Why are conservatives so all fired up about the current health care reform?
It has to do with the multiplier the government uses as opposed to what the private sector would use. If one of the average taxpayer's tax dollars was sent to the federal government "earmarked" for health care, the federal government will chop off about 30 cents (as an example) to administer the health care program and send the remaining 70 cents to the states. If the recipient is a military member (active or retired) or some other government official that has access to government provided health care the cost is taken from the remaining 70 cents. Therefore the multiplier for the health care cost is 0.7 on the tax dollar.
If that 70 cents it then sent to the states, the state in turn will slice off maybe 20 cents to administer the health care program and to cover compliance issues with federal and state regulations leaving 50 cents. If the state begins to supply health care at this level, the multiplier becomes 0.5 or 50 cents on the tax dollar.Then lets say, depending on the state, it is sent to the county or worse the city or town level. At each level more of the remaining amount that started as a federal tax dollar is kept by the entity, the multiplier becomes progressively smaller leaving less money for health care for the individual in need of such service. In this example I would suppose that the county would take, say, 10 cents and the city would take 5 cents leaving 35 cents giving the final multiplier of 0.35 or a little more than 1/3 of the original tax dollar to provide health care to an individual tax payer in need of such service.
So, in real dollars a 100 dollar x-ray would really cost about 286 dollars and a routine check-up with blood work, x-ray, and 15 to 30 minutes with a doctor in real dollars would cost 1,500 dollars will cost 4,286 dollars because of the "administration" costs associated with federally funded and run health care.
So why would the private sector be better? Under the current system it costs about 2.5 times the dollar paid to an employee to break even. This is a very broad generalization because this figure varies with the location of the employee, their duties, and their (believe it or not) pay rate. This is known as "overhead". it is what needs to be earned before a profit is made. Profit is something that the government (federal, state, county or local) is not supposed to be making.
Once that 2.5 multiplier for each dollar paid to an employee (most of which is the tax and regulation compliance burden of the business entity) is met and exceeded, then the business is considered a success. With success comes profit. With profit comes spending, competition and lower prices.
If 1,500 dollars is the real cost of a routine check-up, the combined salaries of those performing the services (nurses, doctor, radiologist, x-ray tech, etc) are about 600 dollars per visit. The remainder goes to mandatory overhead expense, which is a combination of rent/mortgage, power, water/sewer, taxes, etc.
If the multiplier could be reduced to 2.4 by reducing, say, taxes the cost of the check-up would be 1,475 dollars. That 25 dollars is taxed as profit produced by the business. If it was paid to the employees it would then be taxed again as employee income. If it were spent for improvements it would be taxed again at point of sale for goods and services.
The question is would you rather have, a routine check-up that costs 1,475 dollars or one that costs 1,500 dollars that really costs 4,286 dollars?
