Addressing the High Cost of American Healthcare

 

I am a candidate in the May 15 Nebraska Republican Primary for the U.S. Senate because the incumbent, Deb Fischer, is ignoring our enormous and out-of-control national debt.  Of course, there are many other important issues addressed by Congress and my last two posts, here, and here, discuss the need for more gun control to reduce the number of mass shootings in the U.S.
Now it’s back to (fiscal) basics.


The Kaiser Foundation has discovered that by far the top issue of concern for voters this year is the high cost of healthcare. Here are some of the many reasons why this should be a very top priority for deliberation in Congress:

  • The cost of healthcare is the fundamental driver of our debt problem.

  • Three major corporations: Amazon, Berkshire Hathaway, and JPMorgan Chase are banding together to lower healthcare costs for their own employees.  All companies have similar concerns.
  • A major reason for the high cost of American healthcare is the employer mandate  of the ACA which requires companies with 50 or more employees to provide health insurance for all employees.
  • Huge savings for employees, employers and government could be had by modifying the employer mandate to give employees the option to migrate to personal healthcare insurance, see here and here.

Conclusion. “The federal government’s most urgent domestic challenge is the exploding debt and deficit.”  Getting healthcare costs under control is the key to solving our debt problem and reducing a major expense for millions of American families.

The Key to Solving our Healthcare Cost Problem II. Make the Employer Mandate More Flexible

 

I am a candidate in the May 15 Nebraska Republican Primary for U.S. Senate.  I have entered this contest because the incumbent, Deb Fischer, has done nothing to reduce our enormous and out-of-control national debt and, in fact, voted recently (with the new tax law) to increase our debt by $1 trillion over the next decade.  And this is after new economic growth, stimulated by the tax changes, is taken into account.


One way to get the debt under control is with a more sensible budgeting process, but this is not enough by itself.


We also need a major effort to reduce the cost of healthcare.  One problem here is that employer provided health insurance is very inefficient, especially because it insulates employees from the full price of their healthcare. The way to fix this is to make the employer mandate in the Affordable Care Act more flexible in the following ways:

  • Replace income based tax credits in the ACA with aged-based tax credits (which then apply to everyone). See here for details.
  • Allow individual employees to migrate away from the employer plan to individually underwritten personal insurance. This will often save money for the individual employee (and family), the employer (who has fewer employees to cover) and the government (which has a smaller tax exemption). The employees also gain more flexibility for future employment.
  • Such a system, when fully implemented, will save $400 billion per year in government revenue, both state and federal.

Conclusion. I have outlined one way of moving from the defined benefit healthcare system we have now to a defined contribution system which will save hundreds of billions of taxpayer dollars every year by putting more responsibility on the individual health consumer.

The Key to Solving our Healthcare Cost Problem

 

My last three posts: herehere, and here, are concerned with the high cost of American healthcare and how this is so closely tied in with our very large and badly out-of-control national debt. In particular, three giant American companies: Amazon, Berkshire Hathaway, and JP Morgan Chase are forming an independent healthcare company to try to hold down healthcare costs for their combined one million employees in the U.S.


Dr. Elizabeth Rosenthal, an MD and editor-in-chief of Kaiser Health News, points out that this new company may help its own members but end up hurting the rest of us:

  • Previous efforts along the same line by Safeway and Boeing have held down costs for the companies own employees but are too small scale to have had broader impact.
  • The new company, much larger in size, may be able to negotiate lower prices from labs and hospitals for its own members. But then these same labs and hospitals will charge more for everyone else.

Moreover, in general, employer based healthcare insurance has lots of problems:

  • It diminishes incentives to reduce costs by insulating workers from the full price of their benefits.
  • It discourages changes that could displease even a small number of workers, thereby creating incentives to minimize disruption.
  • The pervasiveness of employer health insurance makes it more difficult for individuals to buy health insurance on their own, thus discouraging entrepreneurship.

Conclusion. Given the inherent flaws in employer provided health insurance, it is unlikely that more innovation by individual companies, or groups of companies, will lead to an overall solution to the exorbitant cost of American healthcare.
The solution lies in a different direction: ending or at least modifying the ACA’s employer mandate.  See here for details.  More later!

National Debt and the Cost of Healthcare Go Hand in Hand

 

My last two posts, here and here, point out that:

  • The cost of employer-provided healthcare is going through the roof, now averaging $26,944 for a family of four
  • Medicare beneficiaries are now spending 44% of their average Social Security income on healthcare spending.

Yesterday we learned that three corporate behemoths: Amazon, Berkshire Hathaway and JPMorgan Chase will form an independent healthcare company to try to hold down healthcare costs for their combined one million employees in the U.S.


