By Robert Funke, M.D.
Kingsport (Tenn.) Times News, February 21, 2021
We know the U.S. pays too much for health care, but who actually pays for it now and who will pay in the future? Economists say the answer to both is ultimately individuals and households. That simple, accurate answer only becomes complicated when we see the different ways we simultaneously pay for health care today.
About half the current national health expenditure (NHE) flows through various payroll, state and local taxes. We send over a third of NHE through private insurance companies. We pay the remainder directly out of our pockets in deductibles, copays and non-covered expenses. The 35 million currently uninsured pay everything out of pocket ā and taxes.
Many Americans send additional payment through their employers. Itās worth recalling this peculiarly American arrangement began accidentally due to a World War II wage freeze. Employers were prohibited from offering higher wages to attract needed workers, so they paid their workersā insurance premiums instead.
Although this amounted to a hidden tax in employeesā paychecks each month, it became accepted practice and was particularly popular with employers who reaped tax benefits. It was considered bad policy at the time but acceptable as a temporary work-around.
Now itās just bad policy that doesnāt work well for either and will worsen as automation ends factory jobs, self-driving vehicles end truck-driving jobs, and artificial intelligence disrupts white-collar jobs. Consequently itās short-sighted, and indeed harmful, to keep tying our health insurance to jobs.
Most politicians, including President Biden, still tout market-based plans despite 70 years of the marketās failure to control costs or provide access to all who need health care. Iām reminded of the saying that insanity is repeating the same action while expecting different results. Never mind that economists have shown health care markets donāt behave as other competitive markets. Just last month after a three-year effort, our elite businesses JP Morgan Chase, Amazon and Berkshire Hathaway gave up and admitted defeat on Haven, their bold quest to deliver better market-based health care.
The business model for profitable health insurance is to ācherry-pickā the healthy population with gym memberships and ālemon-dropā those needing expensive care by keeping desired hospitals and doctors out of network and inadequately covering critical medications. The industry essentially works on a commission, keeping 20% of premiums for their own use and profit. Thus their financial incentive is for the NHE to grow, not shrink. Comparatively, remember Medicareās overhead is only 4%.
As an individual and household, I want my health care money flowing into the one, single most efficient pool with leverage for lower yet fair prices. That would be one pool for all Americans, everybody in, nobody out ā ever. Experts estimate switching to single payer will save $500 billion in wasteful administrative costs alone. Copays, deductibles and out-of-pocket expenses have not lowered health care costs, so eliminate them to save the expense of billing and collecting them.
Cover everyone, then doctors and hospitals will be fairly paid for all their work. Large employers could compensate employees with raises equivalent to what they previously paid in insurance premiums, about $15,000 annually for a family of four per the Kaiser Family Foundation. The 50% of small employers who currently provide insurance will have lower expense per employee and more incentive to create additional jobs at higher wages. Aspiring entrepreneurs can leave unfulfilling jobs and flourish without the burden of buying expensive insurance.
Private health insurance may go the way of the Oldsmobile, but just like when you trade in an old clunker for a new car, youāre buying a better, safer, more dependable ride for the future.
We pay enough today to afford Medicare for everyone. Some journalists point to Congressional Budget Office projections of higher taxes, apparently not realizing the CBO only deals with current federal government revenues. They donāt consider the elimination of premium purchases and out-of-pocket spending, which are designed to offset the tax increases for individuals and households. Some will spend less overall on health care than now.
Medicare-for-All bills exist now in both houses of Congress, and detail summaries are available for review. There are provisions to protect individual job disruption through retraining and a phased-in transition. In the larger economy, lost administrative jobs will be replaced by hands-on clinical jobs to care for those previously uninsured.
Despite what we hear, itās not socialized medicine or government-run health care. Itās publicly financed insurance ā Medicare, but without the middlemen and supplemental policies. Doctors will still be private, still paid by Medicare but not through hundreds of additional insurance plans. Public spending on the health and safety of Americans is not overreach, it is the appropriate role of government large or small.
Dr. Robert Funke is a retired Kingsport family physician and member of Physicians for a National Health Program.