constructing the underdog, part vi: health care
we all could use it, but who should pay for it?
by jeffrey d. walker
This article is part a series intended to foster open discussions on the issues as we get set to elect the next President of the United States. See more info about the concept here. You're invited to add your two-cents by joining the discussion.
It seems like forever ago that I wrote an article with the name Mike Huckabee in it, but really, it was only in January. By March, Huckabee's campaign ended. Three months later (earlier this month), Hillary Clinton ended her campaign.
And so, with only the final Republican and Democrat contenders standing, it's time to get it on! Mano-a-mano. McCain v. Obama.
No disrespect to any of the third party candidates, (Bob Barr, Gloria La Riva, Gene Amondson, Brian Moore, Roger Calero, and whomever the Green party picks), but it's fairly safe to assume that most people voting for President of the United States this fall will be choosing either John McCain or Barack Obama. So I'll more than likely focus my attention on these gentlemen from here on out, unless a major third-party player emerges between now and November.
I'll note that my piece last month made no bones about preferring Barack Obama's position on social security and the proposed gas-tax holiday. But don't misinterpret this as a sign that this series has transformed into some kind of kumbiya singing camp for the Obama campaign, with campfires and camp songs, and campanologists and camphor oil. Sure, Obama is charismatic. Here's his inspirational speech video . But there's John McCain, a Vietnam veteran, two-term house representative and four-term senator, who stands in his way. And he's got his own inspirational speech video. And after last month's Obama approving piece, I thought it right to point out an instance where I think Obama has it wrong, and McCain is more on point. And the instance I cite this month is health care.
Unlike many other issues, if you filter it all down, McCain and Obama have surprisingly similar ideas on health care. In analyzing the problem, both candidates' websites talk about the rising costs of health care, the number of uninsured Americans, and the troubles of those with preexisting conditions; moreover, both candidates' websites mention how they want to make health care insurance coverage "Portable" and "Affordable" (See both Barack Obama's campaign website re: health care and McCain's campaign website re: health care.
The fundamental difference is how each candidate plans to accomplish this.
A series of CNN / Money Magazine articles best helped me understand how each candidate wants this to work. I will point anyone interested to these three articles for guidance.
As stated in the above articles (and elsewhere), Barack Obama's plan would require employers to either offer an insurance plan to workers, or to contribute money towards employee's health costs, and if they won't do either, then those employers would be required to contribute a percentage of payroll to the costs of a national public plan. The national plan proposed would supposedly be available to all workers whose employers aren't contributing, and as noted on his campaign website, the "new national health plan... is similar to the plan available to members of Congress."
I see a number of problems myself. One, the creation of the "national public" plan, whatever it may be called, is essentially creating a huge new government bureaucracy whereby an agency of the government will be providing insurance in direct competition with private insurance companies. Maybe this strikes at some Republican bone in my body, but I don't agree that a government run health "insurance company" will be either efficient, or cost effective. Name any government agency that is known to be either of these things vs. a private equivalent? I dare you!
Moreover, to pay for this anticipated huge government bureaucracy, Barack's health care question and answer FAQ page clearly states that "The additional revenue needed to fund the up-front investments in technology and to help people who cannot afford health insurance is more than covered by allowing the Bush tax cuts to expire for people making more than $250,000 per year, as they are scheduled to do" [emphasis added].
Accordingly, Barack is counting on anticipated additional income taxes to pay for his plan, and those only occur if existing tax cut policies are repealed. So Barack needs (1) Congress to permit the existing tax cuts to expire, and (2) Congress to approve and /or fund a completely new federal health bureaucracy in order for his plan to work. If one of these things don't occur, what then?
And even if both steps are met, the uninsured will still have to get off their duffs and apply. It must be noted that, although Obama's website advertises that "My plan begins by covering every American" (See Barack's campaign website citing a Speech in Iowa City, IA, May 29, 2007), in truth, I only understand Barack's plan to guarantee coverage only for children. So, while bringing pressure on the employers to pony up for insurance, what I don't see is any mechanism to pull the unemployed and /or uninsured people into the system. Moreover, as of yet, there's no mechanism in place to punish those whose refuse to comply with providing / obtaining coverage. So if someone isn't getting it, who is going to get them? I don't see how this helps the unemployed / uninsured at all. Moreover, some experts have noted that "Employers may balk at the cost of the mandates under the... Obama plan... and hire fewer workers or pay lower wages to compensate... It may actually burden the people it's supposed to help ."
