Monday, 17 August 2009

The price of health

I see US President Obama is running into trouble over his proposed national healthcare reforms. It seems many Americans are very opposed to a government-run insurance scheme, or seemingly anything that involves more public money going into healthcare. This is all very interesting from a British perspective, as our public-funded system was founded in 1948 on the principle of free, universal healthcare for all, and has stayed remarkably true to that ideal over the years.

The NHS has come to be regarded as something of a national treasure, and for many people the idea of a system that relies on private health insurance, such as in the US, is almost beyond comprehension. We take it for granted that the NHS will always be there for us if we were to need it, whereas having to pay for our medical treatment in such a situation is, for us, almost as unthinkable as having to go without treatment if we could not afford it. Whilst some people do pay for private healthcare in the UK, I suspect that even they view it as something of a luxury, and are reassured to think that should their fortunes change, they could still get a thoroughly decent standard of service for free on the NHS.

Americans, it seems, would probably not be satisfied with thoroughly decent. Their system allows for more choice, at least for those able to afford healthcare at all, and they are very reluctant to give that up. There is something in the American mindset that demands the very best service, the very latest technology, the newest drugs; good enough, for them, is simply not good enough. In fairness, they are generally prepared to pay for it, as evidenced by how the US actually spends 16% of it's GDP on healthcare, compared with 8.4% in Britain. Surprising figures, which show not only that Americans are willing to pay top dollar for top class service, but perhaps also that the NHS is not as inefficient as you might think.

Of course, the majority of the money going into the US healthcare system comes from the private sector (insurance companies, employee healthcare plans, private individuals), but even so 47.2% comes out of public spending, mainly on the government-run Medicare and Medicaid insurance schemes that cover the elderly, veterans, some disabled people and certain qualifying low-income groups. So, as a proportion of GDP, the US and UK governments spend roughly the same amount of taxpayers' money on healthcare. For that, the US get a system that allows 46 million people to go without health insurance, while a further 25 million are considered under-insured for their needs. That's around 23% of the population who could potentially be faced with the choice between going untreated, or paying for treatment which they can't afford. Meanwhile, for around the same money, Britain gets a universal healthcare system which is guaranteed free at the point of use. And that's without the massive extra spending that Americans put in privately.

The two systems on either side of the Atlantic could hardly be more different, ideologically and practically, so direct comparisons are often difficult. But, when looked at in terms of sheer value for money, it does seem that we get a pretty good deal. And that is something that I would have thought the American taxpayer would appreciate more than almost anyone.

Tuesday, 4 August 2009

Taxes: only squeeze those who can stand a squeezing

Last time I had a good old rant about how our tax system, even after 12 years of supposedly socialist government, still inexplicably favours the well-off. I think anybody would be right to share my anger at this, and in my opinion it is reason enough to disqualify any government, especially a Labour one. But how should it be fixed?

For starters, we need to redraw the tax bands to make the system truly progressive, not just the half-hearted attempt we have now. In times gone by, the average earner paid very little in tax, as one might expect. Today, it is the average earner who contributes the lion's share of tax revenue. Also, there are many people on pay that is a long way below average who really should not have to pay tax at all, yet under our system they do, and what's more, now the 10p tax rate has been abolished, they are paying it at the same rate as the average earner. And the 40% top rate of tax, supposedly aimed at high earners, comes in at a little over £30,000 a year, thus catching many people who could hardly be described as rich. 40% is too heavy on those people, yet not nearly heavy enough on the super-high earners who fall into the same category.

Thus the whole band system needs a drastic shift upwards. Those on low earnings should pay nothing, after all their meagre paychecks are barely enough for the basic necessities as they are. The average earner should pay some tax, but at a lower, more reasonable rate. In any case, as the vast majority of taxpayers inhabit this group, the percentage rate should not need to be very high to bring in big revenues to the treasury. Then, as we climb up the income ladder, whereby every pound earned becomes more disposable, the government can take progressively bigger slices of that pound. The comfortably well-off should still be allowed to enjoy the majority of their earnings, but once we get beyond comfortable and into the realms of the stratospheric earnings of bankers, top executives and professional sportspeople, then I would have no qualms in imposing a rate of 90% or higher. There comes a level, which I would call 'enough money for anybody', beyond which further increase to a person's wealth becomes at best pointless, and at worst obscene.

Of course, the myriad loopholes which the rich have traditionally been able to exploit must be closed. Anybody who earns an income from a job, business or investment in the UK must pay UK tax on that income, regardless of citizenship or country of residence; it really is as simple as that. Many business leaders warn against higher taxes or more robust collection measures, lest all our top businesspeople desert Britain for other countries. Personally, I'm minded to call that bluff, and even if some do leave, I say let them go. Such grasping individuals are hardly the kind of people we want running our powerful commercial organizations, and besides, the UK is a massive consumer market, and nature abhors a vacuum. If they don't want to do business here, then someone else will fill the gap, you can guarantee it.

This is pretty radical reform I'm calling for here, but really all that is needed is a little political will. The gap between rich and poor is the single biggest global problem as I see it, and this would go a long way towards halting the UK's shameful slide in the wrong direction on this issue. And the thing is that it isn't really a big organizational task, the solutions are simple, we just need a government that is prepared to carry them out. Labour have shown that they have no real interest, which is frankly despicable given the supposed values upon which people have based their support for them. The Tories have always been ideologically opposed to high taxation for the wealthy, so while I can't accuse them of the same hypocrisy, I know they will be no help. Could a liberal government do it? Perhaps, if they were brave enough to be truly different...

Next time, what to do about tax credits.