Health Care Vouchers: a Market-Based Approach that Would Cost Little or Nothing

According to One More Political Blog, Michael Moore has been embroiled in a debate with Sanjay Gupta about health costs in Cuba:

"Dr. Gupta, CNN's chief medical correspondent, claimed that Moore fudged the facts in SiCKO by saying that Cuba spent only $25 per person per person on health care. Of course, it turned out that Moore did no such thing; he had given the correct figure, $251".

$251 is ten times $25, but both numbers are low relative to American health costs, which are twenty-five times as much again.

How much does the US already spend on health care for the poor? In 2005 Newsmax.com wrote:

"The extension of taxpayer-funded Medicaid to the working poor has led to the largest expansion of a government entitlement since the Great Society was launched in the 1960s.

"The soaring costs of Medicaid – which will more than double this year to close to $330 billion since 1999 – is largely due to legislation that extended Medicaid coverage to many Americans who have low-paying jobs."

Medicaid does not include Medicare, health insurance for the elderly, so it understates health cost transfers. According to the Census Bureau, there are 302,648,273 Americans as of this writing, so let us assume 305 million this year. Thus, very conservatively, Americans spend $330,000,000,000/ 305,000,000 = $1,081 per capita on health care for the poor. If we add Medicare, which according to the Heritage Foundation will cost $454 billion in 2008, America now spends more than $784 billion on health care for the poor and elderly, or $2,570 per capita in cost ($784 billion/305 million), compared to Cuba's $250 per capita on health care for everyone. In addition, according to the American Enterprise Institute, corporate tax deductions for health insurance were worth $188.5 billion in 2004. Moreover, according to Monthly Labor Review, in 2006 state and local government employees' health insurance averaged 10.7 percent of payrolls, which according to the Census Bureau were $61 billion for March 2007. Multiplying by 12 months and taking 10.7 percent yields $78.3 billion. David S. C. Chu, undersecretary for defense readiness, estimates the total cost of military health benefits to be $39 billion. The cost of the Federal Employees' Health Benefits Plan to the federal government is about $22.3 billion in 2007, according to John E. Dicken, director of health care for the government accounting office. Civilian Government employees pay 28 percent of the cost and the federal government pays 72 percent. If we add these costs:

Medicaid: $330 billion
Medicare: 454 billion
Corporate tax deductions: $188.5 billion
State and local government: $78.3 billion
Military: $39 billion
Civilian federal employees: $22.3 billion

The total of $1.112 trillion in government cash and tax expenditures divided by 305 million Americans is $3,645 per capita. According to Kaiser Permanente health care costs in the US amounted to $2 trillion in 2005, divided by 305 million Americans is $6,667 per capita. Thus, roughly 55% of total health costs are already covered through government plans and subsidies.

The Cuban per capita cost for national health insurance amounts to only 10.28% of the per capita cost of current American contributions to the poor and elderly. Yet, the Democrats and Michael Moore argue that we contribute too little money to health care for the poor. Of course, much of US health care costs is due to mismanagement, unnecessary operations regarding prostate cancer, cardiac bypass and heroic end of life treatments. More fundamentally, providers and health care professionals enjoy a combination of artificially induced monopoly through licensure and other entry restrictions coupled with artificially stimulated demand. Such waste, mismanagement and rent extraction by professional interests will unquestionably be increased under a national health insurance scheme. There is already ample corruption and abuse arising from the regulated and third-party-financed system. A publicly financed American health care system, much like New York's Medicaid system, will be a Pandora's box of corruption and mismanagment.

Government cash and tax expenditures are already the bulk of the cost of universal health coverage. If a tax credit scheme were to exclude the top twenty percent of households earning over $86,867 in 2003, then the per capita government expenditure of $4,633 (1.1 trillion divided by 244 million and excluding the 61 million in the top twenty percent)is 69 percent of the average per capita health insurance cost of $6,667. This is nearly the 72 percent that the federal government covers for civilian government employees. Moreover, the $6,667 reflects a considerable degree of mismanagement. Four months ago I called the Cigna Insurance Company in New York and learned that Cigna offered New Yorkers individual coverage coverage for $198 per month ($2,376 per year), with family coverage costing roughly twice as much. If the CIGNA rate were applicable to everyone, which it is not, we would already be paying for national health insurance simply through Medicaid and Medicare spending. As Phil Orenstein of Democracy Projectpoints out in a recent blog, there is significant waste in the health system, especially in government plans, so the true cost (excluding massive mismanagement) may be closer to the $2,376 than the $6,667.

