#Healthcare and #Taxes (Part 2 in a Series)

Yesterday I kicked off a series on healthcare with a brief history of my experience that forms much of my opinion - as well as my belief that single payer without repeal of the Hyde Amendment is not for me. Two types of responses: "Nobody is saying single-payer without repeal!" and "I'm OK with that because (access to healthcare/I'd rather have access to contraception)!" 

While I am heartened to see people assert that there is no single payer being proposed without repeal of Hyde, I just have a hard time putting trust in these assertions. In Colorado, for instance, they aimed to have a single-payer system in-state - without repealing a state ban on funding for abortion services. Talk and action are two different things. As for folks who would rather have contraception than abortion access - sorry, I'm just not with you on this. Sure, you may be able to afford abortion services, but by sacrificing poor women who can't, you are effectively making a choice for them that abortion is not an option. 

But enough of that - let's talk about another barrier that we often see with respect to a single-payer system: the funding mechanism (a/k/a - taxes). 

But before we super dive into that - what does health insurance cost, anyway? Under the Affordable Care Act, the amount of health insurance premiums that can go toward administrative costs is limited (a good thing). For the cost itself, I'm going to look at what my health insurance - one adult and one child - costs. According to Aetna, that number is: $825.78 per month. Of that, I pay 20% of the employee portion ($117.03) and 100% of the child portion ($240.65). 

I could get into the actuary portion of how these numbers are calculated, but it's hard math. Lots of statistics, averages, actual cost, etc., go into it. What makes insurance work is that everyone pays, and then claims are paid for those who use it. In theory, when I'm not using my health insurance (most of the time), it's paying for someone who needs an appendectomy. And if/when I have a malady that requires care, theirs is paying for that care (minus deductibles - $1,000.00 in my case). 

Spend That Money!

Those premiums also pay for overhead - claims handlers, folks who deal with appeals, subrogation departments. So some goes to care, some goes to overhead, and, in the case of for-profit insurers, some goes to shareholders. Because profiting on health insurance is a thing. A reprehensible thing. 

Reimbursement rates are negotiated with providers, and my experience tells me that health insurers are paying 70-80% of what the provider says the value of the service is. Medicare pays even less (around 50%), and Medicaid even less (around 30-40%). 

But back to the premium and taxes - some of the memes that we see on the internet show things like warships and their (admittedly) outrageous cost. Then the question is raised: if we can pay for this, why not single-payer??? To be honest, I'm not convinced this is a winning approach. In deep blue bubbles, it's easy enough, but universal healthcare isn't going to be won in Seattle - it's going to be won in the swingy parts of the state (and I'm not talking Club Sapphire). 

Overhead - Medicare, Non-profit Blues, Commercial Carriers, Investor-Owned Blues. One is very different from the rest. 

We are taught that the premium our employers pay is a benefit of working, and that the share we as workers pay is purchasing a service. My problem with that: it's basically a tax. Yes, health insurance being tied to wages began because of wage freezes during WWII, but flash forward to the present, and they are effectively a tax to pay a private-sector acting like a government entity to provide a service that is also provided by the government - both federal and state - in a much more efficient (generally) manner. Think about it: the Medicare tax is 2.9%, with the employee contributing half. This is paying for 44 million folks' health coverage - 15% of the United States population. Medicaid and the Children's Health Insurance Program (CHIP) cover about 70 million people - or another 18.6% of the population (there is overlap between Medicare and Medicaid, so these numbers don't exactly stack, but you get the point). 

So instead of thinking of that $825.78 as purchasing something, think of it as a tax. And imagine what the government could do with this as a tax. Currently, the average tax for Medicare paid by and on behalf of each worker in the United States is $172.21 each month (average U.S. gross income being $71,258). The total amount from average income taxes per month for Medicaid and CHIP: less than $100 per month (10% of the federal budget, assuming a balanced budget each year, which we all know is malarky). 

In all, nearly 32% of the U.S. population receives subsidized/state sponsored healthcare at the cost to the average taxpayer of less than $300 per month. Many of these folks are people who would tip an actuarial table upside down were they in the private market. 

Cost Comparisons!

So what would the actual cost be of a single-payer system? Back of the napkin math tells me about $900 per month - assuming all things equal - to the average taxpayer. (literally just doubling what is currently paid, and adding that to the pile). For me, that would be a decrease in actual healthcare spending by me and my employer - which in theory means more money in my pocket. 

Now, the actual cost would likely be less because of various other price controls that would come into play with such a move.

Sen. Bernie Sanders has alluded to this - and I believe I've even heard him flatly say it. And he is 100% correct. The costs of health insurance to the average taxpayer would decrease under a single-payer plan, while the total tax "burden" would increase - by shifting a boatload of "taxes" to a private company to a government entity to provide the service with more efficiency, and ensure all residents have coverage. Where liberals who truly support health care for all fail is not mainstreaming this line of argument. Because it isn't "out there," and there is strong evidence that, generally, government does health insurance and care well. Medicare, Medicaid, CHIP, (and in Washington) L&I. 

And it is going to be very important to get folks thinking about the funding issue early, before the GOP comes at folks with sticker shock, while ignoring the cost of premiums associated with the existing health insurance markets. 

Now that the easy stuff is out of the way - next up will be the interplay of no-fault liability plans, third-party plans, car insurance, workers' compensation, and subrogation. Or I'll be nerding out something fierce. You pick.