
Mother Jones
Bernie Sanders Releases Outline of Universal Health Care Plan—And It's Pretty Good
Kevin Drum
Stephanie Kelton | Associate Professor of Economics, University of Missouri-Kansas City
Mother Jones
Bernie Sanders Releases Outline of Universal Health Care Plan—And It's Pretty Good
Kevin Drum
Assuming this is a freshened up version of the plan Bernie that proposed in 2013, I strongly disagree with Kevin.
ReplyDeleteFrom Kevin's article:
-- increase payroll tax 6.2%. Which we all know ultimately comes out of the employee's compensation. Kevin acknowledges this later in the article.
-- a regressive 2.2% income tax on everyone.
-- various taxes on the rich. I would love to tax the rich but you know and I know that any such proposal is dead on arrival in Congress. Hence the tax-the-rich proposal is merely bait-and-switch and the working class will get stuck with the bill for Sander's proposal.
-- reduce total spending on health care by $6 trillion. Riiiight. And I have a bridge to sell you.
-- Bernie's website calls it "federally administered" but that could mean a lot of things. Bernie's 2013 plan would end Medicare as we know it and instead delegate health care to the states (who would be overseen by Uncle Sam, so if you are a lying politician you could still claim that it's "federally administered.") Under the 2013 plan, if you live in a red state, your Medicare would be replaced with Tea Party-Care. States would have the option of outsourcing the program to private for-profit corporations. Medicare's bargaining power would be lost, instead each state would have to negotiate fees with providers. Rural states with small populations would have little bargaining power and little technical expertise for managing health care.
Bernie needs to clarify exactly who would administer this plan. If it is truly Medicare-for-All then all that is required is a few simple amendment to the existing Medicare law to allow all citizens to enroll, to address the funding, to reduce deductions & copays, etc.. No new law required, just amend the existing law.
Bernie's 189 page 2013 plan was also called "Medicare-for-All" but it actually would have ended Medicare as we know it. He is a politician and he talks out of both sides of his mouth so don't rely on optimistic assumptions, demand to see the actual bill !
Did Stephanie suggest the 8.4% regressive tax on the working class? Is this a new kind of "functional finance" that Abba Lerner never told us about?
"Did Stephanie suggest the 8.4% regressive tax on the working class? "
ReplyDeleteDan she is obviously having no influence on the campaign side of things (not her job btw...)
Wait till he runs against Trump on a platform of 8.4% tax increase Trump will have a 50 state landslide "against this commie"... all Trump will say is that he will repeal "Obamacare" and wont raise taxes while offering no specifics whatsoever...
The tax will not be regressive. Most people will do far better with the tax and without the private plan and its co-pays and deductibles.
ReplyDeleteAnd of course a single payer plan would end "Medicare as we know it." Why would you need a program like Medicare when every American has an identical cradle-to-grave national health insurance card?
Single payer will be infinitely simple. One plan, insuring everyone, from the day they are born until the day they die.
"Tea Party-Care. " aka Darwin's "survival of the fittest!" ... Good luck with that!
ReplyDeleteWhen Stephanie gets back to commenting on blogs, if ever, I hope she takes the time to explain what a bunch of deluded pinheads the "MMT community" has devolved into. I can't believe the stuff I read on all of those various Facebook groups that have popped up. Somehow they have taken the sound countercyclical policy idea that in an economy running below capacity the government can employ some unemployed resources simply by spending more money into the economy, and turned it into the daft idea idea that we don't need taxes at all, and can even finance the long term structural components of the federal budget with money manufacturing, and run a program that comprises 17.5% of gross domestic product without any taxes and $ trillion dollars of annual money injection in oth lean times and boom times.
ReplyDeleteIt's a sad state of affairs. Kelton used to always say things like, "We always said, inflation is the only real constraint on spending." But that part of the message has always sailed right over the heads of the economically illiterate tea party they have recruited into the MMT ranks to build up its numbers; the people who learn about how money is made and think they have discovered that everything is free. One the other hand, it serves the MMT folks right for pandering disgracefully in order to win fans, and for failing to come up with a cogent and formal price theory or anything close o a quantifiable model to make estimates of what is feasible.
Dan,
DeleteMMT's problem in regard to inflation is that it adopts the same mechanistic notion you have of the phenomenon as akin to a physical law of the universe; the same notion the mainstream remains moored to. No one anywhere has offered a useful quantifiable model for what is possible because the basic assumption is junk. If it weren't we wouldn't rely on a policy of permanent overreaction which keeps millions unemployed.
