Why Do Insurers Drive Patients to the ER by Denying Preauthorizations?

[docB]

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We all see it several times a day. "My primary doctor sent me in to your ER to get a (insert some diagnostic test here)." I see it for CT scans predominantly but also ultrasounds, MRIs (which we don't do), blood work, transfusions, dialysis catheter issues, G-tube issues, etc. This is usually not emergent. The rational for dumping these patients into the ED when you call the PMDs is "Well, it'll take me two weeks of paperwork and phone calls but you can do it in a few hours." This, unfortunately, is true.

So why do insurers make it so hard on patients and PMDs to get outpatient workups? They have to know about the ER end run. It's not a secret. It is several times more expensive. Even if the actual test or service doesn't cost more out of the ED which they usually do you add on the ED charges and the ED physician charges which often add up to more than the actual study. You also wind up with duplicated work up. A typical example is the PMD sending the 20yoF with CP and SOB for a CT for r/o PE. Lets just for the sake of argument say it is indicated. He already did a CXR, EKG, preg and CBC at his office. Assuming they don't send the CXR (they never do) all that stuff has to be repeated.

Since EDs exist as does med mal we all know these people are going to get these services. Why are the insurers driving up their own bills by forcing them through the EDs?

I think it's because they have run the numbers and they think that by denying the services many people and PMDs just give up. The number that give up offsets the additional costs of the remainder going through the EDs. But I want to hear what others think.

 

[EctopicFetus]

We all see it several times a day. "My primary doctor sent me in to your ER to get a (insert some diagnostic test here)." I see it for CT scans predominantly but also ultrasounds, MRIs (which we don't do), blood work, transfusions, dialysis catheter issues, G-tube issues, etc. This is usually not emergent. The rational for dumping these patients into the ED when you call the PMDs is "Well, it'll take me two weeks of paperwork and phone calls but you can do it in a few hours." This, unfortunately, is true.

So why do insurers make it so hard on patients and PMDs to get outpatient workups? They have to know about the ER end run. It's not a secret. It is several times more expensive. Even if the actual test or service doesn't cost more out of the ED which they usually do you add on the ED charges and the ED physician charges which often add up to more than the actual study. You also wind up with duplicated work up. A typical example is the PMD sending the 20yoF with CP and SOB for a CT for r/o PE. Lets just for the sake of argument say it is indicated. He already did a CXR, EKG, preg and CBC at his office. Assuming they don't send the CXR (they never do) all that stuff has to be repeated.

Since EDs exist as does med mal we all know these people are going to get these services. Why are the insurers driving up their own bills by forcing them through the EDs?

I think it's because they have run the numbers and they think that by denying the services many people and PMDs just give up. The number that give up offsets the additional costs of the remainder going through the EDs. But I want to hear what others think.

I do think it is the bottom. Docs/patient will just quit and this will save them money. I would imagine if they hit 40% of people quitting they would be net + on their income.

The whole double ordering of tests does just drive me INSANE! Esp expensive tests like CTs.

I am sure everyone has a story like this one.

20-something healthy guy shows up after an outpt CT shows "something going on around my appendix". I call the place but yep.. they are closed. I call the PMD who says he didnt get a report but the guy has appendicitis.. "i think"...

So i am like i dont want to irradiate this guy again, but I do rerun labs. I call the surgeon and explain the whole situation.. I tell him the guy does have RLQ pain but its pretty non impressive. He pushes on the guy.. same feeling. We decide to re-CT the guy and it shows.....

mesenteric adenitis with a totally normal Appy..

because i couldnt get the f-in report from his outpt CT place we blew another 2-3k in the workup... drives me nuts.

 

[GeneralVeers]

I just with primary docs would call us before sending in patients. If they call me and say "I'd like XX test, and admission to XX doctor" then it would save me so much time.

 

[docB]

I just with primary docs would call us before sending in patients. If they call me and say "I'd like XX test, and admission to XX doctor" then it would save me so much time.

You mean as opposed to the Vegas special where the patient says "My doctor sent me in and said he'd meet me here to admit me. Who the Hell are you and where is he?" and then when you call their doc he says "No, I don't want them admitted. I didn't even want them in my office. I just wanted you to be the last doc to see them to divert any liability away from me. Send them home and tell them I'll see them 8 months from next Thursday."

 

[SoCuteMD]

My personal favorite is when a doc sends a patient in to be evaluated. We then try to admit the patient to the outpatient doc if he has admitting privileges. The outpatient doc says, "Really?!?! Do you really think he needs to be admitted?" "Well, um, you SENT a 65 year-old hypertensive diabetic smoker with new T-wave inversions here..."

