ECONOMY
How
Much of an Impact Does Health Care Really Have on the Economy?
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resident Barack Obama has
called health care one of the largest drags on the economy, but how much of a
negative effect does the sector actually have?
Public and private health care spending is a
significant proportion of the economy, accounting for $2.5 trillion, or 17.3
percent of the gross domestic product (GDP) in 2009, according to government
records. Last year saw the biggest increase in health care spending in a
half-century of record keeping, jumping from 16.2 percent in 2008. That
percentage has advanced significantly. It was 13.8 percent of the GDP in 2000 and
5.2 percent in 1960, according to the Kaiser Family Foundation.
Taxpayers are picking up more of the tab, with the
federal government expected to pay for more than half of the health care bill
for the first time, according to the Centers for Medicare & Medicaid
Services (CMS). Federal and state Medicaid spending rose 10 percent, while
Medicare rose about 8 percent, according to a Los Angeles Times report.
Many observers have said health care spending is
already significant and the economy will not be able to sustain more growth. In
fact, some say the link is unbreakable.
ÒHealth care is the economy,Ó said Meredith
Rosenthal, a Harvard University professor of health economics. She said the
spending growth severely restricts what government can spend on other issues.
That impact is in addition to what employees and
employers are paying for insurance premiums, which increased 119 percent from
1999 through 2008, according to Kaiser. Workers went from paying $1,543 to
$3,354 a year, while the employersÕ portion jumped from $4,247 to $9,325.
During the same period, wages increased 34 percent and inflation rose 29
percent. That means more dollars went to health care and away from other goods
and services, a significant development in a consumer-driven economy.
Others point out that if health care and the
economy are indeed one, then the increase in health care can be seen as an
economic boost. In fact, the Kaiser study showed an increase in health care
employment during the recession. But a Rand Corp. study said the premium
increases result in a larger number of job losses. A 10 percent increase in
health care costs would result in about 120,800 fewer jobs, $28 billion in lost
revenues and $14 billion in lost GDP.
Obama has proposed comprehensive reform that
targets health insurance, expanding the number of people covered and
restricting insurers on issues such as excluding pre-existing conditions.
Others agree that health care spending is a significant issue but believe that
the focus should be on cost and not
federal control.
TAX AND LEGAL
A
Simplified Tax Code Could Become Reality
s tax time approaches, many
people really appreciate how complicated the tax code is and how there has got
to be a simpler way to do it.
Those people would have plenty of company in that
line of thinking. President Barack Obama has said the code needs to be
streamlined and created a task force to recommend changes. He named as its
chairman Paul Volcker, who, as the former head of the Federal Reserve, has been
credited with taming another monster – the roaring inflation rate of the
late Ô70s.
Although that group has not come up with
recommendations, a couple of senators put forward a proposal in February that
would significantly affect the code. Sens. Judd Gregg, R-N.H., and Ron Wyden,
D-Ore., introduced the bill, which goes by the modest name of the Bipartisan
Tax Fairness and Simplification Act of 2010. It would cut the number of income
tax brackets in half and flatten the corporate tax rate.
There would be just three tax rates: 15 percent, 25
percent and 35 percent. The bill would also eliminate the alternative minimum
tax, which threatens to ensnare middle-income taxpayers each year unless
legislators pass a Òpatch.Ó Also, most taxpayers would be able to use a
one-page form to submit their taxes, the senators said.
The law would almost triple the standard deduction
and reduce taxes for those earning less than $200,000, Wyden said. It would
still allow deductions for mortgage interest, charitable contributions and
child tax credits.
The corporate income tax would have a single rate
of 24 percent but allow small businesses with receipts of up to $1 million to
expense equipment and inventory costs.
The capital gains tax also would be changed. The
law would exempt the first 35 percent of capital gains income from the tax. The
first $500,000 of investment would be considered long-term capital gains income
after six months rather than a year.
The
House of Representatives is expected to offer its own version of tax
simplification.
HEALTH
AND WELL-BEING
Wellness
Programs Help Build Health and Esteem While Saving Money
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mid the debate about health
care reform, some employers are already taking steps to control costs and at
the same time improve productivity with wellness programs.
The idea is in the Senate version of the health
care reform bill, and some people have criticized it because they say it
penalizes people for lifestyle choices. Generally speaking, the programs would
set certain goals, such as cutting smoking, dropping weight and reducing high
cholesterol, and tie them to reductions in health care premiums. Some programs
even offer a cash reward.
And what has some critics concerned is that some
programs charge penalties if people do not meet the criteria. The Senate bill would
allow insurers to penalize subscribers at a higher rate, even thousands of
dollars, for not meeting the wellness targets. The idea has support among
Democrats and Republicans, who have been proposing a version of this for the
past few years.
But, controversy aside, it is clear that more
companies and other entities are interested in the programs for controlling
costs and boosting morale.
At Florida Health Care Plans, 93 percent of the
employees qualify for wellness benefits, according to The Daytona Beach
News-Journal. The insurer pays 80 percent of Weight Watchers dues, access fees
to area gyms and 100 percent of any health care premium increases for eligible
employees, who are nonsmokers with a body mass index less than 27.5.
Hudson Technologies, a company covered by the
insurer, said between 75 and 80 percent qualify for the company to pay an extra
10 percent of employeesÕ health care premiums. The companyÕs program started
slowly, with one success at a time.
ÒOne personÕs success just snowballs,Ó said Pam
Price, HudsonÕs human resources director. The company found absenteeism dropped
substantially and has noticed that employees are more engaged.
Roy Braddy, HudsonÕs director of supply chain
management, used to be a 325-pound smoker of up to two Marlboro packs a day,
the newspaper reported. He was able to get rid of blood pressure medicine,
inhalers and the breathing machine he needed just to be able to sleep.
ÒTo be rid of that shame (of being overweight) is
so liberating,Ó he said. ÒIt brings out a new part of your personality and itÕs
really cool.Ó