No Payor System

The individual and society

Society exists to facilitate each individual’s growth. It exists for the people; not to control them. Under this new vision of social organization our nation is carried forward upon the strength of our individual creativity. The pursuit of happiness is the bedrock upon which both our individual and cultural creativity are built. The complex inter-relationships that give this nation substance stem from these essential exchanges of our humanity, rather than depending upon the interlocking of our rules. It is not a coincidence that Americans are sometimes referred to as cowboys. We conduct our lives with a sense of independence other cultures find difficult to comprehend. Even in Canada, when their Supreme Court ruled against their socialized health system it did so based upon its failure to protect the “security of the person.” This implies a paternal protection of the individual: that the state administers individual freedom. This conceptual difference in the origin of individuality has profound consequences. It defines the character of the American people. This is especially apparent in healthcare.

In the 1960’s, while other countries moved ahead with various interpretations of universal health care, the US was unable to resolve the difficult issues surrounding individuality. Partisan interpretations between democrats and republicans were compounded by the alarm expressed by business and the medical profession. It was not axiomatic to Americans that government should intrude itself into so vital an area of human experience as health care. This multisided debate finally resolved with the passage of Medicare (title XVIII) and Medicaid (title XIX) as amendments to the Social Security Act of 1965. It was a political solution that provided relief for the most pressing needs. But with the passage of this bill began the piecemeal disassembly of the American medical system. To cope with inevitable increases in cost both Medicare and Medicaid resorted to restrictions on access to care, reduction in provider income, and legal sanctions and criminal penalties when government’s definition of the marketplace produced unwanted resistance. In its turn indemnity insurance crumbled under the growing economic pressure. Private insurance responded by introducing managed care. With this business tool they implemented many of the same restrictions as had government in their own effort to control cost. The irony is that in the absence of socialized medicine the individual’s pursuit of happiness has still suffered deprivation. A third of the nation’s people are unable to secure affordable healthcare. There is further evidence of disintegration of the health-care system. In our major cities there is a trend for established reputable physicians to opt out completely from Medicare, Medicaid and private insurance. In this country it is a fair and proper for individuals to make this decision. The constitution protects it. But where does it lead?

We face the problem of the 60’s all over again. But now the stakes are much higher. Business cannot remain competitive and continue to absorb the cost of healthcare. But using taxation to fund Medicare and Medicaid has been equally destructive. The combination of these two approaches has produced an ever widening gulf of uninsured citizens. It seems foolish to believe that further government intervention would succeed. Canada’s experience is hardly reassuring. We need a solution that honors the unique character of this nation. After all, health is the lynchpin between life, liberty and the pursuit of happiness. To sustain these ideals government has an obligation to assure access, but only access, to healthcare. Any intervention beyond this will, of necessity, violate the very principles it is intended to protect.

The key elements of this solution must include universal coverage and personal responsibility. It requires a bold step. When we realize that government need not confiscate income in order to accomplish social programs it becomes possible to resolve the dilemma. Allow each tax-paying household to use a tax-credit to cover the full cost of a basic health insurance policy. The government decides what must be covered under this policy and sets the tax-credit at a fair level to cover these services. Beyond this it has no role. Each household must purchase healthcare from an insurer of its choice. The tax-credit also sets a uniform price. This changes the marketplace. Now, with patient purchasers, it is productivity and outcomes against which the insurance providers will be measured. This tax protected healthcare access thereby satisfies both key elements. What are the economic objections and benefits?

Government loses an enormous inflow of tax dollars. It must also create a funding mechanism for families without sufficient tax liability to completely cover the healthcare tax-credit established premium. The poor will need automatic access to sufficient funds to purchase their own healthcare. The budget for Medicaid, now obsolete, would offset this cost. Current tax deductions for health insurance and other healthcare related expenses, now no longer needed, are another counter balance to tax revenue loses. Presuming that Medicare continues to operate for at least the short term the remainder of the tax shortfall will need to come out of tax-revenue producing aspects of the economy. Built into this reform is an economic bonanza. Business no longer buys healthcare. This has two benefits. First, American business becomes instantly more competitive. If we are currently entering a recession, this is a wonderful stimulus to end it. Relieved of its burden, business can redirect this money into investment for growth, reduced prices to boost sales or into dividends to increase profit. The second benefit is that whatever the business choice, government wins. Tax-revenue increases. For sustainable healthcare reform this is the only change we need to make.

A new healthcare marketplace will emerge. People will search for an insurer that best meets their needs. They will seek quality of care. The insurers profit motive will no longer be buffered by the kindred spirit of business. In turn physicians will need to choose a viable economic model. They can continue to have their effort squeezed to sustain insurance industry profits or assume responsibility for care and introduce a morally sustainable profit motive into the supply side of medicine. If they choose the latter, America will have equitable universal health care at a verifiable price. The pursuit of happiness will triumph.