The ACP Advocate Blog
by Bob Doherty
Tuesday, July 21, 2009
"Don't tax him. Don't tax me. Tax that man behind the tree!"
This quote, famously attributed to the late Senator Russell Long of Louisiana, pretty much sums up reaction to the various ideas being put forward to pay for health care reform.
Both the New York Times and the Wall Street Journal report that Speaker of the House Nancy Pelosi hopes to scale back or even eliminate the tax surcharge proposed on "higher income" households, which will require that the House go back and revise its bill, H.R. 3200, to find more savings or "offsets." The Senate, for its part, has signaled that it is disinclined to pay for health care through an income tax surcharge, and reportedly is looking at taxing high cost insurance plans, limiting the amount of employer-sponsored health insurance that is treated as tax free income, and raising taxes on sugary and alcoholic beverages and other "health-related" taxes, among other options. Each of these options, though, will surely be opposed by those whose oxen will be gored.
The reality, of course, is that no one likes seeing their taxes go up, especially for something that that they think they are getting tax free. But are they really?
No, because each and every one of us already pays for the uninsured. We just don't see it as a line item on our IRS 1040s. In 2004, the ACP published a white paper that cited studies on the estimated costs associated with lack of health insurance. One respected peer-reviewed study found that total medical care received by the uninsured in 2001, including both the full-year and part-year uninsured, was $98.9 billion. This is almost exactly the same as the little over $100 billion per year that the CBO estimates would be the cost to provide coverage to just about everyone under the House bill.
Another study co-funded by ACP Foundation and the New York Academy of Medicine, found that over two-thirds of internists treat uninsured patients who are unable to pay the physician's usual fee, charging them a reduced or no fee and/or creating a payment plan. Approximately 60 percent of internists who provided any charity care provided between a quarter of an hour and five hours per month, while another 15 percent provided six to 10 hours monthly. The Institute of Medicine found that for the entire uninsured population of roughly 41 million Americans in 2002, the aggregate, annualized cost of diminished health and shorter life span was estimated to be between $65 billion and $130 billion for each year of health insurance forgone.
In other words, we all pay for the uninsured: through higher health insurance premiums and higher Medicare payroll taxes associated with cost-shifting, from the lost productivity and lower earnings that result when people don't have health insurance, from higher federal, state and local taxes to pay for safety net programs, and from the uncompensated care provided each and every day by physicians.
The debate today shouldn't be over raising taxes to cover the uninsured. Instead, it should be over whether it is better to continue to hide the $98 billion we already spend on the uninsured, or to make it explicit by having the federal government collect the taxes and find the savings needed to cover everyone. The price tag is about the same - just about $100 billion per year plus or minus. But one would continue a "hidden tax" that still leaves 47 million without health insurance, while the other would help fund coverage for 97 percent of Americans.
Factoring in the enormous human and economic costs of being uninsured, it seems to me that it would be cheaper to increase taxes and find the savings needed to cover everyone. We should debate who should be taxed and how, but let's not pretend we aren't already paying.
Today's questions: Do you think it is more effective for the government to collect taxes to pay for universal coverage - or to maintain the current system of paying for the uninsured through cost-shifting to others? If taxes need to be raised, who would you tax?
About the Author
Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog
Email Bob Doherty: TheACPAdvocateblog@acponline.org.Follow @BobDohertyACP
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