Hey Congress, Here’s a Health Care Reform Proposal for You

Here’s a quote from a top news magazine that is typical of the nonsense we are hearing surrounding the health care debate (and there is a lot of it!): “It is difficult to sustain in a global economy where American corporations have overseas competitors that aren’t saddled with providing health care for their employees.”

Last time I checked, providing health care coverage was not mandated by Congress, although it is one of the options being discussed today. At the moment, corporations CHOOSE to provide health care coverage. No gun is at their heads, just an innocent post WWII executive order that made health care benefits a tax deductible expense (put in place to offset the negative effects of another government regulation, wage controls–does it ever end?). With that tax incentive, firms started providing health insurance because they could capture part of the value to the worker of paying for insurance with pre-tax dollars.

And remember, “foreign competitors” are mostly located in industrialized countries where health care is paid for with higher taxes (like a VAT and profit taxes as well as labor taxes). It isn’t free, it is just paid for differently (and Medicare and Medicaid are examples of that kind of financing in the US–cash income is reduced by these payments on behalf of the employee). Many of our competitors have to deal with significantly more difficult labor rules than their U.S. counterparts.

Finally, in any country, firms cannot pay workers more than the value they add to the company (only state-owned enterprises that get continuous subsidies from the government can do this). “Pay” is defined here as a combination of cash and benefits and taxes on labor. The more that is paid in benefits, the less that is available in cash. And employer-provided insurance still leaves the worker with no health care choice–you are stuck with what management negotiates. One-fourth of small business employees would prefer to get the cash and pay taxes on it. Most employers prefer to provide the insurance and extract part of the “gain” the worker gets by using pre-tax dollars.

So, Congress, don’t “saddle” America’s corporations with a mandate. It will just produce a reduction in cash income as benefits rise. Instead, eliminate the tax preference, let companies pay the cash to workers and let corporations stop doing paperwork and other management services for the insurers. There are thousands of insurance agents selling auto, home, life and liability insurance–why not health care?

Focus on providing catastrophic coverage that excludes no one and that after “x” percent of your income is spent on health care, the catastrophic coverage takes over and prevents financial ruin (if you have no income, you have first-dollar coverage). That addresses the fear that President Clinton said motivated his plan.

And stop talking about “47 million uninsured” – it’s an inaccurate figure designed to panic Americans into supporting this monumental mistake. The current health care reform proposals in Congress do nothing to reduce the cost of delivering the current amount of health care we take. Instead, it will reduce the health care some get to control government expenses, and it can’t reduce the overall amount we spend on health care if we are indeed going to add the alleged 47 million without health care insurance now. Common sense makes this clear. Citizens seem to get this, the President needs to explain how his promise will be kept.