I started thinking about this topic because I recently did my taxes and found I could take some medical expenses as a deduction on Schedule A. The IRS classifies any medical expense above 7.5% of your adjusted gross income as a legitimate deductible item.
I figured that, including what I paid for medical insurance, I actually spent a little over 20% of my income last year for medical treatments. And I wasn't even sick!
What if I needed something big -- like my friend who recently had to get a pacemaker implanted? The bill, he told me, was well over $50,000. But he has pretty good insurance, and so he paid just a tiny fraction of that out of pocket.
In this day and age, I think of health care kind of like fire protection, or the police force. We have a fire department because a private, for profit, fire department just wouldn't serve the public very well. First of all, hopefully, there would never be enough business to support competing private fire departments. And then, you don't want to be standing there with the fire-department salesman negotiating a price while your house is burning down. Or, what if you're getting mugged, and the policeman who works for a private company demands a surcharge before he will pull the attacker off you?
These days, who can pay for medical care if they get a terrible disease, or suffer injury in a car accident? There's no longer a town doctor who makes house calls. You instead go into the big, bureaucratic medical system where decisions are made out of sight, and prices are determined by some kind of weird calculus involving the government, private insurance companies and big medical groups. You have no say in the matter. You can't shop around. You're in no position to negotiate a price, any more than you would be with the private fire-department salesman.
And besides, do you have a spare half million dollars lying around to pay for a bypass surgery if the doctor suddenly determines you need one? Or to pay for a regimen of surgery, chemotherapy, radiation and follow-up care if a test suddenly finds a tumor in your gut? Are you going to try to shop around for a discount doctor? Are you going to cut costs by foregoing the anesthesia?
And yet, I'm continually flummoxed by people who are appalled that they have to pay for health care at all. Some people think they have a "right" to free health care.
But why should they? We don't get anything else for free. One way or another, you have to pay for your goods and services. You pay for the "free" fire department and the "free" police department and the "free" public schools with your local taxes (which, by the way, though you may not realize it, take a pretty good chunk out of your income.)
The medical world uses around 16 to 17% of our national economy. So, theoretically, whether you're rich or poor, you should be prepared to spend around 16 to 17% of your income on medical care -- whether you're paying a private insurance company or the federal government, or paying directly to the hospital.
I have a friend. I don't know the family's financial situation; but they live in an upscale townhouse; they have two cars, the younger daughter goes to a private college; and they seem to do a lot of traveling. Last year the older daughter, who's 26 and was living at home at the time, broke her arm and ran up several thousand dollars worth of medical bills. The daughter only had a part-time job with no medical benefits. For some reason she wasn't on her mother's plan (maybe she wasn't eligible, or if she was, they didn't want to pay for it), and she certainly didn't have her own insurance, because she "couldn't afford it."
So when the doctor and hospital bills came in, the mother gave them to the daughter, who in turn passed them off to New York State. Both mother and daughter had to spend a lot of time on the phone, and fill out a lot of forms, but in the end they got New York State to pay all her bills. In other words, the daughter palmed off her medical bills on the rest of us. She had no qualms about it. It never occurred to her that it might be unethical; she felt no guilt or shame. In fact, she seemed kind of proud of her financial savvy -- that she was able to beat the medical system and get someone else to pay. And then she bought a new snowboard and some other winter equipment and headed off to California to spend the winter working at a ski resort.
Now, I'm an American and I believe in democracy and I respect the Constitution, even if it sometimes makes us uncomfortable. For example, I'm in favor of gun control. But I'm aware of the 2nd Amendment, so I believe we should tread carefully in that area and find a way to limit gun violence without infringing on the rights of hunters and whoever else wants a gun.
The same goes for health care and the individual mandate. It does make me nervous to have the Federal government start telling us what we have to do, and what we have to buy. But do you really think it's fair for people to save money by not getting medical insurance, then run up big, expensive medical bills and expect someone else to cover the cost?
Honestly, I don't know what's in Obamacare. (I do know that our 20-somethings are now eligible to get onto their parents' insurance plans; but you still have to sign up for it and you still have to pay for it.) I don't know how much Obamacare will cost us (and I bet you don't either). But I'm definitely in favor of some kind of medical system that works for everyone, and that treats everyone fairly. And it seems to me that as long as doctors and hospitals are mandated to treat people who are sick or injured, then it's fair for people to be mandated to buy medical insurance. In fact, shouldn't that young lady be spending 16 - 17% of her income on health care -- just like the rest of us -- instead of blowing it all on a new snowboard and airfare to Lake Tahoe?
One thing Obamacare doesn't seem to address very well is the cost of health care. If I spent over 20% of my income on medical care last year, what will I spend if I really get sick. Or rather, not if, but when I really get old and sick?
According to the Organization for Economic Development we spend $8,000 per person per year for health care in the U. S. According to an article on CNN, it's $20,000 a year for the typical family. Meanwhile, the cost of health care has more than doubled in the last ten years.
What can we do about it? Well ... I wish someone had some ideas, but I'll talk more about that in my next post.