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Statistics bear out Americans are not receiving worthy dollar-for-dollar health care compared to other countries, as suggested in the Jim De Bree column “Should Obamacare go Dutch?” published Dec. 8 in The Signal.

The 17.5 percent cost to our economy still encompasses exorbitant profit extracted by insurance companies, hospitals and BigPharma.

We are propagandized to believe our country has the best health-care system in the world, but the bottom line accompanies persistent outrage for those trying to receive care.

There are many health-care models around the world that should be considered, including those of Holland, Taiwan, Norway and Japan.

Constantly, the system in Canada/England is denounced, despite their program being much more efficient.

Plus, obtaining medication from overseas is ballyhooed as poor quality if obtained from foreign pharmacies, despite being manufactured by U.S. companies.

We must combine Workers Compensation, the Veterans Administration, and whatever health insurance members of Congress receive into a system that allows us health care so we are able to compete in the world marketplace.

Considering going Dutch might be a viable option.

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  • Gene Walker

    But, but, but…I thought Obamacare was going to fix all that!

    Maybe now we can finally dismantle this nightmare.

  • Jim de Bree

    Gene, what I am worried about is that Obamacare will be dismantled without a suitable replacement. Dismantling is easy, but doing so without adversely affecting those most at risk is the challenge.

    • Gene Walker

      I agree, but it has to be, at the very least, redone. My son (a healthy 30 something non smoker) was looking for coverage, and the least expensive, catastrophic coverage he could find was $550 per month with a $7500 deductible.

      Prior to Obamacare, we found him coverage for $85 per month, $2000 or so deductible.

      Something has to change.

      • Jim de Bree

        I am not sure that Obama Care is the sole driver of these costs, but it certainly is a catalyst. The Affordable Care Act got a number of things right, but lobbyists tinkered with it and messed things up. Originally the lobbyists dealt only with the Democrats, but now that the Republicans are in power, I think the Republicans will get a lot of lobbying activity thrown their way. some of the cost drivers are listed below.

        First of all, insurers cannot cross state lines, so they deal with relatively small populations of insurable people which does not include enough healthy people. The risk pools need to be spread out nationally.

        Second, the insurers are able to determine who is in network on a county by county basis. My daughter dated a guy for several years who is now an actuary working of a major insurance company. He works in a group that writes algorithms involving coverage, deductibles, which providers are in network for specific subscribers, etc. This is one of the gifts lobbied for by the insurance industry. (All of the lobbying was with Democrats.) There need to be limits imposed on the impact of these algorithms.

        Third, people between the ages of 18 and 26 can be covered at nominal cost under their parents’ policy. These people pay a much lower premium than do the rest of the population and their coverage is effectively subsidized by others, such as your son. True insurance spreads the risk across the entire population, requiring people between the ages of 18 and 26 to pay a market rate would lower the costs for everyone else.

        Finally, it costs a $1 billion to bring a new drug to market. Those development costs are largely born by the American consumer. Forcing big pharma to spread those costs over the global population (instead of having Americans pick up the tab) would significantly reduce our health care insurance costs. Pharmaceutical costs today represent a much larger share of total medical costs than they did a generation ago. That trend is continuing. Consequently, if we are going to contain future insurance costs in America, we have to see that the pharmaceutical R&D costs are spread globally.

        From what I have read, the only one of these points that the Republicans have addressed is the first point. I am not optimistic that the Republicans will get this right.

        • Jim de Bree

          I am responding to a post that Brian Baker made in my original column on this topic. I did not see the post until this morning, so I never responded. I am responding here, because this is a fresh dialog.

          I had commented on the fact that, in Holland, insurance premiums for those unable to pay are subsidized by a tax imposed on employers. The tax is a function of the employees’ salary.

          Brian responded as follows:

          “”As to the part about premiums being subsidized by the government. They are subsidized out of a special tax imposed upon employers that is based on the salaries paid to employees. This tax is an offset against the employer’s income tax.”

          “It’s still a tax on individuals, simply rerouted indirectly through their employer. If that employer tax wasn’t there, the employer would then be able to pay the workers more, right? This is the same rationale used in this country for the Social Security tax. It’s still a “tax”, whether partially paid by the employer, or fully paid by the self-employed. If the employer wasn’t responsible for any of it, then they’d be able to pay the employee more instead.”

          My response to Brian:

          Brian, I think you need to carry the analysis a couple of steps further. (As younoted, the employer gets a credit against his income tax for the premium subsidy tax.) Theoretically, if the tax was not imposed and the employer’s income tax was reduced by this amount irrespective of employment, the employer could elect to increase the employee’s compensation (or the employee could spend the money on other things or pocket the savings). But let’s assume for a moment that those tax savings are passed onto the employees in the form of additional compensation.

          While the employees’ compensation would go up under this scenario, the employees’ medical insurance premiums would also have to increase commensurately to cover the loss of subsidies. This is because the tax no longer subsidizes the premiums of those who cannot afford to be covered, so that cost is passed onto the participants who actually pay. (By the way, that is what happens in this country because hospitals and other providers treat patients who cannot pay and that cost is built into the fees charged to patients who do pay.)

          However, the incremental compensation is taxed at the employee level, which means that the employees have fewer after tax dollars to pay the increased insurance premium.

          Let’s consider the following example. Under the existing Dutch rules, a Dutch employer pays $100 of premium subsidy tax. He gets to reduce his income tax by the amount of the premium subsidy tax. The Dutch employee pays a premium of $200 with after tax dollars.

          If the premium subsidy tax is eliminated and the employer increases the employee’s compensation by $100, then the employee has to pay tax on that compensation. Assume that the employee is in a 40% tax bracket. The employee has $60 additional cash on hand after paying tax.

          However, the employee will find that his insurance premium increased by $100 to $300 since the medical insurance subsidy was not paid by the employer and the insurance company needs to pass the costs onto the customer base. The employee pays the additional $100 premium using the $60 of additional after tax cash from the incremental compensation and $40 out of cash he otherwise would have saved or spent on something else.

          Now let’s look at it from the employer’s side. Assume the employer is a corporation subject to tax at a 25% rate. Since the employer did not pay any premium subsidy tax, its corporate income tax will go up by $100 less the tax benefit of the additional compensation deduction of $25. Therefore the employer’s tax increased by $75.

          So the government has collected $115 of additional tax ($40 from the employee and $75 from the employer). The employee has to come out of pocket $40 to pay the increased medical insurance premium.

          Alternatively, the government could spend $100 of the incremental income tax collected to subsidize the insurance premiums, it would then have an additional $15 of tax revenue. The employer would pay $75 of additional tax, the employee would have $60 of additional cash. Not particularly tax efficient.

          Furthermore, there is no incentive to pay the employee an additional $100 of compensation. The corporation could increase its working capital by $75 (possibly using it to implement technology that replaces human labor) or the employer could pay its owners a $75 dividend, both of which are more likely than the employer increasing employee compensation.

          On a second point Brian and I had the following exchange:

          Jim, you wrote: “The medical services you cite (e.g., veterinary practice; cosmetic surgery; optometry; dentistry) are not essential services which is why they are not covered by insurance.”

          Brian responded: “Which is tangential to the point I’m making, which is that those services that AREN’T regulated by the government don’t see the rapid and out-of-control escalation of cost.”

          Maybe I am using the wrong dentist and veterinarian, but I have noticed that the cost of their services has increased considerably over the past several years. But I agree with your point that government interference under the direction of special interests has caused distortions in the cost of providing medical services.