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11/4/2009 8:33:22 AM - Universal Health Care Financing Problem Solved

I solved the problem with financing Universal Health Care yesterday.

Yes, yes, I know what you're's impossible. The government's best attempt is an inane and incomprehensible document spanning 2,000 pages, and everyone not living in the land of Oz knows that regardless of what they say now it's going to cost the taxpayer a lot more down the road. That's why, for example, the guys writing the bill are resorting to all kinds of tricks like counting taxes levied for the next several years but only providing care in the later ones, and then limiting the duration for which the expenses are tabulated (to 10 years, in this case.) In other words, they're collecting taxes for 10 years, but for the sake of showing a lower cost, only providing health care for about 6-7 of those years. That makes your short-term budget look better than it otherwise would but, as anyone with a brain would understand, does nothing to fix the longer term budgetary issues. All that it does is push the recognition of the massive cost overruns a few years down the road. It's the financial and political equivalent of sweeping dirt under the rug.

Before I get into my solution, though, I should point out that I don't think that having the government provide Universal Health Care is a good idea. For that matter, I don't care about Social Security, but that's another story, and one that I'll write about at some point in the future. I think that, with only limited exceptions (usually relating to things like protecting the environment and wildlife, funding a military, providing basic services such as police and fire protection, etc.), people should be responsible for their own lives.

I think that the federal government's powers should be very limited, as the founders originally intended and clearly stated. I think that unless there's a compelling reason that the federal government should stay out of people's lives. So what, you ask, is a "compelling reason"? A "compelling reason" would be something that is necessary so that everyone can partake of all of the natural benefits of their citizenship. For example, you need strict environmental rules and regulations or else a few people might ruin the public environment for everyone else (via pollution, etc..) You need a military to protect everyone so that a foreign country doesn't walk right into your backyard and start dictating policy. Providing subsidized housing, universal health care, and a million other such things don't fit into that category and only serve to reinforce the reality of a "democracy" ruled by a million special interests, each jockeying to get more of the pie than they're giving up.

I think that "modern democracies" are fatally flawed. An elected official's first priority is to his representatives. What's wrong with that, you ask? You've heard the saying, "There's no 'i' in 'team'", right? Ok, so where's the benefit for a Senator, Congressman, or any other elected official in doing what's better for everyone rather than primarily taking into account only his direct constituents who, of course, are the only ones who vote for him? For that matter, where's the motivation for the average citizen to demand that their representatives do what's best for the whole as opposed to the local individual? With a system like this and human nature, it's not surprising that what you get is a system where most elected officials try to ply their constituents with bribes - loot paid for by all but enjoyed solely by them ("bridges to nowhere", local parks paid enjoyed by the locals but paid for by the entire country, etc..) It doesn't take a rocket scientist to figure out that such a system isn't particularly good at benefiting the collective. Instead, the only way for you personally - as an individual, a district, a city, a county, a state, whatever - to benefit is to take more from the "collective" than you're giving back in return. I think that people respond to incentives, and guess what the incentives are in this equation? That's right - to take as much as you can from others before they take it from you. Brilliant. That's 21st century democracy?

I think - as I have ever since I first read about them when I was just a child - that the Greek city-states had it right. Democracy works, but only when it's done on a small scale. If most people don't have a clue as to how their Senator, Congressman, Governor, etc. vote on 99% of the issues, or even what constitutes most of the issues, much less their subtleties, how is "democracy" supposed to work? Do you really want the ignorant voting on things they don't understand? If the answer is no, then how do you fix the problem - educate them on thousands of various issues (which will never happen), or reduce the complexity of the system? Personally, I'd vote for reducing the complexity of the system. Modern democracy, though, seems to work via a process of ebbing and flowing. One side screws everything up, at which point the other side rides a wave of resentment into office, where they promptly screw things up differently, at which point the original crew is voted back into office. This is insanity. (Don't get me started about political parties - I think that they make things even worse than they would otherwise be.)

All of that said, though, since Universal Health Care seems so important to many people - or at least a reform of the current system where costs continue to escalate out of control - I figured I'd point out how incredibly simple it is to come up with a system dramatically superior to the one that the government is now proposing.

So...back to Universal Health Care. I was reading an interesting article yesterday that noted something that seemed a bit counterintuitive. Specifically, it said that death rates in every modern country examined declined significantly during recessions past and present. The thinking is that when people are concerned about money, they tend to eat healthier because they avoid fast food restaurants and such. They exercise more if they're unemployed because they've got more free time. Etc. etc..

It's obvious to everyone that health care costs continue escalate, and everyone scratches their heads trying to figure out how to slow down the growth in such costs. While things like improved (and more expensive) health care techniques have certainly contributed to the rise, the decades-old trend of modern cultures becoming increasingly unhealthy (gaining weight, exercising less, eating bad food, etc.) have certainly contributed.

So here's the basic idea - the government would provide a subsidy (but not the actual insurance, which would still be sold from any of a number of different private companies, all of which would be able to compete across state lines, which they can't currently do) to individuals for health insurance based upon BOTH their income AND their score on a standardized health test. People would be tested once a year on things like cholesterol levels, lung capacity, body fat, smoking and drinking (as much as possible), and other such things. Their score - which would range from 0 to 100 - would dictate what percentage of their maximum potential subsidy they would receive. The subsidy would not be paid in cash but rather could be deducted from a private insurance company's premiums for the year. (The insurance company would then be reimbursed by that amount from the federal government.)

This would increase competition in the insurance markets (by allowing insurers to sell policies in any state, thus dramatically increasing the number of available insurers), limit the government's financial involvement and obligations, motivate people to improve their lives (and in the process allow tens and likely hundreds of billions of dollars currently spent on health care to be saved and redirected towards better uses), and leave the responsibility as to whether or not someone really wants health insurance where it belongs - with the individual. No one would be forced to participate in the program, but if someone wants help from the government in paying their medical insurance premiums they would have to give something back. In this case, they'd have to be willing to help the "collective good" by improving their health a bit, and thus lowering society's costs of subsidizing their personal insurance premiums. After all, it's one thing to worry about those people that can't afford to pay health insurance premiums, and quite another to try and automatically cover everyone regardless of whether they're willing to invest anything in the effort. People - just like elected officials - need to be motivated to help the collective (in this case, by improving their health if they want some help with their insurance premiums) rather than just trying to get more in benefits than the next person (so that they're a net winner in terms of the limited resources that can be spent.)

Next, I'll explain how you're quite likely paying thousands of dollars to subsidize other people's mortgages (assuming, of course, you're in the minority that actually - when all is said and done - actually pays any federal income taxes.) Once again...the reason will turn out to be a lack of personal responsibility. I'll also explain how to make the system much more fair and efficient...which of course means that it's not likely to be implemented.

- TZ

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