Closing the Enormous Budget Deficit in Atlasian Healthcare

[🐒Gods of Prosperity🔱🐲💸]

As you can see from the latest budget figures from the GM, the Atlasian National Healthcare Act is creating a major deficit. Considering the funding system set up in the law, this was inevitable.

ANHA funding consists of two sources: 1) Funds taken from Medicare and Medicaid, programs replaced by the ANHA; and 2) a tax on private health insurance benefits.  It should be clear from looking at the law why the second of these two revenue sources would be neglible.  The ANHA covers more services than are to be found in virtually any private insurance program, and without co-pays. Further, under the ANHA, doctors cannot accept private payment for these services, so private insurance is nearly useless.  There is thus no demand for its purchase. The law itself takes away all the revenue that was supposed to fill in the gap between Medicare + Medicaid and universal, single-payer healthcare.  

Out of the $1153 Billion current cost of the ANHA, about half is funded by the Medicare and Medicaid funding. A 1.45 % payroll tax in place for Medicare brings in $180 Billion (give or take a few billion). Additionally, Medicare and Medicaid was also funded by general revenues, very roughly about $400 Billion. This means our current deficit for this program is in the neighborhood of $570 Billion. With healthcare inflation, this gap will continue and is likely to grow unless we make a change in policy. We must find the revenue to pay for this program, and we must do so now.

[Southern Senator North Carolina Yankee]

To deal with this deficit of about $600 billion dollars, shua suggested three different tax ideas, which I then forwarded to the GM, Marokai Blue, for review. These options were to increase incomes taxes to 115% of their current levels, a 5% Health care payroll tax (replacing the current 1.45% Medicare payroll tax), and a 6% Value Added tax. In the review, it was revealed that both the income tax option and the VAT option didn't raise enough money. The Income tax hike raised only about $250 billion a year, while the 6% VAT would raise even less at $235.75 billion. The 5% payroll tax would bring in around $424 billion a year because it was in place of the 1.45% tax, and not on top of it and as such it is a 3.55% net tax increase rather then a net 5% increase which would yield $600 billion or so.

We decided that a VAT would have too great an impact on the economy, at the levels that would be necessary to fund this program. According to the GM, a 2% increase has put "250,000 jobs at risk" in the UK. Now, while the GM stated that "at risk" wasn't defined, it is definately concerning that with a significantly larger a economy, that a VAT tax of three times that much could have a very significant impact on the jobs picture and probably far more then payroll tax increase would. It would certainly wipe out the projected growth for several quarters to come. A similar problem occurs with the income tax hike proposal, as a 15% increase (115% of current levels) would only yield about 40% of the needed funds. A 15% increase brings the top bracket to 69%, so we would need to have almost Ike level rates to cover the costs. And this wouldn't just be on the top bracket. Everyone would face a 30% hike or more to cover the cost.


Considering the deficit we are facing and the likilihood of it expanding further we decided that the least bad option would be to institute a 6.5% Health Care payroll tax  to realize the full net $600 billion or so of the 5% increase, which would cover the gap entirely once fully implemented. It is a system, while certainly flawed is a system that is in place already and would present the fewest problems. In order to ease the impact of the transition, implementation would be delayed and then staggered over several months. Both shua and I recommend that future action be taken to further ease the impact, including possible tax cuts eslewhere balanced with spending cuts so as to not affect the deficit, and/or possible tax deductions/credits to employers so as to not drastically increase unemployment as the payroll tax the period in which the payroll tax reaches its full extent.

I developed the following implementation Schedule (Revised):
Current 1.45% - renamed as the Health Care Payroll Tax if not already done so.
January 3%
April 4.5%
July 6%
September 6.5%


All three options basically violate the cap set in Section 8 of the Comprehensive Social Security that the tax burden be not raised by more then 10%. However considering this should have been done two years ago as a part of the HC bill, I think it reasonable to include an exemption into Section 8 regarding Section 4 (Health Care) of the Comprehensive Social Security Act.

[Napoleon]

Or, we can cut benefits until private insurance would be a better option for all but the poorest Atlasians.p

[🐒Gods of Prosperity🔱🐲💸]

Or, we can cut benefits until private insurance would be a better option for all but the poorest Atlasians.p

Yes, if there is a willingness to do major reform of the program itself, that is a possibility (though I think there'd be stronger resistance to it politically).

Our investigations and proposal assumes that the current ANHA continues, and how to fund it. The main thing is we can't wait and not fund this even as we pass new spending bills, and we need to be aware of the real current condition of what taxes need to be under our current policy, as we consider adding new taxing and spending programs like what would be established by the Comprehensive Social Security bill.

[Napoleon]

Everything should be on the table. Obviously conflicting views will have to reconcile to save the programs and our budget. The current bill, I've proposed many cuts to ensure its functionality in the long term.

