A Stitch in Haste

The Urban Institute asks:

With health reform at the forefront of the national campaign, some charge that proposals to restructure our health care system represent dangerous steps moving the country towards government-run health care and socialized medicine. Similar rhetoric was heard last fall when President Bush vetoed legislation reauthorizing the State Children's Health Insurance Program (SCHIP).

The answer, of course, is: No, because we're already there:

In terms of direct spending, federal subsidies for health care and coverage, provided through Medicare, Medicaid, and other programs, are projected to equal $829 billion in FY 2008. Medicaid and Medicare cover 42.7 million and 42.4 million people, respectively, with some poor seniors and people with disabilities receiving coverage from both programs. The government also provides publicly funded health care to almost 9 million current and former federal employees and dependents through the Federal Employees Health Benefits Program; 3.7 million veterans who receive health care through the VA; and the country's active-duty soldiers and their dependents. Only 5 percent of the insured population in the United States does not receive some kind of government subsidy, either directly or through a tax benefit. These government expenditures involve sizeable transfers of income, generally from higher-income to lower-income individuals, particularly in the case of the general revenues used to finance Medicare and Medicaid.

Keep those numbers in mind the next time some health care socialist bemoans the (supposed) failings of our (supposed) "private" system. (Also keep in mind that those are just the federal numbers — state and local governments add a whole additional layer of government insurance and taxpayer expenditure.)

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The "only 5%" figure is a curious number — I presume it refers to the independently (i.e., non-working) wealthy who simply pay all their health care costs and health insurance premiums out of pocket. But the number does indeed reflect a pesky fact that health care socialists rarely if ever acknowledge: Our bizarre, asymmetrical tax code that makes health benefits deductible to the employer but not the employee. (A system which, recall, was implemented by FDR as a "temporary" measure as part of comprehensive wage and price controls during World War II.)

It's rather silly to suggest that a system where the consumers of a service cannot simply go out and buy it, and where providers of that service do not compete against each other to win customers — all because the federal government makes it impossible thanks to a schizophrenic tax code from a war that ended over sixty years ago — the "private sector," or its shortcomings a "market failure" (cf., the New York housing market).

And yet that's precisely what the health care socialists — from Ezra Klein to Paul Krugman to Hillary Clinton — do call it. Go figure.

A truly "private market" for health insurance would be just that: neutral tax policies that would treat all health insurance premiums and benefits equally whether purchased by the employer or the employee (i.e., moving to higher after-tax wages with no health benefits), with the health insurance industry competing directly for end-customer business, not competing indirectly for the customer's employer's business.

Unless and until we implement such a system, no health care socialist has earned the privilege of declaring health care a "market failure." You can't fail at something that you've never attempted.

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Meanwhile:

Millions of baby boomers are about to enter a health care system for seniors that not only isn't ready for them, but may even discourage them from getting quality care.
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Medicare may even hinder seniors from getting the best care because of its low reimbursement rates, a focus on treating short-term health problems rather than managing chronic conditions and lack of coverage for preventive services or for health care providers' time spent collaborating with a patient's other providers.

The American Medical Association responded that seniors' access to Medicare in coming years "is threatened by looming Medicare physician payment cuts."

Geriatrics is, thanks to Medicare, the subset of "health care" that comes closest to pure socialized medicine in America.

Geriatrics is, thanks to Medicare, the subset of "health care" that is not only in the worst condition but is also deteriorating the fastest.

It's not exactly brain surgery to figure out that problem is hardly "market failure."