solution to healthcare and income inequality

So I thought of a solution to two problems and I'm posting them here for feed back. Constructive opinions welcome.

For healthcare I thought about making a universal health insurance. You sign up for it on your w2, just like you list your dependents at your job. All medical issues are covered. The bottom 2 quintiles pay 5% pre-tax, the next 2 pay 10%, and the top quintile pays 15%. Everyone pays (if they have a job). All medical facilities that take gov money must accept the gov insurance. Pay out will be based on the VA cost, plus 20% (va is non-profit, so take their costs for the procedure and add 20% for profit to the facility). This will force private insurance to lower their premiums, and hospitals to lower their costs. The consumer still has a choice between private and public insurance. Everyone with a job will have options.

For inequality I suggest this. Executive pay is written off (tax deductible) as an operating expense. This insentivizes corps to pay their CEOs more as they can just write it off. I suggest that we remove the executive write off and move it to the middle/low worker. The company can write off all wages for employees making median wage, -10% to +100% (say median is 50k, this would mean all wages from 45k to 100k). This means that corps are insentivized to pay their ceos less, but their actual workers more. The corps actually win in this. They can write off more in wages, and because their employees have more money, the employee can buy more product from the company which increases profit.

These are rough ideas, the nitty gritty belongs to the politicians. If I get enough good feed back to modify these ideas I will suggest them to my politicians and ask you to do the same. If you guys think they are just dumb, I'll scrap them and keep thinking.

a reply to: stormson

There's one major issue with the point about CEO salaries. A lot of executives get the majority of their compensation in other ways like with backdated stock options. I think your proposal would just increase this practice of non-salary compensation while giving the illusion that executives are making less money. In other words, companies will just reduce executive salaries while boosting other forms of executive compensation in order to even it out.

Don't forget that corporations don't exist to employ people; they exist to make money for their owners and investors. And many corporate executives are also part owners and/or investors in that company. So why would they agree to limit their own payoffs from their investments? Most businesses eventually fail, so wouldn't you expect the investors to try to squeeze as much as possible out of their investment before that happens? Hence why there are so many different forms of executive compensation.

And here's an example about the backdating thingy. Let's say I'm a CEO that reduces my salary from $250,000 to $100,000 to be in compliant with your proposal. But every year I now get 10,000 stock options (meaning I get the option to buy 10,000 shares of stock directly from the company). And let's also say the company's stock price is $50 per share right now. With backdating, I could look back to when the stock was at its lowest point in a specific time period and choose that time as my "price". So if I noticed that the stock price was at $30 a share 18 months ago, I could set that as the price for my 10,000 stock options.

Basically, I'd have the right to pay $300,000 for 10,000 stocks at the $30 price from 18 months ago, then immediately be able to turn around and sell them at today's price of $50 per share ($500,000 total). That $200,000 in profit that I'd make from selling those stocks wouldn't count as "salary" from the company even though it would clearly be compensation I received from being the CEO. Also, the $200,000 would be taxed at the capital gains tax rate instead of the income tax rate, which would save me even more money. And I could also just keep the shares instead and wait for them to become worth even more later on.

Even though it would appear that I was complying with your proposal by reducing my salary, my CEO compensation package would actually be a $100,000 salary plus $200,000 in profits from my backdated stock options. And then there are expense accounts & other forms of compensation which basically let the company pay for the executive's daily costs like company cars, reimbursements for room & board, reimbursements for travel, etc, all of which I'd expect companies to increase in order to satisfy their executives.

(disclaimer: i'm really sleepy so I might have screwed up the calculations. but my brain's not working completely so i really don't feel like double checking. meh)

a reply to: stormson

How do you battle the corruption that occurs when the CEOs have a business interest in both the Hospital and the insurance provider? We need a Chinese wall between fulfillment and administration.

The problems with our country are not rocket science. The lobbyists force the politicians to pass laws creating cartels and monopolies in exchange for campaign financing.


The problem with Healthcare is like having private prisons. The profit-motive quickly leads to very bad unintended consequences.

a reply to: enlightenedservant

Good post regardless if there were any mistakes.

Healthcare just isn't working in this country. Premiums rise 8 to 10 times higher than inflation every year. This has nothing to do with Obamacare. The system itself needs to be dismantled and reorganized.

a reply to: enlightenedservant

You make a good point.

However, I wasn't really trying to limit the CEO pay, but incentivize increasing the pay of the middle. Like you said, a lot of CEO pay is in stock so they would get a "raise" anyway due to higher demand from the employees now buying more stuff since they would have more money to do so.

