The American people cannot afford government intervention in health care.
During the short time that the Obama administration has been in power, it has undertaken energy reform, banking reform, education reform, environmental reform, regulatory reform and health care reform. The problem is that America cannot take on these grand adventures simultaneously.
Right now, our government is spending about $1.4 trillion more each year than the $2.1 trillion in revenues it will make each year. That $1.4 trillion in deficit spending each year will go to increase our staggering $12.27 trillion in outstanding debt. Add to that the present value of the unfunded portions of Social Security, Medicare and pension funds and America has a grand total of $62 trillion in total obligations. It cannot subsidize health care, as well.
Apart from the expense of Obamacare, there are numerous issues I would like to address:
Issue #1: Individuals with pre-existing conditions cannot get health insurance.
A majority of Americans (nearly 60 percent according to the U.S. Census Bureau) get health coverage through their employers under group health insurance–or employer-sponsored programs. Another 27 percent of the population is covered by government-sponsored health care (through Medicaid, children's health care programs, military health care and various state programs for low-income populations). Those left over are the self-employed or those working for very small companies that do not provide health insurance benefits. They must purchase coverage directly through private health insurance companies.
However, if you have already been treated for some medical conditions or have a history of certain high-risk factors, you may be unable to find a health insurance company that will offer you comprehensive health insurance at any price. This is where state-sponsored risk pools come in. Risk pools started in Minnesota back in 1976. They create pools from individuals denied coverage by private insurance companies and then provide state-sponsored health insurance plans these individuals (regardless of preexisting conditions) can buy. Currently, 34 states offer some form of risk pool, and these risk pools cover about 183,000 people.
This problem of pre-existing conditions is not really a problem at all. Rather, it is a myth or an excuse at best. I am a C-6 quadriplegic and have been for 33 years. I’m obviously uninsurable because of my very expensive health care costs, right? Wrong, I’ve had very good major medical insurance for 33 years. Granted, states could do better at communicating the availability of these high-risk insurance pools. In addition, we could put pressure on states without insurance pools, and/or help to start them. This would cost taxpayers substantially less than national health care and the pools are run by a private insurance company.
Issue #2: The cost of health care insurance is too high.
There is a simple non-experimental, non-controversial, much-less expensive (than national health care) solution to reduce costs: provide a tax-credit to anyone who pays a health insurance premium. This is not a tax deduction; a tax credit is a direct dollar-for-dollar reduction in tax. That is, you calculate your taxable income, you calculate your tax, then you reduce the tax you owe, dollar-for-dollar equal to the cost of insurance premiums.
In addition, we need to repeal the limitation on the deduction of medical and dental expenses. Currently, medical and dental expenses are only deductible to the extent that they exceed 7.5 percent of adjusted gross income.
Issue #3: The poor cannot afford any health care insurance.
There is a simple non-experimental, non-controversial, much-less expensive (than national health care) solution to this issue as well. First of all, free clinics are available in most cities. These clinics need to be encouraged and donations to these clinics need to be encouraged through tax incentives.
In a similar vein, anyone who pays another individual’s insurance premiums should be allowed the same tax credits as they receive when they pay their own insurance premiums. Tax credits should be given to anyone who donates to non-profits that provide insurance premiums to the poor, in an amount equal to the donation. Moreover, deductions should be allowed for paying anyone else’s medical expenses or for donations to non-profits (like free clinics) that provide or pay for medical expenses of the poor.
Issue #4: The cost of medical care is out of control.
Since 1990, the annual cost of medical care has skyrocketed from $665 billion to almost $2 trillion. So much so, that an entire industry has developed in the United States called medical tourism. Americans are going overseas for low cost treatment. Consider the case of Kevin Miller, a self-insured American who suffered a herniated disk as a result of a car accident. As Time magazine reported recently, Mr. Miller could not afford to pay $90,000 to have an American doctor perform the surgery. Instead, he went online and found a hospital in Bangkok where a surgeon trained in the United States performed the surgery for less than $10,000. Mr. Miller is just one of 55,000 American patients that the hospital treats each year. Patients who go to Thailand and Malaysia can save 75 to 80 percent of the cost they would pay in America.
One reason why medical care is so much cheaper in countries like Mexico and India is because it is rare for patients to win a malpractice case there. And, even when they do, the settlements they are awarded are miniscule in comparison to the staggering payouts that American plaintiffs often win. This means that foreign doctors and hospitals are not burdened by the massive premiums on malpractice insurance.
In sum, the American people cannot afford any more government intervention with our health care system. We need to repeal Obamacare now. Rather, we would be better served by removing government impediments and taxes, trusting the American people to care for our poorest citizens, and allowing free market capitalism to bring the cost of health care under control.
-Vern Sumnicht, CEO of Sumnicht & Associates, founder and president of iSectors, LLC is an investment advisor with 27 years of experience helping wealthy individuals, foundations, trusts and other institutional clients manage their investment portfolios.
