Rising Medical Expenses Essay

When I think of taxes, it reminds me of a quote from one of our greatest presidents in United States history, Calvin Coolidge, he stated that “Collecting more taxes than is absolutely necessary is legalized robbery. ” Raising taxes from one individual to pay for another individual is taking away from our Fifth Amendment right, “nor shall private property be taken for public use, without just compensation. ” Not only, are levying added taxes taking away the freedoms of these United States citizens, but it has been proven to lower incoming revenue and decrease employment.

With rising medical expenses being a major problem for this Country, imposing yet another tax on the American people is not the answer; we need to devise a plan to regulate and reform the current system. Since our Federal Government wastes our tax money on things like the mating habits of snails and the bridge to nowhere, it is hard to trust that the Government will spend the sin taxes on rising medical expenses.

There are better plans like allowing interstate competition, which will grant customers to search for cheaper premiums across state lines. Tort reform is another strategy to lower medical expenses by putting more of the burden on the insured for their actions and not making it so easy to sue. Starting a health savings account from birth will cause the consumer to spend more wisely now that they are using their own money.

All these ideas will lower the cost of medical expenses without having to grow the Federal Government with more taxes. Framers of the Constitution stated that “in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity”, the central government must be one of delegated, enumerated powers.

Congress is given eighteen powers, specifically two of them dealing with taxes and regulation, “Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States”, and the other “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes” (Thomson Reuters 2013). These two powers are important because they get twisted around the most when talking about our Federal Government taxing us constitutionally.

The first one dealing with taxes is misinterpreted, because since the dawn of our Country, we have always been in debt, and this clause allows the Government to collect on it. Washington found a way to get around taxing and regulation checks and balances by invoking the Commerce Clause in the Constitution; this allows them to regulate and tax anything that crosses state lines. While advocates for taxing and regulation cite the above-mentioned loopholes, others believe in limited Government, fewer taxes and our personal freedom.

These supporters refer to the “necessary and proper” clause found in Article I, Section 8, Paragraph 18, while others follow our Fifth Amendment right, “nor shall private property be taken for public use, without just compensation” while talking about taxing” (Princeton Model Congress 2013). What’s clear to me is that the Government oversteps its powers and perverts the Constitution to further their agenda and take away from our freedom and our private property. Every cent that is taken of my hard-earned dollar and given to someone else or some useless program is against my Fifth Amendment right.

This debate will go on for years to come, but what is known is that our Government does not always spend our taxes the way they are supposed to. Fact is we have a major problem with unhealthy overweight Americans in this Country; sin taxes would be a great way to punish the people that live a harmful lifestyle, but would the money raised actually go to healthcare costs. Nationally, about twenty cents of every dollar raised in cigarette taxes goes to the earmarked purposes (Anderson 2013).

That means eighty percent of our taxes does not go to things like prevention awareness, quitting programs, or even to lower current medical expenses; instead, they go to numerous wasteful government grants and loans. In 2011, Senator Tom Coburn wrote an article, Wastebook (Coburn 2001), about all the waste and fraud within the Federal Government totaling $6. 9 billion. Here are just some examples: $120 million a year with dead government employees still receiving benefits, $15. 3 million to a “bridge to nowhere” in Alaska, $10 million for a remake of “Sesame Street” in Pakistan, $17. million in foreign aid to China (2nd largest economy), $1 billion on children, prisoners, and others who do not own homes were awarded Energy-Efficient Home-Improvement Tax Credits, and many more. This is just a tip of the iceberg of fraud and abuse with our money, and with the sequestration cuts going on; more and more misuse of taxpayer revenue is coming out into the open. Washington suspended the White House tours to save $174,000 a week for the first time in 12 years, last time being September 11th 2001, but in the same time the IRS can spend $49 million dollars in three years on 225 employee conferences.

Just last year the GSA (General Services Administration) was in hot water over a $823,000 Las Vegas conference, but that was just the start of a long investigation; findings show that the GSA is sitting on well over $100 billion worth of abandoned buildings with no intention of selling them. Not only is the IRS going through the scandal of targeting conservatives for tax-exempt 501 (c)3 and 501 (c)4 status, but amidst sequestration cuts they are handing out $70 million in bonus.

This type of mistreatment of taxpayer money is all over Washington, so I ask, how can we trust our Government to spend our property on rising medical expenses with the disregard they have for it now? We cannot, which is why we need different solutions for this problem. One great way to lower costs is competition; currently only eight states in our union allow interstate competition for insurers. For example, my state of Wisconsin only allows its citizens to get health insurance through companies located in Wisconsin; we cannot go out of state to find a healthcare provider.

This is because of the McCarran-Ferguson Act of 1945, which granted states the right to regulate health plans within their borders (National Conference of State Legislatures 2013). Our legislators receive big campaign donations and possible job positions/advisors after retirement to write bills like this for insurance and pharmaceutical companies to keep competition at bay. In all, there are more than 1,900 state mandates across the United States. Some legislators contribute to this excess by giving in to special- interest demands that insurers cover their specific services and providers; the result is higher premiums for consumers.

Our United States of America was founded on free market capitalist principals, and that is what made us the great country we are today. Competition forces companies to offer a product that no one else can offer at the cheapest price possible. According to the Agency for Healthcare Research and Quality, a division of the U. S. Department of Health and Human Services, the more HMO competitors that an HMO faces in a given market, the more likely it is to engage in price competition; this process means lower premiums for consumers (Stanton 2002).

