August 21, 2012 – Our Hidden 30% Tax

Here are a couple of figures related to our dysfunctional healthcare system that made me sit up and take notice, when I saw them recently. Both are mentioned in the short video below (sorry for the annoying commercial that precedes it, but that’s what you get with CNN).




The first statistic is that 137,000 Americans died over a 7-year period due to lack of insurance.

I've known some of those people. I’ve heard their firsthand stories in the course of my ministry: people who delayed getting medical treatment because they were uninsured, only to find out that – once they either got insurance, or pain finally drove them into the emergency room – it was too late, and the doctors could do little for them. These are heartbreaking stories, especially when you’re looking into the faces of the people telling them, as I have done.

Lack of insurance can literally be a matter of life and death.

Actually, I think that 137,000 figure is probably low.  Lots of people are filled with shame about their uninsured status, and hesitate to speak of it, even to a pollster promising anonymity. Some of these premature deaths-by-insurance (or lack of it) no one will ever know about.

Second is the statistic that we have a de facto 30% tax on every healthcare dollar spent in the U.S.

“What kind of a crazy tax is that?” you may ask. “Healthcare is expensive enough.  That’s one tax we’ve got to dump right away!”

It’s not so simple as that.  This is not the sort of tax you can complain to your Senators and Representative about, asking for a repeal.  It’s the largely unnecessary administrative costs related to health-insurance coverage and billing.

We’ve got a massive industry in this country that siphons money out of the healthcare system for private gain. These are very large, publicly-traded companies, whose executives earn multi-million dollar bonuses and that make huge campaign contributions to politicians and Super PACs. Not all of that 30% is shareholder profit, to be sure.  Most of it is the “overhead” cost of a bloated industry that exists for one purpose only: to allow those profits to be earned.

Countries with single-payer healthcare systems – that’s virtually every other developed country in the world, except for ours, as you’ll see from the World Health Organization statistics in the chart below  – avoid most of this 30% “tax,” simply by eliminating medical billing altogether and picking up the tab for all medical care. We're not exactly getting good value for our money, according to several significant benchmarks:

Of course, as the video makes clear, real taxes would have to be increased to pay for the somewhat lower actual cost – as opposed to the insurance-inflated cost – of medical services delivered to everyone. But at least these new taxes would pay for something real and useful, and not simply subsidize an industry that doesn’t actually produce anything.

The current presidential-election debate is cast in terms of “Obamacare” vs. free-market care. What’s seldom mentioned is that Obamacare is a watered-down compromise (based, ironically, on the system Governor Romney established in Massachusetts, although he furiously denies it).  Obamacare still includes the wasteful 30% “tax,” because it continues to protect and coddle private insurers.

Obamacare is a weak political compromise, the only thing the President and his supporters could sell to the few members of the obstructionist opposition party willing to reach across the aisle. Although Obamacare shakes up the inner machinery of the present medical-insurance system a good bit, it doesn’t tinker with the feature that allows all those for-profit companies to tap into the flow of dollars and siphon off one out of every three, for their operating expenses and profits.  A true single-payer system – one that would begin with the relatively simple reform of extending Medicare to everyone – isn’t even on the table in this election campaign.

“But we must have competition!” cry the free-marketeers. “Only competition can keep costs down!”

Oh, really?  Enough to offset the cost of the one-out-of-every-three healthcare dollars presently circling the drain?

Those are the costs we need to eliminate.

“But that’s socialism!” cry the wild-eyed Tea Partiers.

OK, by some definitions of the word - but not most - it is.  But no more than Medicare is socialism. Or Social Security. Or taxpayer-funded police and fire departments, or just about any other government service you’d care to name. I don’t think anyone but the lunatic fringe has the slightest fear that government-funded services such as these shove us onto some imagined slippery slope that ends up with jackbooted soldiers parading before the Capitol and brainwashed schoolchildren singing Marxist labor anthems. That hasn't happened in Britain, or France, or Australia - or Canada, for crying out loud! So, why should taxpayer-funded medical care be any different here?

Every other developed nation in the world looks on, dumbfounded, unable to figure out why the United States of America allows such blatant waste to continue – and why we allow so many of our citizens to die unnecessarily.