Health Care Rant

For several years I’ve waited for our country to entertain the health care reform issue.  Now that it’s here, I’m both excited and frustrated.

Excited that we are finally talking about it. Frustrated that I don’t feel anyone is taking a practical look at it.  I hate politics because it’s a game played by finding faults in each others plans, rather than building on each idea or proposal to reach a sustainable solution.

I’d never survive in politics.

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I’m not an economist, health care provider or policy analyst. I don’t completely understand the proposals under the health care bill.  But from a lay perspective, I believe there are a lot of assumptions being made by people (myself included) that could be better thought out to have constructive debates about the hot topic.

I lean neither left or right.  I lean towards the most practical and sustainable solution based upon the information I have at any given time on any given subject.  And of course I am driven by self-interest…  I don’t believe that anyone can claim not to be driven by even the slightest self-interest.

Here’s the issue with individuals and the debate around health care… most people don’t understand.  We generally operate under one of two (or both) broad assumptions that shape our views:

1. The government will nationalize health care, which will unfairly raise my taxes.
2. Private insurance premiums are skyrocketing exponentially, so we need to find an alternative.

You can surmise where the left and right sit on the above statements.  What neither side seems to acknowledge and agree upon is that regardless of the outcome of this debate, tax-paying and law-abiding citizens will always pay for themselves AND others.

In the first scenario, we pay the premium via income taxes.  The risk is spread across the entire American population whereby the healthy pay for more than they use, and the sick use more than they pay.  The idea is that you are investing for the future when you will inevitably get older and need more care.  In an ideal world, you eventually end up using what you’ve paid out in your lifetime.

In the second scenario, we pay the premium via employer/ee insurance contributions and co-pays.  What we fail to remember – or don’t even realize – is that our out-of-pocket premiums pay into a “pool” or community where the risk is spread out as well.  The difference with the risk pool in self- or employer-paid health insurance program is 1) in the risk variables, which include size of your company, average age of employees, etc. and 2) the term of coverage – which ends when you stop realizing your benefits (e.g. you quit you job).

In scenario two, a healthy person may never realize the amount that s/he or their employer contributed.  This contribution is simply a private tax exercised by the employer that most employees would be able to pocket if health care were not a benefit. And unless written as a retirement benefit after vesting with a company, there is no lifetime payout.  Because the private tax is marketed as a “benefit”, people have to come believe that it is an entitlement.

Then there are those that are risk averse and won’t pay for any insurance, or those who are independently wealthy enough to pay for medical costs out of pocket.  These two populations represent only a fraction of a percent, so I’ll ignore them here.

The bottom line is, we all pay – whether you call it a tax or benefit. The solution that we pick should be based upon where the most efficiency lies.  Unfortunately, there are no clear lines that define the efficiencies.  Everything is a fuzzy give-and-take, as you’ll see below.

What the health care issue drills down to, is really the debate between economic theorists and social interest theorists.  These theories are a little less defined by party lines than the original assumptions, though heavily influenced by the population that is able to take collective action, such as labor unions, PhRMA and the AMA.

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Subsequent posts are my lay attempt at applying the economic and social interest theories to the assumptions, and pragmatically evaluating the options.

Health care undoubtedly needs reform.  I don’t know how to do this.  But I do know that any new policy should:

• Cover all minors.  They have no control of their situation, and it’s in society’s best interest that we take care of them and mitigate future health care disasters.
• Cover all elderly.  They’ve paid their debt to society and we owe them the respect… particularly the lost generation.
• Protect small businesses.  The U.S. has always been a land of opportunity.  And to price someone out of pursing their dream because they can’t afford health insurance goes against the founding principles of our country.  Look at Mr. Jobs, Mr. Gates, even Mr. Buffet.

Whether we solve the health care disaster with wine and golf taxes or limiting excessive and unnecessary procedures, whatever… I do hope we reach a good, sustainable solution that will easily transform our culture for the better over the next generation.