As Phil Orenstein also has blogged, Rudolph Giuliani has proposed tax incentives of $7,500 to individuals and $15,000 to families to help pay for the costs of private health coverage that they choose themselves.

I would suggest that vouchers aka tax credits are the way to go. Tax credits could be paid for via the termination of Medicare, Medicaid, government employee plans and through avoidance of double counting via the termination of corporate health insurance deductibility. A tax credit voucher, or dollar for dollar tax abatement, would replace Medicare, Medicaid, government employee plans and corporate tax deductions. For individuals who pay less in federal taxes than the voucher amount, a reverse or negative income payment could cover it. This would not cost taxpayers much because Medicare, Medicaid, government employee plans and the corporate tax deduction cover much if not all of the cost of a tax credit that would cover everyone. Even if average costs are $7,500 per person, and exceed savings from terminating Medicaid, Medicare, government employee plans and corporate tax deductions, additional savings could accrue by encouraging insurance schemes that limit payments for unnecessary treatments and bureaucracy.

The cost and coverage problems associated with health insurance are primarily managerial. They could be solved through market competition and redistribution of the monies already expended on health care, much of which goes toward unnecessary care, waste and mismanagement. These could be reduced because the vouchers could be set at a level for a plan that excludes various kinds of waste, such as unnecessary operations and futile end of life care.

An Open Letter to Peter Hogness Concerning Professor Sandi Cooper and Anne Neal

I have sent the following e-mail to Peter Hogness of the Clarion, the newspaper of the Professional Staff Congress, the union of the faculty of the City University of New York (CUNY).

Dear Dr. Peter Hogness:

You have recently published an article concerning Anne Neal that I consider to have been unfair. For example, you call her an "ideologue". I would like to write a response in your newspaper of equal length to your article refuting your false claims about Ms. Neal and ACTA.

Recently, I blogged a response that included a quote taken from Ron Capshaw's Frontpagemag article concerning Professor Sandi Cooper. Professor Cooper sent a response to my Brooklyn College e-mail account asserting that Mr. Capshaw is a "seriously troubled individual" and suggesting that:

"You might at the very least acknowledge that Mr. Capshaw appears not to have understood a word of an undergraduate course where he sat for an entire semester, evidently living in his own script."

Professor Cooper also asserted in her e-mail that:

"your willingness to print as fact the idiotic red-baiting by a former CUNY graduate student, Ron Capshaw, (published originally in Frontpage) suggests that you enjoy red-baiting far more than fact checking."

In the interest of even handedness I have published Professor Cooper's entire e-mail on my blog. I have also invited Jamie Glazov and Ron Capshaw to respond to Ms. Cooper's statements. I have given Professor Cooper's views much more space than the quote that I pulled from Frontpagemag concerning her.

In contrast, the Clarion has not published both sides of the Anne Neal debate. In general, the Clarion has tended to be a left wing propaganda font that has rarely permitted alternative viewpoints.

I would like to ask you to follow the high example that I have set and permit me to write a feature length article to address the Clarion's assertions concerning Ms. Neal.

My blog concerning Professor Cooper is at:


http://mitchell-langbert.blogspot.com/2007/08/sandi-cooper-responds.html

Mitchell Langbert, Ph.D.

John From Cincinnati Is Terrible, But Proves HBO's Creativity

The HBO television show John from Cincinnati just ended. Nancy Franklin wrote a fine review for the New Yorker entitled "Dead in the Water". It was a long seven weeks. I am not adverse to new age, old age or any other kind of spirituality, and enjoy a good aliens or flying saucer movie (indeed, I was an X-Files fan for many years). I also enjoyed David Milch's Deadwood on HBO, which employed several of the same actors as John from Cincinnati. In general, John from Cincinnati's acting was competent except for Greyson Fletcher (Shaun Yost) who is hard to take (unless you're a pederast) and Rebecca De Mornay, whose anger quickly became monotonous.

Milch attempts something different and something creative in John from Cincinnati, and HBO and Milch deserve credit for taking risks and exercising imagination. For every home run there needs to be several strikeouts. John from Cincinnati is a strikeout both for the talented Milch and for HBO. The fact that HBO was willing to air something this bad and this different shows that its creative juices are flowing. I hope that the program's failure does not end Milch's opportunity to hit more home runs, such as his NYPD Blue and Deadwood.

