Robbing Peter to Pay Paul: The health care shell game

Source: Tax Tea Party

When it comes to health care reform, there are moral issues and financial issues.
If there are indeed 46.3 million Americans without health insurance; if 45,000 people die every year from preventable causes because they have no health insurance; if the US ranks 21st out of the 21 wealthiest nations on child well-being – these are all moral issues. It’s when we try to do something about these issues that morality sprouts a price tag.
Those who oppose health care reform aren’t necessarily heartless ghouls who want children to die and the sick to suffer. They’re simply approaching health care from a financial point of view, which can be difficult to reconcile with a moral perspective.

Fortunately for politicians, the shell game known as “cost shifting” lets them take the moral high road while doing nothing to reduce costs, which would be politically unpalatable.
It’s fortunate too that cost shifting comes in a variety of useful forms.

The employer mandate

The employer mandate requires employers to provide health care. Some politicians like to claim that health care will cost less if employers are required to provide insurance. But the cost saving is an illusion: It’s merely shifted to employees, whose wages won’t increase, or to consumers, who pay higher prices for the company’s goods.

Insurance industry reform

Insurance industry reforms currently under consideration by Congress may change practices such as denying insurance when there’s a pre-existing condition or canceling a policy once someone gets sick. This is morally admirable, but will do nothing to lower the rapidly growing cost of health care, which is the real financial problem.
The insurance industry will still need to show a profit to its stock holders. To accomplish this, everyone’s premiums must increase. Without a great deal of money from the government in the form of subsidies, the number of uninsured will increase simply because more people will be unable to afford the higher premiums. This will include perfectly healthy individuals who would normally reduce everyone’s premiums by spreading the risk. The cost is simply being shifted to those who are insured.

Subsidies

Health insurance subsidies for those with low-incomes are also morally admirable, but this is accomplished by shifting the cost to high-income taxpayers. It does nothing to slow the growth of the cost of health care.
As economist Victor Fuchs comments in a recent JAMA article: “When eligibility for a subsidy includes those individuals and families with incomes up to 500% of the poverty level (approximately $110,000 for a family of 4) as in one senate proposal, even the shifting of costs is an illusion. It is impossible to collect enough taxes from those with incomes of more than $110,000 to subsidize the poor and the sick and also help the numerous middle and upper middle income households.”

Too late for reform?

How do we reconcile the moral and financial issues? That’s a real dilemma.
US health care is so deeply entrenched in a profit-driven system that it may be too late for reform. No politician willing to address painful financial choices can get elected.
Politics requires big money. Financial backing comes from corporations and industries whose bottom line depends on maintaining the status quo. Obama may have been elected by raising campaign money from a huge pool of small contributors, but he is outnumbered by an entrenched Congress whose members owe their souls to the company store.
At what point will the cost of health care be such an enormous crisis that we’ll overcome the political obstacles? When costs become 50% of GDP? When Americans start moving to Canada and Europe for the health care? Or when the health care industry prices itself so far out of the market that it has no more customers?
Related posts:
Your insurance industry at work
Why is it so hard to reform health care? Political structure
Why is it so hard to reform health care? The historical background
Why is it so hard to reform health care? National identity
Why is it so hard to reform healthcare? Rugged individualism