The Pinocchio President

[andrei]

When you go to a store in Germany, and buy s.th. for 20 Euros, then the store pays the VAT as part of the 20 Euros. Is that so different from the store taking all of the 20 Euros, then paying corporate tax from that revenue?

the store collects sales tax from shoppers and pass it to the government, so a sale tax is basically an indirect way to tax the consumer.

 

why is almost everything cheaper in US than Germany? gas - food - clothes - cars? it's the amount of taxes included in the price.

 

when the sale tax is 4-8% compared with 19%, when the income tax is quite sensibly higher, how is the german not paying at least double the amount of taxes an american is paying?

 

sure germans might get better EI and social programs, it is cheaper when you get your car impounded, but it has a cost, and a very high cost at that.

 

EDIT: and to answer your question, when you pay 20 euros to buy something at a store, the store is keeping 16.8 euros. if sales tax would be 0, why would the store sell for 20 euros and not for 16.8?

[hrothgar]

When you go to a store in Germany, and buy s.th. for 20 Euros, then the store pays the VAT as part of the 20 Euros. Is that so different from the store taking all of the 20 Euros, then paying corporate tax from that revenue?

the store collects sales tax from shoppers and pass it to the government, so a sale tax is basically an indirect way to tax the consumer.

 

why is almost everything cheaper in US than Germany? gas - food - clothes - cars? it's the amount of taxes included in the price.

 

when the sale tax is 4-8% compared with 19%, when the income tax is quite sensibly higher, how is the german not paying at least double the amount of taxes an american is paying?

 

sure germans might get better EI and social programs, it is cheaper when you get your car impounded, but it has a cost, and a very high cost at that.

 

EDIT: and to answer your question, when you pay 20 euros to buy something at a store, the store is keeping 16.8 euros. if sales tax would be 0, why would the store sell for 20 euros and not for 16.8?

The "incidence" of a tax describes what portion of a tax gets paid by the consumer as opposed to the seller. Tax incidence is a very basic concept in economics. (First semester, Econ 101 type stuff). You might want to read up on it.

 

As a preview of coming attractions, the incidence of a tax varies dramatically between different types of goods. (This division is related to the price elasticity)

[Winstonm]

I believe I have found in The Denver Post the reason we ended up with the health care bill as written:

 

Myth: Canada's health care system is a cumbersome bureaucracy.

 

The U.S. has the most bureaucratic health care system in the world. More than 31 percent of every dollar spent on health care in the U.S. goes to paperwork, overhead, CEO salaries, profits, etc. The provincial single-payer system in Canada operates with just a 1 percent overhead.

 

Myth: The Canadian system is significantly more expensive than that of the

 

U.S.Ten percent of Canada's GDP is spent on health care for 100 percent of the population. The U.S. spends 17 percent of its GDP but 15 percent of its population has no coverage whatsoever and millions of others have inadequate coverage. In essence, the U.S. system is considerably more expensive than Canada's

 

Read more: http://www.denverpost.com/opinion/ci_12523427#ixzz0aivmGbLY

 

 

A $14 trillion economy x 17% x 31%= A shitload of bucks.->political power->no public option, no single payer, no medicare buy in->A $14 trillion economy x 17% x 31%=A shitload of bucks.

[kenberg]

I have a visceral dislike for an author who announces that she, the wise person, finds herself called upon to correct the myths that we, the uniformed, are still clinging to in our stupidity. If she has something to say, she can say it straight out. Skip the crap about how the rest of us are thinking in myths. Anyway, reading her arguments, I am not impressed. I gather my view is shared, since no one jumped on the bandwagon.

[spwdo]

What fraud are you talking about?

 

if health insurance is there for everyone how can one fraud. there's never any money paid to the sick people so the only fraud possible is doctors claiming to have given care that they haven't and receive money for it."

 

 

Yes fraud, you talk as if there is no fraud in these systems...geez

 

 

Fraud here in the USA runs tens of billions, tens and tens of billions of bucks for health care claimed but not given.

 

Yes that means, doctors, patients, medical equip companies, pharmicies, and just plain fake companies with fake invoices etc etc are involved

 

 

Common example,,,,a fake company sets itself up, bills millions in bills. They get the money. They move and start a new company.

 

The patients get their copy of bills months later and medicare follows up even more months later. They are overwhelmed.

impossible here.

