Hearing on Promoting Competition To Lower Medicare Drug Prices
Subcommittee on Health, Hearing on Promoting Competition to Lower Medicare Drug Prices
Thursday, March 7, 2019
The decision to not allow Medicare Part D to follow the Department of Veterans Affairs and negotiate down drug prices helped end the balanced budget that President Bush inherited from President Clinton. This bill also pushed Bruce Bartlett out of the Republican Party and prompted the writing of the book that sealed the deal. The passage of that legislation was fishy, from leaving the vote open unto the wee hours of the night to future hiring of the law's author by big PhARMA.
While the Affordable Care Act helped ameliorate the worst feature of the Act, the coverage gap in the middle, it did not eliminate it. Perhaps competition will allow that gap to be filled. I would not use it to reduce the deficit at this time. The Tax Cut and Jobs Act, which did not give much of the former to the vast majority of taxpayers and could lead to reduction of the latter, its harm is offset by higher government spending.
What passes for modern economics is flawed, not even keeping with the official definition of GDP, which equal government spending, consumption from government employee, contractor, transfer recipient and second order private sector spending, which leads to private sector investment, and exports net of imports (which creates a source of funds for debt finance).
Nothing in this definition includes tax cuts for the wealthy, which mainly produce asset inflation rather than real growth. To forestall asset inflation, deficits must remain high and entitlements should not be cut. I am quite sure that Mr. Holtz-Eakin disagrees with me on this point, but again, his version of modern economics is flawed.
The real danger to our economy is the growth of net interest on the debt, both from rate increases and from continually rolling over net interest costs into new borrowing. This growth in debt is only feasible until either China or the European Union develop tradable debt instruments backed by income taxation. Currently, we trade the security of our debt for consumer products.
This is the secret to the ability of the United States to be the world’s bond issuer. It is why a trade deficit is not necessarily a bad thing, although the President does not seem to realize this. Indeed, exporting the debt is the essential feature of neo-liberalism, as is the belief that saving more for retirement with tax assisted accounts while shifting jobs overseas can have their slavery pay for our retirements. At some point overseas workers will rebel, so we need incentives to pay down the debt.
The national debt is possible because of progressive income taxation. The liability for repayment, therefore, is a function of that tax. For every dollar you pay in taxes, you owe $13 in debt. People who pay nothing owe nothing. People who pay tens of thousands of dollars a year owe hundreds of thousands.
The answer is not making the poor pay more or giving them less benefits, either only slows the economy. Rich people must pay more and do it faster. Most workers cannot reliably save, or even eat. Don’t look to them to ever pay off the debt. Your children and grandchildren and those of your donors are the ones on the hook unless their parents step up and pay more. How’s that for incentive to raise taxes?
We preface our remaining comments with our comprehensive four-part approach, which will aid members’ familiarity with its points, inform new committee members and provide context for our comments.
Bullet Two would take care of the hole we are digging ourselves into, provided that taxation and spending under the other bullets.
If passed, Medicare for All would provide an ever growing pool of beneficiaries with Medicare benefits at Medicaid prices, with the difference being paid by either a payroll tax (employee and/or employer) or with an NBRT/SVAT, which would tax both labor and profit. More beneficiaries will make drugs even cheaper to purchase if Medicare is allowed to negotiate with drug providers.
Short of that, an NBRT subsidized Public Option would allow sicker, poorer and older people to enroll for lower rates, allowing some measure of exclusion to private insurers and therefore lower costs. Of course, the profit motive will ultimately make the exclusion pool grow until private insurance would no longer be justified, leading-again to Single Payer aka Medicare for All if the race to cut customers leads to no one left in private insurance who is actually sick.
The NBRT can also provide an incentive for cost savings if we allow employers to offer services privately to both employees and retirees in exchange for a substantial tax benefit, either by providing insurance or hiring health care workers directly and building their own facilities. Employers who fund catastrophic care or operate nursing care facilities would get an even higher benefit, with the proviso that any care so provided be superior to the care available through Medicaid.
In the long run, employers, especially ESOPs and cooperatives could replace health care services for both employees, the indigent and retirees and opt out of Medicare for All and receive an offset for NBRT/SVAT levies. This proposal is probably the most promising way to arrest health care costs from their current upward spiral – as employers who would be financially responsible for this care through taxes would have a real incentive to limit spending in a way that individual taxpayers simply do not have the means or incentive to exercise.
While not all employers would participate, those who do would dramatically alter the market. In addition, a kind of beneficiary exchange could be established so that participating employers might trade credits for the funding of former employees who retired elsewhere, so that no one must pay unduly for the medical costs of workers who spent the majority of their careers in the service of other employers.
Expanding the number of employee-owned companies and cooperatives could be established with personal retirement accounts. Accounts holding index funds for Wall Street to play with will not help.
Accounts would instead hold voting and preferred stock in the employer and an insurance fund holding the stocks of all such firms. NBRT/SVAT collections, which tax both labor and profit, will be set high enough to fund employee-ownership and payment of current beneficiaries.. All employees would be credited with the same monthly contribution, regardless of wage. The employer contribution would be ended for health care at all levels.
Thursday, March 7, 2019
The decision to not allow Medicare Part D to follow the Department of Veterans Affairs and negotiate down drug prices helped end the balanced budget that President Bush inherited from President Clinton. This bill also pushed Bruce Bartlett out of the Republican Party and prompted the writing of the book that sealed the deal. The passage of that legislation was fishy, from leaving the vote open unto the wee hours of the night to future hiring of the law's author by big PhARMA.