And last night, President Donald Trump, in his generally well-received State of the Union Address, failed to mention our nation’s biggest problem by far: our surging national debt.
And moreover, it is precisely the public cost of healthcare which is driving our debt.
Our country could soon be overwhelmed by a trifecta of huge costs:

  • The cost of healthcare for individual company employees and also for retirees.
  • The cost of healthcare subsidies paid by the federal government.
  • Our rapidly growing and badly out-of-control national debt.

Conclusion. Is it not exceedingly clear that our two polarized political parties must stop spending their time bickering about less important problems and come together to address our huge debt problem and the very high cost of healthcare which is driving it?

The Urgency of Reducing the Cost of American Healthcare

 

Just a few days ago I announced my candidacy in the Republican Primary for U.S. Senate against the incumbent Deb Fischer who is doing nothing to reduce our badly out-of-control national debt and, in fact, just voted to increase it by $1 trillion over the next decade.
It is the high cost of government spending for Medicare, Medicaid and the tax exemption for employer-provided care which is the main driver of federal debt.
But healthcare is also getting very, very expensive for American workers and retirees as well.  In my last post, I reported that:

  • A family of four paid $26,944 for healthcare expenses last year which was 44% of median family income of $59,039.

And now the Kaiser Family Foundation has reported that:

  • In 2013 a Medicare beneficiaries’ average out-of-pocket healthcare spending was 41% of their average per capita Social Security income. This will rise to 50% in 2030.

Conclusion.  American healthcare is expensive for workers, retirees and taxpayers. In other words, it is expensive all the way around, for everybody.  There isn’t a lot of slack left to give way.  The cost of healthcare will impoverish our whole country if we can’t get it under control.  Stay tuned for proposed solution.

The Outrageously High Cost of American Healthcare

On January 24 I announced my candidacy in the Republican Primary for U.S. Senate against the incumbent Deb Fischer who is doing nothing to reduce our badly out-of-control national debt and, in fact, just voted to increase it by $1 trillion over the next decade.
It is the high cost of government healthcare spending for Medicare, Medicaid and the tax exemption for employer-provided care which is the main driver of federal debt.


But now look at a recent report from Bloomberg Markets on the outrageously high cost of employer-provided health insurance for American workers:

  • The average worker paid $5,714 in 2017 out of a total cost of $18,764 for a family plan. Deductibles last year averaged $5,950 per individual and double that per family.
  • In the past five years insurance premiums increased by 19% while worker pay increased by 12% and inflation increased by just 6%.
  • A family of four paid $26,944 for healthcare expenses (including out-of-pocket) last year which was 44% of median household income of $59,039.
  • Health insurance premiums are up 11% in 2018.

Conclusion. I have been predicting a fiscal crisis in the relatively near future over federal debt. But we actually have an immediate crisis on our hands over the horrendous cost of employer-provided healthcare.

Why We Cannot Wait to Fix the Debt

 

A Letter from Birmingham Jail   Why we cannot wait  Martin Luther King, Jr., April 16, 1963

Yesterday was Martin Luther King Day and every year at this time we are reminded of his eloquent letter from the Birmingham Jail, “Why we cannot wait,” written to some of his hesitant supporters in the Spring of 1963.
African-Americans were tired of waiting so long for equal rights in their own country.  On my own personal scale, I am so frustrated by the inability of our political system to address our massive debt problem, that I am getting organized to enter the 2018 Nebraska Republican Senate Primary against the incumbent Deb Fischer who has just voted (with the new tax law) to increase our debt by $1 trillion over the next decade.
Basically I am saying that our debt is so large and growing so fast that it will soon be out of control if we don’t take action to start reducing it very soon.


Consider:

  • The public debt (on which we pay interest) is now 77% of GDP, the highest since WWII, and projected by the Congressional Budget Office to keep getting steadily worse. It will grow by $11.5 trillion in just 10 years to almost 100% of GDP and will reach 150% of GDP, double the current level, by 2047, without major changes in current policy.
  • A fiscal crisis, much worse than the Financial Crisis of 2008, will occur long before 2047 if nothing is done to greatly shrink our annual deficits which are again rapidly approaching the trillion dollar per year level.
  • The new tax law increases deficits by an average of $100 billion per year, and therefore makes it that much harder to shrink them down substantially. It is imperative for the two parties, Democrats and Republicans, to work together to figure out how to do this.

Conclusion. Our national debt is so large and growing so fast that it is virtually out of control. We need prompt and fairly strong action to turn the situation around.  I have often discussed one major way to do this.

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