The Small Hours of Republican Imagination

The Economist's August 11 print edition's cover story is about its claim that America is turning to the left. The leader or editorial on page nine blames social conservatism, the Iraqi War and "oxymoronic trust in big government conservatism" that George W. Bush and congressional Republicans share. The Economist believes that Republican social conservatism and support for big government will lead to a new and perhaps permanent Democratic majority.

In the final paragraph of the article, the Economist makes an important point:

"most Americans distrust government strongly."

Yet, the Republicans have discarded the limited government ideology, or at least its pretense, in favor of "big government conservatism" that provides pork and cronyism to elected officials in the name of "mercifulness". The longer article on this theme on page 20 notes that the US public now says that it would prefer a Democratic president by a 24-point margin due to:

"Growing worry about income inequality combined with growing support for the social safety net. The proportion of Americans who believe that the government should help the needy even if it means greater debt has risen from 41% in 1994 to 54% today...Today only 35% align themselves with Republicans, and 50% with Democrats."

Some of the reasons include the Bush presidency and the War in Iraq. Moreover:

"Mr. Bush has also presided over the biggest expansion in government spending since his fellow Texan Lyndon Johnson...He has increased federal spending on education by about 60% and added some 7,000 pages of new government regulation. Pat Toomey, the head of the Club for Growth says the conservative base feels disgust with what appears to be a complete abandonment of limited government."

The Economist quotes Michael Gerson, a Bush speechwriter who advocates "big government conservatism". He is quoted as saying that "Anti-government conservatism turns out to be a strange kind of idealism...an idealism that strangles mercy."

That a conflict concerning small versus big government exists in the Republican Party at all, and that a Bush administration official considers big government to be more merciful than limited government, confirms that the GOP has lost its way. Mr. Gerson has risen through the Republican ranks yet is unaware of the limited government traditions of the United States that specifically led to the nation's preeminence; the humane nature of limited government; and, in contrast, the nation's failure during the 1930s due to the merciless government policies of (1) the Fed, which caused the Great Depression, and (2) the New Deal, which extended it. The greatest human-caused tragedies in history, Stalin's mass starvation of kulaks; the Holocaust and Mao's mass killings are all the product of big government. It is not clear to me how an American, much less a Republican, can call himself a "conservative" in the American sense and yet advocate big government.

Ronald Reagan won on a program of limiting government, ending regulation and cutting taxes. I am not clear as to why this program was popular in 1980 and 1984 but would not be, in Mr. Gerson's view, in 2008. The Republicans' "big government conservatism" seems to be a thin excuse for cronysim, pocket lining, pork and bloat, practices with which the current administration and the Republican congress have become associated. The only way for the Republicans to resolve this association is turnover.

The most serious conclusion that I draw from the Economist's leader and article is that Republican appointees like Mr. Gerson have not been exposed to classical liberal thinking. A new day must mean Republicans who understand how freedom works, unlike Mr. Gerson. Perhaps the likes of Mr. Gerson arise from failed educational institutions that are committed to left-"liberal" brainwashing.

Big government has existed in Europe ever since Gaius Julius Ceasar declared himself dictator for life, and it has been associated with merciless oppression ever since then. The United States grew most rapidly and drew the most immigrants when it had the least government. Big government leads to economic decline and inequality. The government of India is among the most interventionist and socialist in the world, and India leads the world with respect to child starvation. In India, big government has turned out to be merciless indeed. The inequality with which Americans have been concerned in the past couple of years, and the problems with the health care system, are both due to government. With respect to income inequality the problem is the Fed; and with respect to the health care system it is due to licensure and government regulation.

There are free market solutions to current problems that would be far superior to the state-based ones that the Democrats and Republicans are touting. But they require imagination. America in general and the Republicans in particular have lost touch with the creative ideas of the founding fathers and of Adam Smith. Limited government is the most merciful of ideologies. The ideology that creates poverty and inequality, that creates suppression and intolerance, the ideology of big government that Michael Gerson advocates, is the ideology of the state, the ideology of darkness, the ideology of lack of imagination and rote solutions that ignore unintended consequences and circularities of processes.

We have reached the small hours of Republican imagination. With speech writers like Michael Gerson, the Bush administration has shown that it is ill-educated. Until the Republicans begin to awaken from their sleep, they should stay out of office.