Who in the MMT community is Tea Party? MMT is an inherently pro-government idea.
ReplyDeleteDan believed anyone who does not place priority on confiscatory taxation is in the Tea Party.
DeleteDogma in action.
Why is so hard to implement something literally 99% of the developed world has?
ReplyDeleteThis ain't rocket science. A lot of ideology at work here to against what works, because profits.
Dan.
ReplyDelete"and turned it into the daft idea idea that we don't need taxes at all,"
I rather hope, Dan, that you start reading some psychology and learn about 'loss aversion'.
There is no holy power of taxation. People do not pay tax voluntarily. They *hate* tax with a vengeance. So Taxation should always be a last resort. And importantly it should be imposed *on entities that don't vote*.
The correct solution is to remove individuals from taxation altogether. They must never see tax and they must never feel they pay it. Then you get somewhere.
If you pay attention to the right, they always do everything in their power to highlight taxation and try and bring it to the individual's attention. Then moan like hell about corporations paying tax.
Taxation on salaries should always be paid by the employer. That way an individual's advertised salary is always the salary they take home. The employer calculates tax on the salary paid to the individual and remits it directly to the state. It is never shown on payslips, and ideally it should be rolled into the corporation tax calculation so that it is crystal clear it is a charge to the corporation.
Similarly sales tax should just be in the price of the item and calculated and paid by the corporation selling the goods. That's pretty much how VAT works here in Europe.
The left's mantra should be *corporations pay tax so voters don't have to*.
What I find amazing about the debate on health care (and we're having yet another one at the moment in the UK about the NHS) is that nobody on the progressive side asks the opponents what their proposed alternative use for the people and resources are that is superior to looking after the nation's health.
ReplyDeleteWhere are their employment contracts? Where is the open cheque book with funds in it to hire these people?
And that's because there is no alternative use for resources that is superior to ensuring every citizen is in the best of health. In fact it become a major driver of the production system of the economy. A driver that is infinitely more useful in real terms than shuffling numbers on a computer on Wall Street.
"MMT's problem in regard to inflation is that it adopts the same mechanistic notion you have of the phenomenon as akin to a physical law of the universe; the same notion the mainstream remains moored to. "
ReplyDeleteYES!!!!
I,
ReplyDelete"something literally 99% of the developed world has"
All care is not created equal... iow its not a simple binary relationship if one has or doesnt have "healthcare".... there are qualitative issues involved...
And as far as "profits" go, here in the US an overwhelming majority of care is provided thru non-profit entities... but the people who work there and the facilities, compliance, etc.. have to be paid/paid for...
People does not exactly hate taxes, people hates taxes on them and loves taxes on others. Is a subtle but very important difference when it comes to marketing the politics, and depends very much on the momentum and perception of the people. This is become human societies are implicitly anti-inequality, no matter how the advent of surplus civilizations have make it harder. But the perception of inequality (ore relative importance) is also equally important, if the perceived growth in theoretical wealth is 'fairly' distributed we turn a blind eye, but when it doesn't we don't.
ReplyDeleteAs our society becomes progressively more feudal , and skewed to the top, the proportion of the population who perceives 'potential of being on the winning side' of the higher percentiles of the income distribution decreases, becoming more supportive on progressive taxation even if it's explicit.
The support of taxation, and what form of taxation, depends on context (both at molar and molecular levels).
I dont see why Sanders just doesnt say he will "pay for it" via increased transfer payments...
ReplyDeleteWhen they say "but that will increase the deficit!" just DENY that it will and provide a basic illustration that shows how the taxes will increase as a result of the increased economic activity in the healthcare industry and the "deficit!" would stay about the same... a la Laffer type stuff...
What are the GOP people going to say "Reaganomics was false!" ?
Use their own theories against them... it HAS to be better than running on a big tax increase proposal...
He doesnt have to provide any details .... Trump will NEVER provide any real details during the election and will probably win so why does Bernie have to?
Public healthcare does not equate that private healthcare disappears. There are no quality concerns, that's an absurd claim not backed by comparison to those other 99% countries. It has come to a point where north american population are doing healthcare tourism. FFS, even here inside Europe we have healthcare tourism, not unusually from the "privatize everything" mantra countries to those with socialized healthcare.
