By: Sean McCarthy
There is a truism in governance which states if you want to limit a particular behavior or activity then regulate it—if you want to severely limit it then tax it. Consider the current “health care” debate this country is having. Then reflect on the various “social engineering” initiatives this country has supported based on moral grounds: Prohibition—alcohol; regulation and prohibition of various pharmaceuticals aka “drugs”; regulation of tobacco, and ever increasing taxing of its use; legalization and government funding of abortion; funding and support for various sex education programs for youth; government funding of planned parenthood, and single parent support initiatives.
The list above is but a few random selections. Based on the examples I provided above, when the government both regulated and taxed an activity (tobacco use) the result was a dramatic reduction in the use of the offending product. Those unable to break their habit pay a heavy tax to continue satisfying their urge. Some may say this is an unjust taxation as typically smokers are from the lower strata of the socioeconomic status—we are penalizing the poor to fill government coffers. What can I say? What government tax or regulatory regime is fair? When does it not take from one group and give to another group? At least the behavior is legal and smokers are free to choose whether to pay the price or not, whereas many other tax schemes do not afford one a choice. Note the failings of the other initiatives listed above—what do they have in common? They are projects whose stated objectives are failing miserably. It seems the more money we put into education, or child pregnancy prevention the worse the results. There is no adverse tax, or regulation associated with those behaviors. We don’t regulate or tax the activity—in fact we subsidize it and thereby encourage the behavior.
So, drawing empirically from the anecdotes above, one could surmise if you wish to limit a behavior, then you should regulate and tax it. If you wish to encourage a behavior, then limit the regulation, tax, and cost associated with the activity. (Hmmm, a paradoxical conundrum may exist; we publically deplore an activity, yet through our governmental action we are literally increasing the numbers of participants in said “bad” behavior.)
Applying this postulate to health care will allow an effective perspective to develop. Let’s start by stating the goals for which we can all agree:
- Universal transportable coverage.
- Reasonable/affordable costs for both services and insurance.
- The best health services and medication available in the world.
We don’t want to see costs continue their rapid escalation; we don’t want to see rationing, or long waits for care; and we don’t want to see any degradation in the quality of care in our country as it exists today. It is becoming readily apparent the various proposals being weighed in the Congress will not achieve the basic tenets we desire, nor will they guarantee no degradation of the current system we have.
The various options all discuss increased regulatory oversight of all aspects of our system; they include various increases in the tax burden for both small business and the currently insured. Remember, taxing and regulating limit a behavior; I think we want to encourage citizens and business to be responsible and pay for their own insurance and health care. So, if the solution is to reduce regulatory burden and the tax burden to incentivize a desired behavior, what would it look like? John Mackey’s “The Whole Foods Alternative to Obamacare” (WSJ, August 12, 2009) provides a CEO’s (Whole Foods, national grocer) perspective with several private sector solutions:
-Encourage HSAs (Health Savings Accounts). Similar to IRAs, individuals can deposit money directly tax free, as well as accepting deposits from their employer into this same account tax free. The monies roll forward year to year tax free which encourages savings to cover deductibles or health care costs directly. This is a limit on taxes which encourages a good behavior.
-Ensure all health insurance plans are tax deductible. Whether paid for directly by the individual or by an employer, we should encourage this. Making the premiums tax deductible will definitely encourage everyone to buy an insurance plan.
-Reduce regulations regarding mandatory coverage. Oftentimes many like to blame a failing of the market place when results are not desirable. In this case years of mandated coverage by our well meaning government have increased the cost of coverage for all concerned. Let’s allow the consumer/citizen to choose what coverage they need—not special interest groups and their lobbyists. This is the practice in all other forms of insurance markets (i.e., auto, life, property, etc.)
-Tort reform. No surprise here. If my costs to insure my practice increase, I simply pass the cost to the consumer. If I cannot recover the cost, then I cannot stay in business which limits the number of practitioners, increasing demand on the remaining service providers which further increases costs. Some argue tort reform is a canard. They say liability claims represent only 1% of the total monies spent in health care. What they don’t discuss are the various extra tests, and costs associated with ensuring a practitioner is not vulnerable to a future claim of negligence. Oftentimes a past law suit judgment against a doctor causes all others in the medical field to require additional procedures to ensure they are safe from potential nuisance suits.
-Transparent and timely costs. Call a doctor or hospital and ask for their rate sheet on various procedures and they won’t be able to provide one. Why? Well, it depends on the method of payment, the insurance company, and several other medically irrelevant factors. Why is this not the case with a dentist? How about a Veterinarian? If you get a cavity filled, or your dog has its regular check up, you know the cost and you pay it right then and there. Let’s make routine treatment the same for our personal medical needs. If you have to pay it, you will likely be more cost conscious. If your doctor does not have to wait 60 to 90 days while fighting your insurance company for payment, then costs will be reduced.
You can see these are simple suggestions, but they are based on eliminating needless regulation and tax. We should own our coverage and be responsible for the costs associated with our health care. As with other areas of our life, when we have to pay the freight directly, we are more diligent in ensuring costs are low and quality is high. What about pre-existing conditions? If you owned your health care plan, and it was not tied to your employment, then this issue would be mollified tremendously. With few exceptions we could all get inexpensive health coverage plans when we are young. Similar to term life insurance, you would lock in an annual premium for life. Regardless of sickness in the years ahead, your premium would remain the same. If you lose your job, you don’t lose the coverage—analogous to life, property, and auto insurance. Your employer can, and as your value to the firm dictates, should contribute towards your individual health insurance plan. Again, this would be tax deductible and increase the savings for the individual plan holder.
Individual responsibility, limiting government involvement, and allowing the power of personal economics to govern one’s choice of coverage is the key. Whatever difficult issue faces our country, it is, it will be, and it always has been better to solve difficult issues in our country by supporting individual choice, as opposed to arcane legislation.
A US ARMY Veteran who proudly served as a Cavalry Officer and Airborne Ranger. After his military service, McCarthy worked as an executive in the transportation industry providing transportation solutions for large manufacturing facilities. Intrigued by manufacturing McCarthy was hired by the Trane Company in Pueblo as a production manager in 1995, learning their innovative world class manufacturing processes. This allowed him to run his own facility in Colorado Springs for a small door and window manufacturer.
Commuting, and working long hours for the benefit of absentee owners motivated McCarthy to start his own enterprise. His affinity for “numbers” drew him to the mortgage industry. On July 4th, 1997 he started his venture which he has run continuously either solely or with partners since. He purposely started on that date to commemorate his own “independence” day. McCarthy still owns and operates Castle Investment & Loan, an independent mortgage brokerage and private placement lender.
McCarthy serves on numerous community boards in Pueblo; currently he is President of both the PCC Foundation Board of Directors, as well as the Pueblo Performing Arts Guild (PPAG). He proudly advocates for Pueblo businesses, the downtown district (member Board of Directors Pueblo Downtown Assoc.), taxpayers, and the “Traditional Liberal” perspective of free enterprise, limited government, and fiscal prudence. McCarthy can be reached at: email@example.com