McCain, by contrast, would seek to promote personal insurance choices at the individual level rather than through employers. In fact, McCain's plan in theory might take a majority of employers out of the health care equation all together in the long run!
Under McCain's plan, if you're employed and receiving insurance through your job, the price that your employer pays for your insurance premium will now be charged to you as income on your W-2; as an offset to this new taxable income, "he'd offer a refundable tax credit of $2,500 ($5,000 for families) to anyone who buys health insurance, whether at work or not."
To a working person, McCain's deal may at first seem harsh. Why should a worker now have to mess with extra income that will be taxed but then offset by a tax credit? Why not just leave it alone!
The reason is that the worker now sees what they are paying for health coverage. And if they don't like what their paying, they now (via the tax credit) have the benefit and the incentive to shop for insurance elsewhere. No matter where the insurance is purchased (through work or elsewhere), they still get the tax credit.
The effect I predict from this arrangement, as seconded by one of the critics in the CNN / Money articles, is that " the new credit may help control costs, since consumers would be inclined to choose cheaper policies." I call this the "Geico" effect: as more people become aware of what their insurance is costing them, they will seek out health care providers who can give them coverage cheaper. This forces the providers to have attractively priced products to get customers. And ss the private insurance brokers acquire more and more people as clients, the price people are paying overall would be reduced. And they'll be like, "I just saved a bunch of money on my health insurance, but I still get the same tax break!" And as insurance rates go down, there will be greater access to uninsured persons who will then benefit from the tax break when they start buying coverage for themselves: No huge government bureaucracy necessary, and no pressure on employers (like Obama's plan would create). As such, job growth and hiring should not be effected.
McCain's plan doesn't promise health care for everyone. In fact, " Under McCain's plan, no one would be required to have insurance." However, as noted above, neither does Obama's. The difference is, McCain's plan does have a theory that I believe would reduce rates and make insurance affordable for the uninsured. Obama's plan does not and has not explained to me in a believable way how rates would go down.
That said, McCain's plan I believe is a more realistic mechanism to get more people to buy insurance, and consequently, drive insurance costs down via the power of the consumer - just like Geico did to car insurance. And once costs are down, more people are likely to procure insurance for themselves, especially when they receive a tax break for doing so.
Obama's plan, by resting the burden on employers, and creating a governmental bureaucracy on the backs of taxpayers, has created a plan that will require a LOT of up front costs to implement, and does not (to me) guarantee any greater likelihood of coverage to the uninsured. That's a lot of money that has to be invested before we see any results, and that's just too much risk prior to the supposed reward for my liking. And once you form a government bureaucracy, they are almost impossible to stop.
Let me also note at the conclusion of this, I've never once watch Michael Moore's "Sicko." I'm planning on doing so shortly, and if that makes me re-think my position, I'll note so in the discussion.
But so far, McCain has a better idea from what I can tell. What do you think?
A practicing attorney and semi-professional musician, Walker writes for his own amusement, for the sake of opinion, to garner a couple of laughs, and to perhaps provoke a question or two, but otherwise, he doesn't think it'll amount to much.
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6.20.08 @ 12:28p
Pretty much anything that is dependent on extending the federal bureaucracy has FAIL written all over it. Do you really want to deal with the health care equivalent of FEMA when you need help?
I can certainly see Congress allowing tax cuts for the most wealthy Americans to expire, particularly (as is likely) if there is a Dem. majority in both houses after the fall election. However, I think it's just as likely that the resultant windfall would be snatched up for any number of other projects rather than necessarily earmarked for national health care. And for once, I don't have a problem with that. I'd rather follow McCain's health care plan, and let the money (some of which would then need to be used to fund those tax credits) go to something that didn't require a new layer of bureaucracy, such as infrastructure repair, an alternative energy "Manhattan Project", paying down the deficit, or expanding Amtrak.
Health care is a serious issue, but it's going to get short shrift outside of certain special interest groups for now, as the economy, the oil crunch and the wars in Iraq and Afghanistan dominate policy in the heart of most voters. Provided either candidate is able to secure those issues, health care (and social security, as addressed last month) will come surging to the forefront.
6.21.08 @ 7:28a
IMFO: healthcare should not be a for profit enterprise. It isn't in most of the western democracies, and it shouldn't be here either. Medicare is an answer to your dare: this bureaucracy has less administrative costs (by multiples) than any health insurance company, even if you factor in fraud, which is usually caused by physicians and other providers submitting fraudulent bills.
