(Author's Note: I wrote this in 2005, but the proposal is timely given the imminent passage of Shumlincare.)
House Bill 30, introduced by House Democrats, proposes that Vermont institute a plan for universal health care for all Vermonters. Interest groups and activists have for many years promoted universal health care, and this year they are confident, with a Democratic legislature, Vermont universal health care will pass.
I have a more modest proposal. According to national statistics, Americans spend a median 20% of their household income on health care, and only an average 6.4% of their household income on groceries. Therefore there would be huge cost savings if the government funded universal grocery care instead of universal health care. After all, food is the staff of life. It is basic to our health and wellbeing. Providing universal grocery care would go a long way to keeping Vermont healthy, at the same time saving the state an enormous amount of money, because household food costs are much less than health care costs.
With the government enjoying a surplus because it pays for groceries rather than health care, the government could fully fund universal grocery care. Vermonters would be able to benefit from the cornucopia of food that we now enjoy without having to pay for it.
The grocery stores would love the idea. They would have customers who are taking food for free, and the State would be footing the bill. There would be a run on caviar and lobster. Customers would not have to comparison shop or worry about spoilage because the food is free.
Of course, the idea has problems. With all of us just picking up the groceries we want, there will be no incentive to choose wisely, and food costs would grow faster than the rate of inflation. The State’s coffers would soon be depleted. The State would first pass off the shortfall onto the grocers, mandating that they continue to distribute food to all, but only reimbursing grocers a certain percentage of the cost of the food provided to consumers. Politicians would pass other mandates to the grocery providers: limiting packaging and advertising to save costs, requiring stocking only generic brands, compelling providers to obtain a certificate of need before building or expanding a grocery store.
The system would continue to deteriorate, despite the mandates and regulations, because consumers would still be getting “free” food, with no inducement to be cost conscious. So, rationing would be next. The state would issue regulations limiting the type and amount of food the people could get. By this time a huge bureaucracy will have grown up to regulating issues like ensuring only bona fide Vermont residents got free food, drawing up formulas for funding the program, mandating the type and amount of subsidies the grocers must pay, and whether and how a store can expand; and regulations and record keeping on food distribution, packaging, and advertising.
Sound crazy? This is the system already in place for health care for many Vermonters, , and Vermont Democrats are proposing to expand this program to all Vermonters. The government already requires health providers subsidize health care—by as much as 70% of the cost. In addition, the government has a multitude of regulations covering the type of care allowed, the price that can be paid for the care, and certificates of need for institutions providing care. Next is rationing—already suggested by Democrat Rep. John Tracy, the chair of House Committee on Health Care--as the future for health care, because of the already enormous shortfall in Medicaid funding. Yet the Democrats’ solution to this health care morass is more of the same.
The formula for universal health care, like the formula for universal grocery care, will result in overburdening our state with taxes, regulations, and ultimately rationing. The real costs of health care will continue to spiral out of control, because there is no incentive for the consumer of health care—just like the consumer of free groceries-- to control spending. The result: more and more government taxation, regulation, and rationing to artificially control health care costs
There is a better way to control health care costs and give consumers the right to choose their own health care plan, free of government and bureaucratic intrusion. Consumers would be in charge of paying for much of their health care through health savings accounts.
Here is how health savings accounts work: the consumer deposits into his or her own health savings account tax exempt funds to cover the deductible on a catastrophic health insurance he or she also purchases. The individual deductible on catastrophic insurance is $2500.00, so a consumer needs to save $2500.00 to take care of any uninsured health care costs. Typically, people do not spend $2500.00 a year for their health, so the limit is virtually never reached, and as the years go by, the health savings account becomes larger and larger. Funds withdrawn from the account for health care are not taxed. Whatever funds are left in the account at retirement, when the retiree is eligible for Medicare, are treated, for tax purposes, like an Individual Retirement Account. And health savings accounts can be used for any medical procedure—no rationing here—eye glasses, dental care, elective surgery. The account funds can even be used to pay premiums on long term care insurance. Moreover, there is no deductible or co-pay—ever, whether the funds are taken out of the health savings accounts, or paid for under the catastrophic health insurance policy. So, instead of being taxed and receiving rationed health care, Vermonters who own health savings account can see their own money invested and grow if they use their health dollars wisely and follow healthy habits.
Groceries are cheap and plentiful today because of market competition. Those same principles can be translated to consumption of health care services, with the result of lowering costs, increasing quality, and consumers’ ownership of their own health future.
Universal health care, on the other hand, like universal grocery care, sounds like a fine idea, but the consequences are unhealthy for our state, its taxpayers, its health consumers, and the economy.