 

[CommunityED]

"So i am like i dont want to irradiate this guy again, but I do rerun labs. I call the surgeon and explain the whole situation.. I tell him the guy does have RLQ pain but its pretty non impressive. He pushes on the guy.. same feeling. We decide to re-CT the guy and it shows.....

mesenteric adenitis with a totally normal Appy..

because i couldnt get the f-in report from his outpt CT place we blew another 2-3k in the workup... drives me nuts"


And of course her go re-irratiated

 

[Katydid]

Because the claims adjusters do not care. Their bottom line is more profit for the insurance company, which means denying preauthorization for anything they can.

So, patients, like me, get shafted. Emergency doctors, like you, get shafted. Primary doctors, like my former doctor, get shafted.

All because the insurance company wants to save as much money as possible.

Or, at least, that's my patient-who-has-had-to-call-the-insurance-company-and-yell-to-get-anything-accomplished perspective.

 

[GeneralVeers]

Because the claims adjusters do not care. Their bottom line is more profit for the insurance company, which means denying preauthorization for anything they can.

So, patients, like me, get shafted. Emergency doctors, like you, get shafted. Primary doctors, like my former doctor, get shafted.

All because the insurance company wants to save as much money as possible.

Or, at least, that's my patient-who-has-had-to-call-the-insurance-company-and-yell-to-get-anything-accomplished perspective.

If they didn't deny claims, insurance would be much more expensive, if not unaffordable. Do you think they run a charity?

 

[Arcan57]

Why is it not offensive to you to have the healthcare you provide determined by a private company whose responsibility is to its shareholders? Why is the same scenario with decisions about approved therapy made by the government who (at least in theory) is responsible to its citizens anathema?

 

[GeneralVeers]

Why is it not offensive to you to have the healthcare you provide determined by a private company whose responsibility is to its shareholders? Why is the same scenario with decisions about approved therapy made by the government who (at least in theory) is responsible to its citizens anathema?

Whether my care is denied by a private company or by the government doesn't make a difference. They are both trying to save costs. Whether or not that is the "right" thing to do is another story, but there simply isn't enough money to cover all of the care that Americans want to get for "free" (by free I mean paid for by a third party and not the consumer).

At least if it's a private company denying my care I have the choice of picking another provider - not so if it's provided by the government. Things would be even better if we could get rid of the anti-trust exemption for insurance companies to make them more competitive.

 

[Arcan57]

Do you really have a choice about insurance providers though? WE do secondary to our income level, but most people can't afford any insurance other than what their employer provides. Now I agree that the current system of financing healthcare is completely broken (see previous posts about HSAs with mandatory catastrophic coverage), but within the current system I would prefer to remove the "making shareholders profit" motive for denying care.

 

[GeneralVeers]

Do you really have a choice about insurance providers though? WE do secondary to our income level, but most people can't afford any insurance other than what their employer provides. Now I agree that the current system of financing healthcare is completely broken (see previous posts about HSAs with mandatory catastrophic coverage), but within the current system I would prefer to remove the "making shareholders profit" motive for denying care.

I agree with you. We have no choice and most are captive to one insurer. That's why we need to get rid of the employer-based insurance and make all health insurance purchased privately tax-deductible.

I don't have a problem with insurance companies making a profit. Do you really think a non-profit government plan would run things more efficiently? It's so far never happened in the history of this country.

 

[Apollyon]

That's why we need to get rid of the employer-based insurance

Become chronically ill and get back to us. Seriously. You have this one thing, playing over and over. If I had to get health insurance on my own, I couldn't. Period. No matter how much I had to pay, no one would insure me. What do I do then? Curse my forebears for my ****ty genome? With my insurance, I don't screw the insurance companies - which time bears out - but I am lumped with the same people that have. What's your solution to that? "Sorry, *******, dem's da breaks. No matter you're a productive member of society, and not a leech on that same society, but you have to pay for all health care out of pocket - no insurance for you!"

 

[GeneralVeers]

Become chronically ill and get back to us. Seriously. You have this one thing, playing over and over. If I had to get health insurance on my own, I couldn't. Period. No matter how much I had to pay, no one would insure me. What do I do then? Curse my forebears for my ****ty genome? With my insurance, I don't screw the insurance companies - which time bears out - but I am lumped with the same people that have. What's your solution to that? "Sorry, *******, dem's da breaks. No matter you're a productive member of society, and not a leech on that same society, but you have to pay for all health care out of pocket - no insurance for you!"

Life isn't fair. We can't make it fair no matter how hard we try. You have bad genes, why should I pay for it?

The problem with "guaranteed issue" is that when you implement it, insurance is no longer insurance. They become regulated utilities, and either prices would skyrocket, or the government would have to take over.

