The big debate these days is whether the federal government should be in the business of providing health insurance. Ultimately that’s what the debate is about.

Your answer to this question depends on whether you’re a Liberal or Conservative. Liberals say “yes”. Conservatives say “no”.

What’s funny (to me anyway) is that Conservatives often cite capitalist motives as the reason why the government should stay out of the health insurance business. They say that certain care will be denied because it will cost too much. (They fail to mention that private insurance companies already do this.)

But that’s what capitalist motive is, right? Cut costs to increase profit?

The other fear tactic is that the government will have to raise taxes considerably to pay for this. But that’s a capitalist motive too. Raise prices to increase profit.

The real problem for Conservatives is that they believe that any government program that shows any caring for citizens is evil. To that end they will do anything they can to prevent any social program from coming into existence. Furthermore, they will do anything they can to cut funding for existing social programs to help ensure their demise while simultaneously claiming “see, the government can’t run this properly!”

Lakoff has what appears to be an explanation for this mindset. Conservatives have a strict father model of government. Liberals have a nuturant parent model. Rather than explain those models here, please see the linked Wikipedia articles instead.

People on both sides want to live as independently as possible. It is my belief, however, that Liberals understand that society has grown to the point where we are all interdependent. Conservatives have not yet acknowledged this.

As interdependents it is our duty to support each other when necessary. Conservatives do support each other through contributions to church or charity. But since they choose the church or charity they choose specifically who they support which generally means supporting their own kind.

Liberals believe in supporting people even if they don’t necessarily agree with them.

A Liberal would gladly pay additional taxes to help provide government run health care that took care of a Conservative. The reverse is generally not true. But a Conservative would gladly contribute to a charity that helped provide health care to someone in their own community who needed that help.

I believe that slowly but surely more and more people are moving towards the Liberal view of how things should work. This scares Conservatives who are becoming the dying breed. But obsolescence is a part of capitalism to which Conservatives put all their faith in. They should be happy to see it working even if it inevitably means their demise.

Single-payer means exactly that: one payer. The problem we have now is that there are too many insurance companies with too many plans and too many ways you can or can’t be covered. This means that if you and I each visit the same doctor for the same procedure and all the same billing codes are used but we have different insurance then we pay different amounts. Not only that, but the doctor probably collects different amounts from the different insurance company.

Additionally, because of so many insurance companies not all doctors accept all insurance. This means that although there may be 20 doctors in your town that can treat you, if only 3 of them are covered by your insurance then you have a choice of 3, not 20.

Aside: I’ve run in to this personally with dental care. There are about 25 dentists in the town I live in. But only ONE of them takes the insurance I have. And since they fired me I now have ZERO dentists I can use in my town and now have to drive to a town 15 miles away for dental work.

Now instead consider if we had only one insurance company. Now doctors have a choice – to accept this insurance or not. They only have to learn how to deal with one system (instead of hundreds) which means they’ll learn how that system works and have fewer errors. It also means that all patients would pay the same when they visit the doctor (this could mean $0, but I’m not getting into minutia here). And, the doctor would get paid the same amount for a procedure every single time.

In our hypothetical town with 20 doctors chances are that most, if not all, of them would accept this insurance. So now instead of having 3 doctors to choose from you have 19 or 20. Doctors would now have to compete on service to get new business. Yes, that’s right, single payer would increase competition.

Now let’s talk about the other side of the coin: everyone-in.  In my vision (remember, this is MY vision. Don’t blame anyone else for it.) every single person who resides in the U.S. and anyone who is a U.S. citizen regardless of where they live would pay insurnace premiums into this system. It would be a tax (yes, that’s an “evil” word, but taxes are the price we pay for civilization so get over it).  This tax would be progressive where those earn a little would pay a little, and those who earn a lot would pay a lot.

As I mentioned before I’m not getting into minutia so I don’t know what those tax rates would be. But let’s assume for a moment that they were 10% of your income. Sounds high, doesn’t it? It’s not. Let me show you why.

Right now the median income in the U.S. is about $50,000 for a family of four. 10% of that is $5,000.  But the average (sorry, I couldn’t find a median) cost for health insurance for a family of four for a year is $12,700.  I imagine health insurance costs vary far less than incomes so comparing a median to an average isn’t going to significantly skew the numbers.

