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The Case for Broad-based Health Care Funding
By Representatives Earl Blumenauer and Jim McDermott
While there is intense and critically important discussion about how to fashion affordable health care access and coverage for all Americans, it is important to reflect on how we pay for it.
Done right, this is every bit as significant as Social Security, and arguably more than Medicare. We should look to the funding lessons learned from those two great social insurance programs where everybody pays and everyone benefits. Social insurance is all of a sudden back on the radar screen after the near collapse of our financial markets and dramatic Wall Street losses. Everyone is thankful that the George Bush initiative to privatize Social Security and put America's "nest egg" into stocks and derivatives is nothing more than a distant memory.
People who, a few short years ago, were clamoring to invest their Social Security in the stock market are today finding that it is the only predictable, guaranteed, inflation adjusted part of their retirement portfolio. We watch employer-sponsored health care for workers and retirees become more problematic. Corporations and businesses are shedding coverage and individuals are too often unable to afford their own health insurance. An affordable, guaranteed public option will create a health care safety net that now is more important than ever.
It is essential that we do not risk health care reform with a jury-rigged financing system. We know that at least half the costs of the system can be achieved by expanding health insurance coverage, modernizing Medicare, and emphasizing health care quality and reducing health care quantity. Extending coverage to some 50 million Americans, making it more affordable and providing life-long guarantees will cost more. An additional investment of $50 billion a year, less than half of what we have been spending on the war in Iraq, is well worth it.
This reform should be financed like the rest of our social safety net with a small increase in the Medicare payroll tax by about a third of a percentage point. For about half of working Americans, this would cost a latte a week ($3) or less. This is a huge bargain, given how health insurance will be made far more affordable and secure.
It is true that someone making $1 million a year would pay approximately $6,000 under this tax and likely already has health insurance. However, there are substantial benefits beyond living in a society that has better health care that should not be underestimated. As a practical matter, even the wealthy benefit from a strong safety net because circumstances can change. What is thought to be a gold-plated, life-long insurance can disappear -- think about corporate melt-downs and what happened on Wall Street. For business owners and investors, an investment in health reform will make them more competitive and provide greater stability for their own finances. And finally, it should be noted that if we dismiss a broad-based tax, the alternatives will inevitably hit the million dollar taxpayer much more heavily.
While there are separate policy questions about tax reform, everybody has a stake in a rational, more precise, broad-based financing mechanism. Jumbling together a hodge-podge, focus-group package may look better at a distance, but are fraught with long-term tax-equity and political issues. That might be the most politically expedient strategy, but it isn't sound, long-term tax policy.
There are also very practical political imperatives as well. While no one is wildly enthusiastic about paying more taxes, singling out a small, select group for more intense treatment unleashes intense political opposition because the stakes are so high for them. Taking on beer, pharmaceuticals, and soft drinks, for example, may appeal on some levels, but these are businesses that are based on marketing. What is a soft drink other than product promotion? Soon you have created a "cumulative no-vote" that has much greater and more focused opposition.
As Congress considers financing options for health reform, we urge a broad, sustainable approach, including the payroll tax. We should all be prepared to make hard decisions -- the American people deserve no less.
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A National Tithe Tax
How to pay for an improved national approach to health care is a vexing issue that will require more than preventive savings to be believable by most politicians and the country. Likewise, how to pay for the cost will be equally daunting. Statistically, the most wealthy in our society given a much lower percentage of their income to charities than do most working Americans. Therefore, . . .
Perhaps part of the way to approach the issue of paying for health care is to initiate a National Tithe Tax. Americans with over $500K in annual income would pay an additional 5% in their tax rate. The taxpayer would be given a choice. They can let Uncle Sam use the money to fund national health care OR, they can choose to gift up to 3.0% of the total 5% to non-profit institutions which provide various forms of health care, help for disabled, nursing care, faith based health care, etc. A Tithe certainly sounds better than a tax, and the ability to direct 2/3rds of it to non-profit or private approaches would increase acceptance for those who feel the government is an inefficient way to deliver services.
Earl, you and your colleagues are making the "uncle sugar mistake."
We do not require "uncle sugar pays for everything." That would require Uncle Sugar to be Atlas himself.
No... Uncle Sugar is sitting at the end of a very long sturdy pole: a lever. Uncle Sugar can -create- laws and by so doing, can create incentives and motivations (both "carrot" and "stick") to maneuver the ship in a different direction.
Instead of worrying about how to collect enough money from everyone to fund everything publicly, create "an offer no one can refuse," like a 200%-tax-deduction for corporations and small businesses who offer health care. Regulate the health insurance and health care businesses to impose fair standards. Then, put in a public safety-net beneath the trapeze. THAT is the power of Legislative Leverage. That is the power that you have, and it is the one that you should be using.
