Saturday, August 12, 2017

Single Payer; Universal Health Care; Dare I Say It? Socialized Medicine!

What effect would single payer health insurance have on the taxes that we pay? 

Single payer is shorthand for a health care system in which all citizens, often all people within the jurisdiction of the country, are completely covered for all medical care at no immediate cost to them. All medical expenses are paid by the government, in the case of America that would be the Federal government. They are paid out of tax revenue. What would be the effect on household finances in real time if such a program were instituted?

I am not one for long hours of detailed research, so I’ll be basing all of the figures and suppositions in this post on a cursory look around at some Google research. I chose the example of France as a benchmark for projections of costs and savings that would show up in America. Bear in mind that I am a lawyer by training, and lawyers tend to prefer very round numbers in every situation. All numbers in this post are of the very roundest variety, and are proposed as a very rough idea of what might happen if America chose to put such a program in place.

The Numbers

I’m looking chiefly for the amount that our personal income taxes would rise to cover the expense of single payer insurance. My source for the American figures was Google in general. My source for France was a WHO website.

The total revenue of our income taxes in 2016 was 1.8 trillion dollars. ($1,800,000,000,000.)

The total annual cost of health care in America is 3.2 trillion dollars. ($3,200,000,000,000.) (I believe that figure is also for 2016.) This figure represents seventeen point eight percent (17.8%) of the GDP of the United States. This makes the amount spent annually on each American about ten thousand dollars ($10,000.). We must remember that this figure includes the many levels of profit in our current system, so the amount actually going towards the provision of medical care is much, much less.

I looked to France to discover what happens when you take the profits out of the picture. Annual medical expenditures for individual Frenchmen are four thousand, five hundred dollars ($4,500.) That’s less than half of the costs now being incurred in America. The total expenditure in France takes up eleven percent of their GDP (11%). It is safe to say that the French have achieved this savings by taking profit out of the equation. The quality of French health care, and the French standard of care itself, are fully the equal of similar services offered in America.

This seems to suggest that the total expenditure for health care in America would be reduced by something like fifty percent (50%) if profit were removed from the mathematics. That would bring our total expenditure down to about one point five trillion dollars ($1,500,000,000,000.).  

That figure is very close to the total current revenue of the income tax, suggesting that personal income taxes would need to almost double. It is, however, likely that whatever scheme was adopted would also draw on corporate taxes and excise taxes. Bear in mind that corporations are currently paying the premiums for a large part of the health insurance policies already issued as employee benefits. Federal corporate tax revenue in 2016 was one point two trillion dollars ($1,200,000,000,000.).

In my opinion, both individual income taxes and corporate taxes are currently artificially low. Both were higher in the not so distant past, rather higher in fact. Those higher levels of taxation never seemed to bother either rich Americans or American corporations. Both groups thrived. Both groups can afford to pay more.

So, The Increase

I’m afraid that my skills as a statistician are not sufficiently sharp to come up with a projection of the rise in personal income taxes that would be needed to pay for a single payer system. But there are dim outlines visible.

Right now, about thirty five percent (35%) of American incur no Federal income tax liability. (I used the Motley Fool website for this section.) Of the ninety-seven million people who do pay Federal income taxes, the average adjusted gross income is ninety-five thousand dollars ($95,000.). The tax paid by those individuals is fourteen thousand dollars ($14,000.), which is rate of about fourteen percent (14%). These are the lowest personal income taxes in the known world.

If the 1.5 trillion dollars payable to health care providers is added to the 1.8 trillion dollars currently collected, the projection for necessary Federal tax revenues is 3.3 trillion dollars. Let’s just say that the tax burden about doubles. Applying that increase to the average amount paid, the average tax paid by those ninety-six thousand people would jump to $28,000, with the rate climbing to 28%.

That is enough to make people scream, but let’s take a minute before hysteria overtakes us. For one thing, that simple math does not take into account the contribution of corporate tax revenues. And for another thing, the additional money paid out is immediately offset by a reduction in health care costs to zero. Americans at all income levels would save a substantial part of their discretionary income, and the country at large would experience a drop in health care costs to a much more manageable level. Most people’s incomes would rise. There would be additional benefits. Preventative care would receive much more attention. So would chronic conditions. The problem of the uninsured would disappear. The standard of care would rise, because the application of necessary care modalities, like MRIs, would no longer depend on the level of someone’s insurance coverage. The general health would improve. And these are only the financial and medical benefits.

Think also of the emotional benefits! Families would no longer be financially destroyed forever by the birth of a baby suffering from, let’s say, cystic fibrosis. No one would ever need to worry again about the concept of a “lifetime cap” on benefits. Families and individuals would no longer need to “impoverish themselves” in order to qualify for the Federal Medicaid program. There would be a collective sigh of relief as people became medically secure. The general financial security would be enhanced.

Most Americans are paying more right now for health insurance than they are for Federal income taxes. So even if the taxes double, they’ll save money, while gaining some welcome peace of mind. For anyone who pays more for Federal income tax than they do for health insurance, their incomes are so high that we shouldn’t devote too much time and energy to worrying about them, now should we?

Who Gets Hurt?

