How socialized is health care already?

Like a mantra, the opposing forces within health care assert that reform will socialize the system. Well, I’m here to tell you that health care is already a highly socialized economic sector; it has been for years and is as much the fault of Republicans as Democrats. How so?

1. First, by its very nature health insurance socializes risk. The healthy pay for the sick. A large pool is better capable of dealing with the inevitable $1 million dollar claims than a small employer pool. Less than 15% of the population is truly at risk in a market based system and they will be billed 27% more for the freedom. Many will declare bankruptcy or fail to pay their medical bills, transferring the burden to someone else.
2. All of the ideas being bantied about, such as eliminating pre-existing conditions, guaranteed issue, prohibitions against raising rates, community rating and the like all socialize risk. When you force a health plan to take on risk, such as a pre-existing condition, you are transferring risk and costs from one person to the group.
3. The way we pay premiums is socialistic. You don’t just pay the premiums for you or your family’s health insurance. No, a tax of 2.9% is levied on your payroll to fund Medicare, which is under-funded by $36 trillion dollars. This is a transfer from the working young to the elderly. And, it is applied to illegal aliens with a phony SSN.
4. Approximately 5% of your income goes to State taxes and a large percentage of this flows into Medicaid, which is funded 50/50 by the state and the feds. So an equivalent chunk is paid for by the federal income taxes you pay–likely 10% of your income in total. This is to pay for the poor and reform means the threshholds will be increased. It is outright income transfer and socialization.
5. It is expected that anyone making up to 300% over the federal poverty rate (about $40,000) will be eligible for subsidies on their health insurance and that this will cost all of us at least $1 trillion dollars.Not to mention the penalties on your taxes if  you don’t buy insurance and the $6,000 to $8,000 of your annual income that you will have to shell out for health insurance if you don’t already buy. Forget that you are young and healthy; this is the group that will be expected to pay for the poor, chronically ill, older working adults and others. Its called wealth transfer and socialization.
6. The list goes on and on and on with veterans, and others whose insurance is paid for and the risk socialized through transfer payments.
7. When you go to buy an automobile $1,500 of the price is for health care for the guy who assembles it. But since many of the components come from downstream suppliers who also pay for their employee’s health costs it is likely double or triple that amount. Health care costs are imbedded in everything you buy and passed through to you.

If you were to do a statistical regression, I don’t know what you would find. We know health care is 16% of GNP, on its way to 20%. But, since the elderly, poor, and many others don’t pay at all, their portions are funded by transfers from the haves to the have-nots. So, by-and-large that 16% burden of the GNP is being transferred onto the backs of less than half the population, and that is the people who are gainfully employed at any given time. I would guess that it’s the old 80/20 rule where 20% of population, those who work, are funding 80% of the risk  and costs of the system. If you’ve got better numbers, I’m all ears.

Health care has been on a slippery slope down into a canyon of socialization since after WWII. It is the new implicit right and entitlement graciously handed out by a rich and indulgent society.  It has very little to do with the fact that doctors and hospitals are paid on a fee per service basis. If they were accepting capitated payments, like in an HMO, they would have more risk shifted on to them and that is, of course, where all this inevitably leads when the government runs out of money. It is not so much rationing care as rationing the money. The doctors and hospitals will have to take on capitated contracts and they will be expected to do that rationing quietly, in the course of their practice, without making waves.

The issue is not that we socialize risk but the degree of and who do we transfer the costs– from who to whom. Right now, before any so-called reform takes place the system is heavily socialized. And, the intent is to socialize it even further. Lack of market disciplining forces always leads to inefficiencies and largesse and health care has plenty of both. I don’t expect it to change but it would be nice if the people talking about this socialization issue would get past their denial and call a spade a spade.