Everyone knows why medical care is so expensive.
It is deliberate.
The whole system got screwed up in 1957, when insurance companies convinced the government to allow employer benefits to be tax exempt.
This not only created a privilege of subsidized healthcare for only the wealthy, but gave the wealthy so much greater collective bargaining power through the employer, that it essentially made health care suddenly totally affordable for anyone without insurance.
This caused insurance companies to encourage providers to charge outrageous rates that ensured even more people would have to buy insurance.
The Problem With Tax-Exempt Health Insurance
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The Problem With Tax-Exempt Health Insurance
BY EZEKIEL J. EMANUEL OCTOBER 10, 2008 4:15 PMOctober 10, 2008 4:15 pm
In this installment of Health Care Watch, Stuart M. Butler and Ezekiel Emanuel talk about what the candidates are saying about taxes and employer-sponsored health care coverage. Go to Mr. Butler’s post.
Ezekiel Emanuel, an oncologist, is the chairman of the department of bioethics at the Clinical Center of the National Institutes of Health. He is the author of “Health Care, Guaranteed: A Simple, Secure Solution for America.”(Full biography.)
Decisions made more than half a century ago are a large cause of today’s health care mess. During World War II, the War Labor Board ruled that fringe benefits, like health insurance, did not violate wage and price controls. Then, in the mid-1950s, employer provided health insurance was made tax exempt. Thus, $1 in health insurance, which was not taxed, became worth more than $1 in income, which was taxed. The result is that today’s health care system relies on employers to provide coverage and encourages more and more health insurance and spending.
Stuart Butler is right. Almost everyone who examines the issue — both conservative and liberal policy wonks, doctors, economists, lawyers and politicians — believes this tax exemption is a grievous error.
It is inequitable. It gives more benefit to the rich because their tax rate is higher. For instance, the Lewin consulting group estimated that for the exact same family health insurance package, an executive making more than $100,000 per year gets nearly $3,000 in tax benefits, while a blue-collar worker making less than $30,000, it is under $750. In addition, richer people tend to get bigger and more expensive health insurance packages from their employers, so they get more “freebies.”
It is also inefficient. The tax exemption provides an incentive for people to take more health insurance rather than wages, spending more on M.R.I.’s instead of other goods and services, like education or vacations.
This tax deduction is not free. Tax deductions are subsidies. This one costs more than $210 billion per year. It is the single largest tax break in the United States and dwarfs the mortgage interest deduction. Make no mistake, when the Treasury collects less taxes in one area, it must make up for it either in higher taxes somewhere else or in more debt on our children and grandchildren.
Thus, John McCain’s proposal to eliminate the tax exemption for health insurance is good policy. (About a year ago, President Bush made the same proposal.) The problem is having built the whole health care system around tax exemption, we simply can’t get rid of it without combining it with some other policies. And, as Mr. Butler acknowledges, this is where John McCain’s reform proposals — and President Bush’s proposal earlier — gets it very, very wrong.
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The solution is simple.
End all the illegal employer benefits exemptions, so then the wealthy and poor would all be on a level playing field.
Then instantly almost all people would be without insurance, so then would all demand single payer, to collectively bargain for everyone instead of just the wealthy.
And the collective bargaining power of single payer would quickly force providers to cut charges in half, just like the rest of the world.
And by the way, you are wrong about government administration.
The VA and Medicare for example, add less than 10% overhead, while private insurance companies balloon over head to more than 30%.
That is because government has an inspector general department to cut costs in an unbiased manner. Private companies have no over sight at all.
Again I should repeat, public heath care does NOT increase costs at all.
We now are paying over TWICE what any other country does, per person, and we have some of the worst health care in the world. We have almost half a million deaths a year from medical malpractice.
Deaths by medical mistakes hit records
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It's a chilling reality – one often overlooked in annual mortality statistics: Preventable medical errors persist as the No. 3 killer in the U.S. – third only to heart disease and cancer – claiming the lives of some
400,000 people each year. At a Senate hearing Thursday, patient safety officials put their best ideas forward on how to solve the crisis, with IT often at the center of discussions.
Hearing members, who spoke before the Subcommittee on Primary Health and Aging, not only underscored the devastating loss of human life – more than 1,000 people each day – but also called attention to the fact that these medical errors cost the nation a colossal
$1 trillion each year.
"The tragedy that we're talking about here (is) deaths taking place that should not be taking place," said subcommittee Chair Sen. Bernie Sanders, I-Vt., in his opening remarks.
Among those speaking was Ashish Jha, MD, professor of health policy and management at Harvard School of Public Health, who referenced the Institute of Medicine's 1999 report To Err is Human, which estimated some 100,000 Americans die each year from preventable
adverse events.
“When they first came out with that number, it was so staggeringly large, that most people were wondering, 'could that possibly be right?'" said Jha.
Some 15 years later, the evidence is glaring. "The
IOM probably got it wrong," he said. "It was clearly an underestimate of the toll of human suffering that goes on from preventable medical errors."
It's not just the 1,000 deaths per day that should be huge cause for alarm, noted Joanne Disch, RN, clinical professor at the University of Minnesota School of Nursing, who also spoke before Congress. There's also the 10,000 serious complications cases resulting from medical errors that occur each day.
Disch cited the case of a Minnesota patient who underwent a bilateral mastectomy for cancer, only to find out post surgery a mix-up with the biopsy reports had occurred, and she had not actually had cancer.
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