Health Care

Health Care Bill: Let's Think About This

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I’m going to preface this by saying I’m not here to toe the line for either party.  I’m simply a fellow American who is trying to understand this thing.  I realize that the topic of this article might be somewhat controversial depending on your understanding of it, but hear me out, or read me out depending on how literal you are.

As you know, a Bill for Healthcare Reform was recently forced through congress via "reconciliation."  Idealistically, I’m not opposed to the concept of taking care of fellow citizens who need it.  I don’t like seeing people go through the aguish of things like cancer knowing they don’t have an insurance company behind them with a wheel barrow full of cash.  However, I’m troubled by the logistics of it. 

See, President Obama said in a speech that the bill wasn’t going to cost tax payers any money – that the money would be covered by premiums.  Here’s the thing though, if it weren’t for professonal investors, the insurance companies would be taking a loss.  See, that’s how insurance companies work.  We pay the premiums, they collect the ‘pool’ of cash, they invest that cash like a hedge fund would, and then they pay out claims while keeping a profit from their 'winnings.'

So, can government invest like the insurance companies?  I seriously doubt it.  How are they going to be able to keep from taking a loss ("Loss" meaning that basically we pay through taxes or they borrow money from other countries and/or issue bonds to us in order to pay for the remaining costs). 

On top of this concept of needing to invest successfully (consistently), there are agencies (aka bureaucracies) which will be expanded while some new ones are created in order to run this thing.  In other words, there is absolutely no way it is not going to cost the government (us) more money.

Ok, then how is it going to be paid for? Well, that’s a pretty good question.  Yes, part of it will be paid for by premiums for the new gov't plan, but what about the rest of it?  There are only three ways our government raises money: 1) they raise taxes (definitely going to happen); 2) They print more money to pay for it (which is the primary cause for inflation – meaning we all pay for it over time through a diminishment of the dollar’s value); and/or 3) we borrow the money.  The last one is what scares me the most.

Right now, our debt is at $12.65 Trillion Dollars ($115,000 per tax payer) and growing fast.  For the Interest of that debt alone, we will owe around $632.5 Billion a year*.   To put that into perspective, the entire national defense budget for 2010 was approved at $658 Billion .  So, we are paying almost as much for the INTEREST on our debt as we are for the entire national defense budget (one of our largest budgets)?  Wow.

Considering that, maybe we do need to fix some things in our healthcare system, but the big problem that should be on our minds is how we can get our national debt to veer away from the infinity marker and headed back towards zero.  After all, what good is a government healthcare program without a government here to pay for it, and at the rate we are headed, the U.S. Government will absolutely go bankrupt... many think we have already.  I'm not making that leap just yet.

 

*Assuming a 5% APR - http://www.calculatedriskblog.com/2005/11/interest-on-national-debt.html].

(The National Debt in real-time: http://www.usdebtclock.org/)