Why can't you pay into a "catastrophic health insurance" plan when you're younger (and working) that would never expire? It would only kick in if you have medical bills exceeding a certain amount of money. That is one way to solve it. You pay $50 per month into the plan while you are 20-60 years old. You could even pay less per month if you enacted an age activation, say 70 years old. There are multiple solutions to the problem, but Progessives can only see one solution, the solution they have been salivating over for 50 years.

Government takeover of healthcare just shifts the costs around, it doesn't actually make things more efficient.

 

[rmbsstock]

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[turtle md]

Wow, that sucks! Sorry to hear you were treated so badly.

 

[rmbsstock]

out

 

[Apollyon]

Life isn't fair. We can't make it fair no matter how hard we try. You have bad genes, why should I pay for it?

You really are either an idiot or an *******. Why DON'T you just pack up and GTFO to Aus or NZ? After all, there's no cancer or insulin-dependent diabetes there.

"You" are not paying for my "bad genes" by having employer-paid health insurance. It's a group contract. Do you really think that you would get paid more if the employer didn't provide health insurance? Wait until you are a partner (or whatever the hell your group calls it) and you are the one getting a cut of the work done by the underlings. Then, you'll become a money-grubber just like all of the others, and not want to spend it.

Even though, if I had to guess, you are against it, it's illegal to discriminate against people for problems with their health that don't interfere with their work. However, if I don't have insurance, it's more likely that I might have problems and will miss work, causing you a bigger headache. "You" don't pay more for me being diabetic (and I'm type 1 - not the overweight type 2) with the group plan, but, if I had to get it on my own, it's not that I couldn't afford it - simply no one would extend it to me.

Insurance is the thing you buy hoping you don't need it. (Here is where I go out on a crazy limb) Now that you've come out in favor of eugenics and biologic superiority (as you yet haven't had your MI or CA), let's hope that your hitherto unknown genetic frailties (which, if you paid attention at the University of Indiana in med school, you know everyone has), when they come to light, don't cost anything. Or, at least, you will be intellectually honest and tell everyone that, despite using your health insurance, you object to doing so, because it's not their fault for your bad genes.

 

[GeneralVeers]

You really are either an idiot or an *******. Why DON'T you just pack up and GTFO to Aus or NZ? After all, there's no cancer or insulin-dependent diabetes there.

Why do you take this argument so seriously? I'm always amazed at how people become personally offended when arguing social issues or politics.

"You" are not paying for my "bad genes" by having employer-paid health insurance. It's a group contract. Do you really think that you would get paid more if the employer didn't provide health insurance? Wait until you are a partner (or whatever the hell your group calls it) and you are the one getting a cut of the work done by the underlings. Then, you'll become a money-grubber just like all of the others, and not want to spend it.

Yes I would get paid more if we didn't have health insurance. It's actually figured into our hourly wage at approximately $10/hour. I also work for a national company at a 2nd job that pays higher salary, but in return the employees have to cover their own medical and 401K expenses.

Even though, if I had to guess, you are against it, it's illegal to discriminate against people for problems with their health that don't interfere with their work. However, if I don't have insurance, it's more likely that I might have problems and will miss work, causing you a bigger headache. "You" don't pay more for me being diabetic (and I'm type 1 - not the overweight type 2) with the group plan, but, if I had to get it on my own, it's not that I couldn't afford it - simply no one would extend it to me.

I have no problem with anyone working who can physically perform the required tasks. I would completely separate the employer/insurance system we have now, so someone's perceived disability would be irrelevant at work.

What you are saying is that at some level those who are not sick should directly pay for the sick. I disagree, but if that's what you believe then so be it. Most of the morbidity, especially in early life is due to obesity, smoking, and drug/alcohol consumption. Yes, "poor" genes do effect things, but that doesn't give you an excuse to be 300 lbs, smoke, and drink a fifth of Vodka daily. You can mitigate the effects of your genes, and much of the research now is demonstrating that epigenetics (how proteins and environment effect your genes) may in fact be more powerful than the underlying genetic code when it comes to disease.

Insurance is the thing you buy hoping you don't need it. (Here is where I go out on a crazy limb)

So if you have a pre-existing condition, you are not buying insurance, but rather a healthcare plan. You just made my argument for me.

Now that you've come out in favor of eugenics and biologic superiority (as you yet haven't had your MI or CA), let's hope that your hitherto unknown genetic frailties (which, if you paid attention at the University of Indiana in med school, you know everyone has), when they come to light, don't cost anything.

Eugenics is the intentional alteration of the genetic code to produce a desired phenotype. I have suggested no such thing. I've suggested several ways in which responsible people can mitigate their risk of having catastrophic health bills in the future. One of which is paying into an emergency fund when young and healthy....but wait the young and healthy would rather spend their money on material goods and homes they cannot afford than save it for the future. Another one of the problems with America.

