Wednesday, January 7, 2009

Am I a Socialist

This may be my most controversial Blog yet or ever to come. I just finished the Book by Scott Burns and Laurence J. Kotlikoff, "Spend ‘til The End". Then I watched Michael Moore’s film "Sicko". I am not going to give my opinion of the book or the film, but both got me thinking about the American way of life. 

In short, Spend ‘til The End is an economist’s view of financial planning and suggestions of how to raise and "smooth" your living standard. Sicko is one man's view of the short comings of the United States health care system and a case for national health care. It is one sided and meant to build the case for national health care. 

The book points out how student loans can lower your standard of living for a very long time, possibly into your fifties and sixties. The book touches on planning for health care expenditures and long term care in retirement. Sicko suggests that we will all be better off with a health care system that is free and covers everyone. What if we did not need to worry about the cost of either education or health care? What if both were socialized? 

The more I thought about these questions the more of a case financially I could make that both should be provided as a right of citizenship. Yes taxes would go up, but they would be offset by the current cost of each. Currently I am spending about 6.3% of household income for medical expenses. My employer is spending about 8% of my salary for health care expenses. Would we need to raise corporate taxes and payroll taxes more than that to provide health care for everyone? I am not sure and it is a tough calculation to make. Part of the problem is that currently some of the uninsured are covered with the premiums of the insured. If an uninsured person goes to the emergency room and does not pay the bill, the cost is passed onto the insured. You would also have to factor in those who can not afford there medication and wind up in the hospital because of it. 

This has happened to a family member of mine. The hospital bill was over thirty thousand dollars back in the late nineties. That would have paid for about ten years of medication. This individual now has Medicare part D and has been getting the medication. 

Healthier employees are more productive employees and that would also have to be factored into the cost. Many people would retire earlier if they had health insurance and would be replaced with younger workers that can be paid less. People who do not get their annual check up because of the cost (even some with insurance do not go because of the co-pay) would get their check up and prevent or catch illnesses earlier which would lead to overall lower cost. 

What would happen if a college education was free? Companies and institutions would not have to pay their employees as much to make up the cost of college. If you are a doctor with a half million dollars in student loans, you need to make a certain income just to cover the loan payments. Some individuals may enter a field that pays less, like social work if they did not have to pay for student loans. Or maybe you know you want to do social work and have been accepted to an Ivy League school, but opt to go to a community college because of the cost. Would we have better educated individuals applying for lower paying jobs and possibly making a greater impact to those institutions? Not sure, but there are definitely students choosing their school on price. This is a wise thing to do. 

I know this Blog will be controversial, but I try to think outside the box. As Americans, are we truly happy with the current systems for providing education and health care to our citizens? Is there another way of doing things that would raise the living standard of every American? 
I believe that I am a capitalist, but one that can see the economic benefits of providing both health care and education to everyone. I do not believe that the systems would need to be run by the government and could still remain competitive. 

What do you think? 

1 comment:

  1. If the Ivy League colleges were free, would they still be Ivy League? If the Mayo Clinic would be a free clinic, would it still be one of the best in the world?

    Look at the public school system we have now. Some of the schools are good, and some are bad. You have no choice as to which school you go to, it's determined by where you live. If we socialized college education, I could see them doing community colleges and state schools for free, but not all of them. If you live in LA, you get to go to UCLA, no choice, unless you pay your own way.

    As for the socialized medicine, look at the Medicare program. Most people have to have something in addition to Medicare to defray the costs. Also, Medicare only pays the doctors and the hospitals about half of what they normally charge ($45 for a doctor's visit). They decided what they were going to pay for each procedure back in 1983 and haven't changed it since. So the doctors would be underpaid, just like most state officials, so no one would want to be a doctor. If that's what we can expect from a socialized medical system, count me out.