HEALTH CARE Americans spend more money for health care and get less health care in return than the citizens of most other industrialized countries. 45.5 million Americans (18% of the population under 65) have no health insurance, and those that do pay enormous premiums for coverage that is subject to high deductibles, costly co-pay arrangements, and significant restrictions. Those Americans fortunate enough to have health insurance subsidize (through higher premiums) those uninsured Americans who are forced to use used hospital emergency rooms as a “last resort” health care option. US employers are eliminating health care benefits entirely or shifting a greater share of health insurance costs to employees, forcing employees into managed care solutions (HMO’s) that place significant restrictions on a patients’ ability to obtain (and doctors’ ability to proscribe) required care and medications. Many companies that provided health care benefits in the past say they can no longer afford to do so and remain competitive. The worst of all worlds We now have the worst of all worlds---all the expense, bureaucracy, and “rationing” previously associated with “socialized medicine”, with none of the benefits!   And while many countries regulate the price of drugs in a manner that protects consumers while ensuring drug companies earn reasonable profits, US law actually encourages drug companies to charge whatever they like, resulting in a whopping 16% profit margin (compared to 5% for all U.S. industries combined). In fact, Americans subsidize cheaper drugs in other countries through the outrageous prices they are forced to pay in an unregulated market! No wonder Americans increasingly go without health insurance and shop for their drugs overseas. Roadblocks to reform Recent proposals to address the crisis have been wholly inadequate because: 1. Insuring all Americans is costly and doing it right would require new revenue streams (taxes) and regulations (to control costs); and, 2. Politicians fear offending the private insurance industry, drug companies, and business community whose deep pockets fund modern political campaigns and who oppose such taxes and regulations. As a result, most health care proposals offered by politicians do little to solve the problem. Some focus on tax credits to defray the cost of purchasing private health insurance. But those credits seldom cover the full cost of a policy, and the approach benefits only those taxpayers rich enough to itemize deductions. Others model their proposals on a recent Massachusetts law that requires every employer to offer---and every employee to purchase---private health insurance or face a tax penalty. The taxes pay for government-financed insurance for individuals the government deems “too poor” to purchase private insurance.  This approach offers some relief to our neediest citizens, but does nothing to reduce the cost or provide better health care access to the majority of the population.   Half-measures are not ‘smart politics’  Advocates of such plans say they are the only plans that are “politically feasible” because voters won’t support more comprehensive reforms. In fact, voters are more likely to reject half measures that target only the uninsured. Voters dislike programs where the government singles out a specific group of Americans for benefits while taxing the general population. Achieving “universality” by requiring people to purchase plans they can’t currently afford or face a tax penalty to pay for someone else’s benefit (i.e., the Massachusetts model) will most likely generate a strong political backlash. More importantly, such programs accept that health insurance costs should be shifted from employers to employees. Most voters resent this trend and feel health insurance should be paid for by employers, as it was in the past. What is to be done? A comprehensive health care solution must do three things: 1. It must cover all Americans, not just the uninsured.  2. It must reduce the cost of health care to the individual by shifting costs back to employers, eliminating “cost sharing” schemes and health-related payroll taxes. 3. It must free Americans from “managed care” restrictions and leave health care decisions to patients and the doctors of their choice.   Medicare is the answer  Americans don’t need to look far for a health insurance solution: Medicare works and should be extended to all Americans. The expanded Medicare program should be financed through a 4% business gross receipts tax, and the existing Medicare payroll tax and co-pay deductibles should be eliminated. The cost of health care would thus be reflected in the price of goods and services, and Americans would be freed from expensive health care premiums, co-pay arrangements, and payroll taxes. What’s more, health care decisions would be left to patients and the doctors of their choice. What about drugs?   The Medicare prescription drug program is too expensive,provides too little coverage, and should also be reformed. Recent estimates suggest program costs could exceed $100 billion/year, in large part because, unlike most countries, the US does not regulate the price of drugs. Despite the price tag, the program covers only seniors, who are charged $420 per year premiums ($35 per month) for limited coverage. There is $350 deductible after which the government pays only 75% of the first $2,000 of drug costs, nothing for the gap between $2,250--$5,100, and 95% of costs over $5,100. Tax free medical savings accounts are available for those well off enough to be able to save and itemize deductions, but are of little use to everyone else. Reform is needed to expand coverage and reduce cost. The program should cover 100% of costs for all Americans, young and old. There should be no premiums, no payroll taxes, no deductibles, co-pays, or gaps. Instead, the cost of the program should be financed through 1%business gross receipt tax. In addition, the cost of drugs should be regulated on a cost plus 5%basis. Drug companies would still be able spend whatever is necessary on R&D and investments that benefit public, and would enjoy profits equal to the average profit margin enjoyed by most American industry (roughly 5%). Windfall profits of 16% would be a thing of the past, dramatically reducing the cost of the program.