Nationalizing Health Insurance: A Strategy

In America today, 45 million people, including the author, are living without health insurance. With assistance for the poor and elderly, an outcome such as this describes flaws in the so-called free-market economy in which we live. While a more lassiaz faire attitude towards the provision of health care can be taken (but not assumed), the insurance gap (we are back in the eighties again talking about this ‘gap’ and the other ‘gap’) is a predictable anomaly. Whereas the governor of Massachusetts can assume that the uninsured are either not taking advantage of government health insurance (Medicare for the elderly and Medicaid for the poor), and chalk the uninsured population to those who ‘choose’ to be uninsured. With healthcare costs already 15 percent of the economy and growing at rates in excess of inflation (inflation is around 3.5-4.0 percent, while healthcare costs increases of most companies are projected to grow between 9 and 11.5 percent), the affordability of health insurance is becoming an ever-fading dream. Whereas five or ten years ago, an individual could provide for his own healthcare if necessary, today the costs have become out-of-reach. If one’s employer (if one is lucky enough to be in a permanent position) does not provide health insurance (even with an ever-growing proportion paid by the employees), the luxury of health insurance is becoming steadily unaffordable. While I do not know the statistics on the differential between public and private health insurance administrative costs, all statistics I have seen point to a vastly lower rate of administrative costs for public insurance like the Veterans Administration (if my memory serves correctly, the administrative costs for the VA are near 0.5 percent of the total budget, while private health insurers are much higher). From my experience in economic theory and the fact that the government would be (by definition) required to cover all Americans under a universal health insurance plan, having the government provide healthcare would cost far less and free up money for national savings or corporate investment, both of which would benefit the economy as a whole.

The reason for the vast savings in health insurance costs (I am not proposing the nationalization of the healthcare industry, just the health insurance market would be due to reducing the selection process health insurance companies must deal with. For the maximum profit, they must avoid the high-cost patients or at least charge them more money. In order to do so, they must spend countless dollars in patient risk analysis . Furthermore, they must remain appealing to their potential customers through advertising. In a universal health insurance system overseen by the government, this is not an issue. The pool of insured people is so large that the cost of weeding out high-cost customers is greater than the spending upon them (not to mention the inherent requirement to cover them). While a publicly-run system would leave smaller profits, it would create a public good (increased health) that would far outweigh the costs. The only required question about government-provided healthcare is how to operate the transition period. The government would have to transition the health insurance companies out of the market. The most effective way would be for the government to buy out all of the employees and the future obligations of the companies. However, I am not sure if it wouldn’t be more cost effective (and beneficial to the strengthening of the economy and healthcare industry for the government to immediately nationalize the health insurance companies. A compromise would be to nationalize the companies (taking on their employees for the time being and paying the owners a fixed percentage of the value of the company (I would suggest paying the value of their offices plus 20 percent of their previous year’s revenues). That would be an overly fair arrangement that would eliminate private health insurance (but not touch the actual health care system).

Once the healthcare system is nationalized, healthcare would be provided by the government using existing tax revenues, a corporate tax increase, and a tax increase on the wealthy (a reversal of the Bush tax cuts of 2001, 2002 and 2003) in the form of increased top marginal tax bracket rates, increased inheritance taxes and increased dividend and capital gains taxes. Government could then reign in unnecessary price increases by the collective weight of 285 million Americans negotiating prices as a singular unit. The healthcare cost problem is solved thus. FUCK BUSH!