Universal Health Care Proposal
I have finally gotten the time to do a little analysis on the universal health care mentioned by our Governor in her 2007 State of the State address. Here is what I've got so far:
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In her 2007 State of the State address, Kansas Governor Kathleen Sebelius called for universal a healthcare plan. No details of the plan were given out; however we can look at some history to get an idea of what those details might be.
In 1993, the Kansas Commission on the Future of Health studied the issue of universal healthcare. Despite the fact that the 11 member commission believed healthcare was a "fundamental right"; they conceded that even at the time, huge tax increases would be necessary to fund any program. One projection was a $1.8 billion increase in individual income tax, the other was an increase of $1.6 billion in payroll taxes. This year's entire proposed state budget is $12.1 billion. The group suggested creating a state run insurance company, which would "eliminate insurance companies and their agents from the mix". -axis of logic, Jan 14, 2007.
According to CBS News, all pending legislation for universal healthcare would require an expansion of medicaid. It also requires all employers to provide health insurance. They would further create a state insurance agency or product, or at least a marketplace for health insurance.
Again, we do not know any of the details of the Governor's plan, or if there even is one. But we do know that most Americans agree that healthcare is in crisis, and something needs to be done. However, we should be careful not to fall into the "do something, do ANYTHING" trap that has precipitated poor legislation in the past. For these reasons, let's take a more critical look at what is at the heart of the matter.
First of all, a short discussion of "rights" is in order. How do we determine what a "right" is? Historically, in the United States rights have been "positive" rights. A positive right is something that a person is entitled to that is not at the expense of another. A negative right, on the other hand, entitles one person to something at the forced expense of another. Clearly, universal healthcare as a right will be at someone else's expense. By granting a negative right, we take away a positive right from someone else, which is in this case the right to decide how best to spend one's own money.
The next problem is the most obvious problem, the expense. Who will pay the bill? The one-two punch of higher income taxes and higher costs to employers (for covering all employees) is virtually guaranteed to cause higher unemployment. Most people would agree that a $10.00 an hour job with no benefits is better than a $0.00 per hour job with benefits. However, with soaring labor costs, many employers will be forced to reduce their workforce, re-locate, or outsource.
Next there is the problem of a principle known as anti-selection. In the insurance industry, anti-selection occurs when those who most need insurance seek it most diligently, and those who least need it do not. A similar problem exists with credit agencies and banks. Customers who pursue loans the most vigorously are usually the ones who are the least credit worthy. Insurance companies work hard to develop products that do not encourage anti-selection. With universal healthcare, however, (at least as with medicaid today), there are no copays, and no deductibles. There are no exclusions, and, as a result, abuse is rampant. The cost is therefore much higher than it would be if the plan was completely administered by a private insurer. Moreover, "eliminating insurance companies and their agents from the mix" causes more problems than it solves.
Insurance companies are among the largest, if not the largest class of investors in the country. They routinely purchase investments such as long term bonds, stocks and mortages, that drive our economy. They are also among the largest employers. By taking away one of their best selling products, the overall economy would suffer greatly.
Universal healthcare is a laudable goal. I believe in this goal; however I disagree on the exact methods used to realize the goal. There are a number of smaller, more incremental (and therefore less intrusive and economically dangerous) options available. Some of these include high-deductible health plans in conjunction with medical savings accounts, tax incentives, more portability for existing health plans, allowing the direct purchase of medications from other countries, increased contributions to charities, and finally, less red-tape.
*************
In her 2007 State of the State address, Kansas Governor Kathleen Sebelius called for universal a healthcare plan. No details of the plan were given out; however we can look at some history to get an idea of what those details might be.
In 1993, the Kansas Commission on the Future of Health studied the issue of universal healthcare. Despite the fact that the 11 member commission believed healthcare was a "fundamental right"; they conceded that even at the time, huge tax increases would be necessary to fund any program. One projection was a $1.8 billion increase in individual income tax, the other was an increase of $1.6 billion in payroll taxes. This year's entire proposed state budget is $12.1 billion. The group suggested creating a state run insurance company, which would "eliminate insurance companies and their agents from the mix". -axis of logic, Jan 14, 2007.
According to CBS News, all pending legislation for universal healthcare would require an expansion of medicaid. It also requires all employers to provide health insurance. They would further create a state insurance agency or product, or at least a marketplace for health insurance.
Again, we do not know any of the details of the Governor's plan, or if there even is one. But we do know that most Americans agree that healthcare is in crisis, and something needs to be done. However, we should be careful not to fall into the "do something, do ANYTHING" trap that has precipitated poor legislation in the past. For these reasons, let's take a more critical look at what is at the heart of the matter.
First of all, a short discussion of "rights" is in order. How do we determine what a "right" is? Historically, in the United States rights have been "positive" rights. A positive right is something that a person is entitled to that is not at the expense of another. A negative right, on the other hand, entitles one person to something at the forced expense of another. Clearly, universal healthcare as a right will be at someone else's expense. By granting a negative right, we take away a positive right from someone else, which is in this case the right to decide how best to spend one's own money.
The next problem is the most obvious problem, the expense. Who will pay the bill? The one-two punch of higher income taxes and higher costs to employers (for covering all employees) is virtually guaranteed to cause higher unemployment. Most people would agree that a $10.00 an hour job with no benefits is better than a $0.00 per hour job with benefits. However, with soaring labor costs, many employers will be forced to reduce their workforce, re-locate, or outsource.
Next there is the problem of a principle known as anti-selection. In the insurance industry, anti-selection occurs when those who most need insurance seek it most diligently, and those who least need it do not. A similar problem exists with credit agencies and banks. Customers who pursue loans the most vigorously are usually the ones who are the least credit worthy. Insurance companies work hard to develop products that do not encourage anti-selection. With universal healthcare, however, (at least as with medicaid today), there are no copays, and no deductibles. There are no exclusions, and, as a result, abuse is rampant. The cost is therefore much higher than it would be if the plan was completely administered by a private insurer. Moreover, "eliminating insurance companies and their agents from the mix" causes more problems than it solves.
Insurance companies are among the largest, if not the largest class of investors in the country. They routinely purchase investments such as long term bonds, stocks and mortages, that drive our economy. They are also among the largest employers. By taking away one of their best selling products, the overall economy would suffer greatly.
Universal healthcare is a laudable goal. I believe in this goal; however I disagree on the exact methods used to realize the goal. There are a number of smaller, more incremental (and therefore less intrusive and economically dangerous) options available. Some of these include high-deductible health plans in conjunction with medical savings accounts, tax incentives, more portability for existing health plans, allowing the direct purchase of medications from other countries, increased contributions to charities, and finally, less red-tape.
posted by Jason E. Peck at 1:40 PM
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