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Wednesday, September 07, 2005

The Two Most Unfair Minutes of Your Day

This post was originally guest-blogged at Old Town Review Chronicles and recently re-posted at The Art of Gettting By. It is the first in a series of posts about health care costs and Medicare B.


The first two minutes of every hour you, and every American who has a job, work is dedicated to one specific government program – Medicare. If you are self-employed, you pay the equivalent of four minutes of every hour for Medicare tax. According to the Bureau of Labor Statistics that means one hundred forty million people will pay three percent of every penny they make to make sure that Medicare has enough money to provide health care for the aged, disabled, and dependent. Even setting aside the fact that Congress has decided to cut ten billion dollars over the next four years, Medicare still qualifies as the most unfair tax paid by many Americans.

It is unfair because about three and a half million self-employed persons and well over fifteen million employees do not have health insurance for themselves. Yet every week, these employees donate an hour and twenty minutes of their pay to providing someone else with insurance. What could be more unfair than to ask someone to give up money they desperately need to provide a benefit they don’t receive themselves to someone they don’t even know?

Don’t for a minute think that it is only part-timers or teens working after school, either. The Robert Wood Johnson Foundation released a statistical report this week that debunks that favorite Republican myth. In Texas, up to a third of all employees do not have health benefits. Almost a fifth of the states have more than a fifth of their employees that are ineligible for benefits. Somehow, I don’t think there are that many kids working after school. If there are that many part-time workers; then our economy is seriously about to crumble.

Let’s not forget the kids, though. In more states than not, employees with kids but without insurance outnumber employees with kids and insurance. That puts a strain on the states’ Medicaid program – which provides insurance to poor children. That, in turn, puts a strain on the states’ budgets. That would normally mean that state governments take higher taxes from their citizens – but everyone knows that all taxes are evil. So, what it really means is that money that should go to education and other vital programs are short-changed. In other words, the pain gets spread around further, but not necessarily any thinner.

What makes it even more unfair is that it is totally unnecessary. The federal government already runs a program that would alleviate this problem. It’s the very same program these people are already paying taxes for but are barred from participating in. It’s Medicare. Medicare B is an HMO-like program where recipients pay a small monthly participation fee – currently around fifty dollars a month. The government matches this at a rate of three to one to provide health insurance. For those that don’t like “big gubment” running their lives, Medicare C offers buy-in to privately run HMOs for slightly higher costs.

If Medicare B were open for buy-in at full cost (paying all four dollars instead of just one); then a completely portable and cost-efficient basic medical coverage would be available to every American. If this were enacted in conjunction with a one dollar an hour minimum wage hike, plus a tax incentive of equal value to small employers, the cost would be fully recovered by both employer and employee. It still wouldn’t cover the cost of prescription medicines or hospitalization, but it would be a step in the right direction. If existing insurance companies were allowed to compete through Medicare C; then competition will still work to keep costs down.

More workers covered, small businesses better able to provide benefits (which results in fewer missed work days and less job turnover), and more money flowing into Medicare. Someone please tell me where there is a downside to this!

Rather than tearing Medicare apart, what needs to be done is to expand it. Insurance works best when very large groups exist to defray average costs. What group can possibly be bigger than the entire population of the United States? (Okay – technically, the world’s population, but that is beyond the scope of this discussion.) Another aspect of Medicare B is that it automatically adjusts the monthly premiums to be revenue neutral. That means that as more people enter the insured group, driving down the average cost of insuring each one, individuals are rewarded by paying a lower monthly fee. Wow! We can actually maintain benefits and lower the out-of-pocket expenses for seniors.

It isn’t wrong to stand up for those who are striving to make their lives better. In fact, it is morally reprehensible to kick them in the teeth by refusing to allow them a means to take care of them selves and their families. Medicare B is not a perfect plan. It does, however, take the injustice out of the first two minutes of every hour fifteen million Americans will work today.

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