Or, at least, you will be intellectually honest and tell everyone that, despite using your health insurance, you object to doing so, because it's not their fault for your bad genes.

Again I have no problem with health insurance. Insurance is an agreement between you and a company, whereby the company establishes the risk of an event (like an MI or CA) happening. Based on that risk it sets a price based on your individual risk, as well as the risk for an entire population it insures. Logically as a young, healthy person, I should pay less than someone who is 80 years old with COPD and heart failure.

If you have established diabetes, your risk is known, and the costs of treating it can be calculated. The company therefore has to charge a rate that covers the lifetime cost of treating the diabetes, plus a profit. That is how insurance works. As I stated earlier, you would prefer to establish health utilities subsidized by the government whereby everyone pays a fixed rate regardless of health conditions. That's a discussion we can have, but don't criticize insurance companies for doing exactly what they are supposed to do.

 

[Apollyon]

Yes I would get paid more if we didn't have health insurance. It's actually figured into our hourly wage at approximately $10/hour.

What I'm saying is that, if you didn't pay into it, you would NOT get that $10/hour. Here in Hawai'i, we have the closest thing to universal coverage (and you do indeed have to work for it - if a person works 20 hours a week for 4 weeks straight, the employer MUST provide health insurance), but a person is free to decline it. The reimbursement is something like $10/month.

The money grubbers would not pay you more. It's $10/hour, but not $10 you would get if you didn't.

(And $18K/year/employee is making some insurer rich.)

And why do I take it personally? Because it IS personal! I don't get riled about home foreclosures, because I don't own a house. That's not personal for me.

 

[bulgethetwine]

Why do you take this argument so seriously? I'm always amazed at how people become personally offended when arguing social issues or politics.



Yes I would get paid more if we didn't have health insurance. It's actually figured into our hourly wage at approximately $10/hour. I also work for a national company at a 2nd job that pays higher salary, but in return the employees have to cover their own medical and 401K expenses.



I have no problem with anyone working who can physically perform the required tasks. I would completely separate the employer/insurance system we have now, so someone's perceived disability would be irrelevant at work.

What you are saying is that at some level those who are not sick should directly pay for the sick. I disagree, but if that's what you believe then so be it. Most of the morbidity, especially in early life is due to obesity, smoking, and drug/alcohol consumption. Yes, "poor" genes do effect things, but that doesn't give you an excuse to be 300 lbs, smoke, and drink a fifth of Vodka daily. You can mitigate the effects of your genes, and much of the research now is demonstrating that epigenetics (how proteins and environment effect your genes) may in fact be more powerful than the underlying genetic code when it comes to disease.



So if you have a pre-existing condition, you are not buying insurance, but rather a healthcare plan. You just made my argument for me.



Eugenics is the intentional alteration of the genetic code to produce a desired phenotype. I have suggested no such thing. I've suggested several ways in which responsible people can mitigate their risk of having catastrophic health bills in the future. One of which is paying into an emergency fund when young and healthy....but wait the young and healthy would rather spend their money on material goods and homes they cannot afford than save it for the future. Another one of the problems with America.



Again I have no problem with health insurance. Insurance is an agreement between you and a company, whereby the company establishes the risk of an event (like an MI or CA) happening. Based on that risk it sets a price based on your individual risk, as well as the risk for an entire population it insures. Logically as a young, healthy person, I should pay less than someone who is 80 years old with COPD and heart failure.

If you have established diabetes, your risk is known, and the costs of treating it can be calculated. The company therefore has to charge a rate that covers the lifetime cost of treating the diabetes, plus a profit. That is how insurance works. As I stated earlier, you would prefer to establish health utilities subsidized by the government whereby everyone pays a fixed rate regardless of health conditions. That's a discussion we can have, but don't criticize insurance companies for doing exactly what they are supposed to do.

I wouldn't even waste your breath, Apol. This guy is incapable of contemplating a thought that runs counter to his "beliefs". You can lead a horse to water... but that horse is a donkey.

 

[rmbsstock]

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[GeneralVeers]

I wouldn't even waste your breath, Apol. This guy is incapable of contemplating a thought that runs counter to his "beliefs". You can lead a horse to water... but that horse is a donkey.

As opposed to Liberal Democrats who are always open-minded and ready to consider an alternate viewpoint.

 

[Apollyon]

As opposed to Liberal Democrats who are always open-minded and ready to consider an alternate viewpoint.

So you're admitting you are never open-minded nor ready to consider an alternate viewpoint?

 

[PedsEndoSec]

To, uh, get back to the original post point....

I work in pediatric endocrinology, and so naturally we get a lot of new-onset Type 1 diabetes. We used to try to do all their education outpatient, but we could never get insurance companies to pay for it.... so we started admitting all our new-onsets so they could have it done inpatient.