The study found that premiums were 14 percent lower in highly competitive markets than in fewer competitive markets. With interstate competition, consumers would be more likely to find a policy that fits their budget, giving more people access to affordable insurance (National Conference of State Legislatures 2013). There are many laws out there advocating competition and even ones that break up monopolies like Microsoft when they get too big, so let us do the same for insurance companies. If there is not enough competition from insurance companies, then tort reform is another possibility to lower costs.

In the 1994 case, Liebeck vs. McDonald’s, Stella Liebeck was awarded $2. 86 million dollars after spilling her coffee on her lap and ever since tort reform has been a major debate topic. This is one case among many that cause our insurance premiums to skyrocket; by limiting the time period for which manufacturers are liable for product defects, comparative negligence reforms that reduce damage awards when plaintiffs engage in negligent activity and reforms that eliminate strict liability for non-manufacturer product sellers (Shepherd 2013), can lower costs and boost the economy.

Even though I strongly oppose regulation from our Federal government, I do believe there needs to be laws in place not only protecting the people from corporations, but laws protecting companies from citizens. Tort reform can affect healthcare costs through two mechanisms: (1) direct liability costs and (2) costs associated with intensity of treatment. Liability costs are comprised of medical malpractice premiums, malpractice damage awards in excess of premiums, and the associated litigation costs; treatment intensity, implies that providers must be sensitive to liability pressures (Avraham, Dafny, and Schanzenbach 2009).

From 1998-2006 Avraham, Dafny and Schanzenbach conducted a study of over 10 million Americans, using dataset of our health plans and found that tort reforms of the two above mentioned areas, reduce insurance premiums on average of 1-2 percent. Couple this in with regulating personal negligence lawsuits like the Liebeck vs. McDonald’s case, and you could have some serious savings on our medical expenses. Another way we can protect ourselves is by investing in a HSA (Health Savings Account), which is like Social Security, except it is controlled by you and not the Government.

HSA’s and FSA’s (Flexible Spending Account) essentially are a pre-tax personal savings account. A predetermined amount is taken out of your check each month to use on unexpected medical (HSA) or personal (FSA) expenses; usually these types of accounts come with a high-deductible insurance plan (Mayo Clinic Staff 2013). Like most people, chances are that you give more to your health insurance company than what you take out from them; a high-deductible with a HSA or FSA would take care of that. You would be paying less to your premium and more towards your account, giving you more of your money back in return.

This idea was created to help curb costs, create more competition for your business, and to give the consumer a chance to spend their money more wisely once they know it is their own. The result has been a decline in insurance premiums and fewer unneeded claims. A study by the Galen Institute found that the majority of HSA-eligible plan participants pay premiums of less than $100 per month; try comparing that to the premiums for most insurance plans, which average $335 for individuals and $906 for families – per month (Marotta, and Nedelisky 2006).

Since 2000 on average healthcare costs have gone up 12% each year, while HSA plan premiums actually decreased on average by 17 percent for individuals and by 6 percent for families. Total out-of-pocket expenditures for Americans were estimated to be $187 billion in 1999. If only 15 percent of out-of-pocket health care expenses were paid with money deposited in FSAs (assuming the average individual faces a 15 percent Federal tax rate plus a 15 percent payroll levy), the Federal and payroll tax exemptions would cause tax revenues to drop by over $8 billion (Stanton 2002).

The fact that the Federal Government would lose revenue if more people utilized HSA’s should be the biggest positive of all; the less our government gets from us and wastes on something else is a step forward for us gaining our freedoms back. The Fifth Amendment states, “nor shall private property be taken for public use, without just compensation”; taxing from one individual to pay for another is exactly violating this Constitutional right. I believe in our personal freedom of choice, if a person wants to smoke, drink, and eat un-healthy, they have every right to do so without Government intrusion.

There is something to be said about personal responsibility and, with that being said, no one else should have to pay for their lifestyles, which is why having insurance companies charge based on an individual’s health and not make the rest suffer, would not be a bad idea either. I know this idea is basically like imposing a sin tax, but as I said earlier, you can’t trust the government to use your money wisely with all the waste and fraud that goes on. Regulating the insurance companies to discriminate against unhealthy individuals, would put more of the burden on them instead of the ones that choose to live a healthy lifestyle.

Healthcare is always going to be an issue and for years finding a way to subdue costs has been a challenging feat. I do not believe that a “sin tax” is a solution, and instead of taxing and taking away our constitutional freedom of choice, I found other venues to lower medical costs. If we could trust our Government with a Health Savings Account, like Social Security, we would be better equipped for when health insurance problems do arise; force insurance companies to provide the option for a higher deductible with a HSA incentive. Interstate competition would drive down costs and influence companies to offer a better product to the consumer.

Tort reforms are excellent ways to lower the rising costs of medical expenses by putting more responsibility on the customer and not the company; we need to not only protect the customer from the company, but the company from the customer. All of these ideas would be an improvement over taking from one individual and giving it to another. My favorite quote of all time pertains to taxing and the Fifth Amendment, and was written by my favorite President Calvin Coolidge, “Don’t expect to build up the weak by pulling down the strong. ”