The National Health Insurance Debate

Sunday (2 August '09) Tim Geithner and George Stephanopolous burned a lot of ABC's airtime on the subject of President Obama's proposed health insurance plan. It is interesting to note what Secretary Geithner did not say. Mr. Stephanopolous pressed him on the subject of paying for the plan, specifically if it was going to be possible to have this health program at no net cost to the middle-class tax payer. What Geithner did not say was "no". He danced around the issue like a parent telling a 10-year old where babies come from. The problem is that, today, way too many 10-year olds know where babies come from, how they get to where they come from, and how much fun it is to put them there. The parent, dancing around the question, looks at best uninformed and, at worst, looks stupid. The non-answer also serves to insult the intelligence of the 10-year old, not to mention pique the kid's natural curiosity.

So Secretary Geithner, instead of answering the question candidly and openly (as in "Hell, yes, we are going to have to raise taxes to pay for this program!") informed us that "...nothing is off the table...", and that those making over $250,000 per year will bear the brunt of the increased costs of national health insurance. Is your intelligence insulted yet?

While there is a lot of persiflage (which is a nice word for "crap") floating around the net about what this plan will and will not do for us, to assume that a sur-tax on the ultra wealthy will be sufficient to pay for it requires the plan to be built on a lot of baseless assumptions. The first is that there are enough rich people to pay for the program. Let's say there were 10 million people in the US making over $250,000 per year. Let's also say this program is going to the US another $1 billion per year over the base cost. $1 billion divided by 10 million is $100 per year per person - nothing, really for somebody making $250,000.

But $1 billion in Washington, DC is chump-change. So let's look at $100 billion. Now that's $10,000 per year per rich person, or 4% of their income. Remember, this $10,000 per year comes from pockets of the "wealthy", but benefits you and me (who pay nothing for it), as well as them (who are paying for it all). Can any one see Karl Marx smiling?

Another erroneous assumption is that there will be at least on person making $250,000 per year for every one that retires, dies, changes profession, loses his/her job, etc. This is patently false and Washington, DC knows it. The baby-boomers are beginning to retire right now and that population cohort will only grow over the next 25-years. Yet the birthrate has slowed to the point that the number of folks working and paying taxes will not keep pace with the number of folks retiring and thus not paying taxes.

Another false assumption is that of the income necessary to pay for the system: $250,000. Let's be pragmatic. If you know that, over $250,000 income, a good chunk of that overage will be lost in taxes, how excited are you going to be to earn that extra money? Why not make just $245,000, thus avoid the tax? Why not make $300,000, but have $55,000 deferred until next year? Is it possible that tax lawyers and CPAs are behind this insurance program?

In reality, the polls indicate that most Americans are generally happy with their health insurance programs and that a European-style program of socialized medicine is not something that will work here. What Washington need to look at seriously is not universal health insurance, but an insurance program to help people through catastrophic or long-term health problems. Clearly the health insurance industry is broken and needs to be fixed. However, it looks like Washington is all worried about replacing the carpet and padding, but the roof still leaks. Is this really what we want?

Let the debate continue!