 

 

Hardly possible here to start overnight a company and starting billing total strangers for services not given and receive money for it. One goes through years and years before being able to write a bill . 7 orr more years of education, several years of trainee , then assistant. then your own practise , why risk having all that time and money invested become useless since they take away your medical license . This all when you have a better then decent income makes the incentive to commit fraude small. Either its made almost impossible to commit fraud over here or we as citizens are that honest its not in our nature to commit fraud. i believe its the first.

 

yes, it happens on very rare occasion that a medical degree starts over billing. Lets say doing ten patients a day, but billing 25. they lose their license to ever practise medicine again .

 

But lets look at a simple doctor: you as a patient pay him 20 Euros, when you go to healthcare you get 18 Euros back so a homepractising doctor cant fraud since he receives only money directly from patients.

 

So its only some professions that can actually fraud but its soo rare that it is big big news whenever something naughty happens.

 

Whenever a system of fraud comes known administration fixes that way of doing things.

 

Fraud isnt a issue here, nor i hear it being a issue in country's neighbouring mine so maybe looking at other places and adept a better way of handling those problems works better.

[andrei]

When you go to a store in Germany, and buy s.th. for 20 Euros, then the store pays the VAT as part of the 20 Euros. Is that so different from the store taking all of the 20 Euros, then paying corporate tax from that revenue?

the store collects sales tax from shoppers and pass it to the government, so a sale tax is basically an indirect way to tax the consumer.

 

why is almost everything cheaper in US than Germany? gas - food - clothes - cars? it's the amount of taxes included in the price.

 

when the sale tax is 4-8% compared with 19%, when the income tax is quite sensibly higher, how is the german not paying at least double the amount of taxes an american is paying?

 

sure germans might get better EI and social programs, it is cheaper when you get your car impounded, but it has a cost, and a very high cost at that.

 

EDIT: and to answer your question, when you pay 20 euros to buy something at a store, the store is keeping 16.8 euros. if sales tax would be 0, why would the store sell for 20 euros and not for 16.8?

The "incidence" of a tax describes what portion of a tax gets paid by the consumer as opposed to the seller. Tax incidence is a very basic concept in economics. (First semester, Econ 101 type stuff). You might want to read up on it.

 

As a preview of coming attractions, the incidence of a tax varies dramatically between different types of goods. (This division is related to the price elasticity)

you might not believe me, so I am quoting from wikipedia:

 

"The theory of tax incidence has a number of practical results. For example, United States Social Security payroll taxes are paid half by the employee and half by the employer. However, economists think that the worker is bearing almost the entire burden of the tax because the employer passes the tax on in the form of lower wages"

 

 

No matter of the incidence, more taxes in any economy means higher prices for the consumer, who eventually ends up paying all of them.

[Winstonm]

I have a visceral dislike for an author who announces that she, the wise person, finds herself called upon to correct the myths that we, the uniformed, are still clinging to in our stupidity. If she has something to say, she can say it straight out. Skip the crap about how the rest of us are thinking in myths. Anyway, reading her arguments, I am not impressed. I gather my view is shared, since no one jumped on the bandwagon.

The Great American Pastime: Shoot the Messenger.

[mike777]

I believe I have found in The Denver Post the reason we ended up with the health care bill as written:

 

Myth: Canada's health care system is a cumbersome bureaucracy.

 

The U.S. has the most bureaucratic health care system in the world. More than 31 percent of every dollar spent on health care in the U.S. goes to paperwork, overhead, CEO salaries, profits, etc. The provincial single-payer system in Canada operates with just a 1 percent overhead.

 

Myth: The Canadian system is significantly more expensive than that of the

 

U.S.Ten percent of Canada's GDP is spent on health care for 100 percent of the population. The U.S. spends 17 percent of its GDP but 15 percent of its population has no coverage whatsoever and millions of others have inadequate coverage. In essence, the U.S. system is considerably more expensive than Canada's

 

Read more: http://www.denverpost.com/opinion/ci_12523427#ixzz0aivmGbLY

 

 

A $14 trillion economy x 17% x 31%= A shitload of bucks.->political power->no public option, no single payer, no medicare buy in->A $14 trillion economy x 17% x 31%=A shitload of bucks.

