How much will the health bill cost you?

The rich, those nameless, faceless, spoiled saints that love to pay for everything, are going to give the rest of us "free" healthcare. Except we know how tricky the rich are - they pass their higher costs on to the rest of us. They fire their nanny, move to a lower tax state, do their shopping in Europe... and then they shift their investments to Luxembourg, cut a couple of jobs at the plant, or raise their prices. So, when you're sitting down to the annual turkey feast saying a prayer of thanks for those nice riches that pay for everything, try not to think about them passing some of the costs to you. Crying at the dinner table is gauche.

So, what if the rich pass the costs on to the rest of us? Well, if Joe Rockefeller raises his widget price 5%, Joe manufacturer has to raise his doodad price a little more than 5% - to cover the financing cost on widgets, plus, he has to make a fair profit on the money he puts at risk in his company. Then Joe Distributor raises his costs high enough to cover the 6% increase in doodad pricing, and Joe Retailer has to raise his prices enough to cover the 7% increase in doodad wholesale costs.

Maybe the rich will just take the extra taxes out of their personal budget. They'll cut back on cocaine and hookers. Weelll, when the rich go and waste their money, it creates jobs and income for others. The rich invest their money in stocks and bonds, and it provides funds for corporations to build new factories, buy new equipment, or meet payroll. Let's hope they don't cut back there! The rich hire servants who rather enjoy having a job (my grandfather sure did), so let's hope they don't fire the nanny. Maybe the rich can cut back on jet trips. Okay, I'll give you that one - but I hate flying, anyway. Oh, wait - if they don't jet off to New York for tea and shopping, New York teahouses and boutiques will have to cut back. See, rich people may waste their money (most don't waste much - that's how they got rich), but what I call "waste," some folks call "income." The French Laundry restaurant provides good jobs for staff; designer boutiques employ a plethora of rude-but-beautiful waifs, even Tiffany keeps customer service reps, designers, craftsmen, accountants, and marketing professionals off the public dole. A direct tax takes money out of your pocket, but an indirect tax can take your name off the staff directory.

So, if the cost of healthcare gets passed on to your family, how much is your share? Well, there are about 100 million taxpayers in America*. The health bill is projected to cost $1 Trillion over 10 years, or about 100 Trillion per year. Divided by 100 million taxpayers/families, that's $1,000 per year. As inflation raises the cost of healthcare, it will raise the cost of the healthcare tax, too. And healthcare inflation seems likely to continue - the bill is not addressing existing cost inefficiencies in health care. In fact, if cost increases strap American families, they may delay preventive care, which would increase the incidence of serious illness and serious complications from illness, adding further upward pressure on health costs.

* I am dividing the cost across taxpayers - instead of all citizens - because not all citizens will bear the cost increases. Children almost never have income, so they almost never bear any costs, so we can exclude the roughly 40 Million Americans who are under age 18. The poor don't pay taxes (they receive earned income credit and welfare) and they don't buy as much stuff as the rest of us, so they will carry very little of the cost load. Welfare recipients will probably receive increased payments if cost inflation rises, which would shift their individual cost-share to the taxpayers who fund welfare programs. For these reasons, I believe that most of the costs will be shifted to people whose income (and spending capacity) qualifies them to pay taxes.