Let's Call the Whole Thing Off

by BILL WADDELL

Justice Roberts cast the deciding vote making Obamacare the law of the land.  His logic was largely that it is nothing more than a tax - a whopper of a tax - but just another tax.  Dems are spinning like so many whirling dervishes to avoid the term 'tax'.  Republicans are tarring and feathering Roberts as a traitor to his people.  Let's make this whole thing simple.

Let’s say you and your neighbor have identical incomes and live in houses with identical value.  You are buying your house and paying on a mortgage with interest.  Your neighbor is renting.

 With your identical incomes you both pay income taxes of $20,000.  However, to encourage home ownership and stimulate the construction industry you get to deduct your interest payments so you actually pay $18,000 in income taxes while he pays the full $20K.

Now let’s say the government decides to reduce the tax rate for everyone, eliminate the deduction for mortgage interest, but charge an Obamacareesque penalty of X% of income to everyone who does not buy a house. The reasons for the penalty are the same – to encourage behavior that is deemed not in the best economic interests of the nation.

 As a result of replacing tax deductions for people who behave the way the government wants them to with a system penalizing those who don’t you and your neighbor pay an income tax of $18,000 because of the tax reduction, but he now pays a $2,000 penalty for not buying a house, so his total bill to the IRS is still $20K.

Two different avenues to get to exactly the same place – encouraging behavior from the taxpayers the Congress has deemed to be for the greater good by making misbehavers pay more to the government.

The following video explains the principle quite clearly:

 

The politicians can call the extra two grand charged to the guy not behaving properly a tax, a penalty, a fee, a surcharge …..Democrats say to-may-toe, Republicans say to-mah-toe ….to the guy paying the government it makes no difference whatsoever.

To pay for health care Obama basically had the same choices – Option #1 is to increase taxes but give a tax deduction for everyone who is paying for health insurance; or Option #2 to leave taxes alone and charge a penalty to those not paying for health insurance. 

Even though they have exactly the same impact on both taxpayers and government coffers one is described by the word “tax”and the other by the word “penalty”.  Purely semantics, but Option #1 involves increasing taxes which is a politically disastrous thing to do.  So doing the exact same thing without having to use the term ‘tax increase’ is much easier to sell, but that hardly changes the nature of the thing.

All Justice Roberts did last week was acknowledge the obvious: whether you call them to-may-toes or to-mah-toes, taxes or penalties, they are the same thing.  The Supreme Court has one job - to determine whether laws are in keeping with the Constitution.  Congress has the Constitutional authority to levy taxes. A check written to the government mandated by law is a tax - no matter what word games are played, or which one of many ways to construct an equation with the same answer is selected. 

Why call the whole thing off?  Every lean proponent should know the answer to that one.  It is typical of most organizations - especially the government.  It tries to fix a problem by manipulating the outcome rather than by dealing with the process - getting to the root cause of the problem that is causing the unacceptable outcome.

The root of the problem is out-of-control health care costs.  Obamacare does nothing to address that problem.  The out-of-control costs are mostly massive non-value adding waste, and while there have been some encouraging inroads, the health care industry as a whole has not pursued lean principles.  Health care gets fixed when health care gets lean - period.  Layering more waste and bureaucracy on top of the current waste through a Byzantine set of government controls is a giant step away from lean principles.

Original: http://idatix.com/manufacturing-leadership/lets-call-the-whole-thing-off/

Comments

[Bob G.]

Waste yes, I agree, and alot of it! but your suggestion that "Healthcare gets fixed when healthcare gets lean - period" is a bit misleading (not exactly spot on). With many countries (Sweden, Iceland, Austria, Finland, UK, Greece, Spain, Italy, Japan, New Zealand, Portugal, Israel, Taiwan, South Korea, to name a few) having life expectancies higher than the U.S., all with less than half our Healthcare spending (per capita), I think you might want to fully disclose that it's waste driven by GREED that truly drives the U.S. Healthcare system. Data supported by our own National Center for Disease Control and Prevention suggests that slightly more excercise, slightly better nutrition, a little less drinking, and quiting smoking would reduce most of the costs associated with early death and chronic disease (i.e, where most of our "Health/Sick care $$$ are spent). These simple, modifiable behaviors would not just negate the need for most of the "Health Care" spend as we know it today, but probably negate the need for the vast majority of Lean Healthcare consultants as well. Anyone who suggests that "Lean-Period" is the solution, is either misinformed, ignorant, or just another cog in the "I want mine" GREED machine.

[Bill Waddell]

Bob,

Seems I must be speaking from one "cog in the I want mine GREED machine" to another when I ask, don't you think you should have disclosed that you work for Healthways - a company that makes a lot of money peddling the very solutions you recommend?