Granted, this doesn't clog up ERs, because the doc will just admit them directly, but I never could figure out why the insurance companies would rather pay for a two-day hospital stay than four hours of outpatient education. 😕

 

[GeneralVeers]

So you're admitting you are never open-minded nor ready to consider an alternate viewpoint?

I will not consider an alternate viewpoint when it involves the following things:

1. Expansion of entitlements.

2. Increased government expenditure

3. Unconstitutional.

4. Expansion of government regulation.

Anything that doesn't fall into those categories is 100% negotiable.

 

[Apollyon]

I will not consider an alternate viewpoint when it involves the following things:

1. Expansion of entitlements.

2. Increased government expenditure

3. Unconstitutional.

4. Expansion of government regulation.

Anything that doesn't fall into those categories is 100% negotiable.

Then the nanny state of Aus or NZ is not for you. South Carolina, Alabama, Mississippi - all yours (completely seriously).

 

[tkim]

Granted, this doesn't clog up ERs, because the doc will just admit them directly, but I never could figure out why the insurance companies would rather pay for a two-day hospital stay than four hours of outpatient education. 😕

Not in Buffalo. The local children's hosp requires all new onset diabetes to go through the ED. We even have this preprinted sheet of labs that endocrine wants done before they go to the floor. It also requires a call to the fellow to discuss how much insulin to give, calorie counting the first meal, and admit holding orders. It's the suxxor.

 

[GeneralVeers]

Then the nanny state of Aus or NZ is not for you. South Carolina, Alabama, Mississippi - all yours (completely seriously).

I've acknowledged that my side is going to lose (or has already lost). The natural tendency of governments throughout history is that they increase in size and scope, while freedoms tend to diminish.

My point about Aus/NZ is that when we become centrally-controlled over here, the only significant difference will be tort reform. If I have NO CHOICE but to practice in a centrally-controlled socialist economy, I might as well do it in a country that has tort reform - something that is unlikely to happen here due to the entrenched interests of the trial lawyers.

 

[deleted65604]

Then the nanny state of Aus or NZ is not for you. South Carolina, Alabama, Mississippi - all yours (completely seriously).

Are you implying that these states have fewer government expenditures, and fewer social programs? What exactly was your point about bringing these states into the debate?

 

[GeneralVeers]

Are you implying that these states have fewer government expenditures, and fewer social programs? What exactly was your point about bringing these states into the debate?

Actually he brings up a good point. The states with highest taxes like New York, New Jersey, CA and OR have fared the worst in the recession, as they rely heavily on top income earners to pay much of their revenues. During the economic decline, these people either left (as they did in NJ and CA) or were wiped out financially.

States like TX, FL, and VA which have relatively lower taxes and lower social spending have fared significantly better than the higher-spending states.

 

[docB]

To, uh, get back to the original post point....

I work in pediatric endocrinology, and so naturally we get a lot of new-onset Type 1 diabetes. We used to try to do all their education outpatient, but we could never get insurance companies to pay for it.... so we started admitting all our new-onsets so they could have it done inpatient.

Granted, this doesn't clog up ERs, because the doc will just admit them directly, but I never could figure out why the insurance companies would rather pay for a two-day hospital stay than four hours of outpatient education. 😕

Good example. Similar to the insurers that won't pay for Lovenox outpatient and force their patients to sit in the hospital for a week getting therapeutic on their Coumadin.

 

[Apollyon]

Are you implying that these states have fewer government expenditures, and fewer social programs? What exactly was your point about bringing these states into the debate?

Exactly, my point is that GenVeers has made it a constant statement of his to move to NZ/Aus. I am not implying anything when I say "nanny state" - I am saying outright that the social welfare structure there is much more than here. Have you ever heard the term "nanny state"? More govt and more social programs - not less.

Nothing was "implied", and "exactly" my point was stated - you word it like something vague or sinister. Above board all the way.

 

[deleted65604]

Oh, I didn't get the personal jab at Veers about his past references to Australia.

I'm not conspiratorial, just slow.

 

[GeneralVeers]

Oh, I didn't get the personal jab at Veers about his past references to Australia.

I'm not conspiratorial, just slow.

He seems to miss my point over and over obout my motivation for moving and the conditions under which I would do it. I like America as it presently is, and would have no intention of moving. I think it's wise to have a backup plan when things go South here.

 

[Apollyon]

He seems to miss my point over and over obout my motivation for moving and the conditions under which I would do it. I like America as it presently is, and would have no intention of moving. I think it's wise to have a backup plan when things go South here.

You constantly say about how you should move to NZ or Aus. You bitch all the time about your patient base. The last time I called you out over that, that was the last time. Now I let you bitch on and on. If you like the US as it is presently, I honestly can't find any time you've presented that on SDN to counter all of the minuses.