Another advantage of everyone-in is that everyone is paying into the system so there’s more money available to pay out when people need it. Also, your premiums don’t change if your health does. Just because you got lung cancer from smoking for 25 years doesn’t mean you’ll be charged more. You’ve been paying in for 25 years so now you get the benefit of using what you paid for.

Closer to home, you won’t lose your coverage if you lose your job and can’t afford the premiums. No income means no premiums, but it doesn’t mean no coverage. So lose your job. Or quit your job and start your own business. You’ll still have health insurance.

Since the only way an everyone-in system could be enforced is if it’s run by the government then that’s what we’d end up with. However, I would prefer if that entity was completely self-funded. Whatever money it collects it uses to fund its own operations. It has to ask permission from Congress to raise rates (taxes). And the money it does collect cannot be used for any other purpose. I would even like a restriction on loans – that no loans be allowed either.

I’ve tried to think of some objections that might come up. Here’s what I’ve got at this time:

1. Employees will take pay cuts to pay for this.
Probably not. Most large employers are already paying for a large chunk of health insurance for their employees. Mine pays about 62% of the cost. Even if the cost was exactly the same ($12,700 per year for a family of four) since it’s a percentage of income rather than a fixed dollar amount, and would be considered a tax, wages will adjust, but then so would prices that are a result of the wages. The net effect would be pretty close to zero. The major impact would be loss of jobs for the CEOs of insurance companies. The staff could go work for the single-payer system and would probably be happier since they’d be helping people instead of focusing on denying claims.

2. This will ration healthcare.
Healthcare is already rationed. As my example above illustrated I only have a choice of 3 doctors here in my town. I can’t go to any of the other 17 unless I want to pay 5 times more for a visit. That’s rationing. Single-payer will open up more options for healthcare, not reduce them. This is not about doctors working for the government. It’s about doctors working for themselves and getting payments from the single-payer insurance.

3. It’s socialism!
Yes. And so what? There are some services that belong in the public realm. I happen to believe that health insurance (not health care!) is one of those areas. Again, my vision is not about doctors working for the government. It’s about doctors working for the patient and simply getting paid by a single entity.

4. You’ll kill off an industry
Not necessarily. It will kill off the large-scale insurance companies. But those who are working for them could go to work for the government entity. The notable exceptions are the CEOs who would be crying because they wouldn’t be getting $100 million paychecks. I feel for them as much as you do.

5. The government is inefficient and would waste our money
The administrative overhead for a typical government entity is 5-10%. For the typical insurance company it’s about 30%. Who is more efficient? I suppose if your goal is to make money for stockholders then the private company is certainly more efficient at doing that. But personally I’d rather take that 20% difference and put it back into providing healthcare instead of lining the pockets of shareholders. Also, my vision has the entity as self-funded and does not have unlimited taxing power. It would take an act of Congress to increase funding rates.

6. Doctors will spend more time fighting for payment
Really? How much time do they spend now? Most doctors spend 4 hours per day filing claims and fighting to get paid. Remember, right now it’s the goal of the insurance companies NOT to pay claims. Under single-payer that’s no longer the goal. The current system also has different payouts for the same procedure depending on coverage. Single-payer means a single payout amount for a procedure. The chance of an incorrect payout is drastically reduced.

7. Fraud will increase
In every system there is a certain amount of fraud. Our current system actually encourages it because insurance companies don’t want to pay claims. So doctors will occasionally inflate claims in order to be fairly paid for their services. This happens today already. Insurance companies have people on their staff to help detect fraud and put a stop to it.  With a single-payer system there would also be a fraud detection unit. I would think that it would be easier to detect fraud since doctors can only do so many procedures a day/week/year. If a doctor claimed excessive procedures done then since everything goes through one entity it would be easier to spot. Currently a doctor can file claims with dozens of insurance companies who may not have the entire picture. Personally I think fraud would go down, not up.

8. I don’t want to be forced to do anything
To me this sounds like fear of change. But let’s take it at face value. The only thing you’d be forced to do is pay into the single-payer system. You’re most likely already paying insurance premiums. If so, then the only thing changing is who you’re paying. You’ll have a choice of more doctors. You know you’ll have coverage even if you’re out of work. You know you’ll have coverage even if you get really sick. You know you’ll have coverage if you have a child with Down’s syndrome. So what’s really being forced on you is less risk, more choice, and likely lower cost. Is that a problem?

