My Photo
Location: Sitting inside a TV truck, Somewhere, more then likely in the Southeastern region, United States

I am a grouchy, bald headed old fart filled with opinions and not the least bit shy about sharing them.

Monday, August 17, 2009

National Health Care Lies - More on "You can keep what you have"

One of the repeating public health care themes coming out of the White House is "If you like your current health care, you can keep it." From the President, on down through Press Secretary Robert L. Gibbs to congressional representatives, we hear it over and over again.

Nothing could be further from the truth. The proposed health reforms will eliminate private health insurance. The reason is simple math and business sense.

Most people get health insurance through their employers. Unless you are buying your health insurance on your own, the decision will lay with your employer rather then you.

To how this works let us create a fictitious company. Our company has 50 employees and an annual payroll of $2 Million. Shopping around on the internet uncovered stripped down family policies available to groups of 50 for a little over $600 a month per employee. To make the math easy, we will use $600 for an annual fee of $360 Thousand.

That is not the only employer expense when providing private health insurance. With 50 employees, the employer has one person that spends at least part of their time administering the health insurance policy. At $600 per month for family coverage at a group of 50, the employer is probably also dealing with complaints from employees that are not getting all the services they think they should have.

H.R. 3200 Sec. 412 (see text below) will levy a maximum 8% tax on employers that choose not provide employee health insurance. An 8% tax on $2 Million comes out to $160 Thousand per year.

A government health plan gives our fictitious company two options. They can stay with the private option at $360 thousand per year as outlined above or go with the government option of $160 Thousand dollars per year. And the government option carries the added bonus of eliminating all the administration costs and employee griping.

Which option do you think most employers are going to go with? I know which option my employer will take.

As employees are shifted in massive numbers out of the private sector that pool of private insurance money used to pay claims with will shrink dramatically. That will cause the price of private health insurance to go up. More employers and individual policyholders will abandon the private companies for the less expensive government option.

Once that snowball starts down the hill it will not stop until there is nothing left. Eventually, one buy one, the private health insurance companies will become insolvent and die.

History shows what happens when government enters into direct competition with the private sector. For example, the Roosevelt Administration set up government run electric utilities in direct competition with private concerns. The Tennessee Valley authority destroyed Wendell Willkie's Commonwealth and Southern and wiped out millions of depression era stock holders.

How does this happen? It is simple. The play field is severely tilted.

A government entity pays no taxes. The federal government has the purchasing power to get well below market prices and terms on everything they need. Government can and will set rules and regulations that favor the government enterprise.

If government sets up a public health plan under the terms outlined in H.R. 3200 no private insurance company will survive. The tax advantage alone will be too much of an edge.

Legal scholars on both sides of the public health fence debated to exhaustion whether or not the now infamous Sec. 102 will end private insurance in five years through the language in the proposed law. Both sides have valid points. The debate comes from the fact that other parts of H.R. 3200 will change some of the existing statutes referenced in Section 102. Those changes will cause contradictions within section 102 itself.

I think the legal argument is academic. If there is government financed health insurance, in five years there will not be a private option left to test the law.

For the record H.R. 3200 Sec. 412 will change the Internal Revenue Code with the following language:


(a) In General- Section 3111 of the Internal Revenue Code of 1986 is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection:

`(c) Employers Electing to Not Provide Health Benefits-

`(1) IN GENERAL- In addition to other taxes, there is hereby imposed on every nonelecting employer an excise tax, with respect to having individuals in his employ, equal to 8 percent of the wages (as defined in section 3121(a)) paid by him with respect to employment (as defined in section 3121(b)).


The only thing worse then a bad law is a badly written law.
- Me

Labels: , , ,


Post a Comment

<< Home