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It's not and never will be free

Fri, Jun 1st, 2007
Posted in Commentary

There are in excess of 47 million uninsured and 12 million under-insured under age 65 in the U. S. One in three non-elderly will go without insurance in the next two years. Half of all bankruptcy is due to medical bills. Most people in bankruptcy had insurance when they became ill or injured. 18,000 people die yearly due to a lack of access to medical care (insurance).

No one with an I.Q. greater than their belt size ever believed universal one party tax supported healthcare would be "free". This is the argument raised by proponents of "free" market health care insurance used to frighten folks. The specter of raising taxes to a confiscatory level works only for those who mindlessly regurgitate this nonsense.

The U.S. Department of Health and Human Services report over 45% of health care spending is paid for by taxes. This is based on who writes the check to the healthcare provider. FBI agents and other federal employees have their insurance paid for by the government but the insurance writes the check and is not counted in the 45%. This is tax financed care.

Private employers pay for employee insurance and this is tax subsidized. The Kaiser foundation released a study in January indicating the average cost for a family policy in the U. S. was over $11,000 year. Assuming a person pays 20% ($2,200) of the premium and the employer $8,800 (a tax write off for the employer); the employee has a benefit of $8,800 on which no taxes are due. In Minnesota a family with a $70,000 taxable income avoids paying $2,800 in taxes. This tax preference must be made up by others paying more taxes or reducing programs that may benefit others. Taxes are paying for a portion of these folks healthcare.

One study, in 2002, showed tax preferences accounted to 15% of tax financed health care, 9% public employee health benefits, and direct government payments 76%. The total tax payments add up to about 60% of healthcare payments in the U.S. In countries that have universal healthcare one party overt tax systems the payments total about 70% of payments.

We have only about 10% to go to reach the same level and give basic care to everyone. The 30% overhead of the private for profit insurance companies will pay for it. There will have to be a tax increase, but not a confiscatory increase.

The same old arguments I heard in the mid 60's about "socialized medicine" - (doesn't hold the same terror now that communism is relegated to a few small outposts does it?) - Washington bureaucrats controlling medicine, reduced innovation, and on and on. Progress will have to be incremental because of the vested interests in propping up a failed, arcane, and anachronistic insurance industry that serves no useful purpose in filtering health care dollars.

John Edwards, not my favorite candidate, has brought forth a healthcare proposal that "has it right" according to the New York Times' Paul Krugman, and I agree. He isn't getting rid of insurance companies but holding their feet to the fire. There are six main divisions, but the most cogent are the requirements for insurance companies to provide community based premium insurance available at the same cost to everyone regardless of health history, age (below Medicare), employment, or other characteristics. This is coupled with government insurance people can opt for based on Medicare payment schedules and practices, separate from Medicare, and run by an independent group similar to the Federal Reserve. The private insurance companies will have to compete with the Medicare like plan. The funds for the "Medicare" plan will be untouchable by politicians. If it is managed as well as Medicare it will have a two % administration cost and before long the insurance companies will fold their tents as we all gravitate to a plan without a middle man. A one payer tax supported Medicare for all.

If this is coupled with cost controls similar to Medicare for both the government and the private insurance plan it's a "slam dunk" (this is not a quote from G. Tenent).

It will become obvious to all that under the above scenario business and industry will profit, insurance costs will go down, the medical portion of workman's comp might go the way of the dodo bird, families will pay less for better coverage, and there will be no job lock because the insurance will be portable. The cost for those who cannot afford even the reduced cost will not be a burden we cannot accept. If we can't do it, those who want to retain for profit health insurance get to pick the children and families we leave behind.

Dr. Robert Sauer lives in Preston. He can be reached at r.sauer@mchsi.com

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