The following letter was sent to Senators Warner and Webb. It builds upon my first letter.
September 28, 2009
Dear Senator:
As your constituent, I would like to share with you my ideas on the health care debate. My solution incentivizes Health Saving Accounts and makes private insurance portable across state lines. These are a couple of simple ideas that the American public will support. They’re described in detail on pages three and four of this report. First, however, let me discuss comments made by the President which disturbed me.
The President recently compared health insurance to car insurance when he tried to justify his proposed tax on the uninsured. He stated:
"What it's saying is ... that we're not going to have other people carrying your burdens for you any more than the fact that right now everybody in America, just about, has to get auto insurance ... Nobody considers that a tax increase. People say to themselves, that is a fair way to make sure that, if you hit my car, that I'm not covering all the costs."
Reference: http://www.cnn.com/2009/POLITICS/09/20/obama.health.care/index.html, viewed on 9/27/2009
Health insurance is not comparable to car insurance. Owning a car is a privilege, not a right. Life is an unalienable right protected by our Constitution. For a copy of the Constitution, go to http://www.archives.gov/exhibits/charters/constitution_transcript.html
On the subject of taxation, the Constitution, Article 1, Section 2 states:
“Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons.”
Article 1, Section 8 states:
“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;”
Article 1, Section 9 states:
“No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken
Note: Article I, section 9, of the Constitution was modified by amendment 16.
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
These articles state in plain language that the government is not permitted to target a direct tax upon a select few. Those without health insurance are a select few (less than 10% of the population if you believe the President’s number of 30 million). Unless the President is willing to make an amendment to the Constitution, his plan is unlawful.
The unlawful nature of his proposal betrays the desperation of his plan. Rather than seeking to empower individuals by giving them freedom and choice, he desires to usurp the health care industry. A bill to congress should be drafted that contains only the articles contained in this report. A lengthy, wordy bill is not required to solve the problem. As it is with the software industry, an ‘agile’ solution is a small, incremental change that leads to a better outcome.
Congress betrayed the public’s trust when it passed the 1073-page stimulus bill without reading it on February 13, 2009. The Democrat’s didn’t need to rush the bill; it sat on the President’s desk for four days. In that amount of time, Congress could have read and understood the bill. America needs a change. America needs transparency in its elected government. A short bill that everyone understands will do just that.
If we allow the government takeover of health care, where does the government intervention in citizens’ lives end? What of the moral hazard that is created by saying you should pay for my unhealthy habits? It’s like the great George Bernard Shaw quote: “A government that robs Peter to pay Paul can always depend on the support of Paul.” Until, that is, the government restricts freedom and prohibits unhealthy behavior. Then, everyone loses.
Do not blindly support the President with a silent nod when he hypnotizes the masses with his rhetoric of a ‘public option.’ Leave blind support to the dictators who professed support for the President at the latest U.N. meeting. Rather, send a bill to his desk that he can sign that will create a generation of well-informed and healthier Americans. Support the President by taking up this cause and bringing the bill to Congress. When it receives press coverage, no one will be able to attack it without backlash from his/her constituents. Give American citizens equal opportunity to better themselves.
America was founded on equality of opportunity, not equality of result. “Equal pay for equal work” indeed. Those who work hard and can provide a service should be compensated. How much work does a professional baseball player do? What is his contribution to society? Should he be paid millions per year? Capitalism says, “yes,” if that’s what the market determines. He is providing a service that few can match. His natural skill is something that people pay to watch, and the market determines what his salary will be. He has the same right to earn his salary as you do to earn yours. Capitalism should not be so hastily discarded.
The following section outlines how Capitalism can solve our health care problem. Some of the ideas are shared by Mr. Mackey, co-founder and CEO of Whole Foods Market, Inc. He authored a very intelligent article, which can be read at: http://online.wsj.com/article/SB10001424052970204251404574342170072865070.html. I’ve already sent a version of this to the President, Vice President, and the members of the Senate Finance Committee. The American public needs a voice. You can be our voice.
Health Care Reform
I have a solution to your Health Care debate: Make Health Saving Account (HSA) distributions eligible to pay for insurance premiums and allow insurance companies to compete across state lines. An easy, elegant fix is usually the correct one. My arguments for this fix include fairness between employer insurance plans and private insurance plans, overall cost savings, and insurance for life.
