It seems too good to be true.
Let the government subsidize health insurance for those unable to afford it. How will we pay for it? That’s easy. We’ll eliminate waste, mismanagement, and fraud within the health care system and add a five percent surcharge to the tax bill of those who can most afford to pay for it. Not only will the federal deficit–which for the 2009 fiscal year was $1.4 trillion, the highest percentage of gross domestic product since the end of World War II–not be increased, but the savings gleaned from cleaning up the system and the revenue derived from the tax will actually cut the deficit over ten years by about $80 billion.
As icing on the cake, the federal government, which does such a great job administering Medicare–the same program from which the plan envisions eliminating a half a trillion bucks in waste, mismanagement, and fraud–will now sell insurance policies directly to the public in competition with private insurers.
Well, just like the pop-up on your computer screen telling you that, as the 1,000,000th visitor to the site, you are entitled to valuable prizes, the health care plan now being vigorously debated in Congress is heavy on promises, but badly lacking in reality.
Don’t get me wrong; our health care system is most definitely in need of reform. In fact, the reform measure includes several badly-needed changes which everyone, Democrats, Republicans, insurers, and health-providers, agree upon.
First, the bill forbids insurance companies from denying coverage based upon pre-existing conditions. Polls have repeatedly shown that this is by far the biggest criticism leveled against insurance companies by their customers.
Second, it eliminates the lifetime cap on benefits contained in nearly all policies. But unfortunately, the promises of politicians meet up not only with the reality of exaggerated expectations but also with the state of our current fiscal condition.
Every American administration, from George Washington and the first Congress through President Obama and the 111th, has pledged to reduce waste, fraud, corruption, and poor administration. The results, especially since government bureaucracy exploded in the last third of the twentieth century, have been appalling. It never works. Wasteful spending seems to be built into the system.
It is against this unenviable historical record that those advocating the health bill would have you believe that nearly half a trillion dollars in medical costs can be eliminated through reforming the system. In the end, you know what will happen: The projected savings will not be forthcoming in anywhere near the amount forecast.
So what’s to be done? How about a common-sense approach? Let’s get the most-needed reforms at a cost that is affordable.
First, include the agreed-upon prior-condition exclusion and lifetime cap elimination.
Second, provide a government subsidy to those at the bottom of the healthcare ladder; those who make too much to qualify for Medicaid but not enough to purchase insurance. Most important, this subsidy needs to be for those at the bottom–not in the middle. Subsidize those making less than $50,000 per year. In its current form, the bill subsidizes a family with an annual income of up to $88,000. We simply can’t afford to be so generous. A recent study showed that providing a health-care subsidy to those making not more than $50,000 would cost less than two-thirds of the $1 trillion cost of the present bill and cover an additional 15 million persons. And it would be affordable. Certain administrative reforms in the program with just an infinitesimal reduction in fraud and waste would pay for that.
Finally, by whatever it takes, eliminate the idea that government should become even more involved in the health care business by selling insurance directly to the public. If you like the way the government is handling the distribution of the H1N1 vaccine, you’ll love it as an insurance sales force.
Of course, those who advocate the bill will complain that this proposal leaves too many people without the ability to purchase health insurance. Perhaps it does. But at this time, that’s the best we can do while maintaining some semblance of fiscal responsibility. When our country is in a much-improved financial circumstance, we can explore offering insurance premium subsidies to those at higher income levels.
But for now, let’s take what we can get in reforming a generally functional but occasionally callous health care system–a good and meaningful start–without leaving larger and larger deficit burdens for our children and grandchildren.
Nathan Mitzner is a junior risk management insurance major. He can be reached for comment at