ReplyDeleteBut what public healthcare does is force a minimum of quality and price competitiveness in the private sector. USA = the place where people spends the most on healthcare and get the least from it. Plenty of studies out there, the status quo benefits the inefficient rent seeking healthcare industry and all those related (pharma, HC equipment, etc.).
The mental gymnastics part of the north american population have to do regarding this to avoid the crushing evidence is an outstanding example of collective denial and cognitive dissonance, to the point something is called "public or socialized healthcare" is called "single-payer" in the country.
Meanwhile the risk group of "white adult males" addicted to self-extermination through unhealthy habits, alcohol and (prescribed) drug abuse keeps increasing! All with "Ayn Rand rugged individualism" sign of approval.
To each it's own though... maybe is social Darwinism at work, if this is the model as a nation you want to follow.
Neil, the thing is, they know that once public healthcare is provided, is going to be there forever. No one will be able to undo that. I wouldn't bet on the NHS going anywhere, any time soon.
ReplyDeleteForty years of propaganda haven't been able, constant crappification through cuts and 'advanced management techniques' (bollocks) haven't been able.
The only way that's going away if the current status quo completely collapses.
No one anywhere has offered a useful quantifiable model for what is possible because the basic assumption is junk.
ReplyDeleteWhich basic assumption, Dan J.? MMT's real economists have never denied the validity of the equation of exchange. The idea that you can increase the dollar injections into the US economy by over 17% of GDP annually, even when it is at full capacity, and not induce double digit inflation, is absurd. To deny that this would happen, you have to assume an unbounded elasticity in velocity - and basically assume that all of those people receiving all of that money would not attempt to increase their spending roughly proportionally, but would simply hold more money.
Dan the firms would stop paying for it so you would have an offsetting spending decrease at the firms on the front end ... and it would have to be spent on Healthcare ie you would have to submit claims for procedures that were already performed... it wouldnt be "increase the dollar injections into the US economy" that is not descriptive of the process... it would be ex post reimbursement for services that were previously provided so if nobody gets sick, then there are no payments made... its not like the munnie is going to go to hire more people to sit there and do nothing until somebody walks in bleeding or wtf...
ReplyDeleteThis part of Sander's plan though: "along with the end of current tax breaks that subsidize health care" would still occur because you have to spend to get the deductions... so if the spending by the firms ceases the taxes go up cet par...
Dan-
ReplyDeleteAre you serious here?
"The idea that you can increase the dollar injections into the US economy by over 17% of GDP annually, even when it is at full capacity, and not induce double digit inflation, is absurd."
The goal of single payer is to reduce health care spending overall. So if they achieve a 4% cut to health care spending \ GDP then you start your analysis with that:
GDP effect = -$750 Billion per year in GDP
This is the first order effect that will have to be overcome.
What is going to be the net effect of the health care sector that gets reduced by $750 Billion in income each year? Sounds pretty darned DEFLATIONARY to me!
Not what about on the spending side, if households could be projected to save about $5k per year, then this is where we'd see the demand side increase come from. Is $5K in additional spending power per year going to translate to double digit inflation? Is it even going to offset the $750 billion contraction in the health care industry? I'm not even convinced its going be a huge net increase to the economy just from first order effects!!!
Thats why you just put the program in place and then you wait and see how everything evolves. If two years down the road you are starting to see too much inflation and 6% nominal GDP growth or whatever THATS when you raise taxes.....when you HAVE to. And as a happy side effect of doing it this way, its much easier politically to raise taxes because the economy is roaring then when its in the doldrums and the net effect of the policy is so unclear.
"People does not exactly hate taxes, people hates taxes on them and loves taxes on others."
ReplyDeleteThey do. But then the others, particularly if they are rich others, then up the propaganda showing that the next people in the line for the tax hammer is *them*.
That is incredibly effective - particularly amongst the middle classes who know in their heart of hearts that they 'pay' for everything.
Which is why an approach that takes taxation of individuals off the table (at least for everybody with a normal job) is such a powerful proposition.
"The idea that you can increase the dollar injections into the US economy by over 17% of GDP annually, even when it is at full capacity, and not induce double digit inflation, is absurd."
ReplyDeleteWhy is it?
Spending by corporations on health care is eliminated, the tax breaks are eliminated so that gets collected on the corporation tax side.
And a load of insurance salesmen/processing people get to look for a new job. All that capital is scrapped.
