“Given our current tax code, the simplest way to bring down medical costs would be to fully tax health care benefits as wages and simultaneously increase the personal deduction by an amount significant enough to neutralize the effect of the tax increase. This would do two things. First, the uninsured would get a huge pay increase, enabling them to buy reasonably priced catastrophic policies. Second, those currently insured could opt out of expensive employer-provided plans, trading premiums for extra wages, then buy a more economical plan. The savings would go right into their pockets.
The bottom line is that aggregate medical costs will never come down unless services are rationed more wisely. Rather than being used as a pre-payment plan for routine care, insurance should only cover unpredictable, catastrophic costs.”
From what I can tell, the ONLY thing Mr. Schiff understands about healthcare is the poor design of private medical insurance. The current system does not provide real insurance. It’s nothing more than a system of pre-paid medical, operating with the rules of insurance. And this has created a huge source of fraud by private insurers. Assuming we keep the basic structure of private insurance in place, it should be modified to provide assistance under some catastrophic, emergency situation rather than routine care.
However, what Schiff fails to recognize is that by placing everyone on a high-deductible medical plan, most people would actually end up underinsuring themselves. This has already happened. According to a study by Harvard researchers, 68% of all medical bankruptcies (50% of all bankruptcies) occur with people who have medical insurance. A system of universal coverage would serve to fill in the gaps catastrophic insurance leaves out.
For many years now, Washington’s response to America’s runaway healthcare costs has been the addition of new tax deductions. But we cannot forget that tax deductions do absolutely nothing for those who have lost their jobs. You need income in order to utilize tax deductions.
More so than anything else, tax deductions provide yet another tax shelter for the wealthy, while encouraging further cost increases from the healthcare industry, knowing you have no choice but to pay whatever prices insurers stick you with.
More important, Schiff fails to understand that people must be provided with basic care instead of waiting for a small problem to progress into a deadly and costly illness. It’s called preventative medicine; an important component missing from America’s healthcare system because the insurance industry doesn’t want to pay for it.
I find it mysterious how someone who claims to be an expert in economics is unable to appreciate the fact that taxation of healthcare benefits would create a permanent drag on consumer spending. There is a solution, but Schiff has no idea what it is. As far off from the solution as Obama is, Schiff is light years away.
The solution is some combination of universal healthcare, radical policy change, and technology. A system of universal coverage would save hundreds of billions of dollars annually after streamlining the bureaucracy and slashing the huge administrative costs from the private insurers.
The technology I speak of involves the design and assembly of a national healthcare IT and telemedicine platform. Once in place, a system of integrated healthcare technologies (with or without universal healthcare) would provide:
(1) Significant cost savings
(2) Drastic reduction in medical errors
(3) Efficient rationing of medical services
(4) Adequate resources enabling consumers to be more accountable for their health
Ideally, in such a system a basic level of coverage would be provided to all. More advanced and extended therapies and care would be made available by a greatly reduced private insurance market.
While modern technology would also minimize waste and fraud, without a system to ensure adequate accountability in place, improvements in these areas would be minimal.
While startup costs for a national healthcare IT platform and other changes would be high, the long-term benefits would be tremendous. These changes would not cost any additional funds when viewed over the course of two decades. In fact, if designed and executed appropriately, total healthcare expenditures would decrease significantly.
Finally, it is obvious to anyone familiar with the root causes of America’s long decline that universal healthcare offers the best solution to restore the productivity of this nation. I’m not talking about the one million medical bankruptcies occurring each year. I’m not even talking about the added morale boost anticipated from a system of guaranteed medical care, although these benefits would certainly add to the nation’s prosperity.
I’m talking about making the rules of free trade more equitable, so that U.S. corporations are not forced to send jobs and entire facilities overseas in order to remain globally competitive.
I find it very odd indeed how Mr. Schiff moans how the manufacturing base of the United States has disappeared, while failing to bring up the topic of America’s unfair free trade policies. Once again, I would estimate Schiff has chosen to avoid this topic for political reasons.
Virtually all of America’s major trading partners have some kind of universal healthcare system. Meanwhile, the best healthcare systems in the world have highly advanced healthcare IT platforms, which will enable a smooth transition towards modern medical care. Because these nations have universal care, their national healthcare IT platforms have been funded by the government. Therefore, employers are not burdened with the high and uncertain costs of these liabilities.
Naturally, when U.S. corporations want to cut costs, they can avoid the fastest growing expense on the balance sheet by reducing healthcare benefits, dropping coverage or sending jobs overseas.
These are just a few of the changes I have proposed in a book I have been working on as a part of my work in the healthcare industry. My solution aligns healthcare with true free market dynamics instead of the pseudo-free market system that currently exists.
Lesson #6: Reality Check
Prior to offering further reckless suggestions about healthcare reform, Mr. Schiff might want to go back to the drawing board and figure out the economy as it relates to investments, because it’s the fine details that really matter. At a later stage he might want to take a stab at the political solutions. Similar to his economic solutions, Peter’s approach to healthcare offers little improvement to the current system.
Perhaps if he spent more time doing what a global investment strategist should do, instead of spending his time making daily media appearances and You Tube videos, he just might realize how wrong he’s been. After all, he IS an investment strategist, isn’t he? Maybe he’s really more of a marketing strategist than anything else.
Let’s face it. Peter is accustomed to going up against political hacks, clowns and senile goofballs; most from the perma-bull camp. How hard can it be to shine when placed up against that crowd?
I’m still waiting for him to go up against a real expert without partisan interests. I could offer a few names if he has an interest. Once again, I won’t hold my breath. Everyone knows it’s much better to avoid confrontation when you’re greatly outmatched. I’d say Peter is smart enough to figure that one out.
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Copyright © 2009. Mike Stathis. All Rights Reserved.
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