Tax breaks don’t ensure access for all or control costs
IN HIS STATE OF THE UNION speech, President Bush outlined a health care plan that he claimed would put basic health care insurance within the reach of those who now do not have it. But the plan he outlined does not address the main problems facing our health care system: universal access and rapidly growing costs.
In fact, it is not really a health care plan at all. It is an adjustment to the tax code that benefits the insurance industry at a significant cost to workers. It does not guarantee health care access for all. It does not address the problem of rapidly rising health care costs. A small group of workers who cannot afford health care insurance at present may be able to purchase it under this plan, but their Social Security benefits will be reduced. And workers who receive health care from their employers (as most Boilermaker members do) will see their taxes go up as a result of the plan — if not when the plan starts in 2009, within a few years.
Bush Administration just doesn’t get it
THE PROBLEM WITH this plan is that it treats health care as just another service, like dry cleaning and lawn care, to be regulated by market forces. Want more? Lower taxes on it. Want less? Raise taxes. The income deduction is a form of tax subsidy.
But health care is not like other services. Most Americans have now joined the citizens of every other nation in recognizing that health care is a vital service— like roads, sewers, water, Social Security, and police and fire protection — that should be provided by government and paid for by taxes. As recently as September 2006 a nationwide poll showed that a majority of Americans (56 percent) would prefer national health care, run by the government and funded by taxes, to our present, insurance- driven system.
President Bush acknowledged that the government has an obligation to provide health care for the elderly, the disabled, and poor children. These populations get health care through Medicare and Medicaid. The Bush Administration needs to listen to the majority of Americans who want to add a program similar to Medicare that provides necessary health care for everyone, from birth to death, like the plans already in place in every other industrialized nation.
Adopting a single-payer plan would not only ensure universal access, it would provide a mechanism for controlling the rapid rise in health care costs. Insurance-provided health care is more expensive to deliver than a nationalized, single-payer plan, and far less efficient. One reason is administrative costs. While it has been fashionable to fault the government for inefficiency, Medicare spends only about one percent of its revenue on administrative costs. Private insurance companies spend far more. For example, Aetna spends 23 percent of its revenue on administrative costs.
Administration costs are also driven up by duplication of services — hundreds of insurance companies, health care providers, physicians, hospitals, clinics, and labs — each with their own paperwork. As a result, private health care administrative costs are 24 times as high now as in 1970.
In the for-profit health care sector, administrative costs also cover the profit that goes to shareholders and executive salaries, which often seem excessive. Aetna’s CEO, John Rowe earned $19.7 million in pay and $446.6 million in stock options in 2005. Imagine how taxpayers would react if the head of Medicare asked for that salary.
Health care costs hurt U.S. businesses
WHEN PRIVATE PROVIDERS argue against a national health care plan, they often ignore the significant impact on our economy caused by our high health care prices. Because we cannot abandon the insurance driven model, the United States spends more of its gross domestic product on health care than any other industrialized nation. The excessive costs U.S. companies pay for medical care gets added to the sticker price of the goods and services they produce. For example, health care costs added $1,500 to the price of every GM car manufactured in the United States in 2005; health care costs add only $449 to the cost of a new BMW.
Fifty-six percent of Americans said they would prefer national health care, run by the government and funded by taxes.
A growing number of corporate executives are beginning to recognize that reforming the U.S. health care delivery system would add to their profits. In recent years, the CEOs of auto-making giants Ford and General Motors have called for universal health care. Recently, top executives from Wal- Mart, Intel, AT&T, and Kelly Services publicly called for “[high-]quality, affordable” health care for all Americans by 2012.
This new-found corporate support for health care reform may focus more attention on the problems with our current system, but we cannot leave health care reform to Big Business. Remember that in 1993 corporate interests spent millions to defeat President Clinton’s plan to provide universal access and manage costs. Unionized workers must be involved in any discussion regarding a national health care plan.
We must debunk the myths about single-payer plans
TYPICAL ARGUMENTS AGAINST a single-payer plan are that patients will not be able to choose their own doctors, they will not be able to get the care they need when they need it, and the quality of health care will decline.
