A majority of Americans said they favor “a national health plan.” Yet, with all the talk about Medicare-for-all or Universal Health Care or Cradle to Grave Health Care (or whatever you want to call it) it’s no closer to reality then it was 100 year ago. So what’s the hang-up?
Everyone knows by now that our health care system is the most expensive and least efficient in the developed world, that our monthly health insurance premiums continue to rise and are unaffordable for most, and that we have a crisis of uninsured and underinsured people in the country. So why haven’t we already made a change? What in the world is the hang-up?
I’ll tell you what the hang-up is – not enough people have skin in the game! 56% of Americans get their health insurance from their employer. That means that employers subsidize the cost of health insurance for a majority of people in this country. Over half of our population doesn’t “feel” the true cost of their health insurance. They don’t feel the pain, so they don’t understand what all the fuss is about. Until enough people “feel” the true cost of their health care system, the “status quo” will maintain its death grip on the American populous. Are we then doomed forever to live with this mistake of a health care system that we “accidentally” invented 100 years ago? I say not, and the catalyst we require is just a little political will power. All we have to do is ……
Eliminate the tax breaks for all group health plans
Our health care industry is riding the gravy train of tax-advantage products – group health insurance premiums are both tax-deductible to the employer and the benefit is tax-free to the employee. These tax-breaks add up to billions in lost revenue to the federal and state governments. Our “subsidize” health care system insulates half the population from the true cost of their health insurance and allows health insurers to manipulate up the cost of health insurance while catering to run away health care cost! Eliminating the tax breaks on group health insurance would force Consumers and Insurers to face head-on the reality of the price of health insurance, which should, in theory, put pressure on the escalating cost of health CARE. In addition, with no tax incentive to distribute health insurance, most employer groups would jettison their group health plans, thus creating a transition from an employer group health insurance distribution system to an individual based health insurance distribution system. The free market would prevail at last.
In an individual based health insurance distribution system, without government subsidies, our health care system would be subject to the same marketplace dynamics of as any other goods or services. Consumers would demand price/value equivalency via the price of their health insurance. A consumer driven health insurance marketplace would determine the true worth of their health care. Insurers and brokers would still be in business and they’d still be selling private health insurance – but to individuals not necessarily to employer groups.
But health care is NOT like any other goods or services in our economy, which are constrained by competition, choice and timing. The price for health cost doesn’t change when everyone is health – it goes up. The law of Supply and demand don’t apply to heath care. Health care does is a necessity of life, fundamental to the health and wellness of our citizens and our democratic way of life. In a civilized society, as a matter of national security, health care should be a basic right for all citizens. Our current for-profit health care system will never deliver health care as a right, so the next logical step will be Universal Health Care or health care that covers all citizens from “Cradle to Grave.”
The employer groups will protest the loss of the tax breaks, of course. But could that be much todo about nothing? Let’s do the math. Health Insurance is really expensive, regulatory compliance is complicated and confusing and the overhead necessary to administer group health insurance benefits is really expensive, so what does it really cost the employer group to offer health insurance to their employees? Are the deductions really worth the cost? And why in the world would a business want to be responsible for providing health insurance to their employees anyway?
What! Make people pay for their health insurance, that’s outrageous? Yes, employees will have to buy their own health insurance, or claim as income the value of their employer sponsored health insurance. Company executives, and other highly paid employees will complain the loudest because they are the ones who benefit the most from receiving extremely expensive insurance tax-free. But it’s not all bad, American businesses would be free of the expensive of operating our nation’s health insurance distribution system and could finally increase wages for workers, employees could select their own health coverage instead of simply accepting what the employer provide, and best of all premiums will drop as this new huge block of consumers enter the individual marketplace and demand affordable health insurance.
Revising the tax code wouldn’t necessarily put an end to our “accidental” health care system, but it would force employer groups to reconsider their relationship with group health insurance. It would motivate Insurers to adjust their pricing to reflect the new subsidized free premium environment and put pressure on health care providers to adjust their cost structure. Employees would finally become informed consumers of health insurance who, like all good consumers, seek to minimize cost and maximize value for their particular situation. The result would be a consumer driven health care system where the cost of health care would accurately reflect what the market will bare. A simple change of the tax-code would bring about a restructuring of our health insurance distribution system and bring the full force of collective individual consumerism to bear on our health care system, improving care and reducing cost.
The next step is to transition from the individual base distribution system to a centralized system such as Universal Health Care or Medical-for-All that would eliminate the profit motive, bring to bare economies of scale (volume discounts), streamline administration and reduce the cost of health care. Health Care would finally become simply Health Care.