I don't miss your point. You've made it abundantly clear.

 

[GeneralVeers]

You constantly say about how you should move to NZ or Aus. You bitch all the time about your patient base. The last time I called you out over that, that was the last time. Now I let you bitch on and on. If you like the US as it is presently, I honestly can't find any time you've presented that on SDN to counter all of the minuses.

I don't miss your point. You've made it abundantly clear.

I've repeatedly said "If we go to a socialized system I will move to Aus/NZ". Not very hard to understand. If I didn't want to practice in our current system, I sure as hell wouldn't be here.

 

[Apollyon]

I've repeatedly said "If we go to a socialized system I will move to Aus/NZ". Not very hard to understand. If I didn't want to practice in our current system, I sure as hell wouldn't be here.

In searching your posts for "social" or "socialized" medicine from as far back as you've been posting, only one single post says this. You imply it, but you also have said - several times - that you would NEVER work in a socialized medical system (and did NOT qualify it). You said this after you said you would move Down Under because of the veritable nonexistence of tort law.

And, while searching, I found other people that said the same thing I did. And when it's everyone else that has the problem, the problem is with you.

So, I've stopped commenting on your seeming dislike for your job(s) where you work, due to your patient base. Now I shall stop commenting on your unrelenting, unremitting, constant statements of desire for no government on behalf of medical care.

 

[Jeff698]

States like TX, FL, and VA which have relatively lower taxes and lower social spending have fared significantly better than the higher-spending states.

I guess it depends on how you define 'better'. This is a fundamental concept about low tax states, though. They are typically low tax because they are also low service. That's certainly the case in Texas. We have no income tax. Unfortunately, one of the side effects (or intended effects) is that we don't provide many services. Our public education system isn't all that great and insuring children isn't exactly a top priority. If there are new roads in Texas, odds are there is a toll booth attached to them. Our universities are still good but the price of tuition has skyrocketed over the past 20 years as we've passed the costs of education directly to the student.

As an example, I remember paying about $10/semester hour at A&M in 1986. I just checked and it's about $171/hour. The kicker is now fees. Back then I paid maybe $100 in fees a semester. Now its right at $500. (These damn whipper-snappers today don't know how good they have it. Why, back then, I had to walk to school....)

This difference is at the heart of the disagreement. Some folks (the majority of voting Texans, at least) are willing to accept fewer services for less taxes. I'd prefer that we have more services and am willing to pay more in taxes for it but I'm in the minority here. I'm obviously willing to accept this, otherwise I'd move. As it is, I'm pretty happy here despite this.

Take care,
Jeff

 

[GeneralVeers]

I guess it depends on how you define 'better'. This is a fundamental concept about low tax states, though. They are typically low tax because they are also low service. That's certainly the case in Texas. We have no income tax. Unfortunately, one of the side effects (or intended effects) is that we don't provide many services. Our public education system isn't all that great and insuring children isn't exactly a top priority. If there are new roads in Texas, odds are there is a toll booth attached to them. Our universities are still good but the price of tuition has skyrocketed over the past 20 years as we've passed the costs of education directly to the student.

I lived in California and then Texas. I liked living in California, but everything you just described about Texas applies to California as well. In CA they spend an enormous amount on education, yet do not achieve high grades for lower education. Tuition increases have been large in most of the public university systems.

This difference is at the heart of the disagreement. Some folks (the majority of voting Texans, at least) are willing to accept fewer services for less taxes. I'd prefer that we have more services and am willing to pay more in taxes for it but I'm in the minority here. I'm obviously willing to accept this, otherwise I'd move. As it is, I'm pretty happy here despite this.

I'm still hard-pressed to name a service available in California that was not in Texas. The only things I can think of are generous Welfare programs, and higher pay for public employees. Their "Medi-Cal" system has one of the worst reimbursements in the country, and it's difficult to find a doctor who will take it.

We've reached a frightening threshold in this country: for the first time in our history a majority, 60% actually have net benefit or pay nothing into the Federal tax system. That means that 40% are carrying the other 60%. While that's good for social justice (if you believe in that sort of thing), it means that the 60% has no vested interest in keeping down costs, keeping down taxes, and have no problem demanding expansion of services since it's "other people's money".

 

[glorfindel]

We've reached a frightening threshold in this country: for the first time in our history a majority, 60% actually have net benefit or pay nothing into the Federal tax system. That means that 40% are carrying the other 60%. While that's good for social justice (if you believe in that sort of thing), it means that the 60% has no vested interest in keeping down costs, keeping down taxes, and have no problem demanding expansion of services since it's "other people's money".

I originally intended to argue with you about this, but after some reflection, I'm going to agree with you instead.

