James Henderson and Earl Grinols, both economics professors are Baylor University, and authors of "
Health Care for Us All," make an enlightening contribution to the
Waco Tribune-Herald's Opinion section today. In "
Health Care Mythbuser," Henderson lists ten common opinions or "myths" about the current health care proposals before the Congress. I quote Myths 7 and 9, which describe how the tax burden is shared between health insurance companies and consumers, and how some companies that provide health insurance coverage to employees will respond incentives created by a government plan.
Myth No. 7: The fee proposed by Sen. Max Baucus on high-premium health insurance plans is a tax on health insurance companies. Fees imposed on goods and services are passed on to end consumers. The cost of the proposed fee on insurance companies will be shifted to those who purchase private health insurance policies, in effect taxing individuals with good insurance regardless of their incomes.
Myth No. 9: If you like your private insurance plan, you can keep it. If a government-run plan is approved, it will likely pay Medicare rates. Because Medicare pays hospitals about two-thirds of what private plans pay, the government plan will have premiums that are 20-25 percent lower. The lower cost, coupled with the play-or-pay mandate on employers, will lead them to substitute the government plan for private insurance. The Lewin Group (2009) estimates that one-half of all Americans with private coverage will lose it when their employer switches to the government option.
Grinols lists three fundamental elements that should be included in reform to avoid damaging portions of our health care that are among the world's best in "A Lesson on How Insurance Works."Fundamental I: Lack of earnings is not a health care problem. It is an income problem. The solution to too little income is provision of income.
Fundamental II: There must be a stronger reason for Americans to want to buy health insurance. This, too, is not a health care problem but a motivational problem.
Fundamental III: There are alternative health care insurance reforms that have not become part of the legislative discussion and these points should be brought in. Homogeneous risk pooling by age, sex and location is one, but there are others which lead to individuals’ ability to buy portable insurance at any time, switch companies at will, and pay the same premiums as others of their age and sex without threatening companies’ ability to offer insurance.
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When the health insurance companies are taxed on the goods and services, it will make their health insurance rates go up, effectively leaving the consumers to choose between the free or low cost government's health care or their own more expensive health care. On top of that, since the government will likely pay medicare rates resulting in much lower premiums, many companies won't offer private health care and instead only offer the cheaper government health care. The employee will have to choose between the government health care or buying their own more expensive private health care plan while the rates continue to climb. This basically forces several Americans to do away entirely with the idea of private health care since many would not be able to afford it, eventually making private health care unavailable to middle class Americans. If that occurs, the only practical option left will be the government's which would then becomes a government monopoly, almost eliminating America's free choice in that field. Many times, as Grinols notes, the government tries to find a solution for too little income or little motivation by changing the health care, when, in reality, that should not be the focus. They should address those areas directly.
ReplyDeleteI agree that if the government creates a form of health care that is free or really cheap, it would not be good for middle class Americans. Mainly because most of them have some health care insurance now, but they can barely afford it. Their employers would probably stop offering their current insurance, that is probably decent, for one that is run by the government and not very good. Now the employee bares the results of this new form of health care. On the other hand though, the government based form of health care insurance would probably force privet insurance companies to significantly lower their prices, making the better insurance cheaper. So the bottom line is 'you get what you pay for.'
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