Friday, September 15, 2006

Health Care Reform that Gutknecht SHOULD support

Another Open Letter to Congressman Gutknecht,

I have written before on the condition of our health care system.

Think about the following before judging this proposal.
Yesterday, Ford Motor Company announced that it will offer its 75,000 U.S. hourly workers buyouts and incentives to leave the company. The packages, which could range from $35,000 to $140,000, are similar to those General Motors offered earlier this year.
The U.S. automobile industry spends more per car on health care than on steel – depending upon the model; the health care cost is double the sheetmetal cost. The cost of providing health care adds from $1,100 to $1,500 to the cost of each of the 4.65 million vehicles GM sold last year, according to various calculations. GM expects to spend at least $5.6 billion on health care this year, more than it spent on advertising last year. For every vehicle that DaimlerChrysler AG builds at one of its U.S. plants, the company pays about $1,300 to cover employee health care costs.
Nationally, workers pay an average of 16% of the premium toward single coverage and 28% of the premium for family policies, a Kaiser Family Foundation survey of employers shows. That's an average of $558 a year for single employees and $2,661 for families. Doing the math, companies are picking up the tab for $2,371 for single coverage and $4,182 for family coverage.

In reality, all these costs are passed on to the consumer. If you buy an American-made product from a company that provides health coverage, you are paying for that employees health care.
Is part of the equation when a company considers having a component made – or complete item – overseas, the health care obligation ?

Now, let’s look at the Health Care problem. Simply, rising costs and excessive overheads are contributing to unnecessary cost increases. Yes, some costs are justified, such as advancements in technology, some are understandable such as the aging of America, but some due to our culture such as the expanding waistline of America, and others are due inefficiencies in the medical care process, etc.

If the objective is to provide medical care for America’s citizens, the question is how to pay for it. The current model has three main components : #1. Employers, possibly with some employee contributions, providing insurance coverage; #2. Private policies borne entirely by the purchaser; #3. The un-insured who may or may not receive some assistance through some governmental agency; or may receive care through non-profit hospitals which treat and pass the bill on as part of their overhead onto insured and paying customers, etc.

To resolve this, universal participation in the payment process is needed. My solution is a pretty simple one – a national health care sales tax. The health care expense is roughly 9% of our Gross National Product. So, just put an extra 9% onto everything we buy. Wow, that may seem like a hefty premium, but remember that since you are already paying for much of these expenses in the product purchases or your payroll deduction. The good news is that some companies will be able to reduce their product prices as they will not have to pay for their employees health care --- bam, new car prices just dropped over a thousand dollars. Businesses will properly value employees’ work ethic and realize that they do not want to move production overseas. Additionally, one of the major concerns with illegal aliens is there impact on the health care system as freeloaders … well, since they pay sales tax, they will be contributing.

Now, with universal participation and universal coverage, costs should go down.
First, layers of bureaucracy should be eliminated as there does not need to be all the confusing paperwork and insurance companies.
Second, preventative medicine will be the norm. Today, so many treatable diseases are not detected until it is too late. Emergency rooms are filled with people that wait too long to go to the doctor.
Third, charging more for the service if uninsured than insured will be eliminated.

Congressman Gutknecht, you have been pushing a Flat Tax as a campaign issue. As far back as 1998, the concept of a Flat Tax has been an actively debated as an alternative to the current Income Tax system. My initial reaction was skeptical, but the more I read about it, the more that I see there is possibilities that this could work.
If America is not ready for a full blown Flat Tax system, why not prove it out by a Flat Health Care Tax? I may be wrong on the tax rate, but the concept is appropriate and the rate could be tweeked based on funding requirements.
So, what do you say, Gil … wanna sponsor a meaningful piece of legislation ? If not, I’ll try my idea on your competitors.


A concerned citizen looking for an effective Congressman who will truly serve the First District.

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