http://gregmankiw.blogspot.com/

Basically, what Harvard prof Greg Mankiw is saying is that for a family of three, $15,000/year puts them in about the same place as $50,000/year.

Can anybody see how that's a disincentive to get out of poverty?

Wednesday, November 11, 2009
The Poverty Trap
Chapter 20 of my favorite textbook has a section on antipoverty programs and work incentives. One basic point is that when multiple income-based programs are piled on top on one another, the implicit marginal tax rate can reach or even exceed 100 percent.

The chart above (go to source to view) illustrates this phenomenon. It shows income after taxes and transfers as a function of earned income. Notice that as earned income rises from about $15,000 to $30,000, income after taxes and transfers is roughly flat. Indeed, it could even fall. The bottom line: If you are poor, the government is inadvertently ensuring that you have little incentive to try to improve your condition.
Request to CBO: Can you please make and disseminate charts like the one above? Producing this kind of chart correctly is not easy (and I cannot fully vouch for the accuracy of this one) because a variety of different government programs are involved, and their rules are often complex. CBO has the staff to do it right. Moreover, if such a chart came from a high profile, widely respected, and nonpartisan source such as CBO, the problem would get more attention. It certainly deserves it.
I bet there are people in the Obama administration who are quietly worrying about this problem. Why do I say this? Read this old post. The story there is told by Jeff Liebman, a very smart Kennedy School professor now working for President Obama.

(11-12-2009 09:26 AM)Owl 69/70/75 Wrote:  http://gregmankiw.blogspot.com/

Cool blog - thanks for posting it.

See this post in the Atlantic on the economics of health care, mainly interviewing MIT economist Gruber (on theSenate version) - interesting commentary and links as well - pro and con:
Bending the Curve

What I don't understand about the health care debate is this: If we truly have a failed health care model, why are we looking at other failed models instead of looking at what actually works?

You know the WHO study that ranked us 37th in the world? Forget for a moment the obvious problems with their methodology. Obama says he wants to move toward single-payer. The highest rated single-payer system in that study was Canada. At 30th. So we are spending a trillion dollars to move up from 37th to 30th? Why aren't we looking at numbers 1-29?

There is a bit more hope there for those who advocate single-provider systems (like UK). UK was 18th and Italy (another single-provider system) was actually 2nd (though there are indications that was an outlier). The rest of the best fell generally into two categories--tiny countries where it is admitted that scale considerations skewed the results (San Marino, Andorra, Monaco, etc.), and countries which follow the so-called Bismarck approach, which is neither single-payer nor single-provider (France, Netherlands, Germany, Switzerland, Austria, Belgium, Luxembourg).

WHO quit doing the study after 2000 because of methodological concerns, but there is an organization that surveys Europe every year. The Bismarck countries typically finish at the top (Netherlands #1 for last two years, replacing Austria, with the others consistently in the top 10), the single-provider countries around the middle (UK and Italy were 14th and 15th out of 33 last year).

So why are we looking to Canada and UK for our models instead of to the Bismarck systems?

I'm sorry, but until someone can provide a satisfactory answer to that question, this still looks to me to be more about expanding government than about improving health care.

I think you answered your own question in the last line.

In most things they say, "Follow the money", but in politics, I think it is "Follow the power".

(11-24-2009 11:37 AM)OptimisticOwl Wrote:  I think you answered your own question in the last line.

In most things they say, "Follow the money", but in politics, I think it is "Follow the power".

They go hand in hand, don't they?

The health care deals were f**** the minute big pharma and the other corps got their sticky fingers all over everything.

Here's my insanely naive idea:

1) everyone pays into a 'catastrophic coverage' type insurance fund run by individual states (the fed is too big to do this well, imo)
2) any other insurance coverage must be run as a not-for-profit type business.

I read (will find the ref if necessary) that one of the richest men in the US is the CEO for united health care - with something like 10 billion. There's only 250 MILLION people in the US. If you take the wealth this guy has made off of a fraction of US residents, you could distribute $400 to every man/woman/child! We're talking years of preventative health care can be funded with that kind of money.

So no s*** our system is broken. I am more worried about the dis-incentive to get ahead because people already know this is the result. You work your ass off, get hurt or sick, go bankrupt, while MR. CEO enjoys his billions. Gosh maybe I should have worked harder. yup.

(11-24-2009 02:32 PM)emmiesix Wrote:  I read (will find the ref if necessary) that one of the richest men in the US is the CEO for united health care - with something like 10 billion.

