Burr's bill would encourage families to find their own health coverage, and then help them pay the bills through refundable tax credits of up to $5,400 a family. The proposal could bring health coverage to the North Carolina residents now without it.I can see some merits to the proposal: it would give Americans who are not currently covered the opportunity to purchase whatever kind or level of health insurance that they wished. For some single young people, who are seldom sick (and tend not to buy individual health insurance--even when they can afford it), it might make sense to buy coverage for only hospitalization and other major expenses.
Advocates for the uninsured say Burr's proposal could jeopardize not only low-income families and chronically ill patients, but also the employment-based health-care system that now covers 65 percent of Americans. Burr's measure would begin taxing the value of health-care plans that many employers now offer workers, a controversial provision sure to face opposition. Such benefits are now tax-free, both for the employer and the worker.
The legislation would offer special tax credits to residents to help cover the cost of health insurance and other health bills: $2,160 per person, up to a maximum of $5,400 per family.
Burr, a member of the Senate health committee, said his plan would level the field among residents. He described a Robin Hood-like bureaucracy that would take money from those with rich health-care plans to help pay for those who have nothing.
"Millions of Americans who are currently uninsured would have access to coverage in the free market," Burr said. He said the plan would give patients buying power by allowing them to hunt for their own, personalized coverage.
For people who visit the doctor fairly often, as is often the case if you have small children, a refundable tax credit of $2,160 per person per year would pay a big part of the costs of individual health insurance. (From purchasing individual health insurance for a family member recently, I know that medical coverage is about $350 a month right now in Idaho.)
There are a lot of poorly paid Americans who have group health insurance available to them through their employer--but the employer doesn't pay any of the costs. I'm not sure what those policies cost; my guess is that $2,160 per person per year might pick up a big part.
What makes the proposal more problematic is that it would tax the health insurance benefits that most employers now provide to their employees. (And yes, as much as liberals like to pretend otherwise, a strong majority of Americans have health coverage right now, either through an employer. through Medicare, Medicaid, or the Veteran's Administration. (Although the stories I hear about Medicare, Medicaid, and VA, suggest that asking for more federal involvement isn't a recipe for great health care.)
Right now, the majority of Americans with good jobs, or whose parents have good jobs, get pretty decent health insurance. I can't wildly enthusiastic about my current employer's insurance plan, especially compared to the company I worked for previously--which had 12 employees, lower deductibles, and lower premiums. But it's nothing to grouse about, either. I know what the insurance costs are for my employer and for me, and if this becomes a taxable benefit, offset by $2,160 per person per year of tax credits, I expect that health insurance to get a lot uglier than it is now.
There are so many problems with our health insurance system in America--and contrary to what some people would like to believe, countries with single payer insurance or socialized medicine have significant problems as well. I've blogged before about Canada's problems with long waiting lists, and the signs that politically important groups are going to get elective procedures (like sex changes) prioritized over real health problems.
One of the problems with health insurance is that a lot of what insurance is covering doesn't make much sense. Typically, you insure for items that are likely to be very expensive, but where the chances of that event happening in any given year aren't very high. For example, you get collision insurance for your car because you aren't likely to be in a major auto accident in any given year. If you are, it will cost you $5000-$20,000, depending on the severity of the accident. It makes sense to pay $2000 a year to insure, with the expectation that there a good chance that every 5-10 years, you will be in an accident like that.
On the other hand, you don't buy insurance for your car's wax job. You know that it is a certainty that it will need to be done every year (or more often, for you fastidious sorts). The cost is small; about $10 or so, if you use really good wax. If someone was prepared to write car wax insurance, the cost of adminstration, having an agent come out to verify that you really needed another wax job, and so on, would mean that you were paying $80 a year for car wax insurance.
There's quite a bit of stuff that health insurance covers right now that just doesn't make a lot of sense to do through an insurer, whether it is private or governmental, because the administrative costs are so substantial, and you can be pretty darn sure that you are going to use that service several times a year or more. I'm guessing that most Americans see a doctor about 1-5 times a year; a few may see a doctor more often than that. What does a doctor visit cost?
If you go to at least some doctors, tell him you have health insurance, and you want to just write a check, you will be astonished how much cheaper that doctor visit can be. I know from experience, from a time in my life when, more out of stupidity than anything else, I had no health insurance. (I was 20 years old, making more money than I knew how to spend, and I was in good health.) A few years back, when we lived in California, my family physician charged my health insurer $75 for a doctor's visit; another family we knew had no health insurance, partly from poverty, partly from a father that had never grown up (which contributed to the poverty). They paid the same doctor $25 for a doctor's visit--check written when they arrived.
If you have health insurance, the doctor's visit is going to probably cost $40 to $120. Your insurer will then negotiate that down to $30-$60, and you will end up paying $15 to $40 as a copayment. I recently visited a specialist to deal with a cyst on my lower eyelid--the copayment ($40 because this was a specialist) was more than my insurer paid the doctor!
