Opinion: The Great Healthcare Debate

By Julie E. McNeal, CPA

Add your opinions at the bottom of this article!

As I write, no other single issue dominates the news like the healthcare debate. When pondering issues of the day, I often wish for my very own magic wand. With a mere flick of her wrist, employing her trusty wand, she … Well, she’s not entirely sure what to do about healthcare. The complexity is enormous, the interests, from both the business and the recipient sides, are entrenched, and the projected costs of doing nothing are mind-boggling. It’s fair to say whatever cure Washington and Hartford prescribe will have long-term effects for our families, retirement, and businesses.

So, I set off to Google my way through the healthcare morass.

First stop: The Concord Coalition

The Concord Coalition is a non-partisan Washington think-tank created in 1992 to inform Americans about our long-term fiscal condition. Hint – It’s not good.

Medicare, which serves 44 million people and is the nation’s largest single source of healthcare funding, already spends more than the taxes and premiums it brings into the Treasury — $210 billion in 2007. Spending for Medicare as a percentage of GDP was 2.7% in 2007; according to the Congressional Budget Office, it is expected to rise to 5.9% in 2030 and 9.4% in 2050.1 Okay, so the retirement healthcare that we, our parents, and hopefully our children depend on is really, really expensive.

The Wall Street Journal, August 5, 2009

Here’s a take by economist Arthur Laffer in his August 5 editorial, “How to fix the Health Care ‘Wedge.’” Laffer believes that in order to drive down the cost and consumption of healthcare, patients need to be aware of the actual cost. He advocates patient-centered healthcare reform where patients foot the bill, through individual ownership of insurance policies. No more tax-free employer heath plans and, presumably, no more free (leaving aside the monthly premiums) Medicare for the elderly. Laffer is also looking for tort reform, but that’s way beyond the power of my magic wand.

The Atlantic Monthly, September 2009

“How American Healthcare Killed My Father” is the title of the article by David Goldhill. The sad story is that Goldhill’s father died of an infection contracted in a New York City hospital. I expected a relentless diatribe against the healthcare system. Instead, Goldhill examines how we came to insure against all health risks and the effects of removing ourselves so far from the costs associated with our care and concludes that no one group is the villain of the story. He points out that the incentives in the system “result in a generational pyramid scheme rather than sustainable financing. And that – most important – remove consumers from our irreplaceable role as the ultimate ensurer of value.”2

One last story

My parents cleaned out their house before a move and presented their children with the saved papers from childhood. My papers included the bill for my birth, marked “paid.” Not all that long ago, people paid their medical costs directly.

And it goes on …

I’ve read a whole bunch more, conducted informal and unscientific surveys of people who caught me in a questioning mode, and developed a few thoughts on the subject.

The search for a solution

I fear for any solution that is based on a political mandate. Political parties run in and out of favor. Even if you believe it to be equitable, “tax the rich” as the solution to funding healthcare might very well be reversed once the Democrats are out of power. The nation would then have even less time to deal with the demographic costs of baby boomers becoming Medicare recipients. Funding healthcare is a short-term band-aid. Systemic change and controlling costs is a longer-term cure.

Waving my magic wand and fully cognizant that I couldn’t be elected dogcatcher once the AARP and unions are done with me, I would begin by taxing all health insurance benefits—including those paid through Medicare. I’d provide a tax credit with an escalation tied to the incremental cost of healthcare. This would begin to level the playing field for all.

I’m doubtful that we can move away from health insurance as the primary payment structure in the immediate future. Both Laffer’s and Goldhill’s fixes require transparency in the cost of treatment. Buying health insurance is not like purchasing a car or homeowner’s insurance. Replacing an automobile or a house is not analogous to contemplating treatment for cancer, heart disease, diabetes, or Alzheimer’s. My magic wand begins shooting wayward multi-colored sparks as I contemplate how to provide the physician, hospital, and pharmaceutical cost transparency that will be necessary for informed healthcare consumers.

So setting aside my wand and wishful thinking for easy solutions, there is a compelling business case for a serious look at healthcare. Separating fact from fiction is crucial to the informed decision-making needed by CPAs for their businesses and clients. Business competitiveness, generational workforce movement, retirement planning, and other business risks and opportunities will be impacted by healthcare legislation and mandates. The expense, complexity, and funding issues belie easy answers.

On Wednesday, November 18, the CSCPA and CBIA present Connecticut Healthcare Summit: Impacts on Business and the Economy at the New Haven Lawn Club. The program (recommended for four hours of CPE credit) includes sessions and a panel discussion with local and national experts from The Concord Coalition, ConnectiCare, the state of Connecticut, and more. Take advantage of this unique opportunity to separate fact from fiction. It may just be the best $75 CPE in Connecticut this year.

What are your thoughts? We’d like to know. Register your ideas, solutions, and concerns about the future of healthcare below.

1"The Nation's Health Care Conundrum: Where Do We Go From Here?,” The Concord Coalition http://www.concordcoalition.org/issue-briefs/2009/0515/nations-health-care-conundrum-where-do-we-go-here  

2 http://www.theatlantic.com/doc/200909/health-care/6