Healthcare, Who Pays, Who Promises, Who Taxes?

Written by: Eric Weis on Sep 6, 2008 4:57 PM EDT

Linked to groups: The Passaic County Green Party, Pequannock DFA, Passaic County DFA, BlueWaveNJ, DFA County Committee Project, NJ for Democracy

Linked to campaigns: Obama for America

How healthy are you feeling today?  Me, I am great.  In fact, I just received some really good news.

My insurance company has processed a claim for an overnight stay in the hospital two weeks ago.  I am so lucky, in so many ways.  I did not have a heart attack.  At least not that day.  But when I got the insurance company paperwork, and when they initially denied my claim, I faced several thousand $ in potential costs.  They told me that, when you think you are having a heart attack, DON'T go to the hospital.  Try some less urgent care alternative.  Did they realize the implications of stressing someone who MIGHT have had a heart attack?  Really.  I am not telling tales.  That's what happened to me.

OK, we all have our horror stories.  But what about a more global perspective?

The Organisation for Economic Cooperation and Development (OECD) is a 50 year old economics institute based in Paris France (so already we should suspect something).  In economics, OECD has the reputation for gathering data.  It is not political, other than the fact that it does work with the European Union (in fact it was born amidst the same forces that resulted in the Common Market).

This year, OECD published a review of health care costs for 30 western (advanced industrialized) nations.  It studied the period 2000 - 2006.  Here is the link to the study:

http://www.oecd.org/document/27/0,3343,en_2649_34631_40902299_1_1_1_37407,00.html

Now if you don't want to wade through the report data or some REAL interesting graphs, here are a few relevant conclusions.

In the US, we are spending $2.3 trillion annually on healthcare, about $7600 per person, equal to 16% of GDP.  For reasons I do not understand, our average healthcare premium (family of 4) is now $12,100.  Maybe that is a transfer payment to our 50 million uninsured, but I am just speculating on that.  By the year 2016, US healthcare is forecast to cost 20% of GDP which means that one out of every five dollars we get, earn or hold will be allocated to keeping us healthy and alive.  Just compare this to the OECD industrialized nation average of 8.9% GDP costs for healthcare (at present).  Bottom line - we all know this individually - the US healthcare system is sick.

Now I am no expert and I have no prescriptions for how to fix it.  But I do want to comment on the Presidential campaign insofar as economics are concerned (full disclosure - my degree is in economics although my career is not in the "dismal science"). In fact, my working life has been spent in the healthcare industry as a medical device supplier.

John McCain promises to fund the healthcare system by eliminating the income tax exclusion of employer-paid healthcare benefits.  What does that mean?  Remember the $12,100 per family healthcare premium average?  For 2008, a family filing a joint return with $100,000 in income is in the 25% tax bracket.  So, that $12,000 benefit is going to be taxed, and this family will wind up paying Uncle Sam an extra $3000.  This sure looks like a tax increase on the middle class to me!

Barack Obama's healthcare plan mixes private and public payers (remember the heat he took in the primaries from Hillary Clinton and others who were pushing single payer public programs).  It also emphasizes preventative health and maintains the employer-payment model.  It does NOT impose additional taxes on the middle class.

No doubt his plan (or ANY plan for that matter) will cost more.  And how does he propose to pay for it?  By eliminating the tax cuts for the wealthy that have cost the nation $2.3 trillion dollars...and by establishing rates on taxation that are the same as in the Reagan years. They won't be any less wealthy.  They just won't be building up their vast fortunes quite so rapidly under an Obama administration.  Guess they'll have to hang onto the yacht and put off trading it in until next year.

So who will pay to fix our broken healthcare system?  I don't know about you, but this sure sounds pretty simple to me.  One candidate promises to raise taxes (on the middle class) and the other one promises to hold down taxes, with one exception - to tax the wealthy at the same rate as President Reagan.  One candidate comes from the party of tax-and-spend insanity.  The other one comes from that great old party of fiscal prudence, the one that goes back to TJ (not TR).  Except, this year, the roles are reversed.

The first one, the party that WILL TAX all of us in the middle - is the RED one.  John McCain, Sarah Palin and the Republicans plan to take more of your money.  The other party, the BLUE one, promises to fix healthcare by cutting into the tax savings which have been enjoyed by those in the very top brackets, earning $360,000 and up.  Barack Obama is not going to take your money (that is, unless you are wealthy and if that is the case, please accept my deep regrets at your having to turn in the 2nd or 3rd Benz in the house).

Beyond who pays, who taxes, lies the unknown land of preventative healthcare.  I was in England a couple years ago.  I will not defend a truly socialist healthcare system.  But I can relate my experience at a community hospital (I was there for about a week, visiting someone who was sick).  The daily visits from hundreds of young families, children and pregnant young women were ASTOUNDING.  They came in for their free weekly checkups. The halls were filled with them in the evenings.

Seems to me that the British have got it figured out that healthcare delivered early will save a pile of expense later on.  If you look at the OECD data, you will see that in the UK, healthcare takes 8.4% of GDP and per person cost is $2800.

Curious as I am, I looked up life expectancy information.  Life expectancy in the UK is 78.7 years (same as in the EU) compared to 78.1 years here in the US.  They pay less and live longer!  In fact, just north of our border, the average Canadian lives into an eighth decade of life.  For the details, visit the following site: 

http://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy

Hmmm, Canada is looking awfully good to me right now.  Montreal, here I come!  Those French lessons are going to come in handy.  Hey, many of you know I am a hockey fanatic anyway.  Not all hockey moms and dads are nuts.

- “Arctic Eric”

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