The Black Hole of Healthcare Costs

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  • Robert Messman
    commented 2018-08-10 00:36:44 -0600
    Good overview of Medicare but then a dubious proposal to make it available to all citizens with expanded benefits without any idea of the cost of the expanded benefits. Funny how one can praise current Medicare but propose a drastically different and more expensive version with none of the options current Medicare offers. Currently, standard Medicare covers 80% of hospital and outpatient services. Those who want coverage of the remaining 20%, you can buy one of eight different reasonably-priced optional Medigap supplemental policies plus a Part D drug plan or enroll in an unfairly-subsidized Advantage plan. Allowing for optional supplemental and drug plans would allow younger citizens to opt for lower premiums while assuming the risk for 20% of their medical costs and/or drug costs. People like and deserve some healthcare options.

    In addition, one of the big holes in this proposal is that it frees employers—private, public and non-profit— from sharing directly in the costs for keeping their workforce healthy. Currently, employers that provide and subsidize health care for their employees carry a big portion of our current , total national health. So if you do not have them help support this expanded Medicare, you lose a big portion of the purported savings in this article—disastrous. That means that the premiums in the form of income taxes would have to be prohibitively high, unless, as the paper suggests, the Federal General Fund is hit up for a big portion. Relying on the General Fund to cover a portion of the costs guarantees that the program is unsustainably financed through Federal debt or by an inflation inducing money printing practice because there are no spare funds in the General Fund of a government which is currently running massive deficits.

    Most other developed countries which spend much less than the US on health care, fund their systems with funds from both workers and employers—Germany, France, Taiwan, Japan, to name a few. In Germany, the total payroll tax is around 15%, split evenly between workers and employers. There is no way that citizens would shoulder a 10-15% income tax increase, even if the rate was on the lower end by extending the premium-like-tax to all net income—as it should be— instead of just payroll income. There needs to be a payroll tax so that non-profits, local governments and employers showing no taxable income still help pay for employee health care.
    Any plan to extend Medicare to the general citizenry will have a short life or disastrous financial consequence if it is not fairly and sustainably structured and financed—with appropriate subsidies but serious contributions from all those who benefit. This all starts with a cost analysis by the Congressional budget office or other reputable modeling entity.

    As an aside, because of the possibilities for political manipulation of the current Medicare Board of Trustees—all appointed by the President, it would be best to expand the Board to include appointees from Congress as well as four or so regional blocks of states and to include expertise in both medicine and finance.
    Robert Messman