It is frightening, yes. Many people don't directly pay into the federal tax system. Even if you include payroll taxes, which many people overlook, there are still a lot of people who aren't paying very much federal tax. And so there are a lot of people who aren't conscious of having to give anything up for public services. As you point out, it makes sense that these people might think that public services are paid for with other people's money.

But I want to push things a little further and see if we can find a place to disagree, because I'm uncomfortable with the conclusion that we ought simply to cut taxes for upper-income folks or raise taxes for middle-income and poor people. Or that we should cut government services (I think they're already pretty anemic, and getting worse all the time).

When you look at the big picture of disposable income after taxes, the middle class is getting hammered and the poor people aren't getting any better when both groups are compared with the rich. Income inequality continues to increase, even in the face of a tax system that looks "progressive." Middle-class wages are stagnant or decreasing, middle-class jobs are disappearing, and the odds that any given poor person will be able to climb out of poverty are getting lower all the time. If, as you say, such a large number of poor and middle-income people aren't paying any taxes, it's unlikely that it's the tax system that's causing all the economic distress people are experiencing.

So what is causing it? I suspect one culprit is the indirect "payments" that poor and middle class make, without knowing it. The best example of this is health care. Employee take-home pay is stagnant because the insurance premiums that are deducted from wages keep going up. Employees never see this money, so they are not conscious of having to "pay" for health insurance -- all they know is that they haven't gotten a raise for a long, long time. The scary thing is that because they're not conscious of rising healthcare costs, these workers aren't convinced that they would gain much by bringing costs down. At least, they aren't as convinced as they would be if they actually had to write a check to Aetna every month out of their take-home pay.

Another way the middle class pays indirectly is unemployment, much of which is due to outsourcing of jobs overseas. Even if you aren't the one being laid off, a high unemployment rate keeps wages down and erodes benefits. Why would any employer give raises when they easily find someone else to work for the same wages or less?

Anti-tax conservatives often argue that cutting taxes on the rich and on employers will benefit everyone because jobs will be created and the economy will grow. Maybe they're right. But it seems to me that the real threats to the middle class -- rising healthcare costs and the outsourcing of jobs -- aren't going to be reversed with tax cuts. And if you can't rejuvenate the American middle class, it's going to get painful in this country even for the rich. Imagine Argentina or Brazil, where the rich need to hire private bodyguards to defend themselves from people who have nothing and who share so little with the rich that forcible confiscation doesn't seem like a moral offense.

 

[docB]

Anti-tax conservatives often argue that cutting taxes on the rich and on employers will benefit everyone because jobs will be created and the economy will grow. Maybe they're right. But it seems to me that the real threats to the middle class -- rising healthcare costs and the outsourcing of jobs -- aren't going to be reversed with tax cuts.

You are correct. Cutting taxes would reenergize the economy creating a net gain for everyone and increasing government revenue and therefore their ability to provide entitlements. Wheter or not that's a good idea is a debate for another time. To fix the problems you mention, rising healthcare costs and out sourcing you have to fix the governmental regulatory problems that cause companies to look overseas for relief and the med mal crisis that leads to increased health costs.

 

[GeneralVeers]

When you look at the big picture of disposable income after taxes, the middle class is getting hammered and the poor people aren't getting any better when both groups are compared with the rich. Income inequality continues to increase, even in the face of a tax system that looks "progressive." Middle-class wages are stagnant or decreasing, middle-class jobs are disappearing, and the odds that any given poor person will be able to climb out of poverty are getting lower all the time. If, as you say, such a large number of poor and middle-income people aren't paying any taxes, it's unlikely that it's the tax system that's causing all the economic distress people are experiencing.

I think everyone should pay SOMETHING in taxes even if it's $1. No one should have a net benefit from the Federal tax system. I actually don't disagree with you. Health care is a big reason that middle class wages are stagnant, as employers have to continually pay more to cover the policies of their employees. That is why I advocate cutting the link between employers and consumers. Theoretically this would allow salaries to grow, and give the individual consumers the power to choose a plan that's right for them. It would also encourage competition between insurers. Any time you have increased competition, prices decrease.

Another way the middle class pays indirectly is unemployment, much of which is due to outsourcing of jobs overseas. Even if you aren't the one being laid off, a high unemployment rate keeps wages down and erodes benefits. Why would any employer give raises when they easily find someone else to work for the same wages or less?

Don't expect this to change any time soon. There are two reasons for this: 1. Products can be made much more cheaply in China, and 2. Labor unions. People love to be able to go to Wal-Mart and get a T-shirt for $5. The same shirt would cost 2-3X as much to manufacturer in America. The perverse consequence of forcing companies to manufacture in America would be that the standard of living for the poor would decline, as many of the cheap Chinese goods that they buy would increase in cost. Labor unions are a huge problem in this country. They are an anachronism of ealy 20th century America when there were few developed countries and transportation of goods was difficult. Labor unions have expedited the process of outsourcing jobs, as they add an additional cost on top of the already expensive manufacturing in America. Sure you can employ a union worker at 50% more, but it might mean the loss of 2 jobs.

