I got a call from my wingnut brother (term affectionately used in this case) immediately following Obama's speech. I wasn't able to talk long (screaming toddler), but before I got off the phone, he asked the question "How are we going to pay for it?" I thought I'd share my response.
I'm writing to respond to M's call. (Yeah, so I'm bored at work today.) I've been reading from 3 to 5 hours a day for six months on this debate, so I'm pretty familiar with the subject matter. I also welcome the opportunity to debate with someone who might disagree with me, but who isn't a foaming-at-the-mouth birther. Those people are scary, and there is no having a rational discussion with them.
Before I go further, I want to spend a few moments on why I believe single payer is the best solution to health care reform. First, forget everything you know about our current system. I begin with an assertion: health care is not something people purchase because they want it. No one wakes up in the morning and says, "Hmm, I think I'll get a chest X-ray today," without a reason for it. There are a few minor exceptions (hypochondriacs), but on the whole, people would rather not see a doctor unless they need one. That said, healthcare costs are relatively fixed, or at least predictable. Therefore, just because we insure someone, doesn't mean they will run out to a doctor because they can. They will go because they need to. Over a lifetime, you can predict the average amount someone will spend on healthcare. Actuaries do this all the time.
That said, what we spend on health care is a relatively stable quantity. There is an identifiable dollar amount. The simplest, most effecient way of paying that dollar amount is to divide it by everyone in the nation to determine a cost per person. Raise taxes by that amount (pick your poison - sales, use, income). No profit. No added overhead to providers to deal with different insurers. No executive salaries. This is how any pool of insurance works - except for the for-profit insurance companies. They have to take their cut first.
While you can argue about whether the government could effeciently adminstrate such a system, you can't argue with the math. We gain NOTHING for the money we spend on insurance industry profit. If you think about it, the system we have set up is welfare for insurance companies. They are happy to insure you while you are healthy, and paying premiums. As soon as you get sick, they have serious profit incentives to figure out a way to drop you, which happens all the time (recission). If you get too sick to work, you lose your insurance in at most 18 months. Once that happens, the government has to pick up the tab for your care (after you go bankrupt). Medical insurance in this country is a license to print money at the tax payer's expense.
Personally, I do not buy into the myth of government incompetence. They seem to run pretty damn effeciently most of the time. IRS, NSA, USDA, FDA - we all know when they screw up, but they do their jobs extrememly well millions of times without you ever thinking about it. Regean did the nation a great disservice by convincing us our government was our enemy, instead of our partner. We will be reaping that fruit for decades to come. But I digress.
When M called, he had a simple question that deserves an answer. "How do we pay for it?"
The answer is simple: we already are.
(A note - I talk a lot about "sick" people below. When I refer to sick people, I'm talking about people who need chronic care over a period of months or years. [Dad]'s bypass may have been expensive to us, but in terms of overall medical care, it was nothing compared to leukemia. I consider him to be generally healthy).
Imagine a pie chart of all the dollars spent on health care in the US. That pie chart can be divided into basically 4 groups - seniors over 65 (Medicare), workers with employer provided insurance, the sick poor (Medicaid), and the uninsured. There are a few others (i.e. the VA), but this is the bulk of the dollars. Right off the bat, you should notice something - the "sickest" people in America - those of us approaching the end of life, and those of us too sick to continue to work for employer provided insurance - are already on government insurance, being paid for by the taxpayer. That should say something to you right there. So let's examine the uninsured.
Among the uninsured, you have lots of different kinds of people. Almost all are poor. You will have the unemployable. You will have low wage, part time workers who are not receiving benefits from their employer. These people, for the most part, are generally healthy. Remember, if you are poor, and truly get sick (not something that can be fixed in an emergency room visit), you qualify for Medicaid. So if you are poor, but not insured, you are likely healthy (relatively).
Then you have two more groups of people - the unemployed in transition - people who have lost their jobs and are looking for work, and people employed at small business who make too much money to qualify for Medicaid, but cannot afford their own insurance. These people are also generally healthy.
Finally, you have the last group. The un-insurable. The people with the pre-existing conditions that no insurance company will touch. These people had insurance at one point, but got sick, and either became too sick to work or were fired because of their illness (it is a fairly common practice for insurance companies to hit companies with stiff surcharges in the millions if an employee gets say, breast cancer. Many of these small and medium sized businesses can't afford the surcharges, so they find a reason to fire the employee.) These people will eventually get Medicaid, but only after they have been bankrupted first.
So, of the uninsured, you have generally healthy people that occasionally get treated in an emergency room. We already pay for their treatment through increased premiums to our insurance companies (hospitals overcharge the insured to cover the uninsured). You also have a small number of critically ill people. These people are also being paid for through the same mechanism.
What happens if you insure all of those people? Well, a large number will have to get subsidizes for their insurance. This would cost us money, if they get sick. If they do not get sick, they are revenue neutral.
Another group can afford some premium payment on their own. These people will actually be revenue positive - people paying into the insurance pool that were not paying into it before, but are still generally healthy.
Finally, you will have the critically ill people who have not been bankrupted yet. These will be revenue negative.
However, premiums for the working insured should go down because providers will no longer have to overcharge for the uninsured - there will be no uninsured. Progressives understand how corporate America works though. You price things at what the market will bear, not what it costs you to provide it. The market is already bearing the current rates, so we believe insuring the uninsured will do nothing to drop prices without a robust NONPROFIT option. We don't care if it is "public" or not. Just large, and not for profit. This is why the stock prices of the insurance companies jumped the day after the speech 2 to 4%. Wall Street sees mandated insurance for the uninsured without a public option as a windfall for the insurance companies. They will make a killing.
Hope that answered your question. If you'd like to talk more, I'd be happy to - just give me a call.
Love you guys, and hope to see you soon,
pneuma