Is "profit" a dirty word?
By Henry Lamb
To anti-capitalists, "profit" is a dirty word. Karl Marx hated profit - which he considered to be "surplus value from the exploited proletariat." Despite the spectacular collapse of the Soviet Union, a nation constructed on Marx's theory, there are still people who think "profit" is a dirty word. Many of these people are in Washington, D.C.
Senator John Rockefeller issued a statement claiming that "…insurance companies are awash in profits." In reality, the health insurance industry stands 35th among Fortune magazine's profitability rankings, with an average profit of 2.2%.
Senator Chuck Schumer doesn't think much of profit, either. He has proposed fees (taxes) that will extract $75 billion from private insurance companies over the next decade. Since taxes, or fees, are a cost of doing business which is simply passed along to the consumer, Schumer's idea is nothing more than an indirect tax that individuals will have to pay. But by applying the tax to insurance companies, Obama's promise not to increase taxes for people earning less than $250,000 can go unchallenged.
It is clear that Rockefeller, Schumer, and the majority of Democrats want to reduce the cost of health care by squeezing profit out of the health insurance industry. This, of course, would kill the health insurance industry, and leave the task of providing health care services up to the government. This is the ultimate goal. Whether it's called "public option," "co-op exchange," or "single-payer," the goal is the same: get rid of the profit private companies earn, and let government provide the service.
Conservatives in the Senate, in the House of Representatives, and across the country know that the solution to the rising cost of health insurance is more competition. Obama, and his Congressional minions, claim that some form of a government-controlled "public option" will increase competition.
What nonsense! Government-controlled or government-subsidized not-for-profit organizations offering health insurance is not competition, it is confiscation of the industry. Government does not level the playing field for private competitors; it levels the competitors. Unlike private insurers, a government program does not have to cover costs to stay in business. Examine other government programs, the Post Office, or Amtrak, for example. When the costs of operation exceed the revenue, Congress ups the national debt limit, borrows more money, and the government-run program continues.
Medicare and Medicaid are often held up by Democrats as great examples of government-run health care programs that all Americans want. They are, indeed an excellent example of government's ineptness at operating a business that should be left to the private sector. According to the calculations of the Medicare Trustees, Medicare is operating at a deficit every year, and to fund the program over the next 75 years at the current level of service would require $38 trillion – that's with a "T" - which amounts to 260% of GDP.
Karl Marx would love this plan!
There is a way to increase competition among health insurance companies which would reduce the cost of health care almost immediately, with virtually no cost to the government or to the taxpayer. Simply let all health insurance companies compete across state lines. Costs would fall before breakfast!
Health care costs would decline significantly if Congress would limit awards in malpractice cases. The cost of malpractice insurance – which has to be passed on to the patient – has skyrocketed beyond all reason, as the direct result of ambulance-chasing trial lawyers manufacturing outrageous payoffs in medical cases. A baby doctor in a metropolitan area may pay as much as $250,000 per year for malpractice insurance. Just to cover this insurance cost, charging $100 per patient, the doctor would have to see 69 patients per day, 365 days per year.
Congress could reduce health care costs immediately with no cost to the taxpayer, by implementing these two changes.
Obama has said he can save $500 billion by squeezing waste, fraud, and abuse out of Medicare and Medicaid. Hooray! Go to it! This money could be used to provide a tax credit when low income families choose to buy health insurance.
These ideas have been advanced over and over again in Congress. Democrats have blocked every effort to pursue these solutions to the health care cost dilemma. It would appear that their goal is not to reduce the cost of health care, but to destroy another major segment of our capitalist system in order to expand government's control over the economy, and American citizens.
Get weekly updates about new issues of ESR!