The Socialized Medicine Scheme and the Crisis-Cult of the Uninsured

One of the main arguments in the socialized medicine scheme is the crisis-cult number of uninsured. That the number of uninsured is 47 million (1)

What is the definition of an "uninsured"? How many are uninsured? What are the components of the statistic "uninsured"? How many people are involuntarily uninsured?




What is the definition of an "uninsured"?

Common sense would indicate that an uninsured is a person without insurance. The definition of the term uninsured is: not covered by insurance. (2) Seems rather straight forward. Wrong.

The differing statistical measurements of those without health insurance in the United States use the following definition for "uninsured": have not had health insurance for one or more periods in the last twelve months. (3) (4) (5) Therefore, when you see a number within a news story regarding the number of uninsured, its not the true number of "uninsured" its rather the number of people that have not had health insurance for one or more times in the last twelve months.

Hence "uninsured", meaning not covered by insurance, is a much different concept than not had health insurance one or more times in the last twelve months.

How many people have been uninsured one or more times in the last twelve months?

That is a very good question without a sound answer. The statistical estimates vary from a high of 83 million to a low of 35 million. (6) (7) (8) (9) (10) In other words the statistic is very unreliable. The favorite number quoted is 47 million by proponents of socialized medicine. (11)

What are the components of the statistic "uninsured"

One must remember, from the discussion above, that "uninsured" does not mean without insurance. However, proponents of socialized medicine conveniently leave out the true definition as "uninsured" is so much more powerful a term when attempting to make their political case for socialized medicine.

Politics are in play concerning the term "uninsured". Politics are at the forefront of the lack of discussion by proponents of socialized medicine regarding what makes up the statistic "uninsured". One example of statistical component omission is the phenomena of voluntary uninsured vs. involuntary uninsured. (12) That is to say, a large group of people elect to voluntarily not own health insurance. This group of voluntarily uninsured are people that otherwise qualify for health insurance and have the ability to pay yet opt to not purchase health insurance. Moreover, this group is a component of the 47 million statistic when in fact they are not "uninsured" they are "voluntarily uninsured".

Are uninsured non-citizens part of the 47 million statistic? Yes. (13) (14) (15)(16)Hence uninsured non-citizens have not been removed from the 47 million statistic for political reasons as the 47 million figure would quickly decline and not have as much political impact for proponents of socialized medicine.

An additional component is the millions who qualify for taxpayer financed (government) health-care benefits offered but just do not take the coverage for a variety of reasons. (17)

Involuntarily uninsured

The 47 million figure is an unreliable figure which further includes voluntarily uninsured people, non-citizen uninsured, and voluntary nonparticipants in taxpayer financed and offered health care.

Then what is the number of involuntary uninsured? 16 million. (18) In other words, those US citizens that are uninsured which desire to be insured is the true "crisis" number which equates to 16 million. That is, the crisis is overstated by 31 million people.

Summary

The "uninsured" health insurance statistic is based on a definition different than the traditional definition of not covered by insurance. The statistic "uninsured" for health insurance varies widely. When that statistic is dissected into its components the real number of involuntary uninsured for health care becomes 16 million which means the popular figure of 47 million is overstated by 31 million.

Note: mentioned above is that the total number of uninsured is a very unreliable statistic and varies widely. A fifteen minute side presentation by Catherine Hoffman of Kaiser Family Foundation is highly informative in this regard. Link is here:

http://www.kaiseredu.org/tutorials/CountingtheUninsured4/CountingtheUninsured4.html

References:

(1) http://www.pbs.org/newshour/bb/health/july-dec07/uninsured_08-28.html

(2) http://dictionary.reference.com/browse/UNINSURED

(3) http://www.kaiseredu.org/tutorials/CountingtheUninsured4/CountingtheUninsured4.html

(4)http://www.kff.org/uninsured/1420.cfm

(5) http://www.kaiseredu.org/topics_reflib.asp?id=142&parentid=71&rID=1

(6)http://nooilforpacifists.blogspot.com/2005/06/health-care-facts-and-myths.html

(7)http://sanantonio.bizjournals.com/sanantonio/stories/2009/09/21/story3.html

(8)http://www.realclearpolitics.com/printpage/?url=http://www.realclearpolitics.com/news/ap/politics/2009/Aug/05/health_care_debate__how_many_actually_uninsured_.html

(9)http://www.kff.org/uninsured/8004.cfm

(10)http://wiki.idebate.org/en/index.php/Debate:_Public_insurance_option_in_US_health_care

(11)http://www.pbs.org/newshour/indepth_coverage/health/uninsured/map_flash.html

(12)http://www.freedomworks.org/files/FreedomWorks%20Issue%20Analysis%20Source%20of%20Insurance.pdf

(13)http://online.wsj.com/article/SB124579852347944191.html

(14)http://www.cis.org/articles/2000/coverage/coverage.html

(15)http://www.kff.org/uninsured/7451.cfm

(16)http://www.freedomworks.org/files/FreedomWorks%20Issue%20Analysis%20Source%20of%20Insurance.pdf

(17)http://money.cnn.com/2008/04/29/magazines/fortune/colvin_aetna_esuite.fortune/index.htm?postversion=2008050106

(18)http://www.freedomworks.org/files/FreedomWorks%20Issue%20Analysis%20Source%20of%20Insurance.pdf

The Socialized Medicine Scheme: Cadillac Health-Care Plans

Proponents of the socialized medicine scheme
want to pay for the $1 trillion price tag of
socialized medicine by levying a tax on so called
Cadillac health-care plans (1). What is a Cadillac
health care plan? Will everyone end up with a
Cadillac health-care plan? Who will pay the tax?
What is the amount of the tax?



