How to pay for a national health care plan is one of the big obstacles the Obama administration must hurdle in order to reach its goal of providing health insurance coverage for every American. The question is whether it can be done at all without literally breaking the bank – especially following on the heels of the approximately $10 trillion in expenditures over the next few years that have already been approved by Congress and signed into law.

So, how do Obama and Congress plan to get this done?

First, they talk almost incessantly about between $1 trillion and $2 trillion in cost savings that can be achieved in the current health care system. He problem is that there is no way to measure it. Not really. It’s just talk.

A number of other ideas are also being floated to pay for universal health care coverage, and the ultimate choice will probably include some combination of the following:

Taxing the “rich”: This source couldn’t possibly cover all the proposed costs of a national health care plan. A graphic illustration can be seen in the fact that if you tax away the profits of the entire Fortune 500 list of companies, it would only bring in around $100 billion. In 2008, the number was $99 billion. This assumes that these businesses would continue to operate if everything they earned is confiscated by the government, in addition to the income taxes they already pay. As for the individual “rich” taxpayers, the result would be much the same. The combined net worth of the Forbes 400 richest Americans is about $1.2 trillion. If the government took everything they have to fund universal health care, it would only be a one-time fix, leaving nothing to tax in the future.

Taxing health care benefits that employees currently receive tax-free from their employers: No doubt this can be accomplished, but not without reducing the incentive employers have to provide health care coverage for their employees. The idea also includes tinkering around the edges of income tax deductions on individual tax returns, such as reducing the deductibility of various expenses. This can certainly generate more taxes, but hardly enough to pay for universal health care on an ongoing basis.

Cutting costs in the current health care system by improving technology, reducing unnecessary or duplicative procedures also really can’t be measured with any degree of confidence. There are simply too many moving parts, all interacting in different ways at different times and continuously changing at the same time.

Reducing payments to doctors and hospitals for Medicare and Medicaid patients: Contrary to the public perception, doctors are already being underpaid by both Medicare and Medicaid, with the result that many physicians are no longer willing to accept patients whose care is paid for by these programs. Furthermore, the government is notoriously “slow pay,” especially the state Medicaid programs. For instance, in California, MediCal is so slow and underpays for services so severely that many doctors refuse to accept their patients. An actual situation I encountered while I was running a hospital illustrate the point: a general surgeon was paid ten cents for a $50 fee that he charged for an emergency room consultation. On another occasion, a neurologist received only 17 cents for an ER consult. Such cases were not all that unusual. So, you can cut payments, but unless you are willing to conscript doctors, you can’t force them to treat patients whose bills are paid by the government.

Lowering the cost of health care insurance by creating a program that will compete with private sector insurance plans seems like a good idea on paper. But the reality is that a government funded health insurance program has unlimited financing available, which means that any losses they might experience will be funded regardless of whether the plan is profitable or not. The private sector can’t compete with this and will eventually be forced out of business, leaving the government plan as the only remaining option. It’s unfair competition, but it won’t be viewed that way by most politicos. There are laws designed to prevent this sort of predatory behavior by private citizens and businesses, but it’s generally OK when the government does it.

It never ceases to amaze me how often people in government seem to think that they are smart enough to structure programs that can control and regulate human behavior without imposing autocratic control over people. It has been repeatedly tried throughout history, and it always fails – eventually. The evidence is abundantly clear in the universal health care plans of other countries that have already adopted such programs.

© 2009 Harris R. Sherline, All Rights Reserved

Read more of Harris Sherline’s commentaries on his blog at “www.opinionfest.com”