Anti-tax conservatives often argue that cutting taxes on the rich and on employers will benefit everyone because jobs will be created and the economy will grow. Maybe they're right. But it seems to me that the real threats to the middle class -- rising healthcare costs and the outsourcing of jobs -- aren't going to be reversed with tax cuts. And if you can't rejuvenate the American middle class, it's going to get painful in this country even for the rich. Imagine Argentina or Brazil, where the rich need to hire private bodyguards to defend themselves from people who have nothing and who share so little with the rich that forcible confiscation doesn't seem like a moral offense.

Taxing the rich has never produced as much tax revenue as predicted. Why? Because when taxed rich people have strategies to prevent paying. They either reduce their economic activity, or hide their money where the government can't get it.

The best way to improve things for the middle class is to cut government spending. You've forgotten one of the biggest problems we have that is driving our deficits, and hence poverty. The Medicare and Social Security entitlements BY THEMSELVES will bankrupt our country. Even if we taxed every dollar from the rich and confiscated all their property we still would not be able to meet our Medicare and SS obligations. Without a serious effort to restrain the costs of these programs, our entire country will collapse.

 

[rmbsstock]

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[GeneralVeers]

OK, GeneralVeers, I thought that I am an ASS and I should shut my mouth and listen to the elite here. But I think your Comment here is Bull--
"Taxing the rich has never produced as much tax revenue as predicted. Why? Because when taxed rich people have strategies to prevent paying. They either reduce their economic activity, or hide their money where the government can't get it.

I am not saying if you work hard you should pay extra taxes than most, but also your answer is bull **** too. You are talking about middle class people who have their MA degrees and Engineering degrees, losing their homes, living in cars (as in California) because we cannot catch the thieves who evade paying taxes? (well because they know how to hide it well)!
I disagree with this weak excuse...
I think I will shut my mouth again and try to learn from the elite, although I have a masters but lost my job. (they found someone to accept less pay)

I was making a statement of fact. Whenever taxes on the wealthy are raised, the amount of income the government receives is never what is it projected to be due to the two reasons I cited. You have every right to have a moral problem with people "evading taxes" but the fact is that they do.

Also, how do rich people not paying taxes cause a standard of living decrease for the poor? Since they pay little or no Federal taxes anyway it should be relatively neutral. The government is not constrained by a budget, and continues deficit spending, so services are maintained regardless of how much the evil rich are paying.

 

[docB]

I am not saying if you work hard you should pay extra taxes than most, but also your answer is bull **** too. You are talking about middle class people who have their MA degrees and Engineering degrees, losing their homes, living in cars (as in California) because we cannot catch the thieves who evade paying taxes? (well because they know how to hide it well)!

Note that in a lot of cases we're not talking about tax evasion. The tax code in the US is so complicated because politicians have tried to use it for social engineering that people with means can legitimately shelter their money to a much greater extent than the typical middle class person. This fact is why they came up with the Alternative Minimum Tax years ago that is now turning into a real problem. The answer to this is not to raise the taxes on the rich. That is a political gambit that exploits class envy to get poor people vote for politicians. The answer is to reform the tax code and use it only to raise money for the government rather than to incentivize behavior.

 

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[GeneralVeers]

If the rich and super-rich don’t pay their fair share of this tab, the middle class will get socked with the bill. But the middle class can’t possibly pay it. America’s middle class is under intense financial pressure. Median wages and benefits, adjusted for inflation, have been going nowhere for thirty years; health costs are soaring (employers are quickly shifting co-payments, deductibles, and premiums to their employees), fuel costs are out of sight, the prices of the houses occupied by the middle-class are in the doldrums.
"

Class warfare is the heart of the issue. You said "fair share" which is repeatedly brought up. The rich already pay their fair share, as the top 1% of earners pay 30% of all Federal revenues, while the top 10% pay 2/3.

The problem is that more than 50% of the poor and middle class do not pay their fair share. With the exception of payroll and Medicare taxes, they pay nothing, yet consume most of the services.

 

[rmbsstock]

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[docB]

I think you're at least a little conflicted if you're quoting Robert Reisch and Ron Paul. The Devil is in the detalis of what you suggest. The definitions of what constitutes "rich," "super rich," "fair share," and even "middle class" depends on who you're talking to.

I think people making exactly what I make should not be taxed and someone who makes more than me should be taxed back to the stone age. Unless I get a raise😉.