Overhead costs run at only 1%...nonsense. This is just nutty accounting.

 

 

"In business, overhead, overhead cost or overhead expense refers to an ongoing expense of operating a business (also known as Operating Expenses - rent, gas/electricity, wages etc). The term overhead is usually used to group expenses that are necessary to the continued functioning of the business, but do not directly generate profits."

[Winstonm]

Overhead costs run at only 1%...nonsense. This is just nutty accounting.

 

This was an opinion piece from a Canadian citizen - she used poor word choice - so sue her.

 

Let's try another one:

Healthcare costs as a percent of GDP runs 10.1 in Canada and 16.0 in the U.S. according to Wikipedia.

 

There is no doubt that administrative costs of health care are substantially higher in the U.S. than Canada - a report I read showed about 3 times as high.

[kenberg]

I don't wish to shoot her, I doubt anyone plans to sue her. But you posted the piece, so it's fair to observe that there is no reason to take her seriously. That there may other more solid arguments on the subject is not in dispute.

[jdonn]

Poor word choice? It wasn't even opinion stated as fact, it was fiction stated as fact. Come on...

[Winstonm]

Poor word choice? It wasn't even opinion stated as fact, it was fiction stated as fact. Come on...

Obviously, this is way wrong, too.

 

Canada's national health insurance program had overhead of 1.3 percent; the overhead among Canada's private insurers was higher than that in the United States (13.2 percent vs. 11.7 percent). Providers' administrative costs were far lower in Canada.

 

Source? The New England Journal of Medicine http://content.nejm.org/cgi/content/short/349/8/768

 

What did that crazy Canadian say??? Oh, yeah,

 

The provincial single-payer system in Canada operates with just a 1 percent overhead. (Crazy Canadian Quote)

Canada's national health insurance program had overhead of 1.3 percent (New England Journal of Medicine Quote)

 

You just can't trust those lying point-three-ers. Worse than teabaggers....

[mike777]

Winston, Winston Winston....did you even bother look at this study.

 

 

1) It was written on what 1999 or older data.

2) It was written by MD's who seem to have no idea of accounting and accounting terms such as overhead.

3) Look at how they define and count overhead costs.

4) administrative costs is not the same as overhead costs.

 

 

"In business, overhead, overhead cost or overhead expense refers to an ongoing expense of operating a business (also known as Operating Expenses - rent, gas/electricity, wages etc). The term overhead is usually used to group expenses that are necessary to the continued functioning of the business, but do not directly generate profits."

 

 

 

 

 

 

"Overhead expenses are all costs on the income statement except for direct labor and direct materials. Overhead expenses include accounting fees, advertising, depreciation, insurance, interest, legal fees, rent, repairs, supplies, taxes, telephone bills, travel and utilities costs.[1]"

 

 

 

 

 

 

Think about it...on the face do you really think wages, rent etc etc costs only 1% to run a system...yes if you do not count most of the costs.

[hrothgar]

Winston, Winston Winston....did you even bother look at this study.

 

 

1) It was written on what 1999 or older data.

2) It was written by MD's who seem to have no idea of accounting and accounting terms such as overhead.

3) Look at how the define and count overhead costs.

 

 

 

Think about it...on the face do you really think wages, rent etc etc costs only 1% to run a system...yes if you do not count most of the costs.

Its entirely possible that the definition of "overhead" as used in this article is different from that used by an accountant.

 

With this said and done, it would still be interesting to understand where these differences come from.

[Winstonm]

Mike,

 

I am sorry if these results and conclusions differ from your personal viewpoints....

 

(emphasis added)

Results In 1999, health administration costs totaled at least $294.3 billion in the United States, or $1,059 per capita, as compared with $307 per capita in Canada. After exclusions, administration accounted for 31.0 percent of health care expenditures in the United States and 16.7 percent of health care expenditures in Canada. Canada's national health insurance program had overhead of 1.3 percent; the overhead among Canada's private insurers was higher than that in the United States (13.2 percent vs. 11.7 percent). Providers' administrative costs were far lower in Canada.

Between 1969 and 1999, the share of the U.S. health care labor force accounted for by administrative workers grew from 18.2 percent to 27.3 percent. In Canada, it grew from 16.0 percent in 1971 to 19.1 percent in 1996. (Both nations' figures exclude insurance-industry personnel.)

