Thursday, October 16, 2008

Saving McCain On Healthcare

John McCain may have gained some ground in the debate last night, but he certainly did not deliver a knockout blow. Among other things, he failed to adequately explain the benefits of his healthcare proposal. Indeed, he has never adequately explained the benefits, so I will have to do it for him.

It is the conventional wisdom, or at least the congressional wisdom (oxymoron?), that health insurance* should be provided by employers. I contend that this is a poor way of providing health insurance, in that it denies health insurance to millions of people, raises premiums, ties employees to their employers almost like indentured to servants, is unfair to lower income employees, and results in higher taxes for businesses and individuals.

First, let's look at the dollars and cents. When you pay premiums to an employer based insurance plan, you get a tax deduction. This means that the amount of savings is determined by your tax bracket. For example, let's say your annual insurance premium is $10,000. If you are in a low income tax bracket, say 15%, your tax savings will be $1500. However, if you are in a higher tax bracket, say 33%, your tax savings will be $3300. It is plain as day that the higher your annual income, the greater your benefit under the current system. And don't forget, any one who does not get health insurance from his employer gets ZERO tax savings. Is this the result that liberal Congressmen wanted for constituents when they came up with the tax code? Are they to dumb to figure this out?

Now, lets look at the McCain plan. McCain would give a $5,000 tax credit (per couple filing a joint return) to any one purchasing health insurance. Since it is a tax credit, and not a deduction, is means $5,000 to every taxpaying family, even low income families who owe zero in taxes. This would be a greater benefit on a percentage basis to those with lower income, and a smaller benefit on a percentage basis to those with higher income. Under the current system, for someone in a 15% tax bracket to save $5,000 in taxes , his insurance premium would have to be $33,333.33. I have never heard of an insurance premium that high, even for plans with frills. So tell me, which plan states the insured more money, McCain's or the status quo?

Next, let's consider Freedom. This is simple. With employer based health insurance, the employee is limited to whatever insurance plans the employer offers. With McCain's plan, which disengages health insurance from employment, the insured can purchase any health insurance plan that is available in his state. Every one would have the exact same choices available to him as everyone else, including members of Congress.

I believe that premiums would be lower under McCain's plan also. Under the current system, insurance premiums are negotiated between insurance companies, large businesses, and labor unions (small companies and individual customers have no negiotiating power whatsoever). These entities have only their own interest at heart, not yours and mine. Furthermore, the pool of negotiating parties is limited, and the pool of potential customers is reduced by tens of millions of citizens (the 47 million uninsured). Keep in mind, many of these 47 million are healthy, and inclusion of healthy people in insurance plan helps spread out healthcare costs, and therefore helps keep premiums down. Finally, because we would be able to choose any health insurance plan that is on the market, insurance plans would be forced to compete for our business, not for IBM's business, or the AFL-CIO's business. They would have to come up with insurance plans to satisfy us.

Also, wages and salaries and jobs would go up if employers did not have to provide health insurance. I should not have to explain this, but the conventional wisdom is so ingrained that I think it is necessary. If a business does not have to pay health insurance premiums, guess what, its overhead is lower! A lot lower. That means: higher pay for employees; or higher contributions to retirement plans; or, hiring more employees; or, investing in equipment, plant, advertising, or other revenue increasing items, and hence the possibility of even more jobs, higher pay and better benefits. Now, would that be good for the economy, or bad?

Finally, did I mention FREEDOM? If I had a dollar for every time someone has said to me, "the only reason I stay at my job is for the health insurance," I would be a wealthy man. People are tied to their jobs; they do not feel free to leave their jobs because of the fear that they will lose their insurance. It is time to end the idiocy of employer-provided health insurance.

Elect McCain, take your tax credit, and go out and buy your own insurance. Embrace freedom, and you will be healthier, wealthier, and smarter than Congress.

*You know what bugs me? When polticians say "health care" insteadof "health insurance." Doctors, nurses, and hospitals, among others, provide health care. Insurance companies are financial middlemen. They transfer money from one party to another for a fee. That is not "health care."

For an alternate point of view, go to bafflegabbed.typepad.com.

3 comments:

Amanda said...

Hi, Dad. Graham told me about your dueling blogs. Neat.

Let me qualify my comment, first, with an acknowledgement that I understand very little about this health insurance stuff, so feel free to correct me as need be. That said:

I get the "free market" idea behind the McCain proposal, and it's nice in theory, but it seems overly idealistic considering the current situation. The health insurance system is too corrupt already to be righted by a "more free" market. I'm not in a position to say specifically what should be done, but I think the whole thing needs to be overhauled, and dare I say, socialized.

I agree that the reigns of insurance need to be removed from the hands of employers. I, even, was hesitant to step down from a position in a stupid restaurant for fear of losing my (pretty crappy) health insurance. I ended up shopping for my own, and, as a young and healthy person with no pre-existing conditions, was able to find insurance at a reasonable rate. I did, however, have to go into a lengthy explanation over the phone, with some rep., regarding the one recorded-and-minor illness I'd had the previous year, in order to ensure that I wasn't too sick for health insurance.

This is the problem. You're a good and ethical doctor, and you're not the only one. I'm sure that the articles I've read, and the news I've watched, and the Michael Moore's of the world have inflated, somewhat, the corruption in the insurer-doctor-patient relationship. The problem is that I just don't know which doctors I can trust. I don't know who's prescribing me drugs I don't need in order to get a kickback from the drug companies. I don't know who's not providing me the care I need, because he'll get a bonus from my insurance company. Not all doctors operate (how do you like my puns?) this way, but some do, and it makes every discerning patient suspicious. Furthermore, the whole "you can't get health insurance/care if you're already sick" thing is just plain unacceptable. It is immoral, and the potiential for this kind of manipulation needs to be removed. The only currently working (in other countries) system I've heard of that does so is a socialized one. Every citizen gets the health care he needs, because he is a citizen (or green card holder?). There's no hesitancy on the part of the doctors to provide proper care, because there's no incentive to do otherwise. Everybody gets all semantically upset over the term "socialized," and I think that's ridiculous. Socializing one system (disregarding our current banking system, of course) does not a communist nation make.

Your thoughts?

Bafflegabbed said...

Yeah dawg! Well said, sister.

Love, Brother.

Desman said...

OK. But if you're a politician who wants government to take over the reins of health care, first of all, say what you really mean, and second, go all the way.
Obama, and HRC before him, gave lip service to the free market, and competition between insurance companies, and came up with these incomprehensible plans, that do nothing for patients, raise taxes, and give more and more power to Congress.

I maintain that Medicare is the best run insurance plan we have, with the lowest overhead. So, I would like the Obama, during his reign, to propose a single payer system: everybody gets Medicare, and everybody pays a payroll tax for a premium. The premiums would be low, everybody would have access, and the insurance companies would be gone.