Posted by: Paul Chiariello | January 24, 2011

Who Really Pays For Health Care in Public and Private Systems??

The argument is often used that in a Public Health Care System those who work end up paying for those who do not.  This is ‘unjust’ or ‘unfair.’  I agree with this reasoning.  However, it is then simply left at that without looking at who really pays during the present system of Health Insurance.  Pointing out that there is something unfair about one system does not imply that the other system is more fair.

So to go back a step, lets look at public health care.  In the public system major costs are spread out among the population so that no one is completely destroyed financially when they are hit with a hospital bill.  Everyone puts in taxes so that when an individual is hurt or sick they do not have to bear the whole burden in one big bill.  This makes complete sense so far.  The only problem that people bring up concerning fairness is that many people do not pay taxes.  It is unjust and unfair that hard working tax payers should pay the health care bills of those that are lazy and do not contribute.  This again makes a lot of sense.

But lets take a step forward now and ask who really pays the health care costs  that are similarly distributed by private insurance companies via premiums??

Well first we need to ask who pays the private insurance companies? Obviously the vast majority of people get their health care plans through their businesses.  But now we need to ask, where do businesses get the money to pay the insurance companies?  Easy, they charge the consumer of their product or service just a little bit extra.  It isn’t much.  A few cents here and there.  But it adds up as everything single you pay is more expensive.

Now lets compare.  Who pays in a Public System?  Those who pay taxes.  Who pays in a Private System?  Those who buy goods and services.

We’ve already established its unfair for a hard working tax payer to pay for some lazy guy’s health bills.  But isn’t it even more alarmingly unjust/unfair that a poor hardworking breadwinner who’s place of employment either cannot/does not provide health care and the struggling entrepreneur trying to get out of debt must settle for either no or shitty health care insurance while they equally put into everyone else’s health care bills??  In fact, those who earn less actually spend a proportionately larger slice of their salaries on basic needs.  Which means they put proportionately more into paying your health care bills than those who are better off and can afford to save part of their income and not directly spend it (and thus paying the hidden tax for health care in consumer goods and services).

In other words, in a private insurance system where businesses pay the book of health care packages: if you have better health care, you ultimately pay proportionately less for it than those without it or with poorer plans.

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Responses

  1. [...] Working off point #3, it is important to note that the poorer you are, the higher percentage of your income is spent on basic needs while the lower your taxes are.  If everything costs less you can either buy more and upgrade your life and/or put away needed savings.  A private system creates a much heavier proportional cost on the poor than a public system and allows them to save/spend a larger portion of their income.  I go into this point a lot more in my blog post here. [...]


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