In my younger days I had very strong opinions about how I thought the world should be run. Of course those opinions varied depending on the mood I was in. I contemplated national ID cards (this was in like 1982) and being able to track the movement of everyone to what a Randian society would actually look like. As I’ve gotten older I’ve tempered my views somewhat and tried to make them more consistent with each other. (Monitoring every citizen doesn’t work well with a Galt’s Gulch economy).

Yet I still find myself a bit torn. Some of that is not understanding all the details. So I read and learn. Today I read The Conservative Nanny State which discusses how the wealthiest in this country use government to keep money flowing upward. I’m also reading The Forgotten Man: A New History of the Great Depression. One point in this book is that the protective tarrifs were what caused the depression in the first place, and both Hoover’s and FDR’s refusal to remove them prolonged and deepend the depression.

The one argument in The Conservative Nanny State that I found interesting is that most (if not all) free-market proponents both complain about the inefficiency of government AND claim that it’s unfair for government to compete with private business. It would seem that free-market theory would have inefficient businesses – even if run by the government – at a disadvantage. If the government really sucked that bad at running a business then why would private business be so afraid of government run business? Could it be that government run businesses aren’t as inefficient as we’ve been led to believe?

Take this example from page 14 of The Conservative Nanny State:

Back in the late 1990s, several express mail companies actually went into court to try to force the U.S. Postal Service to abandon an ad campaign that was proving very effective. The Postal Service ads pointed that its express mail service was much cheaper than FedEx or UPS. After the courts refused to outlaw the ad campaign, the express mail companies went to their friends in Congress, who effectively tamed the competition.

The U.S. Postal Service is not funded by any tax dollars. It is completely self-funded. Yet it was prohibited from promoting its services because private enterprise couldn’t compete? Where exactly is the logic in that.

Lest you think that The Conservative Nanny State is a “let the government run everything” book, there are arguments about getting the government out of the way on the issue of debt. From page 59:

In a free market economy, businesses know that investment decisions don’t always work out as expected. Sometimes businesses invest in developing a product that turns out not to be as good as they believed, or that doesn’t have the market they anticipated. They may invest based on trends, such as rising oil prices, that do not continue, leaving them with large losses. Or, they may extend credit to people, businesses, or countries that turn out to be bad credit risks. No one expects that the government will step in and sustain the demand for a bad product. Nor do we expect the government to intervene to make sure investors’ expectations about rising oil prices are realized, for example, by buying up massive amounts of petroleum. But when it comes to making bad credit decisions, the nanny state conservatives do expect the government to step in and bail them out.

In a truly free-market there would be no government intervention. Companies making bad loans would be S.O.L. if the people those loans were made to couldn’t pay them back. It could be claimed that the current financial crisis we’re in stemmed in part from changes to the bankruptcy laws back in 2005. Lenders were more likely to lend money because they knew that they could benefit from the fact that it was harder for people to say “I’m broke, I can’t pay my debt, I’m filing for bankruptcy protection”.

What the new laws did was effectively put ALL the responsibility for the loan on the part of the borrower. It indemnified the lender who could shirk his duties in making sure the loan would be repaid. Higher risk loans deserve higher interest rates. You see that on corporate and municipal bonds and bond ratings. Credit scores serve a similar purpose for personal lending. So why would someone with a credit rating of 600 deserve the same low interest rate that someone with a score of 800 might get? They shouldn’t. The score of 600 is a higher risk and deserves a higher interest rate.

In exchange for the higher interest rate, the lender is also taking a risk that the loan won’t be repaid. That’s factored into the higher rate. But when the bankruptcy laws changed lenders realized that their risk was lowered. Someone with a 600 score now had the same risk as someone with an 800 score. Why? Because the government was turned into a debt collection agency.

You can read the entire book online for free (yes, free – there’s even a section on why copyrights and patents are a form of protectionism that are a drag on the economy).

After reading it I feel better about my weird combination of free-market and socialistic views and I hope someday soon to be able to articulate them better.