[Bryan]

Bob G.,

IF GREED is true driver of the U.S. Healthcare system, THEN less GREED would lower healthcare costs, correct?

How THEN, does more exercise, slightly better nutrition, less drinking, and no smoking reduce GREED?

How do you propose we "modify" my behaviors for the good of the country? What about my children's behaviors? Perhaps you would be interested in how I feel we should modify your behaviors? Are you willing to trade suggestions? That would only be "fair and equitable", no? And just how much money would this save on my health insurance premium, daily health care burden and contribute to my long term financial planning? Where will the taxes come from when we solve World Health? Will they come from the taxes to solve World Hunger? World Poverty? World War? The War on Drugs? The War on Terror? Please explain how this works...because I can't help but see a pattern here.

[Bob G.]

Bill, Bryan,

Will lean improve Healthcare, absolutely! Will Lean fix Healthcare, absolutely not! Thank God for doctors, drug companies, hospitals, nurses, Lean consultants and the salaries/"profits" they enjoy from working in this industry and for making things better. But my point was missed - one example: why was there over $880 billion spent on pharmaceuticals/drugs last year alone? Try using the 5 whys.

[Bill Waddell]

Bob,
I appreciate you toning the comment down a few levels. A couple of points:

If you were a regular reader you would pick up on the well documented, absurd mismanagement of the big pharms. You might want to search the blog to see the magnitude of the waste. Compound that with massive government waste administering the FDA. Eliminate that and the $880 billion is cut in half, or better.

Your whole spiel seems to be built on an assumption that my unhealthy lifestyle choices are based on stupidity on my part, and that I want to live forever. Believe me – I get it. I know that my violations of your creed will probably create health problems for me and very possibly shorten my life. I accept that and am perfectly willing to pay my health insurance premiums and to cover the cost that is not covered, and I am perfectly capable of making the decisions to balance the length of my life with how I choose to define the quality of it.

What gives you – or Michael Bloomberg or Michelle Obama or anyone else – the right to tell me how to live my life and how to spend my money? How does reducing the amount of my income I willingly spend on healthcare help anyone?

What does irritate me is paying $1,000 for health care that should cost me $500.

The total amount of health care spending in this country is not in and of itself a problem. The amount spent for bureaucracy and waste is a problem. The amount spent by people who cannot afford it is a problem. But if I choose to take up downhill skiing this winter (a highly unlikely event) and break my leg incurring a medical bill I am perfectly willing and bale to pay, that is not a problem for anyone.

[Bob G.]

My last comment. Can we agree that the cost of healthcare = value add + unintended waste and intended waste(greed)? My previous example ($880 billion spent on pharmaceuticals/drugs last year) is in fact just one example. Sure, drug companies need profits to enable ongoing R&D, but why does their advertising spend outpace their R&D 3 to 1? http://www.catholicreview.org/article/life/children/drug-company-greed-puts-kids-at-risk-us-speaker-tells-vatican-meeting

[Bill Waddell]

Bob,

At last we see eye to eye - a good way to go into the holiday.

I would add to your equation an element of a wasteful pill-popping culture. How much of that $880 billion was spent for drugs that are wholly unnecessary, or are for trivial purposes ... such as pumping ritalin into every kid who misbehaves in class because saying "my kid has ADHD" is better for the ego than saying "my kid was raised without any sense of self-discipline or respect for authority"?

[Donna]

"The root of the problem is out-of-control health care costs. Obamacare does nothing to address that problem." Totally agree. But we've been sold the story that the solution is to give people access to health INSURANCE, not to health CARE. How can we shift the discussion to the base issue, rather than the SOP thinking rooted in a system already not working? To make a parallel: how have you helped companies undergo the massive mental shift that "going lean" requires, and how could that approach be used to make this country completely re-think our approach to health care?

[Mark Graban]

I'm not the biggest fan of the way the "Affordable Care and Patient Protection Act" came to be (a monstrous big batch of a bill that was rushed through) but we should really question of the law accomplishes the two goals of safer care and more affordable care.

It's not going to be fixed from DC. Even if you believe in the law, as former CMS head Dr. Don Berwick clearly was, he stated that we need a lot of grass roots level improvement throughout the country (including Lean).

I agree with Donna - we need to provide CARE, not just coverage. We need to reduce waste to increase throughput in our hospitals and clinics to ensure real access to care. And that care needs to be SAFE. We need to reduce (or eliminate) preventable medical errors and harm (and death).

If we don't fix processes and take real waste out of the system, the only foreseeable future includes harm and rationing or denial of care, regardless of what gets passed or overturned in D.C.

We all need to get to work.