Corporations aren't spending their current profits. They are saving them. So eliminating healthcare payments, less tax, will just put their profits up - which they will then hoard like they are doing with everything else.
Functional Finance is about responding to inflation via the auto-stabilisers. Let people coming off unemployment insurance and getting jobs deal with the cut back. There is almost certainly more room than you think, and certainly an awful lot of bank loan restrictions you can put in place before you need to start worrying about deploying the Taxation juju stick.
Ban and regulate before taxation. That way there is less objection to proposals.
The left's mantra should be *corporations pay tax so voters don't have to*.
ReplyDeleteIf "corporations are people" and have the rights of natural persons, then they should have the responsibilities, too. Easy argument.
I dont see why Sanders just doesnt say he will "pay for it" via increased transfer payments...
ReplyDeleteWhen they say "but that will increase the deficit!" just DENY that it will and provide a basic illustration that shows how the taxes will increase as a result of the increased economic activity in the healthcare industry and the "deficit!" would stay about the same... a la Laffer type stuff...
What are the GOP people going to say "Reaganomics was false!" ?
Use their own theories against them... it HAS to be better than running on a big tax increase proposal...
He doesnt have to provide any details .... Trump will NEVER provide any real details during the election and will probably win so why does Bernie have to?
Bernie WANTS to raise taxes. He thinks it is foundation to a progressive program that is based on addressing inequality through redistribution.
I would be surprised if Stephanie has not had the opportunity to set him straight on the economic. But for politicians, politics trumps economics.
The ACA was approved by the Supremes by classifying penalties as a tax. It therefore follows logically that premiums paid are also a tax; Sanders plan therefore amounts to a tax cut.
DeleteThe mental gymnastics part of the north american population have to do regarding this to avoid the crushing evidence is an outstanding example of collective denial and cognitive dissonance,
ReplyDeleteThe US is going the way of Sears. The libertarian CEO ran it into the ground.
MMT's real economists have never denied the validity of the equation of exchange. The idea that you can increase the dollar injections into the US economy by over 17% of GDP annually, even when it is at full capacity, and not induce double digit inflation, is absurd. To deny that this would happen, you have to assume an unbounded elasticity in velocity - and basically assume that all of those people receiving all of that money would not attempt to increase their spending roughly proportionally, but would simply hold more money.
ReplyDeleteThose funds are not just dumped into the economy but are paid for services. With the increased number of people being treated, services are increasing, and the ability to provide services is being increased by training more people, expanding facilities and buying more equipment, as well as pharma. There is little problem expanding quantity, other than the time factor right now as the roles are increasing and building out and training personnel takes time. But supply is rapidly increasing to meet increasing demand due to the ACA.
Dan, I thought that was a fantastic idea about companies paying the tax instead of the employees. I used to hit 40% tax all the time because the excessive overtime I did. If people only saw their take home pay they might become less tax adverse.
ReplyDeleteI had once had a neighbour who was always complaining about the taxes, but his daughter got a government grant to go to drama school, which he could have never been able to afford, and she went on do very well for herself. But he still moans about the taxes and she became a rank Tory.
No one's mentioned it yet, but I think Warren's Mosler's healthcare plan is the best I've seen. Simple, easy to understand, and has good incentives built in.
ReplyDeleteYeah, Bernie's plan seems a bit hamfisted. Should just advertise as lowering medicare enrollment to age 0, put a few token tax increases here and there that fall mainly on the uber-wealthy, presto-chango.... (govt should have a deficit, might as well come from medicare and social security... err should word it as, private sector should have a surplus)
Let's not forgot, probably THE most important thing to hammer on about single payer is that it's VERY VERY PRO BUSINESS. Especially for the ostensibly worshipped small businesseses and entrepreneurs... You can't very easily start a business if it means your family loses its health insurance.
Kevin sounds like Paul Ryan's story over here (boo-coo xfer payments) now he is GOP speaker of the house having reached there on the back of rampant Ayn Randism....
ReplyDelete"Bernie WANTS to raise taxes. He thinks it is foundation to a progressive program that is based on addressing inequality through redistribution."
ReplyDeleteTom this just seems highly unlikely to ever win in an election...
And btw wrt Sears the news is out that Wal-Mart is closing 100s of stores too... laying off 16,000 iirc
ReplyDeleteThe first step is winning the nomination, and he is doing much better than most expected.
His emphasis on addressing increasing inequality with redistribution through tax policy doesn't seem to be getting in the way yet.