I don't think Obama's program goes far enough. I liked Kucinich's program much better.
6.24.08 @ 7:15a
I'm certain that anyone getting paid the federally approved minimum wage of $5.75-$7.25 a hour will not be able to afford to comparison shop for health insurance. And that's the group being talked about here.
When I was self-employed, I purchased an individual plan for a while. It was a bare-bones, no frills, just help me live if I'm in a car accident kind of health insurance. It was $140 a month, plus $20 co-pay for doctor visits and no prescription card.
My maintenance health condition requires me to go to the doctor every three months, and pay for medication every month. So, at that base level, my outlay for premiums, doctor visits and medication was nearly $2,000 a year. Anything extra I had during that time - annual exams, physicals, lab work for blood tests needed for my maintenance condition, foot surgery - cost a lot more.
At $7.25, the average worker brings home approximately $14,000. That's assuming they're able to work 40 hours a week. Many people in those positions are scheduled 32-38 hours a week.
-Rent or possibly a mortgage in an average city in a safe location will average $500 or more a month.
-A car payment $150-$300 a month, car insurance $100-$200 a month, assuming the person buys it.
Already, at the low end, we're at $9,000 a year in expenditures. That's before gas, utilities, food, and clothing.
-Food for one person a month: approximately $200.
-Utilities, on average per month: $250, with basic phone service, and budget-billing gas, water, and electric.
-Gas a month: roughly $120, for a small vehicle.
Without clothing, the other necessities cost about $6,800 a year.
So for basic living expenses, we've exceeded our income by $800. Public transportation might offset this considerably, but it's hard to count on that in some areas.
Notice there is no room in the budget for health or dental insurance, rental insurance, haircuts, a movie out, or savings. All of these items fall into the "luxury" category.
I've gathered data for public policy research studies, and I'm basing these numbers on what real people told me what they make and what they spend. People all over the country, working as CNAs or in factories or in retail. Some folks were also office managers for small businesses, or retired people on fixed incomes. A few were teachers in small communities.
Many of these people qualified for a minute amount of public assistance, but somehow, made do on what they had. People like to criticize them for being bad money managers, when in reality, they are some of the best budgeters you'll find. Their lives depend on it.
They didn't look at themselves as being at poverty level.
But they are.
6.24.08 @ 7:16a
Anything can throw the above numbers into a tailspin. More than likely, if they even qualify for a credit card, they carry a bit of debt, too. It's just the way it is for some working people.
Some might say, "Oh, get a better education and get a better job."
You're going to tell a teacher that? Or the CNA taking care of your grandmother? Or a retired person?
When we start looking down our noses at people with gainful employment, then we lose a bit of humanity. Not everyone is destined to become a CEO or a rock star or a basketball player.
At my current job, my buy-in to my insurance plan costs the same as when I was self-employed. It's a slightly better plan, with more assured coverage, but what I pay is only a fraction of what my company, with a group rate covering 3,000 employees, pays in total for my health care.
So one of the major discrepancies of our health care system is that while I paid $140 a month self-employed for a basic plan, I pay that now, and my employer pays an additional $400 a month for me.
That's $540 a month the insurance company stands to gain for every month that I don't have something catastrophic happen to me. I still have to pay the same co-pay for the same number of doctor visits, the same amount for my general prescription.
So in order to make a profit, insurance companies make it nearly impossible for employers to cover more people with health insurance. But the profit is all but guaranteed, just as it is with drug companies.
6.24.08 @ 7:57a
And another couple of things.
Insurance company riders all but prohibit quality care, and few insurance companies provide preventative health care - a factor that would drive premiums and costs down.
If you have a pre-existing condition, even something as minor as hypothyroidism (personal experience), many basic insurance plans will not cover the maintenance of that condition. So you have to pay out-of-pocket for all care of that condition. Furthermore, many insurance companies will evaluate the symptoms of a condition, and then put a rider on the symptoms, preventing care of anything in relation to those.
And preventative care is not something insurance companies are interested in, because it cuts off the revenue stream. Instead of paying for 6 visits to the nutritionist if you're pre-diabetic so that you learn what not to do and hopefully not become diabetic, many insurance companies won't cover the visits.
Overall, it doesn't matter what either candidate says about health care, because the companies will compensate for the lack of revenue in a different way. It's a hot-button, emotional issue in a capitalistic society and without regulation, nothing effective can be accomplished.