While the Affordable Care Act helped ameliorate the worst feature of the Act, the coverage gap in the middle, it did not eliminate it. Perhaps competition will allow that gap to be filled. I would not use it to reduce the deficit at this time. The Tax Cut and Jobs Act, which did not give much of the former to the vast majority of taxpayers and could lead to reduction of the latter, its harm is offset by higher government spending.
What passes for modern economics is flawed, not even keeping with the official definition of GDP, which equal government spending, consumption from government employee, contractor, transfer recipient and second order private sector spending, which leads to private sector investment, and exports net of imports (which creates a source of funds for debt finance).
Nothing in this definition includes tax cuts for the wealthy, which mainly produce asset inflation rather than real growth. To forestall asset inflation, deficits must remain high and entitlements should not be cut. I am quite sure that Mr. Holtz-Eakin disagrees with me on this point, but again, his version of modern economics is flawed.
The real danger to our economy is the growth of net interest on the debt, both from rate increases and from continually rolling over net interest costs into new borrowing. This growth in debt is only feasible until either China or the European Union develop tradable debt instruments backed by income taxation. Currently, we trade the security of our debt for consumer products.
This is the secret to the ability of the United States to be the world’s bond issuer. It is why a trade deficit is not necessarily a bad thing, although the President does not seem to realize this. Indeed, exporting the debt is the essential feature of neo-liberalism, as is the belief that saving more for retirement with tax assisted accounts while shifting jobs overseas can have their slavery pay for our retirements. At some point overseas workers will rebel, so we need incentives to pay down the debt.
The national debt is possible because of progressive income taxation. The liability for repayment, therefore, is a function of that tax. For every dollar you pay in taxes, you owe $13 in debt. People who pay nothing owe nothing. People who pay tens of thousands of dollars a year owe hundreds of thousands.
The answer is not making the poor pay more or giving them less benefits, either only slows the economy. Rich people must pay more and do it faster. Most workers cannot reliably save, or even eat. Don’t look to them to ever pay off the debt. Your children and grandchildren and those of your donors are the ones on the hook unless their parents step up and pay more. How’s that for incentive to raise taxes?
We preface our remaining comments with our comprehensive four-part approach, which will aid members’ familiarity with its points, inform new committee members and provide context for our comments.
- A Value Added Tax (VAT) to fund domestic military spending and domestic discretionary spending with a rate between 10% and 13%, which makes sure every American pays something. Carbon taxes are included in this category.
- Personal income surtaxes on joint and widowed filers with net annual incomes of $100,000 and single filers earning $50,000 per year to fund net interest payments, debt retirement and overseas and strategic military spending and other international spending, with graduated rates.
- Employee contributions to Old Age and Survivors Insurance (OASI) with a lower income cap, which allows for lower payment levels to wealthier retirees without making bend points more progressive.
- A VAT-like Net Business Receipts Tax (NBRT), which is essentially a subtraction VAT with additional tax expenditures for family support, health care and the private delivery of governmental services, to fund entitlement spending and replace income tax filing for most people (including people who file without paying), the corporate income tax, business tax filing through individual income taxes and the employer contribution to OASI, all payroll taxes for hospital insurance, disability insurance, unemployment insurance and survivors under age 60.
Bullet Two would take care of the hole we are digging ourselves into, provided that taxation and spending under the other bullets.
If passed, Medicare for All would provide an ever growing pool of beneficiaries with Medicare benefits at Medicaid prices, with the difference being paid by either a payroll tax (employee and/or employer) or with an NBRT/SVAT, which would tax both labor and profit. More beneficiaries will make drugs even cheaper to purchase if Medicare is allowed to negotiate with drug providers.
Short of that, an NBRT subsidized Public Option would allow sicker, poorer and older people to enroll for lower rates, allowing some measure of exclusion to private insurers and therefore lower costs. Of course, the profit motive will ultimately make the exclusion pool grow until private insurance would no longer be justified, leading-again to Single Payer aka Medicare for All if the race to cut customers leads to no one left in private insurance who is actually sick.
The NBRT can also provide an incentive for cost savings if we allow employers to offer services privately to both employees and retirees in exchange for a substantial tax benefit, either by providing insurance or hiring health care workers directly and building their own facilities. Employers who fund catastrophic care or operate nursing care facilities would get an even higher benefit, with the proviso that any care so provided be superior to the care available through Medicaid.
In the long run, employers, especially ESOPs and cooperatives could replace health care services for both employees, the indigent and retirees and opt out of Medicare for All and receive an offset for NBRT/SVAT levies. This proposal is probably the most promising way to arrest health care costs from their current upward spiral – as employers who would be financially responsible for this care through taxes would have a real incentive to limit spending in a way that individual taxpayers simply do not have the means or incentive to exercise.
While not all employers would participate, those who do would dramatically alter the market. In addition, a kind of beneficiary exchange could be established so that participating employers might trade credits for the funding of former employees who retired elsewhere, so that no one must pay unduly for the medical costs of workers who spent the majority of their careers in the service of other employers.
Expanding the number of employee-owned companies and cooperatives could be established with personal retirement accounts. Accounts holding index funds for Wall Street to play with will not help.
Accounts would instead hold voting and preferred stock in the employer and an insurance fund holding the stocks of all such firms. NBRT/SVAT collections, which tax both labor and profit, will be set high enough to fund employee-ownership and payment of current beneficiaries.. All employees would be credited with the same monthly contribution, regardless of wage. The employer contribution would be ended for health care at all levels.
posted by Michael Bindner at 10:00 AM
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