The Tax Attic with Jerry Coon – August 13, 2009

 

Jerry Coon, Enrolled Agent

Jerry Coon, Enrolled Agent

Health care reform

The subject of health care reform is the topic of choice for most everyone today. It looks like health care reform is going to happen. Read what Senator Max Baucus, chairman of the powerful Senate Finance Committee, recently had to say in response to a question of about the odds of a health care reform bill passing this year: “100 percent. Given. Inevitable. The country wants it. The president wants it.”

Given the fact Senator Baucus speaks for enough senators to pass a bill no matter what we may or may not think, I believe he is right in his calculations. We are most likely going to have health care reform.

There are two big questions that come to mind in this debate on health care reform. First, will our government be able to efficiently run its part of the reform package? Second, what exactly will that reform look like?

Efficiency and the federal government are not words that are discussed in the same sentence very often. The federal government has a history of being good at dealing with concrete issues, such as building the interstate highway system that links the north with the south and the east coast with the west coast. In the previous century, they built the railroad system. In the 1960s, they put a man on the moon. Granted private industry did much of the work, but the federal government was the grand designer and they were good at making that happen.

Solid projects with a black-and-white goal in sight: Connect the railroad system from coast to coast. Build a highway system to move products and people easily anywhere in the country. Beat the Russians to having an American walk on the moon.

What is their history, though, when it comes to the managing of life’s softer issues? For example, President Johnson’s Great Society was going to eradicate poverty and eliminate discrimination, among other admirable goals. It hasn’t happened yet, but billions of dollars were spent in the pursuit of those goals. There really wasn’t a black-and-white goal, so there really was no project completion.

Another example that hits home a little closer would be the State of Massachusetts and their mandatory health insurance program. Currently, 97% of all Massachusetts residents are covered by health insurance. From that point of view, it’s been very successful. However, from a cost containment point of view, the program has been a disaster. If what I hear and read is true, in the few short years that the program has been in existence, Massachusetts now has the highest per-person costs for medical care in the entire United States. They are considering implementing a “global payments” strategy that basically pays a set amount per person per year to the medical provider for all services associated with that person. That sounds like the providers will all be fighting for the healthy people and no one will want to take on the unhealthy or even potentially unhealthy people. It also sounds like the providers might not want to offer or may limit access to some of the more expensive operations, tests or procedures that under the present system are not limited. It will be interesting to see how Massachusetts deals with their problems.

On a federal level, there are several areas that almost everyone does agree upon. First, health care costs are rising faster than the Detroit Tigers pitching staff’s earned-run average. I believe this is really what has fueled this whole debate. If it didn’t cost a fortune for health insurance, everyone who wanted health insurance would have health insurance. If it didn’t cost a fortune for an operation or to go to the hospital, people would be able to pay for their expenses out of pocket.

Second, anyone who presently has health insurance should not be penalized or forced to enroll in a federal program unless they want to.

Finally, even though our quality of health care is higher than anywhere in the world, it has complicated problems and has areas in which it can and should improve.

All of us will be greatly affected by any program that Congress puts together. It is and should be the debate of the century, so to speak. Next week I will look at some of the highlights of the bill Congress currently has in the hopper. This is Jerry Coon signing off. 

Jerry Coon is an Enrolled Agent. He owns
Action Tax Service on Northland Drive in Rockford.
Contact him at (616) 866-4704 or jcoon@actiontaxservice.com.

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