Repairing the Healthcare System: Inequality and Health Care

Stanley Feld M.D.,FACP,.MACE

Neither the Democrats nor the Republicans are discussing the real causes of the escalating costs of healthcare.

The media, policy wonks and pundits are on another insignificant tangent about costs. I also believe our Presidential candidates are not interested in understanding the real problems in the healthcare system.

The solutions to the real problems challenge the vested interests of important and powerful secondary stakeholders. Secondary stakeholders finance the Presidential candidates’ campaigns.

America needs less costly political campaigns. Campaign finance reform would diminish the influence of secondary stakeholders in favor of the interests of the consumer. Candidates should be advocate for their most important constituent, the consumer.

Consumers have written to tell me the issues involved in healthcare reform are too complex to understand. I believe it is the consumers’ obligation to themselves and their families to understand the issues. It is the media’s obligation to truthfully present the issues. Politicians need to be shown the level of consumer concern or they will do nothing to reform the system.

The media is probably opposed to campaign finance reform. Its revenue would be severely decreased by campaign finance reform. None of the candidates would be able to afford advertisements on television or radio. Occassionally the media touches on a core issue that the politicians avoid. The issue is inequality in the tax code for healthcare.

“Democrats, and even a few Republicans, are in a populist mood, and fair enough. But if they really want the tax code to be more "progressive" -- i.e., from each according to his means -- they ought to forget the Bush tax cuts and address the way the government subsidizes health insurance. On the advice of our doctors, we're not holding our breath.”

A progressive tax code is one core issue. Politicians are not dealing with the issue of the tax code and healthcare reform.

“According to the Democratic consensus, too many people lack health insurance, and the liberal remedy is to protect the status quo while expanding public programs for the uninsured.”

We know most public programs such as Medicare and Medicaid are on the verge of bankruptcy. Patients are constantly faced with diminished access to care and increasing out of pocket expenses for services not covered by these entitlements. Physicians are faced with ever decreasing reimbursement for services.

What makes anyone think that expanding public programs for the uninsured would lead to an increase in efficiency of care? How could expanding public programs decrease the cost of care and increase the quality of care or access to care?

“Not only does the current system cause unnecessary problems for the insured, but many of the gaps in coverage are the result of the way tax subsidies shortchange the uninsured, particularly working-class and middle-income families.”

This represents a perverse outcome to the Democratic Party’s declared mission to help working-class and middle income families.

“If such inequality and unfairness existed anywhere other than health care, the Democrats would be raising hell. Instead, they're silent -- which is politically telling.”

The Democrats are clever. They want to pass a healthcare policy that will fail. Then the only remaining option will be universal healthcare with a single party payer. The politicians’ goal is to keep consumers frighten and not in control of their own destiny. Frightened consumers lead to political power.

“The core problem is that people who get insurance through their employers pay no income or payroll taxes on the value of the benefit. The Treasury defines this as”tax expenditure," meaning its revenue the government forgoes to encourage certain behavior. If these losses were converted to the equivalent of direct spending, the tax exemption would have cost more than $208 billion in 2006. The only federal programs that cost more are Social Security, Medicare and national defense.”

This deduction is in favor of employer and high income earners. The deduction is not reflected in the federal budget. The self insured do not enjoy an equal benefit.

“If the purpose of health-care reform is to decrease the ranks of the uninsured, these job-related tax breaks are poorly targeted, even regressive. The more generous the employer health plan, the more the subsidies increase. On average, lower-wage workers have more limited coverage as part of their compensation, usually from small- or medium-sized businesses. Estimates show that the subsidy is worth more than $3,000 for upper-income families (with higher marginal tax rates), and less than $1,000 for those on the lower income rungs.”

If the politicians really wanted to subsidize the poor, they would reverse structure of this subsidy. This is not a new insight. It is an insight that is simply ignored by politicians.

"So why the Democratic silence? Perhaps it's because they think such a change would interfere with their main policy goal, which is slow but steady progress toward government control of the health-care market. Or possibly it's because many of the most generous tax-subsidized health plans come from union-negotiated contracts. Or maybe Democrats simply don't want to concede that President Bush has a point.”

All of the above are true. However, President Bush has not shown political will, nor does he have the political capital or courage to declare that all the reforms he suggested must occur simultaneously in order to be affective in repairing the healthcare system.

“If the Republican Party came to their senses, they would recognize an opportunity to poach a traditionally Democratic issue. Whatever the Democratic Party’s other ambitions, how can they stand by a system that offers the least assistance to the working class and nothing at all to the uninsured?”

Healthcare is a major national issue. Let us get on with the business of Repairing the Healthcare System. Consumers must understand the issues and demand reform.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.