8% Health Care

Last year President Obama asked Congress to come up with health care reform that pays for itself, encourages competition and is affordable. In the background of the debate on just how to accomplish these goals is the looming issue that, as more and more baby boomers start to retire, Medicare will be the next financial crises if it is not overhauled in this reform.

The old idea of a public option is dead on the floor of Congress. But what if there were a different kind of public option, one that paid for itself, encouraged competition and was affordable? What if every individual or family could choose to pay 8% of their taxable income, capping out at $6,000 dollars, to a government plan for whatever basic health care they needed? The option would exist to choose a private health insurance company for either more or less than 8%, more services or fewer, but the safety net of a public option for all basic health care that cost only 8% of an individual or family’s income would still exist. An 8% plan would replace Medicare, and make the services Medicare provided financially sustainable.

You may have heard the tag line from late night commercials, “but wait, there’s more.” With an 8% plan the tag line would be reversed, “but wait, there’s less.” Take a look at your pay stubs. You are already paying for a public option, whether you are eligible for Medicare or not. Medicare tax is 1.45% of every person and every business’s income. If you chose the 8% plan, you would only be paying 6.55% more than what you are already paying.

To many, 8% must seem so inexpensive as to be too good to be true. A couple months ago the PBS NewsHour did a piece on the Dutch health care reform that by all accounts is doing quite well. The average cost for health care in that country was reported to be 7% of a person’s income. The numbers for the US also seem viable for such a cost. The median household income in the US is 50,000.00 dollars per year. A family choosing the 8% plan would pay $4,000 per year. If only 1/3 of the US population, 100 Million people, used the 8% plan, there would be 400 Billion dollars per year for health care, just for those 100 Million people.

The economic benefits of an 8% plan are many. Besides being affordable, paying for itself and encouraging competition, the 8% plan is not employer based, so it goes with you. Another benefit of this plan is for businesses. In a time when businesses, especially small businesses, need a boost, not having to pay for an employee’s health care would be exactly the stimulus they need. But wait, there’s less. They would not have to pay the 1.45% Medicare tax, either.

Make no mistake; this idea is only part of the greater solution of health care reform. However, an 8% plan is vital to health care reform becoming a true reform.

Health insurance companies will have to become more efficient. They might even have to stop pouring billions of dollars into lobbying Congress to keep things the way they are and start working on how they can deliver better health care to their customers.