Toxic Liabilities

By: Brooks A. Mick

The term “toxic assets” is bandied about incessantly today on financial news shows, in congress, in the Treasury Department, and around the water cooler in banks and other lending institutions. It refers principally to the bad loans and their subsequent packaging as investments by Fannie Mae and others.

I am writing about a toxic liability, however, not a toxic asset. GM, Chrysler, Ford, and other companies are being laid low by health care costs among other expenses. Not only the costs of current employees are expenses to these companies, but some have contracts that require they pay health costs of retirees in perpetuity.

As a participant in the health care system since 1962, and having studied health care costs from that time until now, I propose that the major defect in our US health care system is that we pretend employers pay for much of it. This has several pernicious effects:

1) The belief, conscious or subconscious, that someone else is paying surely encourages over utilization by the patients. Many illnesses treated in 1955 by over-the-counter remedies (still just as effective for head colds, for example!) are now using health care dollars that could be better spent on illnesses that are truly helped by professional medical care.

2) Putting the employer into the process adds a layer of bureaucracy which inexorably decreases inefficiency and increases costs.

3) Physicians would aim for maximum efficiency if they were spending their patients’ money, but tend to see the faceless bureaucracies as cash cows which are ripe for milking.

4) The employer-based system produces discrepancies in health care because of tax breaks for those employee benefits but no tax break for individuals and families who must purchase their own privately.

These employer-based bureaucracies add costs that are never recovered, and then one has to add in HMOs, one of Richard Nixon’s worst ideas, as another costly bureaucracy. The proposed efficiencies and savings have never seemed to match the added costs.

Obama claimed, during the debates with John McCain, that taxing health care benefits was a rotten idea. His exact words were:

“And this is your plan, John. For the first time in history, you will be taxing people’s health-care benefits.” (It was) “…radical…” (and) “the biggest middle-class tax increase in history,” also “out of line with our basic values.”

Obama considered it likely that McCain’s plan would decrease the likelihood that employers would provide health care. But now, in an astoundingly cynical about-face, Obama proposes to tax employee health benefits, plans to push people away from employer-based health care, and rather than giving tax breaks to ordinary citizens so they can afford to purchase their own, his ultimate goal is to goad people into government-based universal health care.

This is not only a cynical about-face, but a planned one, I propose. He had this in mind all along and was just used his scare tactics to win a debate when he was actually planning the same action he hoped to implement himself, but for a different goal. McCain’s taxation of employer health benefits was to encourage private health care and competition. Obama’s taxation of employer benefits is designed to destroy competition and maximize government power over the citizens. When the government has its big ham-fists around the neck of your health care, it also has you by the gonads.

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