Opinion

David Cay Johnston

A tale of two healthcare plans

By David Cay Johnston
September 11, 2012

No issue affecting taxes so clearly divides the two parties in the U.S. election as healthcare. The two parties, in their platforms, describe very different approaches to healthcare economics. Both use political plastic surgery to cover up ugly truths.

The stakes are huge. Americans spend $2.64 per person for healthcare for each purchasing power equivalent dollar spent by the 33 other countries that make up the Organization for Economic Cooperation and Development. The OECD data shows the U.S. spends $8,233 per capita compared with an average of $3,118 in the other 33 countries.

A growing share of federal tax dollars, in direct spending and in tax breaks, is going to U.S. healthcare as the population ages, even though about one in six Americans lacks health insurance.

America‘s healthcare system, more accurately described as a non-system sick care system, totaled 17.6 percent of the economy in 2010, compared to an average of 9.2 percent in the other 33 countries, as the OECD data shows.

In the United States, total public and private cost of healthcare is significantly greater than the total of corporate and individual income taxes, as well as payroll taxes. For each dollar paid in all three of those taxes in 2010, healthcare came to $1.29.

If we just lowered our costs to those of France, which has universal care in what is widely regarded as one of the best systems if not the best, it would save almost as much money as Americans paid in individual income taxes in 2010. The French spend 6 percentage points less of their economy on healthcare. In the United States, the individual income tax in 2010 came to 6.3 percent of the U. S. economy, the lowest since Truman was president.

Take a look at your pay stub to get an idea of the kind of money being spent on a system that fosters bankruptcy, bedevils small business and ranks 31st among the 34 OECD countries in preventing premature death.

REPUBLICAN PLAN

The Republicans say the federal government is “structurally and financially broken” and that “three programs - Medicare, Medicaid, and Social Security – account for over 40 percent of total spending,” which is “harming job creation and growth, (while) projections of future spending growth are nothing short of catastrophic, both economically and socially.”

The Republicans promise to “empower millions of seniors to control their personal healthcare decisions,” a vow immediately followed by a promise to cut federal spending.

The clearest explanation of what that would mean comes from Representative Paul Ryan, the Republican vice presidential nominee. Before he started obfuscating, Ryan laid out his plans in detail. He boasted that by changing Medicare from a plan that provides treatment for every older American into one that gives seniors a fixed sum to buy their own health insurance, taxpayers would save through 2084 the present equivalent of $4.9 trillion.

What Ryan did not mention is that his plan would also mean $8 of increased private spending by seniors and the disabled for each tax dollar saved.

We know how Ryan’s plan would raise total costs because David Rosnick and Dean Baker, economists at the Center for Economic Policy and Research which promotes government policies that it says would benefit workers and the poor, used the same formula that Ryan (or his staff) applied to the same Congressional Budget Office data, but on private medical care spending. Ryan’s spokesman did not respond to requests for comment.

Beyond the fact that it makes no sense to spend $8 to save $1, older people do not have the money. A tenth of Americans age 75 and older live below the official poverty line. Another 24 percent have only saved a tad more.

Every indicator shows that Americans have not enough for their old age and that a shrinking number have pensions while the Republicans now in charge of the party want to cut Social Security benefits, if not kill the program.

So why would any Americans under age 55, whose healthcare benefits Ryan wants to cut when they reach 65, think they can afford to spend $8 to save $1? Recently Ryan has softened his plan to let those who wish stay in traditional Medicare. Since anyone not rich who can count would stick with Medicare, Ryan’s promised taxpayer savings would never materialize.

Alan Grayson, the combative one-term Democratic representative from Florida, got it right when he said on the House floor in 2009: “The Republican plan – don’t get sick and if you do get sick die quickly.”

DEMOCRATS FAVOR UNIVERSAL CARE

The Democratic platform calls for universal healthcare. “We will end the outrage of unaffordable, unavailable healthcare,” they say, though after six decades that party promise remains unfulfilled.

President Barack Obama‘s Patient Protection and Affordable Care Act will enable those with pre-existing conditions and twenty-somethings without work to get health insurance. But the plan does nothing to address the larger economic problem. American healthcare costs too much and needs replacement, not a nip and tuck.

Portugal, with half the income per person as America, provides universal healthcare. Cuba, the CIA tells us, ranks 40th in infant mortality, while the United States is nine steps lower at 49th, an astonishing fact given U.S. spending compared to the poverty induced by Castro’s collectivist economic policies.

Doing worse than Portugal and Cuba is, in my view, not just costly but immoral.

Just as Republicans are trying to limit the franchise, so are they trying to limit who gets healthcare. The Democrats are better only because they recognize that universal care can be cheaper while removing an annoying and costly distraction from business.

Death and taxes will always be with us. What we need is to spend less on taxes while doing the best we can to stave off death.

Comments
5 comments so far | RSS Comments RSS

Obamacare is corporatism in one of its vilest forms. The private health insurance industry was on the verge of collapse. The individual mandate saves the industry from demise by forcing tens of millions to buy high-cost, defective products. There is a reason insurers’ and providers’ stocks when up after the Supreme Court ruling.

Our health insurer, Excellus BC/BS, a “non-profit” in upstate NY will have jacked up our premiums by 1/3 in the past 2 years for a high deductible plan which costs use $9000/yr with and $11,000 deductible — $20,000 out of pocket before they pay a dime. The last notice of increase arrived just after the Supreme Court ruling.

Democrats flunked the healthcare and insurance test. Until we have single payer, nothing will be done about the cost side of the equation.

Posted by upstater | Report as abusive
 

“American healthcare costs too much and needs replacement…”

Thank you for publishing the truth!

Posted by matthewslyman | Report as abusive
 

upstater, that is no doubt true, but sometimes you need to walk before you learn to run.. Obamacare is a great start, and seems to me to be bridging a gap in the interim.. THe folks killing SIngle Payer are the GOP…

Posted by WD7179 | Report as abusive
 

While traveling in France my wife got sick and I took here to the doctor. We had to wait a whole hour! There were no secretaries. She did improve wonderfully. But the Bill! I had to pay 20.60 in Euros for the doctor and 15.60 Euros for the 5 pharmaceuticals.

I like going to Canada, but don’t tend to get sick there. Neither do they. If I were born there I would expect to spend 1/2 as much on medical care and live two years longer.

As David Cay Johnston wrote in one of his books, successful healthcare is accomplished on the service model, not the business model. The horror show my 52 year old friend Chris proves how cruel our system can be… ensnarled in jurisdictional squabbles between HMO and doctor and hospital. If you knew what he knew, you would Never advocate for our system. More svelt insurance companies are still too many oars in the soup.

Posted by TheOldSodbuster | Report as abusive
 

But in Canada, they are dying in the streets! It takes ten YEARS to get a doctor’s appointment! They vote on whether to kill your children before they allow them to go to school!

SOCIAMALISM! SOCIAMALISM! SOCIAMALISM!

Fox News told me so.

Posted by KeeLlewellyn | Report as abusive
 

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