Three Reasons Why A National Health Plan Is Doomed

What would an acceptable reduction in medical expense be? 10%? 15%? 50%? Would you be happy if your anesthesiologist reduced his bill from $2,200 to $2,000? What if the surgeon reduced his fee $122 to $1,098? Probably not. Now, if the hospital reduced their invoice $5,390, you would be ecstatic until you discovered that you still owed $48,589.

Clearly, any reduction in medical expenses would be appreciated, but a meaningful reduction for most people would have to approach 50%. Any reduction in medical expenses has to be accompanied by an equal reduction in income for the payee.

According to the US Department of Labor –Bureau of Labor Statistics, as reported in May of 2008, 3,353,110 wage earners with 15 Healthcare Practitioner and Technical Occupations job descriptions earned $288,721,888,800.
http://www.bls.gov/oes/2008/may/oes_nat.htm#b29-0000

Imagine asking the entire working population of New York City to accept a 50% salary reduction so that your medical expenses will be reduced. Imagine asking those same people to reelect you to office after you made that request of them! Our elected officials have one objective: They want to be reelected. Their chances of achieving that goal are significantly diminished each time one of the legislative acts they endorse fails. It is far more beneficial for them to criticize the efforts of the opposition versus proposing legislation that might not succeed.

According to the Congressional Budget Office, the Average Effective federal income tax rate in 2005 for healthcare practitioners was 14.1%, plus 6.0% for Social Insurance Taxes, 4.9% for Corporate Income Taxes and 0.5% for Excise Taxes, creating an overall effective tax rate of 25.5%.

Those 3.3 million healthcare workers paid $73.6 billion in federal taxes in 2008. Imagine asking the federal government to take a $36 billion cut in tax revenues!

Finally, much of the cost of medical expense has been directly attributed to the cost of medical malpractice and product liability insurance. Our litigious society provides an opportunity for those who are injured to receive compensation through a circuitous process that incurs enormous legal expense in addition to actual compensatory payments. Clearly, significant reductions in the cost of medical care cannot be accomplished without commensurate changes in the insurance industry and the legal profession.