and the
Citizens Economic Research Foundation

Barbara's Column
December #2

Who should pay for our health care?
by Barbara Anderson

The Salem News
Friday, December 9, 2005

I bring you tidings of great joy! The Legislature has finally agreed with Gov. Mitt Romney that Massachusetts shouldn't tax capital gains retroactively.

So now we can all celebrate the new activism of citizens who fight back special mention to a group of vocal taxpayers from Peabody's Brooksby Village and indulge in new hope for the future of the commonwealth.

However, we must beware the legislative impulsiveness that created the capital gains crisis in the first place, because it may return later this month on the matter of health-care reform.

The holiday season, when voters are distracted, is a bad time to be dealing with major issues that have been awaiting action for years, if not decades. The new payroll tax increase proposed by the House could damage our economy, which isn't doing too well anyway. Cigarette taxes won't cover much for long, as already overtaxed smokers quit or die.

Reform is necessary, and a proposal by Romney is moving in the right direction. The House plan moves backward, to an anachronistic world of an earlier century when many people and their health insurance were joined to their jobs for life.

Even then, it didn't make a lot of sense to have the insurance provided by one's workplace. Auto insurance and homeowners insurance are the responsibility of the insured, who pay for it and own it themselves. The present tax-free benefit of health insurance distorts the marketplace.

Citizens for Limited Taxation, whenever possible, has substituted benefits for pay raises because the organization doesn't have to pay FICA on benefits, and we four employees don't have to pay federal and state taxes on them either. I'd think other employers would want to do the same thing for the same reason, if they could.

There are some who wouldn't work for the pay I accept just because my job is fun. I've willingly taken pay cuts to have health insurance.

But some employees are senior citizens who are on Medicare, and others are low-income workers who need more money in their paychecks in order to live in this high-cost state. Some businesses, like restaurants, have a high turnover, or like construction and landscaping, are seasonal, so the health insurance paperwork would be a constant burden.

Granted, the present system isn't fair. Businesses and individuals who have health insurance also pay for the health care of those who don't have insurance, driving up our premiums and clogging hospital emergency rooms. Reform plans that require everyone to take responsibility for their health care attempt to address this. But it isn't going to be easy as long as we treat health care as a right.

If you can't afford food, or shelter, you must depend on charity or erratically funded government programs to keep you alive. But we all pay, one way or another, for those who can't or don't carry their own health insurance.

Even as a libertarian, I don't have a problem with this: The goal becomes maximizing personal responsibility while minimizing waste, fraud, and inefficiency of delivery.

So, for sure, we don't want the government running the health-care system. There is also no reason to expect employers to pay for health insurance. The job of business is to provide goods and services, which also means providing the jobs that create all private and public-sector revenues.

There is some rationale for charging businesses for workers' compensation and unemployment costs. Social security and other pension systems attached to these jobs are the subject of another discussion.

But our health insurance should be fully portable, unconnected to our place of employment in other words, something we don't lose when we lose a job.

Since government requires medical treatment for everyone, government should pay for it using tax breaks.

Sen. Edward M. Kennedy and universal health-care advocacy groups presently support taxpayer-funded insurance. The easiest version of this is to make at least basic health-care premiums tax-exempt, then require all taxpayers to carry it. Then the government charity aspect would be needed only for people who don't pay taxes.

This brings us to the subject of illegal immigrants, who also get free treatment in our emergency rooms. This must be addressed, for many reasons, at the national level. But at least, all those who get free medical treatment should be required to give a Social Security number and, if they can't, should be returned to their places of origin after treatment.

Cruel as this may sound, American taxpayers cannot take care of everyone in the world, so a line must be drawn somewhere with legal immigrants who, when they come here to work, also would get tax breaks for health insurance like the rest of us.

Health insurance companies can compete for our individual business. We could choose to join groups that negotiate prices. Healthy-eating, nonsmoking, daily exercisers might get a pretty good deal. Government-preferred companies would be required to accept everyone, while charging market premiums and co-pays that would encourage us all to take better care of ourselves.

The Legislature should take up the health-care issue right away in the new year, and enact genuine, dramatic reform to create a 21st-century model for the rest of the country.

Barbara Anderson is executive director of Citizens for Limited Taxation. Her syndicated columns appear weekly in the Salem News, Newburyport Times, Gloucester Times, (Lawrence) Eagle-Tribune, and Lowell Sun; bi-weekly in the Tinytown Gazette; and occasionally in the Providence Journal and other newspapers.