Monday, January 22, 2007

Inasmuch as I think Bush is way off with his rejiggering of the tax code as it applies to health insurance premiums, I've been challenged to come up with my own proposals...

As I see it, the 'problem' (and I'll explain in a bit why I'm using quotes) has relatively little to do with whether employers pay for health insurance or whether said premiums are deductible to the employer and tax-free to the employee. In fact, I don't think the 'problem' has much to do with insurance itself.

People who lack insurance usually do so because their employer doesn't offer insurance and because they don't have the money to purchase insurance on an individual basis. Some of these people are 'uninsurable', as they have health issues that make insurance prohibitively expensive, while others could buy insurance at somewhat reasonable rates but elect not to because they want to spend those dollars elsewhere.

Bush's tax gimmick will do nothing to help those who are basically uninsurable; the little subsidy Bush offers them won't lower their costs to the affordable level. Nor will Bush's tax gimmick do much to pursuade those in the second group to purchase health insurance as they feel so strapped for cash that they simply won't lay out the money for insurance that they would rather spend on food, shelter, movies or whatever.

Health insurance is simply a way for people to spread around and share the financial risk of their getting sick. Policyholders promise to help pay the medical bills of other policyholders in return for their promises to help them should the need arise.

In theory, the health insurance premiums charged to a given individual (or family) would approximate the costs they'd be expected to incur during the coverage period. If the actuaries expect me and my family to incur $10,000 in medical costs, plus or minus a few adjustments, such as for the risk of the catastrophic illness or injury, I'd expect to pay in the ballpark of $10,000 for a year's worth of health insurance.

Thus, it ought not make a big difference whether someone bought health insurance or went 'naked' as the costs they paid out - whether for insurance premiums or medical payments - would be about the same.

The 'problem' is that health care itself is rather expensive. From $100 office visits to get a $75 prescription to the $250,000 bankrupting surgeries, there isn't a single aspect of health care that one could call inexpensive.

The focus ought to be on lowering the costs of health care, not on playing games with the taxation aspects of health insurance. Bush ought to be doing what he can to increase the supply of medical practitioners. He ought to eliminating the bureaucracy associated with providing health care. He ought to be removing the rules that require health insurance to cover everything under the sun. He ought to remove the need for practitioners to practice the defensive medicine that drives costs up. He ought to be making it easier (and cheaper) for drug companies to bring new drugs to market. He ought to be removing the rules that require doctors and hospitals to provide more care than they and their patients feel necessary.

Now, as for why I use quotes around problem? A good part of why health care costs are so high is because so much more can be done now than in the past. We can diagnose illnesses that used to go undiagnosed. And there are now cures and treatments for illnesses that used to go untreated. There is so much more available to us now than in the past... and these 'extras' don't come cheap. Whereas once upon a time, a GP had to pretty much go it alone, now there are specialists who can better treat illnesses and injuries than your run-of-the-mill GP. There are now drugs that we can take to treat conditions for which there previously were no solutions. And these extras aren't cheap.

And we consumers want our medical care. We're not willing to go without knowing what is ailing us. And we're not willing to go without treating what is ailing us. We're power consumers of medical services. We see the benefit of going to the doctor and getting prescriptions and having surgery and so on. We can't get enough of medical care.

So combine high demand with a high costs of providing these services and you have a situation much like what we now have: health care costs that climb and climb and climb. One could fiddle around the edges, but none of that will do much to make medical care less expensive. For the only way society really has of lowering how it lays out for health care is to start telling people 'NO'.... no, we're not going to figure out what is wrong with you.... no, we're not going to fix your problem.

And that, dear readers, is a non-starter. Nobody is ever going to propose doing that... for, to paraphrase both a Dire Straits song and the Meineke commercial, I want my medical care... and I don't care if it costs a lot.

BTW: what's with capping the amount of health insurance that is tax-free? According to Bush's plan, anything over $15,000 in health insurance premiums is to be taxed.

If the amount isn't indexed to inflation (which I don't know to be the case), then Bush has created his own AMT problem… as the costs of health insurance continue to rise, beyond the $15,000 a year threshold, more and more families will find themselves having to pay tax on what was previously taxfree. Note: it wouldn’t surprise me if the dummy and his incompetent team failed to take this into account. Nor would it surprise me if they took it into account and decided to do it anyway.

And even if it were indexed, this sort of progressive taxation is what I'd expect from the Pelosis of Washington, not from someone who described himself as a conservative. But what should we expect from a failed President who has all but thrown in the towel?