Before you go stealing a guy's money that he's earned, how much is he actually paid annually by his company compared to investments or other income sources? His job as CEO is to run a profitable business, not run a charity. Obviously he has done a good job and has been rewarded as the board of directors and shareholders have approved. Turns out, the CEO of United Health actually only made $3.2 Mil in 2008 and $5 Mil in 2007, yet people are trying to run him up a flagpole.

You don't see people looking for the CEO of Walt Disney, American Express or HP to start writing checks. BTW, those CEOs make make $51 Mil, $43 Mil, and $34 Mil a year, respectively.

(all numbers from http://www.aflcio.org)

Don't get me wrong, a guy with 10 billion wouldn't miss a billion here or there, but the fact that he has a large amount of money and runs a profitable business doesn't mean he should wear out his checkbook $400 at a time.

You might be thinking of William Frist, who's ONLY worth $2B.

The striking thing from that list of the richest Americans is how FEW in the healthcare industry made that list. There are 4 people in the Stryker family who are worth over $1B by building up that company. John Abele, who founded Boston Scientific, is worth about $1.2B. There are 3 more under the medical devices category and 3 more under pharmamaceuticals, and that's it out of a list of 400 Americans. For a part of the economy that supposedly accounts for one-sixth of GDP, remarkably few people (12 out of 400) have become what seems to be implied as obscenely wealthy.

Not to pick on you, Emmie, but this one seems a bit of a red herring. I'm not saying your ideas are bad, but your extreme example and the implications that this is a huge area where obscene wealth is being made just does not appear to be true.

Lou started to address this, but if you want to get upset about obscene wealth, that list seems overwhelmed with "titans" of finance compared to their overall slice of economic return.

And actually, the wealth of most of these people actually comes off the backs of shareholders who invested in the companies they ran. Sure, there was revenue and profits that helped drive up what investors were willing to pay for those shares, but it's not necessarily a one-to-one measure.

(11-24-2009 10:44 AM)Owl 69/70/75 Wrote:  So why are we looking to Canada and UK for our models instead of to the Bismarck systems?

I'm sorry, but until someone can provide a satisfactory answer to that question, this still looks to me to be more about expanding government than about improving health care.

Are we really looking the single provider-UK model? Seems as if the Reid/Baucus senate bill is about heavily regulating existing providers (huge caveat, have only read the Atlantic piece on the actual legislation, nothing else). Once the moderate Dems and J Lieberman kill the public option, then you've mostly got new regs of existing providers and expanding Medicaid/Medicare for the poor (or a voucher system?).

Obama walked away from single provider right from the get go, made deals with AMA and big pharma.

I think Obama is missing a huge cost containment (and Nixon to China type moment) by avoiding med mal tort reform. He might be able to peel off a number or Republicans on that issue.

From the press accounts, appears the R's haven't been willing to deal at all, so maybe there's no room for Obama's team move toward centrist issues that would lose the permanently pissed off far left and kill the whole effort.

Anyway, I'm going to go kill a deer with my little brother and we'll make our own sausage this weekend.

(11-24-2009 07:37 PM)ausowl Wrote:  

(11-24-2009 10:44 AM)Owl 69/70/75 Wrote:  So why are we looking to Canada and UK for our models instead of to the Bismarck systems?
I'm sorry, but until someone can provide a satisfactory answer to that question, this still looks to me to be more about expanding government than about improving health care.

Are we really looking the single provider-UK model? Seems as if the Reid/Baucus senate bill is about heavily regulating existing providers (huge caveat, have only read the Atlantic piece on the actual legislation, nothing else). Once the moderate Dems and J Lieberman kill the public option, then you've mostly got new regs of existing providers and expanding Medicaid/Medicare for the poor (or a voucher system?).
Obama walked away from single provider right from the get go, made deals with AMA and big pharma.
I think Obama is missing a huge cost containment (and Nixon to China type moment) by avoiding med mal tort reform. He might be able to peel off a number or Republicans on that issue.
From the press accounts, appears the R's haven't been willing to deal at all, so maybe there's no room for Obama's team move toward centrist issues that would lose the permanently pissed off far left and kill the whole effort.
Anyway, I'm going to go kill a deer with my little brother and we'll make our own sausage this weekend.

Obama has clearly stated his preference for a single-payer system, and his willingness to approach it in stages over a number of years if necessary. The left wing democrats are in agreement, except they may not be so tolerant of the interim stages. What's being proposed in any version looks nothing like a Bismarck plan, and is clearly an interim step on the way to somewhere, as there's no no way any of the proposals are really going to work. Once the new approaches prove to be flawed, there will be pressure for further change. All of the 100-odd additional regulatory agencies/schemes that are being established fit nicely into a single-payer system, but few if any have a place in a Bismarck-type scheme.

