Continued from page 1…
Original Post dated: September 8th 2008
The two candidates have squared off on this critical problem in the United States. We in America believe in an ideal, that health care can protect us all from disaster and care for us through any medical calamity.
The facts are much more morose. The quality of healthcare in America is primarily governed by insurance companies. This is because most of us have health “insurance” and it is the companies selling the coverage that govern the selection of your care.
Having had numerous health insurance plans over the years, we have determined that each has had their weaknesses and strengths, but that consistently over the past ten years, it has become a battle to get anything paid for by our insurer.
We are told by our insurer on a regular basis we went out of plan, when we did not. We are told what prescription drugs we can and cannot use, despite what our trained physician tells us. And we repeatedly find errors in the findings of our insurance companies in rejecting claims, even to the extent where tests ordered by, or visits to our primary care physician from that plan, are rejected as not being within plan. How can your primary care physician not be covered? Fact is, they are, but the insurance companies are so geared towards rejecting every claim possible, they reject even the most obviously correct claims out of hand hoping to save money. If you screw up and do not file your complaint in time, you are responsible for the cost and the bill. Whoops.
Cost of Health Care
Now, what is the other primary problem? There is a farcical lie being propagated about the increases in the cost of health care. Of course, health care is, like everything else, increasing in cost, but the fact of the matter is, the insurance companies are paying much, much less than the uninsured American. Why is this? The insurance companies want you to believe they have negotiated lower prices on behalf of their insured. The fact is, that is a lie. The insurance companies have forcibly stated what they will pay for specific procedures and it is tough luck to the doctor that doesn’t want the money. This has led to a back and forth where hospitals and doctors have raised prices astronomically to get even small increases out of the insurance companies.
We have seen instances where insurance companies pay 1/3, or even less, of what is billed by a clinic or doctor. One case for a routine test was recently billed at approximately $2700 by our local hospital. The insurance company paid just under $1200. The hospital has no choice being a member of that plan but to accept the $1200 as payment in full, but an uninsured individual will be billed the inflated price of $2700 and be expected to pay it!! That is true even though the only reason that inflated price exists is to get a fair payment out of the insurance company in the first place.
In turn, what has happened is that the insurance companies are raking in astronomical revenues and the quality of health care in the US is dropping. Companies like United Health Care are reporting unheard of profits and revenues while their cost of revenues is dropping. While doctors and hospitals are being swamped in a quagmire of expensive paperwork we all pay for, the insurance companies are rolling in profits. If the cost of health care is indeed so high, how can the insurance companies paying for it be so incredibly profitable?
We do not see either candidate addressing the true problem, but we see Obama’s plan vastly more practical. Massachusetts has what looks like a similar plan. The state recently introduced a law that, on the surface, is rather draconian. They required that everyone have health insurance. If you don’t you pay a tax penalty. That seems inherently unfair, and it is, but it introduced something else that was quite unique. The state now offers insurers a way to sell insurance through the state at competitive rates. It has made it vastly easier to purchase health insurance and to find the best coverage for your family. Interesting dichotomy.
Here is McCain’s Plan…
John McCain Will Reform The Tax Code To Offer More Choices Beyond Employer-Based Health Insurance Coverage. While still having the option of employer-based coverage, every family will receive a direct refundable tax credit – effectively cash – of $2,500 for individuals and $5,000 for families to offset the cost of insurance. Families will be able to choose the insurance provider that suits them best and the money would be sent directly to the insurance provider. Those obtaining innovative insurance that costs less than the credit can deposit the remainder in expanded Health Savings Accounts.
John McCain Proposes Making Insurance More Portable. Americans need insurance that follows them from job to job. They want insurance that is still there if they retire early and does not change if they take a few years off to raise the kids.
John McCain Will Encourage And Expand The Benefits Of Health Savings Accounts (HSAs) For Families. When families are informed about medical choices, they are more capable of making their own decisions and often decide against unnecessary options. Health Savings Accounts take an important step in the direction of putting families in charge of what they pay for.
McCain’s medical plan is based on financial incentive. In general, this does not work, and it is a naïve plan. When you offer a discount to people on a product, part of that discount or benefit is taken by those that sell the product. It is a natural cause and effect of supply and demand. If you have a car, for example, and the government offers you a tax credit of $5000 on that car, you can expect the price on that vehicle to rise at the show room at least in some part of that $5000. So, before the tax break, perhaps you would have paid $24000 for the car, but after the tax break, you gladly pay $27000 because you will still be ahead $2000.
This misguided political approach is exemplified by a horrific law in Massachusetts. The state provides a tax incentive to buy and sell cars only through licensed dealers, but in turn stifles private sales of used vehicles. The state does not allow one to deduct sales tax on cars purchased used from individuals, but only from licensed dealers. So, if I purchase a car for $5000 and sell my old car for $3000 to a private party, the state collects sales tax in full on the $5000 spent on my car, the $3000 spent by the party that bought my old car in addition to whatever sales tax paid when we originally purchased our old car. This is beyond double taxation, it can and does result in multiple taxation of the same item all at the expense of the citizen.
But if you buy from a licensed dealer, you get to deduct the amount you sold your car for from the amount you spent on the new car. So, now, in the same exact transaction, you buy the $5000 car and trade your old car into the dealer for $3000 and the state only taxes you on $2000. Sounds fair until you realize what has really happened. Dealers know they are in the driver’s seat and inherently give worse trades on vehicles, pocketing part of the supposed tax savings. People selling their own cars have to make much more to compensate for the tax, so it has raised the price of used cars in the state. The dealers profit. The state profits. The citizen loses.
Why does this law exist? To make more money for the state. The licensed dealer pays the state. The taxes charged multiple times on the same vehicle go to the state. The money is stolen from the tax payer by both the dealers and the state.
So, now that you understand the premise of why a tax incentive does not work in your favor, you can understand why McCain’s plan is misguided. McCain wants to offer a $5000 tax credit to families that purchase health insurance. All that will do is allow the insurance companies to boost their prices.
In addition, he wants to raise taxes on those having corporate tax plans, forcing them to pay taxes if the plan they have costs the company over a specific amount. This never works. It is unfair to those that live in areas with a higher cost of living and it provides less incentive for companies to provide the benefit. It encourages those participating in the plan to opt out to reduce their tax burden and it complicates the tax laws.