 

Conclusions The gap between U.S. and Canadian spending on health care administration has grown to $752 per capita. A large sum might be saved in the United States if administrative costs could be trimmed by implementing a Canadian-style health care system.

 

It seems plain to me that the U.S. does a better job than Canada of managing costs within similar systems (private systems), but Canada's model is far less costly based on lower administration costs than the U.S. model.

[mike777]

I do note that the health care system includes much more than hospitals and primary care doctors. The entire system should include, medical equipment and suppy companies, druc companies, etc etc. This study seems to not look at any of that.

 

 

With all of that said...who would argue that there is waste in the system, in any system. The trick is actually getting rid of it rather than just claiming to get rid of it. Good luck.

[mike777]

FWIW I saw this

 

 

http://www.heritage.org/research/healthcare/wm2505.cfm

 

 

 

"Health care reform is a complex problem, of which administrative costs is only one component. However, for policymakers and ordinary Americans to understand these issues, journalists, analysts, and advocates have an obligation to avoid "playing with numbers"--either through inadvertent misunderstanding of what the numbers represent or through a deliberate choice of misleading numbers that appear to support a desired"

 

 

 

"The fact is that, in recent years, Medicare administrative costs per beneficiary have substantially exceeded those costs for the private sector, this despite the fact that, as critics note, private insurance is subject to many expenses not incurred by Medicare. Contrary to the claims of public plan advocates, moving millions of Americans from private insurance to a Medicare-like program will result in program administrative costs that are higher per person "

[Winstonm]

Methods For the United States and Canada, we calculated the administrative costs of health insurers, employers' health benefit programs, hospitals, practitioners' offices, nursing homes, and home care agencies in 1999.

 

I don't mean to beat a dead horse, but consider that in the primary Canadian system there is zero administrative costs for health insurers and employer's health benefit programs...

 

Can you imagine the savings to business by not having to arrange and help pay for health insurance benefits for employees???

"Health care reform is a complex problem, of which administrative costs is only one component. However, for policymakers and ordinary Americans to understand these issues, journalists, analysts, and advocates have an obligation to avoid "playing with numbers"--either through inadvertent misunderstanding of what the numbers represent or through a deliberate choice of misleading numbers that appear to support a desired"

 

I agree that it is easy to manipulate numbers - but at the same time common sense should tell you that if you don't need insurers and employee health benefits you won't have any administrative costs for either of those.

[Winstonm]

"The fact is that, in recent years, Medicare administrative costs per beneficiary have substantially exceeded those costs for the private sector, this despite the fact that, as critics note, private insurance is subject to many expenses not incurred by Medicare. Contrary to the claims of public plan advocates, moving millions of Americans from private insurance to a Medicare-like program will result in program administrative costs that are higher per person "

 

The rub lies in the fact that Medicare is only a partial system - it cannot be compared to a total government single payer as Canada uses.

 

To claim higher costs and then extrapolate those costs as the same under a complete coverage plan is disingenuous IMO.

 

Think about it - if every citizen in the U.S. were automatically covered by a system such as the one in Canada, there would be little need for administrative overhead and the entire billing/paying process could be streamlined. On a percentage bases, that would lower administrative costs.

 

Ih the U.S., we continually try to work within the confines of our existing system instead of totally revamping the system itself - and then we claim the problem of the existing system would automatically follow us into a unique system because we can't imagine a radical change in the status quo.

 

The sad part is that we probably cannot change, as the political power bases would not allow radical change to their power infrastructure.

[PassedOut]

Can you imagine the savings to business by not having to arrange and help pay for health insurance benefits for employees???

I certainly can!

[mike777]

this discussion got me thinking, just what the heck are admin expenses and how are they measured.

 

For example is fighting fraud an admin expense? I dont know. Is actual fraud an admin expense?

 

FWIW I found this one article.

 

 

http://voices.washingtonpost.com/ezra-klei..._in_health.html

 

 

 

Administrative costs are one of the more confusing issues in health-care reform. Start with the term: What counts as an "administrative cost" for a health insurer? We all agree that paying bills counts. But does profit? What about disease management? Advertising? A nurse who dispenses health advice over the telephone?

