The Health Insurance Tax

Health insurance is what most of us think of when we consider paying for health care. But it is not just insurance. It's a tax.

It is possible, if insurance companies are honest and forthright, to learn how much money is paid to the insurance companies and how much money is paid by them for claims, such as for medical services. In the ideal situation, the premiums would be just over the claims paid, with the difference paying the insurance companies for their insurance work and for accepting the risk of expense.

It is possible, with some effort, to figure out how much your likely/average insurance claims are and the premiums that you pay. Unless you have a government-subsidized insurer such as Medicare or MaineCare (Medicaid), premiums exceed payouts.

The problem is that the premiums exceed payouts not only by an amount appropriate for claims management and financial risk-taking, but also by much more. The difference is a tax.

By law, insurers can count the people in your family (if a family plan), but cannot generally adjust for the health of the people being insured. Therefore, you subsidize the druggies, the motorcycle maniacs, the junk-food addicts, and the attention-seekers who lack the social skills to obtain a conversational ear in the free market of social interaction. The ban on pricing of insurance to match risk of claim is "community rating," a euphemism for "make the healthy subsidize the infirm."

Small wonder that people are interested in buying insurance outside of the state. Insurance should be a simple and privately made arrangement between someone who does not want financial risk (the patient) and someone who, for a fee, is willing to accept the risk.

If emancipating us from community rating leads to the problem of high insurance costs for various chronically ill people, that's a shame. The problem exists, true. Setting aside the question of using tax money to help out the chronically ill, we should note that it is deceitful to use tax money for that purpose without announcing that that's what is happening. Throwing our ill neighbors to poverty or premature death is not what I am trying to achieve. Forcing government to call a tax a tax is what I am trying to do. If the deserving ill need our tax money, then the government should have no misgivings about saying that's what's happening. We need to fight the hypocrisy.

A second form of the health care tax is enacted not by government but by doctors and hospitals. To work at a hospital, a trauma surgeon (for example) must promise to care for patients who arrive when he is on call to receive patients who have no previously chosen doctor. But a significant amount of trauma surgery results from injuries of the uninsured and poor. Instead of shaking down the hospitals who have put them in the position of having to work for free, they merely raise the prices for the same surgery when they do it to insured patients or to the rich uninsured. Hospitals adjust their charges similarly, using access to rich uninsured, or well-insured, patients to pay the expenses incurred by the uninsured poor.

Further price discrimination results frm insurers who pay low fees and require that the recipient accepts them as payment in full. MaineCare does so, but a provider is free to reject MaineCare and collect as high a fee as he thinks is reasonable, at his own risk. Medicare is not so fair; no doctor can collect higher than the price-fixed maximum fee for caring for a Medicare patient without declaring to Medicare that he will do so and not receiving any Medicare money for two years from anyone.

Again, if an insurer pays less than a fair price and requires the doctor or hospital not to ask for more money, then there is price discrimination and the doctor or hospital is forced into the role of a tax collector.

To end the health-care tax, we need to deregulate medical insurance so that there will be no cost-shifting. We must also end the price-fixing that applies to Medicare patients and keep insurance competitive including for the old and the disabled.

Do you like preserving the wilderness, without any global-warming or other environmentalist nonsense? If people have to pay extra for hiking-injury or search-and-rescue-if-lost insurance, they may decide not to dos o and stay home instead, reducing health insurance cots for the rest of us and decreasing travel in our places of nautre. This form of conservation has a negative cost and is a plus.