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05/01/2007: "Universal Coverage vs. the Status Quo"

As of late, the Republican Party and to some extent conservative political thinkers (the two are not always the same) have shown a disturbing disconnect between the real world and their perceptions. This is not just evident in the handling of the Iraq War, but in matters of domestic policy as well. The evidence of this can be found in the results of the 2006 election where the Republican Congress was handed its walking papers by voters fed up with double talking Republicans. Unfortunately the results of election have seemingly had little if any positive effect upon this disconnect. A case in point is the health care “crisis”.

The Democrats have made no secret of the fact that they favor Universal Coverage through a system using a “Single Payer”. This is a misleading way of saying that they want to socialize the health care industry and put it under the sole control of the US government. They claim that this is necessary due to the failures of the “free market” system to adequately provide for a significant portion of society that currently lacks health care insurance coverage. They point out that millions of people are not covered by medical insurance right now and therefore declare that there is a crisis that requires federal intervention in the form of socialized medicine. There are two major errors in this line of thinking.

First of all, it is important to note that lack of health care insurance coverage does not equal lack of medical care. It is true that millions of people currently lack health care insurance, but this is due to a variety of causes including in many case a calculated voluntary decision on the part of many individuals not to pay the premiums for health care coverage which they could otherwise afford but decide not to obtain. Instead of insurance, these people have decided to pay for medical expenses out of their pocket, and take the risk upon themselves. In regards to the poor who cannot afford insurance coverage or medical care, there is no question that they are receiving medical care through a variety of government and private solutions. A lack of health care insurance does not equate to a lack of health care. There is no “crisis” in regards to health care, only in regards to health care insurance, and as such it is more of a middle class crisis than a crisis of poverty.

The second and more significant issue (at least it should be for the Republicans) is that the current system is far from a “free market” solution, and therefore their support for the status quo is far from supporting a free market solution. A free market requires that all potential parties to a transaction have free access to the market unhindered by oppressive barriers and are protected by an unbiased legal system. This must apply to potential consumers as well as potential providers. In the current system, the consumers are effectively locked out of the market place and must instead rely upon their employer to provide them with adequate coverage. Although there are “private” health care policies available they simply do not compare in price and quality to what can be provided by an employer. If the employee is dissatisfied with the coverage provided by the employer, the consumer/employee has little choice in this matter other than changing employment. Now this state of affairs is NOT a free market. If it is failing it is NOT because of the inability of the market place to provide effective solutions for the consumers, but because the barriers imposed by federal regulations (in this case a combination of tax code and insurance regulations) have effectively locked individual consumers out of the market, and instead locked them into a system that gives their employers overt control over their health care decisions, and thus greater leverage in retaining employees. No matter how hateful a job may be, the fact that it provides health care coverage to an employee and the family will often retain the employee if nothing else would have. This is not the free market at work.

When you examine this system more closely, I think it will become apparent that the concern that is being voiced by the American people about health care coverage is not really a fear of not getting adequate medical care, but is more a concern about job security and frustration at being reliant upon potentially fickle employers for not only ones' income but also health care. Republicans need to be aware that this is a very serious issue for millions of Americans who currently have health care and who have jobs, but who fear the consequence of losing both. Again, the issue is not that of poverty, but of middle class concerns for their family's security. Ignoring these concerns or cavalierly waiving them aside as insignificant is political suicide.

Although we could debate the viability of introducing a system that was truly based upon the “free market” it would be a fruitless discussion since that is not going to happen. We are not going to abandon our current system of employer sponsored health insurance coverage in favor of a true free market where the employer is removed from the equation and the consumer has the freedom to choose the best health care options for themselves. That is just fantasy. What is going to happen is that some form of Universal Coverage is going to be proposed, and if all the Republicans can do is act in opposition, then eventually they will lose, and a socialized version of Universal Coverage being promoted by the Democrats will be implemented with potentially disastrous consequences. The Republicans and/or conservatives must offer more than “principled” opposition. They must offer a viable alternative.

Now the Democratic flavor of Universal Coverage is based upon the socialist models found throughout the world, particularly in the UK and Canada. It is odd that these models are the only ones being considered since they have not been very successful. It is true that the system is popular in Canada, but that is because the system is primarily popular among those who are not sick. If you are seriously ill in Canada, the attitude changes quickly. The fact that most people in Canada are healthy would seem to explain the popularity of the Canadian health care system. In the UK, even this support has been lost as the sky-rocketing costs of the slow cumbersome and inefficient system have caused anxiety even among the healthy. From listening to the politicians it would seem that there is no choice available other than the status quo which is unsatisfactory to most Americans (even though it is working for those same people) and socialized medicine which has failed to provide “good” medical care but has provided “secure” health coverage. It would seem that security of coverage is more important to most people than quality of treatment or freedom of choice.