Thanks for the reply.

a reply to: dfnj2015

That's why payout is based on va cost. That bypasses both insurance and hospital pricing corruption (hopefully).

Thanks for the reply.

a reply to: dfnj2015

True.

That's why I thought of the gov backed insurance. If forces the insurance companies to compete with a more fair insurance pricing scheme.

Thanks for the reply.

a reply to: stormson

I wonder if they uncapped the income that is taxable for social security, that would probably even out the wage scale somewhat.

a reply to: stormson

The solution is for people to realize that neither health care, nor income equality are rights. Cut back the regulations so that people can have more buying power.

originally posted by: stormson
So I thought of a solution to two problems and I'm posting them here for feed back. Constructive opinions welcome.

For healthcare I thought about making a universal health insurance. You sign up for it on your w2, just like you list your dependents at your job. All medical issues are covered. The bottom 2 quintiles pay 5% pre-tax, the next 2 pay 10%, and the top quintile pays 15%. Everyone pays (if they have a job). All medical facilities that take gov money must accept the gov insurance. Pay out will be based on the VA cost, plus 20% (va is non-profit, so take their costs for the procedure and add 20% for profit to the facility). This will force private insurance to lower their premiums, and hospitals to lower their costs. The consumer still has a choice between private and public insurance. Everyone with a job will have options.

For inequality I suggest this. Executive pay is written off (tax deductible) as an operating expense. This insentivizes corps to pay their CEOs more as they can just write it off. I suggest that we remove the executive write off and move it to the middle/low worker. The company can write off all wages for employees making median wage, -10% to +100% (say median is 50k, this would mean all wages from 45k to 100k). This means that corps are insentivized to pay their ceos less, but their actual workers more. The corps actually win in this. They can write off more in wages, and because their employees have more money, the employee can buy more product from the company which increases profit.

These are rough ideas, the nitty gritty belongs to the politicians. If I get enough good feed back to modify these ideas I will suggest them to my politicians and ask you to do the same. If you guys think they are just dumb, I'll scrap them and keep thinking.

There is no solution to "income inequality". First off, you have to define what you mean by inequality. Second, people's abilities, interest, and opportunities are never equal. Some people are going to make more than others. Those who are billionaires have usually created a product / business that is desired on a global scale which affords them great wealth.

Imagine if you are an author. You write some book. The book becomes really popular and you sell 50 million copies of the book. At $15 dollars a book, you have just made $750,000,000. Almost a billion. How is you being able to sell that many books creating income inequality? Should your income be limited because the the warehouse worker stacking your books only makes $10/hr?

It is always funny when these income inequality discussions come up, the OPs always use CEOs as some example conveniently leaving out all the other people who make crazy amounts of money. The top CEOs make a lot of money because they are running massively sized global operations. The F500 are the largest companies in the world.

Crying about what some F500 CEOs make is like crying about what the top actors in Hollywood make. They are but a small subset of the broader population and in no way represent all CEOs or actors.

a reply to: BELIEVERpriest

i never said they were rights.

regulations aren't stopping buying power, not having enough money to buy things with are.

originally posted by: stormson
a reply to: BELIEVERpriest

i never said they were rights.

regulations aren't stopping buying power, not having enough money to buy things with are.

Regulations increase costs and limit consumer choice.

a reply to: Edumakated

income inequality is ceos making hundreds of times more than the average worker. that can be fixed.

at the moment the company is incentivized to pay the ceo gobs of money because that can be written off as a business expense. if that was changed from the ceo to the worker, then the company is incentivized to pay their workers more. the ceo will still make much more than the average worker, just not as much more because the incentive to do so isnt there.

your author example is a really bad one. the average author only makes about 15% of what the publisher sells it for. the warehouse worker works for the publisher, not the author. however, the author does have people they pay, like agents, and that pay is usually a percent of what the author makes. so when the author makes a lot, so does there agent. when walmart makes a lot, it doesnt make any difference to the average worker (they usually dont get bonuses, they just get to keep their jobs) but the ceo gets a massive bonus.

again, many ceos make so much because the company gets a tax break to pay them so much, no because they are really worth it.

as for actors, same for athletes, they have a union that has bargained for a share of the pie. many big actors make their money on the back end, a percentage of the profits. for example, keanu reeves was paid $10 million base for the first matrix, plus 10% of gross sales ($463,517,383 world wide, so another $46 million). he paid his agent 10-20% out of that.
again, the movie did well, so he did well. he did well, so his agent did well.

a reply to: stormson

You haven't stated it outright, but that is the fundamental principle behind your implications. You should learn to use critical thinking skills before offering such solutions.