The health insurance companies? The ones who cheerfully cash your checks for years and then deny payment when you make a claim? The ones who tell you that your son or daughter will just have to die because that life-saving medicine is too expensive, and your soon-to-be-dead child will just have to make due with some cheap-ass fifth string medication? Those companies? Who will cry for them? Not me.

The hospitals? They were all non-profits until recently, and they can make do again in that honorable condition.

The doctors? They’ll be better off! They’ll be able to practice medicine again. Money will no longer be their main concern. And they will still be in the top five or ten percent of wage earners, so don’t worry about them losing much money on the deal.

Your congressman? Yes, he will no longer have the medical industrial complex tit to suck on with all of his might. Perhaps he’ll open a hardware store back in Old Rag, West Virginia, and leave us all alone while someone more qualified takes his job in the House of Representatives.

The Effect, As Experienced By Others

How about France? How’s that universal health care working out for them? My oldest son went to France for a semester back around 1990. He’s a healthy lad, but he did have one bout of misadventure while skateboarding in Lyon. His friends took him to the hospital with a painful hyperextended knee.

He got the greeting that any Frenchman would get. They asked him his name, and wrote it down. He was admitted, and a work up was done. X-rays were taken, and he was seen by an orthopedist. He was given a thorough exam, the x-rays were examined, and he was diagnosed with “nothing to worry about.” They gave him some instructions, some anti-inflammatory medication, and they gave him his x-rays to take with him, “in case you get back home and you need further medical assistance.” His bill for this was about eight dollars. I think they charged him for the carry out x-rays.

In America this would have been a $1,500 emergency room visit.

I recall a news story in the 1990s about an American woman who went to France for vacation. While she was there, she suffered the onset of some kind of condition, maybe heart related. She presented in the French hospital and received treatment. The condition was somehow chronic, and it required additional treatment, but she had no health insurance. So if she returned to America, she was in financial distress immediately. No insurance! A pre-existing condition! The story was that she remained in France, living essentially either in railway stations or on the street, so that she kept her access to life-saving health care. No one should have to live like that, or make choices like that.  

Americans love to complain about taxes. But what if the taxes that you paid actually did you some good? Many Americans do think that it’s nice to consider the eleven multi-billion dollar aircraft carriers that lurk all over the world on our behalf, but that stuff is expensive. Wouldn’t it be a better idea to spend some of that tax money on health security? Some of it, that’s all I ask. Wouldn’t we be grateful for the peace of mind that comes with not having to worry about “how much is this going to cost me?” every time your child gets hurt at the park?

Other developed countries? I live in Thailand, and I occasionally run into visitors from other parts of the world. Rarely do I encounter American tourists. It’s not the expense, many Americans could afford a vacation in Thailand, it is the time involved. Europeans get vacations that run to weeks at a time, often a month at a time. Most American workers, labor or management, get two weeks a year and your boss won’t let you take them all at once. No, it’s one week at a time for Americans. That’s not enough days in a row to vacation in Thailand, where the flights are more than twenty-four hours door to door, and then there’s the jet lag. But I have spoken to several Norwegians over the years. Their experience is fascinating.

I ran into a guy down in Krabi a few years ago, a bachelor from Norway. He was not a big shot, not a highly educated person. He vacationed every year in Thailand for four weeks during the winter months. We had a nice chat. I asked him about his taxes, and he gladly admitted that he paid over fifty percent of his salary in taxes. He was proud of the system, and grateful for all of its advantages. He didn’t have to worry about anything. All medical expenses were paid; he got more than six weeks of vacation every year, plus lots of holidays; there’s nothing called a “sick day” in Norway, if you are sick, you don’t go to work; his retirement was assured, including a place to live and all expenses; he felt like he had it made. And by the way, that fifty percent tax rate was deducted from a fair wage. He was a very ordinary guy. He had two jobs: in the summer months he worked in the forests for the government, and in the winter months he worked in town for a library or something. For this, his annual salary was 90,000 Euros. So after taxes he had plenty of money to live well and fool around in Thailand for a month every year.

What about our neighbor to the north? Canada has the kind of health care that we should have, if there were a just God. Have you ever heard of a Canadian complaining about their single payer health care? Dare I say it, their “socialized medicine?” Why no, you have not. There’s a good reason for that.

We should have it, too. And some day, I believe that we will. It’s going to take a while, though. That’s because no one in our government gives a good God-Damn about us. We are expected to work our asses off, and pay taxes, and fight their wars, and never complain or demonstrate in the streets lest the demerits go on our permanent records, and expect no consideration and settle for the few crumbs that fall off of the rich man’s table. Thank you sir! Oh yes sir, I am content, sir! Don’t worry about me sir! Yes, little Johnny who had a heart problem lives with God now, sir, and he’s better off! We’ll be fine, sir! It’s all sickening.

I only hope that the necessary adjustments can be made without the application of the traditional methodologies and tools of the past. Those would be the old Captain Midnight routine, piano wire, incendiaries, hooks, the Hearts of Oak, guillotines, explosives, and rope. The old "not a stone left standing on a smoldering stone" routine. It’s rather embarrassing when that happens, because it’s such a failure of dialog and diplomacy. History is full of it, though. Just remember.

Disclaimer: I am against violence in every form! Please, dear Federal overseer, don’t put me on a list! My counsel is always that peace should be the way in all things! I live a quiet life, and I like it that way. 

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