Escalating Health Costs and Health Care Vouchers

The New York Sun reports that health care costs in New York and nationally are expected to rise by 8.7 percent, or roughly $700. The national cost per person is $7,982, while in New York it is $8,719 (the difference is probably due to the cost of parking in New York City). The Sun quotes the management consulting firm of Hewitt Associates to the effect that nationally employees will pay 21% of the cost, or $2,008 and employers will pay 79% of the cost.

I have previously blogged that the sum of current Medicaid; Medicare; tax expenditures on corporate plans; and state and federal employees' insurance would pay about 69% of the cost of health insurance for every person, including the uninsured, in the US. Thus, if instead of sponsoring inefficient plans like Medicaid and Medicare, and by combining all the federal and state governments' spending on all plans, including tax expenditures, Congress could create health care vouchers which Americans could use to purchase health insurance from private companies. In fact, the percentage would be higher than 69% of cost because of the large amount of waste and corruption in Medicaid and probably in the other government plans as well. This would require ending the corporate tax deduction for health insurance and replacing it with a blanket tax credit that would apply to all Americans. Those whose taxes are less than $8,719 would receive reverse income tax to cover the cost of health care. Taking government out of health care to a greater extent (by ending Medicaid, Medicare and government employee plans) would be a step toward deregulation of health care. If this were combined with increased incentives for globalization (receiving expensive operations in foreign countries like India where they cost 90 percent less) and limits on heroic end of life care which is in the area of 1/3 of all costs but does not produce life-extending outcomes (insurance for which could be purchased privately if wanted) and unnecessary operations, current government spending would likely cover health costs for all Americans, at as good a level as they receive now and probably better than other nations'.

The problem is not one that ought to involve spending money, but rather one that ought to overcome government bureaucrats, public health officials and health providers, all of whom have juicy "stakes" in arguing for more bureaucracy, more spending and ineffective care.