People don't need more money. What we need is for the cost of living to go down. Regulation inflates the cost of living, and what you're suggesting is more regulation.

a reply to: Edumakated

how so?

the company will put out anything it thinks will make profit. the gov regulates whether its a safe product to put out.

most regulation costs are written off as cost of business, just like absurd ceo pay. the company takes money from the little guy (cause it cant write that off) and gives it to the ceo (cause it can write that off). all i suggest doing is changing where the incentive is, from the ceo to the worker. if anything the company will be able to write even more off.

originally posted by: stormson
a reply to: Edumakated

income inequality is ceos making hundreds of times more than the average worker. that can be fixed.

at the moment the company is incentivized to pay the ceo gobs of money because that can be written off as a business expense. if that was changed from the ceo to the worker, then the company is incentivized to pay their workers more. the ceo will still make much more than the average worker, just not as much more because the incentive to do so isnt there.

your author example is a really bad one. the average author only makes about 15% of what the publisher sells it for. the warehouse worker works for the publisher, not the author. however, the author does have people they pay, like agents, and that pay is usually a percent of what the author makes. so when the author makes a lot, so does there agent. when walmart makes a lot, it doesnt make any difference to the average worker (they usually dont get bonuses, they just get to keep their jobs) but the ceo gets a massive bonus.

again, many ceos make so much because the company gets a tax break to pay them so much, no because they are really worth it.

as for actors, same for athletes, they have a union that has bargained for a share of the pie. many big actors make their money on the back end, a percentage of the profits. for example, keanu reeves was paid $10 million base for the first matrix, plus 10% of gross sales ($463,517,383 world wide, so another $46 million). he paid his agent 10-20% out of that.
again, the movie did well, so he did well. he did well, so his agent did well.

The vast majority of CEO compensation is in stock options. Corporate boards moved to stock options because ultimately, shareholder value is what matters. The incentive is for the CEO manage the company in a way that increases shareholder value.

As I stated, not all CEOs make $20 or $30 million a year. Very few do and it is only at the largest companies with the bulk of that money being stock options. You can deflect all you want, but why is it such an inequality problem when a CEO is making $20 million / yr but perfectly fine for an Actor or Athlete to make the same? You can't say some people's wealth is more fair than others.

originally posted by: dfnj2015
a reply to: stormson

How do you battle the corruption that occurs when the CEOs have a business interest in both the Hospital and the insurance provider? We need a Chinese wall between fulfillment and administration.

The problems with our country are not rocket science. The lobbyists force the politicians to pass laws creating cartels and monopolies in exchange for campaign financing.


The problem with Healthcare is like having private prisons. The profit-motive quickly leads to very bad unintended consequences.

Very well said.
There needs to be regs to insure that the pay for CEO's ( a very very small part of the population) are paying what is intended.
And the practice of owning both hospitals and insurance companies would seem to be a conflict of interest that even a politician would see. But lobby money makes seeing congressmen blind. More regs.

a reply to: BELIEVERpriest

um...yes, people do need more money. why do you think 14.5% of americans are in poverty? why are half of walmart employees on welfare? why do 3/4 of food stamp recipients have full time jobs? they dont have enough money.

regulations are laws to keep companies from doing shady stuff, like dumping waste into a river. guess what, if it will save the company a few bucks, they sure as anything will dump that stuff into the river. they did it before, and some companies still do. the company only cares about making a buck. if that means putting out dangerous stuff because a safety feature will cut into profits, they will. they do it all the time.

but hey, if you think the company has your best interest at heart, please go to one of those countries that dont regulate. let your kid work in a sweat shop. drink the tainted water and eat the parasite ridden food. your call.

a reply to: BELIEVERpriest

Unfortunately we have corps that will put aside corporate stewardship for the ever increasing quest for profit increases. There is a reason rivers caught on fire, large areas of ground water was ruined and tobacco and asbestos were legal long after the manufactures knew how dangerous they were. Profits.
Regs can do very bad things and they can do positive things.

a reply to: Edumakated

"You can deflect all you want, but why is it such an inequality problem when a CEO is making $20 million / yr but perfectly fine for an Actor or Athlete to make the same? You can't say some people's wealth is more fair than others."

as i said, the actor and athlete have a union that got them a share of the pie that the producers (movies) or owners (sports) would gobble up. the athlete/actor are workers, not runners.

the inequality is when a ceo makes 300x what the average worker makes. used to be it was only 20-30x. ceo pay has skyrocketed while average pay has remained roughly the same. its the vast difference that creates the problem, not the fact that there is a difference. i expect my boss to make more than me, but not 300x more than me.