Cadillac health-care plans defined

The term "Cadillac" was first used to define a category of health-care plans in the 1970's. The term was used again in the 1980's. Then it was used extensively in the 1990's when Hillary Care was proposed. Basically the term was meant to distinguish the perception of luxury health-care plans.(2)

However, the proponents of the current socialized medicine scheme have arbitrarily defined a Cadillac health-care plan in terms of the level of annualized premium. Individuals have a Cadillac plan if the annual premium exceeds $8,000. A family is deemed to have a Cadillac plan if their annual premium exceeds $21,000. (3)

Will everyone end up with a Cadillac plan?

In order to find the answer to the the question posed above you first need to understand a predominant phenomena of taxation. The phenomena is: when you introduce or increase a tax on an item you will get less of that item. For example, if government levied a $1 tax on a loaf of sliced bread, consumers will demand less sliced bread and hence sliced bread supply will fall as demand for sliced bread falls.

Therefore, if government levies a tax on Cadillac plans, then demand for Cadillac health-care plans will fall hence we will have less Cadillac plans. Employers will buy more modest plans for their employees. (4) In other words, employers will exercise tax avoidance.

However, a problem then occurs for the revenue stream needed by proponents of the socialized medicine scheme. As the Cadillac tax reduces the number of Cadillac health-care plans , then tax revenue will fall as less taxable items exist to in fact tax. Its the Laffer Curve and associated arguments by Dr. Art Laffer. (5) What then?

This problem has been solved by socialists by merely not indexing for inflation the $8,000 individual and $21,000 family thresholds mentioned above. (6)

Looking back in time, an income earner once suffered tax bracket creep. That is, inflation pushed up wages of the income earner and the income earner being also a tax payer, moved from one tax bracket into another tax bracket due to inflating wages. However, prices were inflating simultaneously. Hence the income earner's purchasing power remained unchanged with wages following prices. Yet the income earner's tax bracket changed and the income earner paid more tax thus suffering diminished purchasing power due to tax bracket creep. That is, constant purchasing power as wages follow prices yet higher taxes ended in dimished purchasing power.

Tax bracket creep was deemed unfair and hence the introduction of tax brackets indexed for inflation.

Ah the evil of it all! What is good for the goose is not good for the gander when it comes to tax revenue needed to fuel the $1 trillion dollar socialized medicine scheme. Socialists have merely gone back to the taxation concept of tax bracket creep. In this case one might call it health plan creep.

The Kaiser Family Foundation states that the average family plan premium is $13,375. (7) Kaiser goes onto to mention the average price increase for family health care plans from 1999-2009 was 8.7%. Hence the average family plan will become a Cadillac plan by 2015. (8)

Its rather simple mathematics to see that everyone will eventually have a Cadillac health-care plan.

Stepping back for a moment, and looking at the term "Cadillac" from the perspective of Political-Economy, socialists are simply using the specific term "Cadillac" as a sham. Its merely a term used for a class warfare and misdirect strategy. Socialists are using the term Cadillac to make John and Jane Q. Public think only people with very rich benefits aka Cadillac plans are going to carry the water for the funding of the socialized medicine scheme. Hence John and Jane Q. Public are class warfare baited and their attention is directed away from the fact that John and Jane Q. Public will soon, themselves, have a Cadillac plan. Oops! Oh yes! The dollar threshold of a Cadillac plan is unadjusted for inflation hence through the compounding of inflation everyone ends up with a Cadillac plan.

Hence John and Jane Q. Public's modest benefit plan soon morphs into a Cadillac plan due to inflation. Like tax bracket creep, socialists have now introduced health benefit plan creep. Its merely a matter of time when everyone has a Cadillac plan. Which means its merely a matter of time when everyone pays the tax. John and Jane Q. Public are being duped.


Who pays the tax and at what tax rate?

Another phenomena of tax is that the ultimate payer of any tax is always the consumer. (9) (10)All taxes are passed onto consumers. Hence the concept that the Cadillac tax will be levied against insurance companies is yet another class warfare and misdirect argument to throw John and Jane Q Public off the real subject at hand.


What is the tax rate? Try 40%. (11)

Summary
Within a very short period of time, all consumers of health care insurance, through health benefit plan creep, via non-indexed thresholds and inflation, will have a Cadillac plan and the consumer of health benefits will be taxed at a 40% rate.



Notes:

(a) the picture above is the Titanic beginning sea trials 04/02/1912. Seemed appropriate.

(b) the Cadillac tax has been proposed by politicians through expert analysis and confirmation by MIT economist Jonathan Gruber. However, it has been uncovered that Gruber has a major conflict of interest. Please see the following post by Donald Luskin of Trendmacro entitled Where's the Outrage:
http://www.poorandstupid.com/2010_01_03_chronArchive.asp#3413284275177039725
References:

(1)http://www.nytimes.com/2009/10/13/health/policy/13plans.html?_r=1&hp

(2)http://www.slate.com/id/2232434/

(3) http://www.nytimes.com/2009/10/13/health/policy/13plans.html?_r=1&hp

(4)http://www.healthbeatblog.com/2009/12/fact-check-the-cadillac-controversy.html

(5)http://en.wikipedia.org/wiki/Laffer_curve

(6) http://www.nytimes.com/2009/09/21/health/policy/21insure.html

(7)Ibid

(8) http://www.nytimes.com/imagepages/2009/09/21/business/21insure_graphic_ready.html

(9) http://www.sweethomenews.com/article/20284-consumers+pay+tax+hikes

(10) http://www.heritage.org/Research/Taxes/cda04-12.cfm

(11) http://www.nytimes.com/2009/10/13/health/policy/13plans.html?_r=1&hp