When 100% of the people in the country are "the insured, somehow," and when both healthcare and health-insurance must play fair, we will have finally reached "the American standard" on this point.
This is America. Why should We, of all People, settle for "anything less?"
I would pay more for my Medicare Premium if it meant better coverage and more people covered!! My medicare supplement policy is the elephant in the room anyway. $96 a month for Medicare, $400 a month for the Supplement!! 400% more for the supplement than the main insurance!! WHAT AN INSURANCE SCAM!!! Millions of people on Medicare cannot afford the supplement premiums and are forced into Medicaid which is barely accepted by any doctors or hospitals any longer! BECAUSE OF GREED!!!
More taxes - so lame! How about getting rid of the F22 we don't need and invest in healthcare.
How about gearing down with the huge national DEFENSE BUDGET (actually OFFENSE). Why does the USA have the largest defense budget, more than the rest of the world combined?
How about doing away with studying the mating techniques of frogs, etc. There is so much waste in
the government, why not take a look there first?
Expanding Medicare to extend national health care, with an increase in the payroll tax to pay for it makes the most sense to me. However, I think it needs to go a little further. Why stop at just providing for the 50 million who are currently uninsured? Why not take it one step further and cover EVERYONE?
I don't mind paying increased Medicare tax for public health care, but I DO mind paying an increased tax AND still having to pay the profiteers for my own health care.
Go for the whole enchilada, give us ALL Medicare! Lifting the burden of health care expense from individuals and business is the best economic stimulus plan for everyone!
Indeed. The insurance industry is a racket in this country; that's it. A Mafia.
Looking at the figures from the WTO we could raise a significant amount of money for universal health care with a 1% tax. We already pay a tax for Medicare.
Median per capita income 2007 $47000
Projected number employed 2009 141,655,000
$470 x 141665000 = $ 66,577,850,000 or $ 66.5 billion.
The tax rate could be adjusted for income and the tax would be broadbased.
$470 per year = $ 1.29 per day. Compared to what some people a paying for medical insurance now, this would be a bargin.
When are we going to start a dialogue on national dental care? The United States is the only western power that places dental health next to hair care. If you are under forty you have no idea what I am talking about.
Yes and I lived throught the late 60's and early 70's where everyone in American ALWAYS made fun of people's teeth who lived in England. Jokes abounded about the English and their horrible lack of dental care!! Now look, it is the other way around!! The English have comprehensive dental care and Americans are on their own!! Dental insurance in the US is a JOKE. It barely covers anything and just about everything is considered elective or cosmetic which lowers the coverage to next to nothing. I decided not to wasted my money on dental insurance as it SUCKS.
Americans are now the butt of the dental jokes!! Way to go American businesses and insurance providers!! You have royally F**ked us over! However the dip in our health as a result is going to translate to a less healthy workforce with more absences. I do not see how these businesses don't see the FACT that they are losing BILLIONS because of instant greed.
You are so right.
I find it difficult to accept the word of anyone who still talks of the guaranteed social security. Al Gore spoke of the "lock box' of social security, and we all know there is not a lock box anywhere, only an IOU from the government, and for those citizens 30 years old, this IOU is not worth that much.
For just a tiny tax of $150.00, we are going to fund the health care system?? WOW ! ! That is unbelievable!!! really unbelievable.
welcome to economies of scale!!!
Hey, my podunk country of origin is ranked 6th on the Who scale and provides catastrophic insurance for everyone at $150 per year for a 35 year old. So it does work.
Financing is crucial. A common complaint is "Why should I pay for what I don't need?" The answer is,"You do need it." My health insurance will do me no good whatsoever if I get a tuberculosis superbug from the person at McDonald's who lost job/health insurance half-way through treatment and could not afford the potent antibiotic combination for long enough to actually kill all the germs in that person's body. There is a growing problem with methicillin resistance, due in no small part to the number of people who could not afford to continue treatment of an infection.
Jesus had it right. We are in this together, and selfish is always short-sighted.
Thank you for this thoughtful comment.
Nice to hear someone talking seriously about financing.
Thanks Earl. Financing is what no one wants to talk about. We hear the argument that reform will lower our costs. That may be true from the viewpoint of our whole society, but the savings are going to have to go back into the system in one way or another in order to sustain it. That means taxation, and it should be broad-based and progressive, as you say.We should not pretend otherwise. We do need universal public health care, we need to pay for it, and it will be worth it.
DeanOR, constituent in Portland.
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