Do We Know as Much about Health Care as We Do about Finances?

An article came out today in BusinessWeek about Americans’ “Financial Literacy – The Time is Now”. The article summarizes that Americans are, well for the most part, illiterate with respect to understanding much about the financial concepts and processes that infect every aspect of our lives. The article presents a view that most people are not only unaware of basic financial principles, but that they are completely unprepared to make or assess financial decisions that are essential in their own personal lives. To further bring home the point, Americans are not behaving in financial ways that critical to their own interests and needs.

So I think we can boil this down to: You are neither qualified nor capable of being trusted with your own money. I would extend this statement to a significant proportion of the very rich. Thank god they either can hire financial managers (except those who hire scam artists) or they have enough money in their inheritance to require them to make such huge and numerous missteps that they are unlike to lose it all in one generation.

If most people are so bad at understanding finances, what would make us think that Congress is going to come up with a financing plan for the Health Care Reform system that they are moving forward toward passage into law. Now it may be that I missed the explanation Congress gave about how the cost of the new system will be provided. Let me see if I can remember the basic principles of their plan:

• Everyone must purchase health insurance or be fined (taxed)
• Employers (with more than 100 employees) must offer health care insurance programs to their employees or be fined (taxed)
• For anyone who cannot afford a health care insurance program there will be a public option sponsored by the Government which they will be able to enroll in

Looking at these requirements, the new Health Care system appears to be in line with the financial astuteness of the American public. The new system will be able to cover more people than it does today because they will be compelled to purchase it. Employers not offering plans today will be required to offer a plan and so they are all but required to pass these costs on to their customers. So the cost of services and produces will rise. This won’t be any problem at all, because people will have less money in their bank accounts given they have spent more of that on buying the mandatory health insurance plans that they were not purchasing before. So those individuals who could not afford a health care plan before will now have less personal funds available to afford the new health care plan that they are required to have.

But not to worry, if you have a good plan today then the Government will tax you for the extra value that you are provided with and this will make it more affordable to you.

The logic of a “more affordable“ plan is of course a Government concept. The financial expertise and acumen that is required here is nothing more than an extension of the financial knowledge and skills that the American public reportedly possesses. The Congressional approach of making people pay for their mandated policies will clearly result in lower health care costs for the nation. I don’t know why this is true; but apparently the wise and intelligent servants of the people in Congress have it all figured out.