Back when I was "self-insured," my doctor ran a lot fewer tests, because he knew that I was paying for it myself--no insurance company was involved. Are the extra tests useful? Sometimes--and sometimes they are protecting the doctor from a malpractice suit. The more that you have to make decisions about which tests are really necessary, the more it reduces costs.
Maybe what makes sense is to have coverage only for the equivalent of that car crash: hospital visits; specialists; procedures or tests that are expensive and not terribly common. Right now, we as individuals, and as a society, are spending a lot of money on insurance policies that cover things that would be a bit cheaper if:
1. Our employer didn't send money to an insurance company.
2. Who waits for us to go to the doctor about a sinus infection.
3. Who charges us 50% more to cover the team of clerks processing the insurance paperwork and waiting for payment.
4. While a veritable army of clerks at the insurance company processes the paperwork from the doctor, verifies coverage, checks the ICD codes, and sends out paperwork and checks to the doctor and to us.
And note: this would be true for a "single payer" insurance system as well. Most socialized medicine systems only knock some of of this process out, because you still have to verify coverage, and there's no shortage of paperwork in socialized medicine systems.
There's another side to this as well, if we adopt a "single payer" system or a true socialized medicine scheme. If the government pays the piper, the government also calls the tune. As the AIDS epidemic, and the government's response to it demonstrated, a well organized pressure group can demand and get disproportionate funding for their pet disease. Sorry, but that's the way representative government works. If sufferers from disease X are very well organized, or politically connected, they may be able to get disease X prioritized over other diseases that are actually bigger problems. The opposite is a disease like schizophrenia, that has no political organization at all, but is one of the largest single causes of all medical costs in advanced societies, and gets relatively little research funding.
What if the government decides that it needs to "contain costs?" One way to contain costs is the Canadian model: don't invest enough in resources, and let people get sicker or die while waiting to get to the head of the line.
Another way to contain costs is to start pressuring people to make better choices. Insurance companies already do a bit of this, but it is largely polite scolding. I understand that at one time, some Canadian provinces refused to pay for oxygen for emphysema patients who would not stop smoking. This makes perfect sense to me--but is it really that hard to see a single payer or socialized medicine system refusing to cover people who smoke? What about people who drink to excess (however they chose to define it). What about not getting your share of green, leafy vegetables? These are all the sort of things that a sensible government would do to reduce costs--assuming that they were interested in reducing costs.
Health insurance is a very big, very complex problem. People that reduce it down to just "greedy lawyers" or "greedy insurance companies" or "all our problems will go away with socialized medicine" really haven't thought about this very seriously.
UPDATE: One aspect of the problem that I haven't addressed above is the problem of transfers to the needy. In some circles, the idea of the government taking care of the poor by providing health insurance is sacrilege. But as Blackstone's Commentaries on the Laws of England reminds us:
Life is the immediate gift of God, a right inherent by nature in every individual; and it begins in contemplation of law as soon as an infant is able to stir in the mother’s womb....A Christian Commonwealth, as American society was understood by its Founders, had an obligation to care for the poor. This didn't necessarily mean that every poor person had a right to a particular standard of living, but as Blackstone points "every thing necessary for their support." This would certainly include necessary medical care--but not necessarily elective procedures such as sex changes, which seems to be on the planned improvements list for Ontario's health plan. (I put the quote in from Blackstone just to annoy people like BinkyBoy, who seem to want the Christian Commonwealth obligations to care for the poor, without the equivalent Christian Commonwealth obligations to pass and enforce the moral laws that go with it.)
The law not only regards life and member, and protects every man in the enjoyment of them, but also furnishes him with every thing necessary for their support. For there is no man so indigent or wretched, but he may demand a supply sufficient for all the necessities of life, from the more opulent part of the community, by means of several statutes enacted for the relief of the poor, of which in their proper places.
Exactly how to best provide essential medical care is certainly worth discussing. The Hill-Burton Act passed in 1946 obligated public and nonprofit hospitals built with, or receiving federal funds to provide emergency medical care and some quantity of free non-emergency medical care to those who could not afford it. Emergency rooms meet this obligation, but they are a very expensive and inefficient way to provide non-emergency medical care to the poor. Medicaid does a better job, but I know that a lot of doctors are unwilling to take Medicaid. I remember a family physician of mine in California was going on and on about the importance of doing something about providing medical care to the poor, while he was removing a cyst from my chest. "So, do you accept Medicaid patients?" "No--the paperwork is a hassle." Physician, heal thyself.
This tax credit proposal would certainly help those people who are not poor enough to be eligible for Medicaid, but still are too poor to obtain their own health insurance. But $2,160 per person per year does not seem like it is a big enough tax credit. Adding to my concerns, and showing the complexity of the problem, is that at least some people who are poor enough to deserve public assistance in obtaining medical insurance are rich enough to burn through several thousand dollars a year in cigarettes, marijuana, and alcohol. Some people are poor through no immediate fault of their own; others work hard to be unable to care for themselves.
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