More Health Care Thoughts

This part two of a thought experiment about the US Health Insurance industry.

I am employed by a not-for-profit organization that provides medical and dental insurance to its employees. Employees are required to share in the cost of this program, and a variety of competitive options are provided. I opt for the so-called “80/20 plan,” in which essentially 80% of costs are covered following a $20 copay, subject to an annual deductible. I have approximately $50 withheld pre-tax from my paycheck every two weeks, for a cost to me of about $1,300. In addition, I have a Flexible Spending plan available to reimburse me for the things not covered by the plan, including vision care as well as the aforementioned copays and deductibles. For 2009, I am withholding $750 from my pay to co-insure myself for healthcare.

In all, my insurance will cost me over $2,000 this year. (Of course, my employer is also bearing a significant amount of the cost of my coverage, an amount unknown to me.) Let me reiterate – the amount of your copays and deductibles also comprise the cost of your health insurance. These are the conditions imposed by the insurance company to provide healthcare coverage. They won’t pay the bill until you pay these costs above and beyond your premiums.

Unfortunately for me, in addition to my normal checkups (physical, eye exam, two dental exams) I had one trip to the Emergency Room last winter, and I broke a tooth later in the year, which have added over $1,000 out of my own pocket to the total bill. But fortunately I am in generally good health, with no chronic issues to deal with.

The Federal Government will withhold about $5,600 in estimated income taxes from my paycheck this year. My actual final bill will likely be less than that, but for purposes of this discussion let’s use the higher number. My health insurance costs - not including the emergency situations - equal about 36 percent of my annual federal income tax bill. If the Federal Government became the sole provider of health insurance in this country, but the result was a 30% increase in my Federal income taxes – it would save me money.

Let me repeat that – I would be better off with a 30% tax increase it the tradeoff is that I have no medical bills to pay.

This is a very simplistic calculation, to be sure. For one thing, every employer is different in the amount that they ask employees to pay. Some people pay no premiums out of their own pockets, while others pay significantly higher amounts. But I have a competitive plan, and I earn more money than the average worker in this country. I also am not covering anybody else under my plan, unlike many who cover spouses and children. I suspect that most people pay more than 36% of their federal tax bill in health insurance costs.

It is for this reason that I don’t understand why a tax increase is anathema to so many. For most US citizens, publicly-provided health care coverage would put more money in their pockets. Quite the opposite to the message promoted by the conservatives, this would be an economic boon rather than a burden. Some people would have higher tax bills as a result, but those people would be the mega-rich of this country. I submit that adding a few hundred or a couple of thousand dollars to the pockets of the average American will result in greater economic stimulus than keeping it in the investment portfolios of our country’s wealthiest citizens. The middle class are far more likely to actually buy stuff with their extra cash.

Thoughts on Health Care

The latest political boogeyman is Universal Health Care, as proposed by the Obama administration. Lots of rhetoric is thrown back and forth on the issue, and the Right Wing, while offering little in the way of alternatives, continues to snipe at the proposal.

Some of the common themes:

It's going to lead us to socialism!
Please. For one thing, the checks and balances in our government are too strong, and the election cycles are too short, for us to become a socialist society. If the people don't want the US to become a socialist society, we'll vote out those who we think are leading us in that direction.

Besides, the government has been providing essential services that benefit the public good for a long, long time. Having a state-sponsored police force hasn't led us to socialism. Nor, for that matter, has publicly-run health care, like Medicare.

There will be a government bureaucrat standing between you and your doctor!
I'm not sure how this is worse than having an insurance industry bureaucrat standing between you and your doctor. Or between you and your reimbursement, for that matter.

Private capital is incented to operate more efficiently!
Private capital is incented to maximize profits. Sure, they might provide health insurance with fewer employees than the government will provide it with, but they are also looking for ways to get more money into the pockets of the executives and shareholders. Some of this is done by operating more efficiently. Some of this is done by increasing premiums. And some of this is done by denying coverage to people who believe they've purchased it. In a government-run universal system, there is no profit or bonus incentive, so those costs are eliminated.

As for operating efficiently - raise your hand if you've never heard of governmental entities cutting jobs? I thought so.

Government spending will increase! Taxes will go up!!!
And spending on private healthcare coverage will go down. Again, I fail to see the difference between a dollar sent to the government and a dollar sent to a private company.

You'll have to wait in line to get treatment!
Which is no different from today. People don't get surgery on the same day they sign up for it, they have to wait a couple of weeks. As for the converse, it's simply not true that in countries with socialized medicine that a person in cardiac arrest (for example) has to wait for the doctor to treat a kid with a skinned knee. Would any civilized society stand for that?

I admit that I can't begin to do an analysis of all the dollars associated with a government-sponsored health coverage system. I also don't deign to understand all the details of the Obama package. There is no doubt that there are tremendous flaws in the system, many of which are the result of granting too many concessions to the insurance industry.

But common sense tells me that, in the long run, a government-sponsored health industry will be cheaper than privately run insurance companies. Yes, more people will be covered, but those people already incur costs that the rest of us cover through Medicare, or rate increases needed to offset charity care. If covered, those currently uninsured are also more likely to receive preventative treatment rather than more costly critical care.

And since the government already provides Medicare and Medicaid, there is already an infrastructure in place upon which the new system can be built.

Health insurance should be about providing for the health care of people, not about increased profits. We will never have adequate coverage until those providing the coverage have the patient's health as their primary focus. That is not currently the case.