Employer Based Health Care vs. Socialized Medicine vs. The Federal Government

The conservative movement in this country is up in arms with the recent health care legislation going through Congress. While the population is divided on whether they agree or not with idea of a government run health care option, one thing is true - Socialized medicine is among us now. I'm not referring to Medicare and Medicaid programs currently run by the Federal Government. Those programs are showing the typical problems associated with any program run by a governmental body. They are overrun with waste and administrative costs. They have large lobby groups that cast a large net of influence on the government officials who write the laws. And they are overrun with fraud. No. the Socialized programs (ie. those that have helping to pay for those who have not) I am referring to are the Employer based health insurance programs that make up the majority of plans in existence that are currently on fire because of the legislation be considered.

Let's look at the way these programs operate. First, most of the larger ones are self insurance programs. That means that the employer simply sets up a fund that pays the insurance bills for their employees and their families. They are run by a Health Maintenance Organization (HMO) that charges the employer to monitor the program. A fee schedule is created (based on many factors) that covers the entire cost of the program for all employees and the administrative costs divided proportionately between the employees and the company. The company doesn't really pay the premiums, they collect the premiums from the employees and then pay the bills as they come in from the providers (doctors, hospitals, etc.). At the end of the year, the total cost of the program is re-evaluated and the rates for the next year are adjusted. If the group has a large amount of claims, the costs go up. (Rarely, if ever, do they go down.)

If your watching what is going on here, you see that the costs of someone who has no claims will still go up with the rest of the group. To some, that's a fair way of doing it, but not necessarily to those that are healthy. However, few complaints are logged because the premiums, considering the alternatives, are very affordable. Conversely, it may not seem fair to charge more for a person who gets sick as part of the group. After all, it may not be their fault. This is what socialized medicine is all about.

This is also largely how Medicare and Medicaid work. Employees are required to pay a percentage of their wage into the system for every dollar they earn with the employer making a matching contribution. When you reach retirement age (or become disabled in the case of Medicaid), you are eligible to receive the benefits of the program. Some may say that this is an investment in your future. But you are only required to contribute while you are working. But what about those who don't work and don't contribute? Are they still eligible to receive benefits? The simple answer is "Yes"!

One of the ways that the proposed health care system seeks to pay for itself is in cutting waste in the present Medicare and Medicaid systems, but there really is no way that it will happen. The savings will only come as a reduction in future increases. And the savings will probably be offset by the administrative charges for monitoring the program in order to make sure that we don't pay for unneeded procedures such as mammograms or end of life care. The proposal calls for a 5% or more surcharge on those making more than $500,000 ($1 Million per family) to help pay the cost of the program for those that cannot afford the premiums. Those that do not presently have insurance will be required to have it. If you can afford it and choose not to buy insurance, not buying it will cost you a fine or imprisonment. But never fear, if you can't afford it, the government will gladly pay for it and charge someone else.

One difference in the employer sponsored program is that the insurance is offered, not required. Employees are not required to sign on for whatever reason. Some already have insurance through a spouse. Many do not make enough of a salary to pay for health insurance in addition to other necessities and choose to opt out. With the government program, you are required to have insurance or be fined up to $250,000 or spend a year in jail.

Now, the liberals in Congress insist that we need and will have health care reform. The conservatives DO NOT disagree, contrary to what you read. The difference is that health care reform can happen without taking all the wheels off the cart.

The present system is broken! Insurance costs are skyrocketing. Many are uninsured. Those that are uninsured either choose to be uninsured, can't afford to pay for coverage, or have been denied coverage for pre-existing conditions. (By the way - pre-existing conditions are not considered in the employer based systems as long as you have maintained your coverage from job to job.) When one of these uninsured get sick, they are required to pay their own way. Sometimes those bills can be so large that the family stands a chance of losing everything they have because they can't pay the bill. The government will tell you that the rest of us are absorbing the costs of these unpaid bills. And that is undoubted part of the reason that health care costs are sky high and rising. By creating government run plans that seek to compete in order to keep costs down, we would essentially be double charging the same people that are paying the bills now. That's not the people that are required to be part of a government program. It's the employers that are paying for half of the health care premiums now. The same people who pay half of the medicare and medicaid payments through payroll taxes. The same people that pay half of the social security taxes for their employees. The same people that we look to to invest their hard earned money (what's left after taxes) into creating more jobs for more people so that we can all get back to work and pay our taxes for those that reap without sowing anything. Get the picture?

The largest burden is placed on those that are are saddled with pre-existing conditions such as the self-employed and those that lose their employer-based insurance. Cobra was designed to fill the gap in employment, but many have exhausted their 18 months of benefits due to the struggling economy. Insurance companies don't consider you part of a group to spread the cost out, but are required to take you on if you have kept up your coverage through HIPAA. The problem is that someone who has been unemployed for any time at all may not be able to afford cobra premiums which can more than double their payments at a time when their benefits from unemployment are sometime less than half of their salary. And unemployment doesn't last forever either. After Cobra, should you be blessed with Pre-Existing Conditions, the HIPAA plans can cost more than five times the cost of the employer based premiums - unaffordable to most.

Fixing the system means dealing with these issues in a way that makes sense and does not create more problems in an already weak economy. Health insurance companies are not saints. They are businesses with the main objective of creating a profit for their shareholders. Some have non-profit status, but this does little to control the salaries of executives, some of whom make millions of dollars each year. Many are owned by the same health care industry that determines the costs of services. It would seem that regulations could be put into place to control costs as well as these conflicts of interest in an industry that now controls one sixth of our economy.

I, for one, am in favor of a system where insurance for individuals is co-mingled to save on premiums and still cover pre-existing conditions much the same as Employer based systems are doing now. These groups could be as big as a state and still would provide enough profit provided a large percentage of the populace is contributing. The pools need to be large enough to spread the cost due to pre-existing conditions in order to make them affordable for all. Socialized - yes! Fair - Maybe! But better than government run for sure! Open the state borders to competition between insurance companies and see what happens to premiums!

If the government wants to assure that those who can't afford insurance are covered, they can find ways to make that achievable through Medicaid or tax incentives. Creation of oversight committees to reign in costs is worth considering as long as they do not intervene in the relationship between the patient and the physician.

The other way to help reduce costs overall is by re-visiting tort reform. Professionals in the health care industry are human. They are not perfect and they do make mistakes. There are circumstances where they should be held liable. But there are also frivolous lawsuits designed to do no more than drive up costs by making attorneys rich. How many ambulance chasers ads do you see on a daily basis any more? Just look at the back cover of your local phone book. By putting a limit to frivolous lawsuits, costs for healthcare would come down tremendously because physicians would not be piggy backing tests that are “obviously” not needed simply to cover their backsides in a trial.

Government should be "of the people, by the people, and for the people".1 A government run system does nothing to create incentives to control costs. The sooner we the people stand up and say enough is enough, the sooner we get control of our own destiny and limit government control over every facet of our lives. That's the way our country's founders envisioned it. That's the reason we have the greatest free country in the world. And that's what we need right now before it's too late.

Socialization of services doesn't have to be bad. But, by limiting the government's involvement to oversight, we all win!



1 From the Constitution. Now would be an excellent time to revisit this wonderfully thought out document that is as relevant today as it was when it was written.