Monday, February 15, 2010

Health Care

Much of the pain and agony of the Health Care debate for the past year could have been avoided if Congress had listened to the will and wisdom of the people. Providing health care for every American citizen is a goal well worth pursuing. No civilized nation can  refuse to provide medical care to those in need simply because they lack the money to pay for care. However, there is a more financially responsible, and less expensive way  to achieve universal coverage than the plan President Obama recently signed. The backlash against that bill is based on a number critical errors the politicians made which are too numerous to mention here. I favor expanding Medicare to cover everyone, financed by a  payroll tax, or a value added tax. Details of the advantages of that plan can be seen in the article below . Such a plan would have reduced the burden of employee health insurance for America's businesses by at least 50%. The resulting increase in corporate profits and tax revenues to the Government could have brought us out of this depression almost overnight.


The assumption that the Health Care Industry is a drag on our economy is patently false. The money we spend on health care circulates through the veins of our economy creating over 18 million jobs while  keeping our citizens healthy and productive.

The assumption that health insurance reform is not affordable is also false. Private insurance companies typically add 15% to 20% to the actual cost of health care to cover their marketing costs and profit margins. The money we save by eliminating the middle man can help bring us out of this recession by reducing the cost of employee health insurance for America’s businesses as well as covering the cost of providing insurance for every American citizen.  

Medicare is a good example of a National Health Insurance program that works.  Medicare is roughly equivalent to a high quality Blue Cross policy, with the added benefit that there are no pre-existing conditions. Medicare is currently financed by a 2.9% payroll tax split equally between employers and employees. The reason it’s headed for financial problems in a few decades is because it  covers only the oldest and sickest among us. If we add the other 85% of our younger healthier  population to Medicare the projected deficits disappear and the average cost of insuring every citizen drops significantly. As a result we end up actually saving money by covering everyone with a broad based payroll tax which costs significantly less per person than we are now paying on average. We don’t have to look for a new source of money if everyone is covered. The insurance companies know this and that is why they lobbied so strongly to force every American to buy individual health insurance policies.

People on Medicare are generally happy campers, which is the reason the health insurance industry also lobbied to hard to keep a public option off the table. They fear the competition. When you enroll in Medicare you receive your own personal policy which can not be canceled. Your policy is completely portable no matter where you work or live. You have freedom to choose your own doctors and you no longer have to worry about pre-existing conditions. Your card is accepted throughout the country by almost every physician and health care facility. Physicians like Medicare because they save money by only having to submit their bills to one agency and, Medicare tends to give Doctors a freer hand in deciding what care is best for the patient than the private insurance companies.

It’s been estimated that a 10% payroll tax  (split 8% employer-2% employee), would be adequate to provide Medicare style coverage for every American citizen. If you think that is unaffordable keep reading.  Employers can easily spend 12% to 16% of gross wages for health insurance through private insurers and that number is rising steadily. Therefore a payroll tax of only 8% could potentially reduce employer’s health insurance costs by as much as 50%.  That projects to a savings of hundreds of billions of dollars annually for our nation’s businesses. It’s that simple. As business profits rise so do wages and tax revenues to our struggling Federal and State governments. You can ask your employer how much he, or she,  pays for your insurance. Then calculate how much your employer would save if he only paid 8% of your salary for insurance. Now calculate how much your wages would increase if your employer passed on half of that savings to you.

While an 8% payroll tax would be a significant savings for the vast majority of employers who already provide health insurance to their employees, it would put a harsh burden on the small family owned businesses which can’t afford to provide insurance for their employees. Obviously these businesses would need to be subsidized with some of the 350 billion dollars we will save by eliminating the need for Medicaid, plus SCHIP, and other tax supported programs, once every American is covered under the same plan.

If anyone has further doubts that a public health insurance plan such as Medicare will save money, get on the internet and search for reports coming out of the Congressional Budget Office and the Government Accountability Office reporting that a single payer style system is the only system that saves enough money to pay for the cost of insuring every American citizen while reducing the national deficit.

Finally, we need to address the legitimate concerns of those who are worried about “Socialized Medicine”. Keep in mind that Health Insurance and Health Care are not the same thing. Medicare is insurance- not care. Veterans care is socialized medicine because the Doctors are government employees and the hospitals are owned by the government. Under Medicare our physicians remain self employed and the hospitals are still owned by private corporations. If you have good insurance now don’t assume that Medicare won’t be equal, or better, until you check the facts. Patient surveys consistently show Medicare receiving higher customer satisfaction ratings than private insurance.

The  convoluted plan signed by President Obama achieves none of  the cost savings that come from simplifying health insurance by covering every American under one policy. Instead that plan creates a confusing maze of “insurance exchanges” and “co-ops” that only make it more difficult for Doctors to get reimbursed and impose fines on those who can’t afford insurance. President Obama says that no one who likes their present insurance will lose it. That is not true. The plan signed by the President  provides strong incentives for businesses to pay a minor penalty and drop their employee health plans. Their employees will then be required to buy their own insurance policies in a private insurance market that is free from price fixing regulations. Many families won't be able to afford these policies even with the tax payer funded subsidies that are promised in the plan. The cost of these private policies are likely to be much higher than predicted and the ability of citizens to pay the cost of the subsidized premiums has been grossly overestimated by Congressmen and Congresswomen who receive salaries of $175,000 per year, plus  health insurance, at the expense of the taxpayers. Few of our  politicians in Washington have any idea how difficult it is to raise a family on  a typical median wage of  $45,000 per year.  

Jay Quick

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