By John Sarvay. Photos by Michelle R. Harris. Illustrations by Bob Gorman.
It’s called a national health care plan. The bill is gonna be a doozy—somewhere around $100 billion a year, according to health policy experts. And don’t think you won’t be paying for it.
Add it up: federal wage taxes (7.7 percent) plus federal income taxes (15 percent for the lowest bracket) plus state taxes (5.3 percent) equals 28 percent of your income already going to Uncle Sam and his penny-pinching affiliate, the Commonwealth of Virginia.
Now add a seven to 12 percent health care tax. That’s the current estimate. By 1995 you may be giving as much as 40 percent of your paycheck to the government. And largely to support the richest segment of our population—the Golden Girls and their boyfriends. Your grandparents.
Start socking away those nickels, folks.
Giving until it hurts
When New York’s Empire State Blue Cross recently adopted a new health care plan similar to the proposals in Washington, there was a big generational shift in cost. Generation X got the shaft.
Single 30-year-old males saw a 170 percent jump in insurance costs, while their smiling 60-year-old counterparts basked in the glow of a 45 percent reduction in costs.
In actual dollars, a 30-year-old family head is now paying $4,000 a year more for health insurance in New York than under the previous system. Naturally, the 60-year-old family head is paying $4,000 less.
The New York plan uses a system of strict community rating. You simply divide the total health care spending by the number of people insured. The total is split evenly between the people insured.
Sounds fair, doesn’t it? Everyone pays the same amount. Except that everyone doesn’t use the same amount of health care.
The typical 18-to-30-year-old consumes 50 percent less health care than the average working American. And the average 50-year-old consumes 50 percent more. And the consumption rate climbs as you move up the age groups. Just add it up, folks.
It’s a lot like splitting the grocery bill with your roommate. Except that you work at a restaurant and never eat at home. And her boyfriend is always coming over for dinner. And she’s always eating your Pop-Tarts.
Even the Congressional Budget Office reports that “young healthy people” are the one group that will benefit least from a New York-style, community-rated health care system. In a Washington Post editorial in July, writers-cum-demographers Neil Howe and Bill Strauss summed it up nicely:
How will 13ers react to a Clinton “centerpiece” that bills America’s poorest age bracket (under 35) for the benefit of America’s richest age bracket (over 50)?
The Clinton health plan’s massive penalty against young workers could become a political lightning rod for their anxiety about falling below the living standards of their parents and about the huge public debts they are inheriting. And it may crystallize youth anger over their apparent lifelong mission: fixing—and paying for—big messes created by their elders.
And, so the questions linger: Will national health care become another shaky subsidy for society, a second social insecurity system? And wouldn’t it make sense for insurance to be more equitable? That, for instance, people pay for what they use? Like in real life.
Reform it right the first time
It makes a lot of sense simply to charge people based on usage, according to Dr. Louis Rossiter, a professor of health administration at Virginia Commonwealth University.
Rossiter sees the key to reform in a different method of community rating. One that benefits young people more than New York’s system does.
In New York, everyone is rated as one big group—healthy, sick, rich, poor, urban dwellers and mountaineers. Rossiter thinks we should adopt a looser type of community rating where groups of people are rated based on age or sex or geographic location.
This looser form of community rating is like eating out. You get a bill for your table and split it. In New York, 13ers would wind up paying for everyone in the restaurant.
“First you compute a pure community rate,” Rossiter says, “and divide the total health care spending by the number of people. But then you group that by age, sex, geographic location and some other appropriate factors, but not health factors.”
In other words, groups who use a lot of health care would pay more than groups who use very little health care. But, only groups selected by age or some other factor that isn’t related to a person’s general health.
So, instead of lumping healthy 30-year-olds with 60-year-olds, banded community rating would separate these groups. Healthy and sick 30-year-olds would be rated against each other. Healthy and sick 60-year-olds would be rated against each other.
Such a system would make a big difference to twentysomethings, and to the businesses who employ them. It would put them on an equal footing with older generations.
It also would reduce intergenerational transfers, an American tradition since 1937.
Paying for mom and dad
Intergenerational transfers are not new. Their modern American origins can be found in the development of the Social Insecurity System in the late 1930s. The premise was that sometimes people fall behind and need help. A trust fund was created to help the elderly settle into retirement.
Today, however, that trust fund is an empty promise for future generations. Our tax dollars earmarked for social security aren’t set aside for our retirement, but for today’s retirees, who are consuming far more in payments than Uncle Sam collects in taxes. Like the federal budget, the social security system is running on hot air and hope.
And all of the health care plans floating around D.C. involve a similar arrangement. Money will be taken from your paycheck to help pay for national health care. And if that health care plan rates everyone—young and old—equally, those taxes will be paying for yet another form of social security.