Current law makes insurance plan premiums tax free for those individuals and families who get insured through their employer. How is it that the government is allowed to discriminate against a person who chooses to get insurance directly from an insurance company? To be fair, his or her insurance premium should also be tax free.
Now, you may make the argument that the government can’t afford to not tax insurance premiums. But, as I’ve already stated, the government doesn’t tax the premium of a plan provided by employers. In effect, the government creates an incentive to get insurance through an employer. This insurance, however, will be cancelled when an employee retires. To whom will the retiree go but the government for help?
By not taxing insurance premiums, the government will encourage the young and healthy to seek out health insurance independent of their employer. In my own example, I pay $600 in insurance premiums annually through my employer. It’s taken off of my check before federal and state taxes are applied. I looked up a similar plan offered through Blue Cross Blue Shield. For similar coverage, I would have to pay $1200 a year. Now, at first glance, this may seem unfair. But, understand that my employer pays $4600 a year on my behalf for my insurance coverage. If I go with private insurance, I would remove $4000 from the overall equation.
But that’s not the whole truth because my insurance premium through my employer is federal and state tax free. Thus, for me to purchase private insurance, I need to gross $1600, not $1200. This 33% increase accounts for both federal and state taxes. Thus, the net money saved is $3600, or about 2x my premium before taxes.
For more evidence of the elegance of this plan, consider this: By getting private insurance early in life when a person is healthy, they will likely have insurance before they have a pre-existing condition. The majority of ‘dropped coverage’ claims are due to rescission, where the insurance company claims to be misled on preexisting health conditions. If people get covered early in life and keep the coverage after they retire, that will dramatically reduce the number of dropped-coverage cases.
Now, consider the alternative. Should I stay with my employer’s coverage until I retire at 65, how will I get insurance if I already had a heart attack or other poor-health condition? My insurance costs would skyrocket because I would likely have higher medical bills. I might even be denied coverage because I wouldn’t be profitable to the insurance company.
That’s a key point that I’d like to take a few sentences to talk about. Insurance companies are driven by profit. They need to make a profit. Some say that desire for profit drives up insurance costs. But those people are not looking at the entire equation. We live in a free-market society. Inefficient companies do not prosper and should be allowed to fail. But those companies, who streamline costs and hire only the right number of right people, thrive. Supply and demand drive a free market to establish a fair price for goods and services.
Thus, it is perfectly reasonable that I should be denied coverage if the insurance company can’t make a profit off of me. They are trying to provide a service that I’d like to purchase.
To avoid the scenario where I am denied coverage in my retirement, I should get my own private insurance now when I am young and healthy. Yes, the premiums will be greater since I will not receive help from my employer (I would forfeit the $4600 employer benefit that was paid on my behalf). But my plan will not be cancelled when I retire. Also, the government can create an incentive by not taxing distributions from HSAs for insurance premiums.
Now, you’re probably asking yourself, what does the government get for not taxing this money? Here’s your answer: When all of America is on their own private insurance, which will stay with them until they die, Medicare and Medicaid can be removed. Those programs are the two of the biggest entitlement items on the federal budget. And they’re quickly going bankrupt.
The solution that I’m proposing will not immediately solve the bankruptcy problem of Medicare and Medicaid. Those who are currently receiving assistance should not lose that assistance. Also, those who are close to retirement and have been counting on assistance should not be denied. But, you can probably get the majority of America’s young adults (less than 40 in age) to go along with this program because, in the end it will save them money. Sure, you say that we could continue with Medicare and Medicaid by reducing the benefits. In 30 years time, however, that benefit will be negligible.
The solution is simple. Allow HSA distributions to pay for insurance premiums. It’s a one-line fix on page 8 of IRS publication 969 (2008). Current language states, “You cannot treat insurance premiums as qualified medical expenses unless the premiums are for…” Change that language to say, “You can treat insurance premiums as qualified medical expenses.” Also, as Mr. Mackey states, “Repeal all state laws which prevent insurance companies from competing across state lines.” Make health insurance portable.
This will be a short bill that will pass Congress. The youth of America will go for this change because it empowers them. The elderly will also back it because it doesn’t affect them. Continue to tax for Medicare and Medicaid until those programs are no longer needed. Let the people take responsibility for their own lives.