You can connect those dots in various ways, I suppose, and if you choose to connect them in a way that does not put us on the path to single-payer, I can only say that I hope you are right. But I don't see it that way. And I do not want to live in a single-payer system.

I wouldn't want the other Beveridge variant--single-provider--either, but I would prefer the UK NHS to Canadian single-payer. At least in UK you can get decent health care by spending your own money outside NHS.

As your comments about Obama missing out on tort reform and republican unwillingness to deal, I think you've answered your own question. As long as Obama doesn't allow anything the republicans want to be considered, exactly why would you expect them to deal? You get bipartisanship by considering ideas from both parties. Obama wants republican support without doing what he has to do to get it. That's not the republicans' fault.

Unlike most people debating the issue, I've actually spent enough time as a consumer of various European health care systems to have an idea what works and what doesn't. Everything the democrats have proposed is taking us in the "doesn't work" direction. I've seen no indication that they are considering anything from the good European systems. I have seen a few disingenuous quotes from various democrats (and Michael Moore) along the lines of, "France has great health care, therefore we should do what UK does." I even heard Moore say in a interview that we need "a single-payer system like France." He's clueless. France is not a single-payer system.

Good luck with the hunting.

(11-24-2009 07:37 PM)ausowl Wrote:  Once the moderate Dems and J Lieberman kill the public option,

I think Dems will go nuclear to get a public system (I won't call it an option).

(11-24-2009 09:19 PM)Owl 69/70/75 Wrote:  Unlike most people debating the issue, I've actually spent enough time as a consumer of various European health care systems to have an idea what works and what doesn't. Everything the democrats have proposed is taking us in the "doesn't work" direction. I've seen no indication that they are considering anything from the good European systems. I have seen a few disingenuous quotes from various democrats (and Michael Moore) along the lines of, "France has great health care, therefore we should do what UK does." I even heard Moore say in a interview that we need "a single-payer system like France." He's clueless. France is not a single-payer system.

Michael Moore - ugh.

Thanks for the perspective re your Europe experience.

Not really on pt, but a friend in the medical device field spends spends significant time in Europe (Germany, France, England) on clinical trials, pre-FDA clearance sales and training - all cutting edge, mostly cardio in his cases, techniques.

Don't know how much innovation is coming from Europe v. being driven by the US device industry, but at least Europe doesn't have the FDA to deal with and are open to surgical innovations.

(11-25-2009 01:04 PM)ausowl Wrote:  

(11-24-2009 09:19 PM)Owl 69/70/75 Wrote:  Unlike most people debating the issue, I've actually spent enough time as a consumer of various European health care systems to have an idea what works and what doesn't. Everything the democrats have proposed is taking us in the "doesn't work" direction. I've seen no indication that they are considering anything from the good European systems. I have seen a few disingenuous quotes from various democrats (and Michael Moore) along the lines of, "France has great health care, therefore we should do what UK does." I even heard Moore say in a interview that we need "a single-payer system like France." He's clueless. France is not a single-payer system.

Michael Moore - ugh.
Thanks for the perspective re your Europe experience.
Not really on pt, but a friend in the medical device field spends spends significant time in Europe (Germany, France, England) on clinical trials, pre-FDA clearance sales and training - all cutting edge, mostly cardio in his cases, techniques.
Don't know how much innovation is coming from Europe v. being driven by the US device industry, but at least Europe doesn't have the FDA to deal with and are open to surgical innovations.

What I understand to be happening is that most of the pure research takes place here because of the tax advantages (which are significant) but a lot of stuff gets to market and out into the system there because of the FDA. That's almost certainly an oversimplification, bit I think, not a gross one.

Conservatives complain that we are on the way to becoming a European socialist state. I wish that were the case. I'd take Europe in a heartbeat over where we are headed--a more expensive, less efficient knock-off that reflects none of the lessons that Europe has learned in the last 50 years.

(11-24-2009 07:37 PM)ausowl Wrote:  

(11-24-2009 10:44 AM)Owl 69/70/75 Wrote:  So why are we looking to Canada and UK for our models instead of to the Bismarck systems?

Seems as if the Reid/Baucus senate bill is about heavily regulating existing providers (huge caveat, have only read the Atlantic piece on the actual legislation, nothing else). Once the moderate Dems and J Lieberman kill the public option, then you've mostly got new regs of existing providers and expanding Medicaid/Medicare for the poor (or a voucher system?).

Anyway, I'm going to go kill a deer with my little brother and we'll make our own sausage this weekend.

This is truly beautiful: in one post are mentioned the making of sausage, the making of laws, and Otto von Bismarck.
God bless the Parliament!