Those claims are myths, as a comparison of the United States to Canada quickly demonstrates. Canada’s system may not be perfect — or even the best health care delivery system — but I use it here for comparison because of its similarity to the United States and because comparative facts are readily available.
How the Bush Plan
Works Doesn’t Work
THE PROPOSED PLAN allows taxpayers to deduct money from their taxable income — $7,500 for single coverage and $15,000 for family coverage — if they purchase health insurance, but it makes the cost of employer-provided insurance taxable income. At present, this benefit is not taxed.
In his speech, President Bush said that deducting $15,000 from taxable income provides a tax cut of about $4,500 for the average family. But the average family health care insurance plan cost $11,480 in 2006, according to Kaiser Family Foundation. It will undoubtedly be much higher when the plan goes into effect in 2009. Taxpayers would make up the difference — nearly $7,000 a year, using Bush’s estimated tax savings, which tax experts say are high.
For workers with employer-paid health care insurance (most Boilermaker members), the plan actually raises taxes — if not immediately, then within a few years. The reason is that their employer-paid plan will rise in cost and will be taxable, but the tax deduction will remain at $15,000 or $7,500.
And for most workers, the income deduction will reduce their Social Security retirement and survivor benefits. The reason is that the $15,000 deduction reduces their contributions to Social Security. Social Security benefits are based on total contributions, which are a percentage of earned income. A reduction of $15,000 in income each year will reduce Social Security payments significantly over a lifetime, with a proportional reduction in benefits.
First, there is the myth of loss of choice. Worldwide, most single-payer plans allow patients to see the doctor they choose, as Canada does. We do not have to follow the British model, which limits choice, just as HMOs do.
Second, there is the myth of poor delivery of services. Judging by customer satisfaction, Canada’s delivery of needed care is as good as — or maybe better than — the United States. In a recent poll, only 21 percent of Canadian patients reported having trouble getting the care they needed, but 28 percent of Americans had that complaint.
Another survey showed that nearly 90 percent of Americans who have insurance said the current system is “meeting their needs,” the same percentage as in Canada. But only 60 percent of uninsured Americans responded that way; in Canada, everyone is insured at all times.
Third, many Americans believe our health care system is the best in the world and will deteriorate if we try to nationalize delivery. But much evidence suggests Americans have an inflated sense of how good our system is at present. Life expectancy in the United States is far below that in most countries with universal access to health care. While U.S. citizens live an average of 77.5 years, Canadians live an average of 79.9. Infant mortality, another standard measure of the quality of care, is also lower in Canada and in other countries with single-payer systems than in the United States.
New technology is more readily available in the United States, but the impact on quality of care is ambiguous. More Americans pay for unnecessary tests and procedures (driving up costs) than in Canada, according to experts. Most important, Canadian patients are more likely to report getting “excellent” or “very good” care than U.S. patients.
If Canadian health care were truly inferior to U.S. care, we would expect Canadians to be flocking across the border for surgery and other treatments. But an extensive examination of hospital records in both countries suggests the opposite. An increasing number of Americans are going to Canada for such procedures as Lasik eye surgery, and to purchase prescription drugs, both of which are lower-priced in Canada.
Many problems yet to solve
WITH THE UPCOMING presidential election, the United States has an opportunity to take a giant step toward a health care delivery system that will provide necessary medical care to all Americans. But to bring that about, we need to hold candidates accountable. They will not develop positions unless we let them know they are important to voters.
Somehow the United States has fallen behind every other industrialized nation on this issue. There is no reason that the richest nation in the history of the world, whose economy has dominated the world economy since the 1940s or earlier, cannot find a way to ensure that all our residents have access to necessary medical care every day of their lives.
The models are there. We do not have to copy any single nation, but we can learn from the experience of all nations to find a system that works. If we do not, then rising health care costs will force millions of Americans to go without the care they need and make our employers less competitive on the world market.
We cannot afford those alternatives. We need real health care reform now.