Recently the debate about healthcare has centered on the phrase “Health Care Overhaul”. Both sides of the issue clamor loudly for the advantages or disadvantages of such an “overhaul”. Often times in such a debate I find myself somewhere in the middle; and in this debate this is certainly the case.
That government should be limited by the express powers granted to it by the Constitution, to me, is a no brainer. But the flip side is that, as much as I might deplore it, government has grown greatly and is now a bigger part of our lives than the founders ever dreamed. One sure way for the government to get EVEN LARGER is to begin meddling in health care. This argument I definitely agree with.
However, it is unarguably a shame that in the United States, the self pronounced “City on a Hill” to the world, millions of people have little or no access to adequate health insurance. This is also unarguable.
So each side has a legitimate point, but as is often the case, are arguing for extreme positions. Doing nothing will not solve the problem posed in point 2, while a single payer system will only make the fears of point 1 even more concrete. Neither seems to be a plausible solution.
So let me put forth my compromise plan. I dreamed this up one day knowing little about some of the various detailed proposals that have been made (or the system in Massachusetts) but was pleasantly surprised a little while later that I was not the first to think of this! (OK, seldom am I the first to think of anything). So let me put down some details for you.
But before we begin, FIRST, we need to assess just what it is that we are trying to tackle. The original argument, and most convincing one, is the 47 million Americans who have little to no adequate health coverage. 47 million…that’s a LOT of people, roughly 15% of our population! 1 out of 7 Americans!
It doesn’t take long looking at the numbers to realize that this number, while convincing, is little more than an aggrandizing fib. Let’s break the numbers down:
47 million: the number of uninsured or underinsured.
80: the percentage of that number which are actually citizens or are naturalizing (i.e. are federal income tax payers)
15-20 million: the number of people who could afford health coverage but choose not to be covered. (Either they are wealthy enough to be self insured or feel they are healthy enough to not need coverage)
10-15 million: the number of people who already qualify for government provided health coverage
So, we do a little math and find out that the “47” million people that are always discussed, in fact, gets whittled down to 8-12 million citizens who truly cannot afford coverage. This comes out to be 3% or 1 in 30 Americans.
Suddenly it doesn’t look like such a big problem to tackle!
So, here is my simple solution:
Require some minimum coverageIf no coverage can be proven then perform means testing
1.
If means are there, a direct tax is levied and the taxpayer is supplied with a government “pooled” plan
2.
If means are not there, the citizen is NOT taxed and is supplied with a government “pooled” plan
So, there’s the outline. Here are the details.
First, everyone thinks it is fair to require drivers to carry some minimum level of liability insurance. This coverage is not necessarily to protect the driver, per se, but to protect all the OTHER drivers who may be injured by an individual’s actions, either physically or financially. Uninsured citizens who use medical services are necessarily harming other citizens by driving up the costs of health coverage for those who actually pay. They are also harming other citizens by adding instability to the system when they have no recourse but bankruptcy after accruing large medical bills. So requiring some minimum level of catastrophic health coverage is not so farfetched.
As for the government “plan”, this plan should be lean, mean, and revenue neutral (or close to it). The base price for this coverage should be par for the industry, at a minimum. It would probably work better if it was actually slightly higher (say 10-25%). The purpose of the plan is NOT universal coverage. It’s the opposite. It is a penalty if you do not go out and find coverage on your own. The premiums for this plan should be set at a level to encourage citizens to go out and get their own coverage!
But of course, not all Americans can afford adequate coverage. For this reason, some means testing is applied and the direct tax is either reduced (say by 50%) or eliminated, depending on the individual’s circumstances.
The plan should be mostly paid for through these direct taxes and partial taxes, keeping it as close to revenue neutral as possible. So here’s an example break-down.
The average cost of coverage is, say, $8,000 per year for a family of 4. This comes out to be $2,000 per person. (We’ll do the math based on individuals). So we’ll set the government premium at $2,500 (see the incentive here?).
Year 1 (using the low numbers of participants):
15 million are added to the roster and DO NOT qualify for reduced rates, all are taxed
$2,500.
5 million are added to the roster and qualify for reduced rates, all are taxed
$1,250.
5 million are added and do not have the means for any payments, all are exempt from the direct tax.
Total participants:
25 millionTotal Revenue:
$43.75 billionTotal Cost:
$50 billionNET:
$6.25 billion or 0.3% of the Federal Budget
That net result is around $21 per American which, in theory, should mostly be made up for in reduced coverage costs (remember, 25 million people are now using their health coverage and are “spreading the cost around”).
Year 2: (worst case scenario—or best, depending on how you look at it)
5 million people remain on the roster and DO NOT qualify for reduced rates
5 million people remain on the roster and qualify for reduced rates
5 million people remain on the roster and are exempt from taxes
Total participants:
15 millionTotal Revenue:
$18.75 billionTotal Expenses:
$30 billionNET:
$11.25 billion or 0.5% of the Federal Budget
Of course, you could play with the numbers, add multiple “tiers” of qualification, etc. But the point is this; compared to the price tags I’ve seen out there for other options, this plan seems to be incredibly cheap and easy to put in place! It deals with the problem of uninsured Americans while giving us as Citizens and incentive to take care of ourselves! Without this final point of encouragement, any sort of government supplied plan would almost certainly spiral into a single payer system. Checks must be in place to ensure that the government subsidized plan is NOT undercutting private business and encouraging people to rely on the government more than they already are!