And ironically, under a payroll tax, retired folk pay nothing. So benefits for your grandparents—God bless ’em—will be paid for by you (assuming you have a job).
It’s business as usual in Washington. Younger Americans may soon be calling Uncle Sam the Sheriff of Nottingham. But to America’s older folk, he’s still their favorite sugar daddy.
That puts some members of Generation X in a foul mood.
We’re already footing the bill for a faltering social isecurity system. And intergenerational skeptics want to know: What makes national health care any more stable? Nothing really, but there is a need for reform, and people between 18 and 30 stand to benefit if the reform is fair and equitable.
After all, says Rossiter, “That age group [18 to 30] is most likely to be uninsured because we have Medicare for those over 65 and Medicaid for the poor, and by the year 2002 all children will be covered by Medicaid.” Not to mention those monthly Social Security checks, Dr. Rossiter.
“The intergenerational transfers are important in a lot of areas, but particularly in health care if we revert to strict community rating,” says Dr. Robert Hurley, another VCU health administration professor.
But Hurley says it all balances out. Eventually. One day we’ll get old and be able to kick back on high-dollar prescription medicine and forget about our problems. And someone else will pay the bill—unless cynical young people are running the country then.
What price healthiness?
Rossiter, who has spent several years in D.C. helping craft health care proposals (albeit for Mr. Former President, George Herbert Walker Bush), says the plans he has seen circulating in Washington will cost between $80 and $120 billion a year. Those numbers exceed President Clinton’s recent budget reduction package by $100 billion over five years. Some budget reduction.
The additional funds for health care will come from cost-shifting, a popular method of governmental budgeting. It’s also known as taxation. And us without representation.
Two groups will foot the bill—workers and businesses. Especially younger, part-time workers and small businesses.
“There will be taxes required to support any plan,” says Rossiter. “They will find some way to blunt the impact on lower-income people,” he adds.
Most likely by making businesses pay. That is, making consumers pay.
“The preponderance of employers who don’t offer health insurance are small businesses,” Hurley notes. He says a national health care plan would make “health insurance coverage a fundamental cost of doing business.”
Hurley says the number of small employers in America is incredible. “Small businesses are the largest employer of new hires. Young people are most often the new entrants into the labor market, so their employment opportunities may be limited if there is a reluctance to hire because of health insurance costs,” he says.
Yes, he says, “it’s very likely that some small businesses will go under, and very possible that some companies would cut employees, but the government will subsidize small business.”
All in all, both Hurley and Rossiter predict the impact will be less severe if a level-headed plan is adopted. The question is: Will it be a level-headed plan?
The bottom line: Do we need it? Will it help?
Everyone agrees that national health insurance is needed. And health reform—that is, lowering the costs of health care in this country—must be a part of that process. But, do we, the young adults of America, really need comprehensive health care?
Yes and no.
Yes, we are the group of Americans that is pretty uniformly uninsured or underinsured. Mandated insurance would ease the minds of a lot of worried college graduates, fresh off their parents’ plans.
Some argue that Generation Xer’s choose to go uninsured. The reality is that many just can’t afford it. But the argument raises an interesting point.
“They’re just banking on being healthy and not needing health insurance. Some tiny percent will have an accident that will require large amounts of expenditure, but no one is denied hospital care in this country,” Rossiter says the argument goes. Of course, that hospital care costs. A lot. (See “Crying in my cup,” pages 4-5.)
A recent report by the Virginia Joint Commission on Health Care last spring looked at essential health services by age groups. Its perspective was that even our robust, strong, health-conscious generation—we “immortals”—needed health care, although not as much as the very young and very old.
Even simple coverage would be a blessing for many part-time, low-income workers. And limited options—options health care experts call “must have” and “should have”—may be one step towards controlling costs and insuring everyone at a reasonable price.
“If you want to buy more than the basic coverage, fine,” Rossiter says. But, he adds, no one should be able to get tax write-offs for cosmetic surgery or other non-critical care.
But, the White House chatter points toward comprehensive benefits, benefits that the Virginia report calls “moderately” and “not particularly” important. The more comprehensive the benefits, the higher the cost. And the higher the cost, the higher the bill.
We’re proving to be the dumping generation for the rest of America’s fiscal problems: Social Security, budget deficits. Hell, why not add a trillion-dollar health care bill?
If our generation truly wants affordable health care, it’s time to live up to another of our nicknames: Baby Busters. It’s time to tell our laughable, elected representatives to do something right. Pass an equitable system of health care reform that doesn’t dump on their children and grandchildren. Pass a system that spreads both the benefits and the pain.
Don’t just do it, do it right.
(Editor’s Note: Writer John Sarvay receives comprehensive health care coverage through his job with the state. Ha, ha, ha.)