 

Hard to say. But all of them get grouped under administrative costs at various times. Indeed, I've spent the last few weeks looking into studies and talking to experts, and there's not perfect unanimity on how to measure any of this. But most seem to think that Medicare's administrative costs are significantly undersold in the public debate. An apples-to-apples comparison would not leave you with the 2 percent of total Medicare spending often bandied about in debate. That doesn't count, for instance, Medicare's premium collection, which is done through the tax code, and thus through the IRS. Nor does it count most of Medicare's billing, which is outsourced -- and this might surprise people -- to private insurers like Blue Cross Blue Shield and listed under vendor services rather than program administration. A more straightforward estimate, according to experts I've spoken to, would be in the range of 5 to 6 percent.

[Winstonm]

this discussion got me thinking, just what the heck are admin expenses and how are they measured.

 

For example is fighting fraud an admin expense? I dont know. Is actual fraud an admin expense?

 

FWIW I found this one article.

 

 

http://voices.washingtonpost.com/ezra-klei..._in_health.html

 

 

 

Administrative costs are one of the more confusing issues in health-care reform. Start with the term: What counts as an "administrative cost" for a health insurer? We all agree that paying bills counts. But does profit? What about disease management? Advertising? A nurse who dispenses health advice over the telephone?

 

Hard to say. But all of them get grouped under administrative costs at various times. Indeed, I've spent the last few weeks looking into studies and talking to experts, and there's not perfect unanimity on how to measure any of this. But most seem to think that Medicare's administrative costs are significantly undersold in the public debate. An apples-to-apples comparison would not leave you with the 2 percent of total Medicare spending often bandied about in debate. That doesn't count, for instance, Medicare's premium collection, which is done through the tax code, and thus through the IRS. Nor does it count most of Medicare's billing, which is outsourced -- and this might surprise people -- to private insurers like Blue Cross Blue Shield and listed under vendor services rather than program administration. A more straightforward estimate, according to experts I've spoken to, would be in the range of 5 to 6 percent.

Those appear to be fair questions. At the same time, I also believe it is fair (although extremely difficult to quantify) to say there would have to be administrative savings by doing away with the necessity of health care insurers and employee health care plans.

[luke warm]

Those appear to be fair questions. At the same time, I also believe it is fair (although extremely difficult to quantify) to say there would have to be administrative savings by doing away with the necessity of health care insurers and employee health care plans.

medicare pays states and/or regional companies to administer benefits paid for meda and medb (and even medc and medd) claims... if it didn't do so, of if it did so itself, those costs would not go away... many are of the opinion that they would increase

[Winstonm]

Those appear to be fair questions.  At the same time, I also believe it is fair (although extremely difficult to quantify) to say there would have to be administrative savings by doing away with the necessity of health care insurers and employee health care plans.

medicare pays states and/or regional companies to administer benefits paid for meda and medb (and even medc and medd) claims... if it didn't do so, of if it did so itself, those costs would not go away... many are of the opinion that they would increase

You are jumping in mid-discussion. I am not talking about the effects of changes within the status quo but in dumping the existing system entirely for a Canadian-style health care system.

 

There would be no need for Medicare - everyone is covered. That eliminates the preponderance of the administrative costs and surely removes all the administrative costs of inherent in health insurance and in employee plans.

 

It is fact that Canada has administrative costs less than 1/3 of those in the U.S. They also spend per capita less than 1/2 of what the U.S. pays. I suspect there is more than mere correlation between those figures.

[bid_em_up]

In Germany, we pay a little bit more in taxes ...

is it twice more "a little bit" ?

 

 

ok, maybe twice more is as exaggeration, but "a little bit more" it is too.

 

edit again: it seems that twice more might be quite accurate:

 

a 75000 euros/year will pay 33% income tax

a 75000 US/year will pay 20% income tax

 

if you factor in the sales tax, 19% versus 4%-8% you are getting there ...

Lol, maybe you should start by comparing similar incomes, instead of comparing a 75k $ salary with a 105k $ salary.

I am wondering if you try to be sarcastic, but whatever ...

75,000 Eur != $75,000 US.

 

75,000 Eur. = $108,000 US (approx. based on exchange rate of 1.438)

 

This is what is meant by.....comparing similar incomes, imo.

 

and fwiw, my local sales tax rate is 9.5% and is constantly trying to be increased for various special local projects. ymmv.