Sunday, May 4, 2008

The costs of universal health care are too large!

Growing health care costs is an issue important to families, workers, and especially, politicians. Along with higher prices for both energy and food, health care costs are rising and fewer individuals can afford to purchase insurance.

The Presidential candidates have turned their attention to short-term issues such as economics, health care, and prices, and away from longer-term issues such as climate change and war. Not that the latter are less important, but with the economy just barely breaking positive growth (0.6% annually) and prices rising at alarming rates (4.0% annually), short-term economics is what is on the American voters’ minds.

Medical costs are rising faster than average prices: 4.6% compared to 4.0%, respectively. The NY Times notes that as health care costs rise, fewer are insured. John McCain’s solution to this problem is “dollars should be put back into their [the families’] hands.” He proposes a new tax credit (up to $5000) to aid in health-care costs. Barack Obama and Hillary Clinton both propose sweeping health care reform (of differing degrees) to a universal health care system.

John McCain’s proposal is not “sweeping reform,” but definitely has holes. A tax credit certainly does not solve the problem of rising health care costs and falling coverage, and simply transfers the burden to the American tax payer. The universal health care system proposed by Barack Obama and Hillary Clinton will address the problem of coverage directly, and likewise transfers the costs to the American taxpayer, and the costs are likely much higher than they suggest.

Massachusetts, led by Mitt Romney, initiated a universal health care “experiment” in 2007. All residents in the state of MA are required to be insured, and if they cannot afford it on their own, the state will subsidize it. Sounds great, right? Well, one year later a health care budget gap of $100 million must be accounted for by July 1 (two months from now), adding to the already $1.2 billion dollar gap in the $28 billion dollar budget. Point: it is expensive to pay for universal health care, and barring all economic downturns, the government’s ability to budget for the system unlikely. Massachusetts is appealing to the federal government and certain state tax increases (like adding to the cigarette tax) to cover the health-care budget gap.

Someone must pay for a universal health care system. When the budget for such a system is underestimated – who is going to pay for the slack?

Another issue is at stake here: the labor force. The unemployment rate fell last month to 5.0%, and national payrolls fell only slightly (only 0.01% of the labor force). One of the industries that keeps the labor market strong during times of economic stress is health care. During this economic downturn, the health care industry hiring workers, while other industries like retail and manufacturing, are firing workers.

Why interfere with an industry that is clearly adding jobs to the American economy and driving growth? Initiating universal health care will likely cause workers to seek alternate, privatized markets with more incentives (i.e., higher incomes). The quality of health care may suffer, and job-loss in the industry may occur. By going to a universal health care system, the economy will lose jobs in an industry that is keeping us afloat.

Do you have any questions/comments? Please write them below. Nontruths

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