[Ban my account ffs!]

I will fight to keep the benefits of the ANHA, at a minimum, for the poor and middle class.

Everything else should be on the table, including co-pays and deductibles for high income Atlasians and a reformed payroll tax.

We could also pare back benefits for wealthy people and allow them to purchase supplemental insurance fromt he private market above and beyond what they get from the ANHA... but that should only be a last resort as it is inherently unfair.

I would also be open to forming a tiered system that gives basic healthcare to all (preventative/doctor visits/life saving operations/prescriptions) but makes some care options elective and adds an extra charge (these charges could be on a sliding scale based on income)... not unlike your options when you choose a cable package.

[Southern Senator North Carolina Yankee]

I think an extensive overhaul is too much to include into the Comprehensive Social Security Bill, a bill that is already fairly extensive.

In my opinion we should include the recommendations made to serve as an inducement to complete a more balanced and extensive reform of the ANHA, and do so relatively quickly. That will allow us to pass the CSS within the next week or so and get it off the floor.

[Teddy (IDS Legislator)]

Taxes could be applied to private healthcare to fund the public system.

[Southern Senator North Carolina Yankee]

Teddy, that is already in the ANHA. Considering that the bill bans private insurance from competing with the gov't plan on the items it covers, you are talking a very small tax base to start with, since all that is left of private insurance is plans that cover stuff not included in the ANHA.

[Teddy (IDS Legislator)]

Teddy, that is already in the ANHA.

Ah!! a wonderful idea!!

Considering that the bill bans private insurance from competing with the gov't plan on the items it covers

Uugh!! What a stupid idea!! No wonder why deficits are running away. What are we? Canada? Do we really want a healthcare system as flawed as they have up there?

Also, does that not just rise costs on things which are not covered? Like "I need this operation" "sorry, that's not covered" "crap, might as well buy insurance" "well we are going to tax you" like WTF? who came up with this?

[Napoleon]

Teddy, that is already in the ANHA. Considering that the bill bans private insurance from competing with the gov't plan on the items it covers, you are talking a very small tax base to start with, since all that is left of private insurance is plans that cover stuff not included in the ANHA.

Wow, that is actually very stupid.  I suggest we overhaul the entire cf before it consumes us.

[Southern Senator North Carolina Yankee]

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The source of that problem is I beleive the phrasing of this clause. The use of the words additional insurance refer to I beleive basically a supplemental plan, beyond that which is covered by the Act. By stating that is not forbidden, it implies that competing plans are or atleast might. If memory serves me, this text was modified slightly during the debate because the previous text contained an explicit ban, and I beleive either Franzl or Marokai got that removed. However it didn't rephrase this clause properly when doing so.   

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Are they covered? or Are they eligible to be covered? Such an error means that difference between it being optional, and everyone being in it automatically. Alone that is enough to cause major problems. Combined with the poor phrasing of (d) it is enough to either constitute a ban on private insurance on the items covered, or create enough uncertainty about the statute to ensure counter measures being taken by private insurance. Most likely, a complete pull out of the private market on the items covered in the act.

[🐒Gods of Prosperity🔱🐲💸]

Allowing for payment from private insurance is a good idea, as it will give people more options and reduce cost to the program. However, it isn't going to make much of a difference on the revenue side. Since the tax on health insurance in the bill is 2% or less for most people, and a large percentage will choose not to keep their private healthcare insurance, we can assume that the tax will fill less than 2% of the gap.

[Southern Senator North Carolina Yankee]

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Shua, could you reference the exact section of the ANHA that does this? I think I might be misreading something.

[🐒Gods of Prosperity🔱🐲💸]

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Shua, could you reference the exact section of the ANHA that does this? I think I might be misreading something.

It's seems to me that it's set up in the structure of the bill that transforms all private insurance into a government program, but it's most clear from Section 2:

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(b) states the doctor cannot bill a patient. I interpret this as meaning a patient's individual health insurance as well, as from (a) we see that all payment for these services and benefits is paid for by the Atlasian Government.
There's a reference in section 1f to health insurance companies being required to join an exchange, but I don't see anything private that remains about them either in terms of funding or benefits.

[Southern Senator North Carolina Yankee]

Clause a merely serves to protect people from being billed for what the gov't covers.

Clause b is a problem because of the way it is worded. Going back to what I said about companies likely just leaving the market to avoid conflicting with the ANHA (In RL, they would sue the gov't most likely and probably win ).  It may be a leftover from when the bill explicitly banned competition from private insurers.

[🐒Gods of Prosperity🔱🐲💸]

Clause a merely serves to protect people from being billed for what the gov't covers.

I don't read any limitation there that it only applies to people who already have government insurance.

[Southern Senator North Carolina Yankee]

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The bold is suppose to suffice as such.