This is because of the fundamental failure of the Republicans to properly present the situation and offer effective alternate solutions. The Republicans have more or less ignored the profound sense of insecurity expressed by most Americans in regards to the current employer sponsored system, and then simply objected to Universal Coverage on the basis that it would require socialism and all the evils that socialism entails: a bloated out-of-control government that is too large, too intrusive, and unresponsive to the needs of the people.

However, Universal Coverage does not have to mean Socialized Medicine. There is another model that can be used to provide Universal Coverage that does not look to the failed model of socialism for guidance. This model is the IRA and has already been partially implemented by the Bush Administration. For decades this system has been providing a successful alternative to people looking to supplement their retirement. In addition, the Health Care IRA has proven somewhat successful at providing solutions to those small businesses and individuals who have the ability to pay for health care but were unable to get the same benefits as those working for large companies and government agencies. The model of the IRA is clearly superior to that of socialism since it has proven to work where socialism has proven to only cause long term suffering and eventual collapse.

A Universal Health Care System based upon the IRA principle would be easy to design and implement. First, the tax credits given to employers for providing such coverage to their employees should be transferred to the employees themselves by allowing them to put as much money as they want into a Health Care IRA and requiring a minimum deposit/withholding to insure inclusion and coverage. In one fell stroke, health care coverage would become “transportable” and employers would no longer have the stranglehold over the employee's lives through health care. I suspect most employers would be glad to be rid of the burden since the need to provide health coverage has gone from being an attractive perk to a burdensome nuisance. This system would require that all dependents of the Health Care IRA beneficiary would be covered by a catastrophic health care policy that is currently available “off the shelf” and quite affordable. Such coverage is essentially a very high deductible health insurance policy that covers the health care costs associated with serious illness and injury involving protracted hospital stays, surgery, etc. The rest of the funds could be used on either direct medical care and/or insurance coverage, or simply saved for the future according to what the consumer believed was in his or her best interests. Of course there would need to be some regulations to insure that “fair” access was provided to all potential participants by requiring certain minimum coverage options on policies to be sold to through the IRA, and removing such policy restrictions like the “pre-existing” conditions, etc., but this would be very feasible to arrange and easy to negotiate with insurers considering the large number of consumers that would now be freed to purchase the coverage that suited them in an open and free national health insurance market.

Some problems that would remain would be how to include the unemployed, unemployable, and the working poor in the system. In regards to the unemployed, this may not be such a big problem depending upon the amount of time between jobs. If some small percentage of each deposit was required to be kept as cash, then there would be sufficient funds to cover costs while the employee was looking for a new job. Or perhaps simply some sort of “unemployment” insurance that would be mandated as part of the program. In the case of the unemployable, perhaps keeping the current system of Social Security disability combined with Medicaid would be the best solution. And in regards to the working poor, a reverse income tax (much like the Earned Income Tax Credit) could be employed to guarantee that low income earners who do not earn enough to contribute a meaningful amount to the system would still have adequate funds in the account to pay for the catastrophic health care policy, and some minimal level of coverage for the beneficiary and the dependents. Of course these are just a few ideas. I am sure there are others that would work quite well.

The current Republican policy of opposing Universal Coverage as an unacceptable socialist solution, and blindly supporting the current status quo system is simply unacceptable to the American people even if it is acceptable to fat-cat corporate leaders who are able to use the leverage of a virtual monopoly on health care coverage to retain employees. The current system is far from a “free market” solution in that it interferes in the market place by locking out consumers from the decision making process, gives too much control to employers, and fails to meet the needs of millions of potential consumers. And even in regards to the “fat-cats” in corporate America, I suspect there are many that would favor giving up their monopoly on health care coverage. I suspect GM would jump at the chance of transferring some or all of their current health care burden onto someone else.

The health care “crisis” may be a false crisis to the extent that there really is no crisis in American medical care. America still has the best health care system in the world, and access to the system is virtually universal even if it is not implemented in a clear and easy to understand manner. However, there is a crisis regarding health care coverage to the extent that there is a growing sense of insecurity in the middle class. The Republicans have an opportunity to resolve this problem while fixing the current system which is unsatisfactory to everyone. Let us hope they choose to do so rather than support a status quo that goes against the principles that the Republicans claim to support: Liberty, Economic Freedom of Choice, Reduction of Government Interference, Free Markets, etc.