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The Most Interesting Thing I’ve Ever Read About Health Care

November 12, 2009

I’m not going to get into the health care debate. In fact, I’m not even going to write much today (with all the comments I get on the Confessions posts, I should write them every day! But I don’t have that many confessions. Or do I…)

However, I read something the other day in Inc Magazine (Nov. ’09) that was the most interesting thing I’ve ever read about health care. It’s a quote from the CEO of a company called Senior Whole Health named John Baackes. He’s talking about how our current health care structure (your company pays for your health care, which isn’t considered “salary”) came to be, pretty much by accident:

The fact that we have employers central to our system is the biggest problem. And it exists this way all because of a historical accident. During WWII, companies couldn’t raise wages to attract workers, so they began offering health insurance. The IRS then determined companies could consider that a business expense rather than counting it toward personal income.

So…this entire imperfect institution is based off of a business tax deduction that started 70 years ago?! This is news to me.

Here’s my solution: Give everyone in the country a raise equal to the amount their company pays for their health care. Drop their business’s health care plan. Mandate that everyone in the country purchase some form of health care (or raise taxes and just give everyone health care).

So, say for example (this is purely hypothetical–I would never discuss actual salary or health care information, and I mean that) that I make $25,000 a year. My company spends, say, $5,000 on my health care a year. So as of January 1, I get a $5,000 raise. In the now-competitive, capitalistic health care market, I can purchase my own health care plan that fits a person like me who gets sick no more than two times a year and wants to have protection for big catastrophes, and I can keep the remainder to pay my bills and mortgage.

Bam! Problem solved.

(Now tell me why this won’t work. But don’t tell me that quote isn’t interesting. It’s damn interesting.)

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9 Comments leave one →
  1. Neeraja permalink
    November 12, 2009 10:08 am

    Very interesting quote. I had no idea.

    The problem with raising your salary is that now that income becomes taxable. You and your company have to pay Social Security, Medicare, unemployment, and other federal, state and local taxes on the amount. By a corporation providing health care coverage, their expense is taxed differently. I’m not saying it wouldn’t work, just that tax code would need to change as well.

    • November 12, 2009 10:28 am

      Good point–you would have to change the tax code. But if the tax code caused this whole system to come into creation, surely it can be revered given the difference in situations between WWII and now.

  2. Bob permalink
    November 12, 2009 8:44 pm

    Interesting post, Jamey. I was very much aware that the majority of American’s healthcare being employer provided and the way that is taxed differently is a big issue (and I would agree, problem) with our health care system, but I had no conception of the history of how that came to be.

    I think you’re logic stemming from this history is largely sound, but you’re flirting with innacuracy when you get to “In the now-competitive, capitalistic health care market, I can purchase my own health care plan that fits a person like me who gets sick no more than two times a year and wants to have protection for big catastrophes, and I can keep the remainder to pay my bills and mortgage.”

    In order for health insurance to be reasonably priced as well for people who need to go the the doctor two times a month rather than two times a year, your insurance premuim will have to be high enough (by virtue of being in the same insurance pool) to offset their higher costs, or those higher costs will have to be covered by the government (at least for people who can’t afford them…however we define that). Granted, one doesn’t HAVE to structure things this way, but I think it’s the ethical thing to do, given that one doesn’t choose to be sick, and I consider health care a right when affordable to a society (which certainly applies in the US).

    • November 13, 2009 12:42 am

      Great point. I actually think that if you give everyone the raises I mention in this entry, nationalizing a basic level of health care would work. If you want to personally upgrade from the basic plan to cover higher levels of health care, you can do that too.

  3. My White Blood Cells Could Kick Your White Blood Cells Asses in a Fight permalink
    November 13, 2009 9:50 am

    We could just ban health care altogether. The strong will survive, the weak will not. The world’s spiraling population growth will slow a little and there won’t be a problem with social security anymore.

  4. November 13, 2009 1:50 pm

    I tend to agree that insurance needs to be decoupled from employment (I mean, my employer doesn’t pay for my auto or homeowners insurance and I pay for that on my own). But one major problem will be that insurance companies will refuse to cover people with certain conditions that make them more expensive. So coverage will be expensive, like Bob mentioned, and not necessarily available.

    Now don’t call me a communist, but tell me what you think of this video (hope the link works): http://www.youtube.com/watch?v=Jng4TnKqy6A

    (the guy makes one pretty serious mistake when he refers to “fire insurance” and he means “fire protection” but I think you can overlook that)

  5. November 13, 2009 1:54 pm

    Oh yea, and you really need to start listening to This American Life they did a whole show on Health Care recently which had a really interesting piece on the history of the system. You can listen to it on their website for free. I think you would find it interesting (there were actually two shows in a row that were all about health care, but the second one dealt more with insurance).

    Of course, if you really want to get into it you could also listen to the Planet Money podcast from NPR which goes even more in depth about it, but they also talk about a lot of other stuff and TAL gets kind of the cream of their reporting every couple of months.

  6. Bob permalink
    November 13, 2009 7:07 pm

    http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/

    As I told Jamey in person but will repeat here for his readers, this Frontline program, “Sick Around the World,” was a great look at how other developed nations run their health care systems and what the U.S. can learn from each case. The entire program can be viewed online.

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