Healthcare Costs Out of Control — My Simple Solution

Back at the beginning of February, my son sliced his finger with a linoleum carving tool in Art. Here’s a sketch he did of it later:

Alex Cut Sketch

I picked him up and took him to the ER at a local hospital. The cut required four stitches. I was reviewing the claims for this on line and noticed that the hospital tried to charge my insurance company $362 for “Misc Services” and the doctor staffing the ER charged $898 for “Op Services” and “Surgery.” I’m supposed to pay a $150 deductible for ER visits. My insurance company reduced the hospital charge to $139 and had me pay it as my deductible. They paid the $898 charge to the doctor without reduction.

The primary motivation of my call was to determine why I had to pay the $139 (which turned out to be the lesser of the allowable charge and $150 deductible). I was also amazed that getting four stitches costs $900. That’s outrageous. That’s $225 per stitch! So the total cost associated with taking my son to ER to get 4 stitches in his finger was $1037!!!

Granted, I only paid $139 but I realize there’s no free lunch. All I have to do is look at what we’re paying through my wife’s employer for health insurance — $421/month to cover a family of four. I know from my former employer that the total cost of my health insurance was over $1300 a month to cover a family of four. These costs are out of control and unjustified. There have to be other factors at work here.

One that I can easily point to is ER treatment of illegal aliens for non-emergency care. Unfortunately, I’ve been to the ER three times in the past 18 months. Every time, a majority of the people waiting were spanish-only speaking brown skinned people with sick babies. I didn’t ask for papers, but it’s not a huge leap to infer that the majority of them were, in fact, illegal. Illegal aliens don’t pay payroll taxes (they present an strong argument for consumption based taxes, actually). In fact, I see the whole illegal immigration issue as a ridiculous subsidy for certain industries. They get cheap, exploitable labor at very low cost while all the rest of us foot the bill for social services that the employer should be paying for. I’ve always been puzzled by “liberals” that support illegal immigration. They are on the wrong side of this from the “I-hate-the-evil-corporations” standpoint. In fact, they really like cheap landscaping services, maid, and nanny services.

Another problem I can easily identify is other people (legal aliens, and citizens) opting out of paying for the health care system while at the same time relying on it via ER care. If you don’t have access to health care via an employer, it’s very expensive. So people who are on the edge (and even some rich, greedy folks), so to speak, just decide not to pay for health insurance, even though they will have access to it via emergency care. This should be addressed with a catastrophic health care payroll tax. Illegal immigrants and people who voluntarily or involuntarily “opt-out” of paying for their healthcare should not be allowed to be free-loaders (in the classical enconomic) sense any more. This is a clear tradgedy of the commons situation and needs to be addressed with federal intervention.

Another major problem is the whole “employer-provided” health care concept. People don’t see how much they are actually paying for health insurance. People also don’t see how much health care providers charge for services. Sure, you get explanation of benefits, but who really reads those? I know I don’t most of the time. People with health insurance just don’t have an incentive to keep costs down because they are shielded from those costs. The other big problem with this system is that insurance providers just have to sell corporate execs, they don’t have to provide good service. If you want health insurance, it’s almost always cheapest to get it through your employer — especially since it’s not tax deductible if you buy it yourself. So if you don’t like the service you get, it’s tough shit for you and the insurance companies know it.

My solution to these problems is very simple and requires only three things.

The first is the simplest. Make all healthcare expenses tax deductible for everyone, not just corporations. Why we put a 7.5% AGI minimum on deductible health care expenses is a mystery to me. There are Flexible Spending Accounts, but these are really just a bone thrown to plan administrators (insurance companies). Why do I need to commit a certain amount of dollars up front? Why should I have to try and guess what my medical expenses for the year will be and why shouldn’t the money roll over if I don’t spend it all? FSAs as currently structured are a joke. Just make all healthcare expenses tax deductible. Simple and effective with no corporate welfare thrown in.

Second, a new federal payroll tax that would fund catastrophic health care policies for all. If you have a job, you will pay this tax. You will pay it no matter how much you make and it will be the same rate for all people. I’m a firm believer in everyone paying some taxes no matter how little they make. Everyone that earns income (no matter how small) should have a stake in how the government spends tax money. The government will set minimum policy requirements and allow private insurers to offer policies. Each taxpayer will be able to select their policy of choice each year.

Third, lock-down the border and implement a real guest worker/immigration program. By lock down the border, I mean do whatever it takes to shut it down. If they have to build a fence and man it with machine gun-toting guards, fine. I’m tired of hearing how this is impossible and will cost too much. It’s quite possible and wouldn’t cost much at all. Do the math yourself and then compare your computed costs to the national budget. Now compare them to the cost of social services, education, and health care for those workers. Yes, you see it really is possible and not that expensive.

Now, by real guest work/immigration program I mean allow millions of people to work/immigrate/apply for citizenship a year. If there’s demand for 10 million cheap laborers, then do the paperwork and get 10 million cheap laborers here legally. I’m even for a path to citizenship. See, I’m not a racist. So don’t pull that tired argument out. I’m for law and order. I’m for screening out people with criminal backgrounds or contagious diseases. I’m for creating a non-exploitive environment for “undocumented workers” that isn’t a huge corporate subsidy. And notice that I’m not even mentioning terrorism here. This is a simple dollars and sense issue with the bonus of creating a less exploitive environment for manual laborers.

The sad thing is, I know I’m not the smartest person in the world. Not even close. In fact, I’m sure many of the people running for various offices, including the presidency could think of all this themselves. I’m sure they have. You could tweak the details of my plan to make it look more “liberal” or “conservative.” But the fundamentals are sound and plainly visible to anyone that looks at this problem with some care. We are paralyzed on this issue because of the special interests that would be hurt by this plan, namely health insurance companies, health care providers, corporations exploiting cheap labor, and hypoctritical, racist latino groups that promote illegal immigration to grow their power base.


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