If you are seriously interested in universal health care – read on. If not, skip this presentation. It is more than sound bites, one liners and propaganda.  After you have assimilated the figures you will need to ask the question: what does my tax money really get me?

And why doesn’t the media tell the truth?

As you can see the American cannot live on the disposable income all things being equal, therefore he skimps on medical insurance and does not even address long term care.

I investigated the situation and wrote the following piece after spending 9 months managing my wife’s breast cancer treatment. Simultaneously we were in weekly Skype contact with another woman in Finland whose breast cancer was discovered about two weeks before my wife’s first indication. The Finn was operated on in 10 days after her first visit to the government clinic. It took exactly 2 months to the day for my wife to get a confirmation of cancer and then another 3 weeks for surgery and that is with good insurance. Without insurance our total cost would have been $116,000 whereas the Finn’s out-of-pocket expenses amounted to about $200.  The Finnish woman was 60% through her treatment by the time my wife’s even began.  Both are now just fine.

The Cost of Socialized Medicine

There has been a lot of misinformation in the media regarding universal health care vs. a private system such as we have here in the USA.  I have yet to see a simple easy to understand apples to apples comparison of one system vs. the other. All presentations have been apples to oranges and badly distorted.

This comparison is done in response to arguments of increased taxation that socialized medicine would bring.

Below is a broad presentation of the differences in taxation between the USA and Finland.
I have picked Finland as an example simply because my roots are there. Similar figures can be derived from any western European country.

For simplicity I have not made any attempt to account for inflation or possible currency fluctuations but to use conditions as they are today.

Different countries have different ways of filling the country’s treasury. There are capital gains taxes, value added taxes, inheritance taxes, etc. This presentation deals only with an average single taxpayer who works for a living.

The first utterance of ignorance from an opponent of universal health care is “higher taxes”. This is totally false as can be seen from this presentation.
The second utterance of ignorance are the words “in Canada”.  Universal health care does not begin and end in Canada. In fact the Canadians have made a minor mess of it all.
The third utterance of ignorance is the statement “I want to be able to choose my doctor”.
That statement is categorically false. The Finn has the option of walking into a clinic and getting care from the doctor on duty, making an appointment with the doctor of his choice or going to a private facility of his choosing. In most countries with socialized medicine there exists an option to obtain private care.  Approximately 15% of Finns use the private system and they opt to pay a premium over free care. The government system compensates that individual at a given rate for a portion of the cost of private care and the recipient of care pays the difference only.

There is no possible way to make a minutely accurate comparison due to individual circumstances, tax deductions and credits, insurance premiums and their vast differences, college costs, etc. Some basic assumptions have been made here in order to present a general picture. Variations or corrections to individual circumstances will not appreciably alter the general picture.

Finland provides free or partially subsidized dental care to its citizens. This discussion is completely ignored in the following presentation, however, were it included it would make the American system that much more deficient. And yes, mental care is covered too.
                                                                                                                                                                               
As a starting point I asked a tax professional, who is employed by the government as a tax expert and appears in the Finland media in that capacity, to provide me with a basic outline of what an individual pays in taxes based on a monthly income of 3,000 euros. Here is the original e-mail with my own translation inserted after each entry.

Kolmen tonnin verotettavasta palkasta menee 32% veroa, noin 9% valtiolle ja 16%
kunnalle. Loput on palkansaajan eläkemaksuosuutta ja työttömyysvakuutusmaksua.
Alla asiaa selventävä taulukko.

From a 3,000 euro monthly salary 32% goes for taxes, of which 9% to the state (Federal) and 16% to the county. The remainder consists of part of retirement payment (our Social Security), and unemployment insurance.
The table below shows the details.

Työnantaja maksaa kansaneläkemaksua, työttömyysvakuutusta,
sairausvakuutusmaksua ja erilaisia tapaturmavakuutusmaksuja noin 25% palkasta.

The employer pays (retirement) Social Security, unemployment, health insurance and other accident insurance payments for a total of about 25% of salary.

The employee pays 4.3% of salary to a work retirement fund (similar to our 401k). This is included as a part of normal tax payment. The employee collects this at retirement in addition to social security payments. The combination of both will result in a retirement income of 60% of salary and is accumulated at the rate of 1.5% per year worked. If the combination exceeds this percentage then the social security payments are reduced accordingly or eliminated entirely. This work retirement insurance is administered by several insurance companies under state audit. 75% of this fund is invested in state securities (like T bills) and 25% is invested into the stock market.
In other words a highly paid corporate executive would get 60% of salary at retirement from the work insurance fund but no state social security.

The funds are collected through payroll taxes and managed by private insurance companies and are fully guaranteed by the government of Finland.

So now in general terms they pay a total of 32.46 percent from an annual salary of 37,500 euros or $53,250 dollars.

$53,250 x .3246 = $17,285 deducted from salary leaving $35,965 as disposable income.

What do the Finns get for their taxes?
Complete free health care without limits of any kind. Insignificant co-pays.
College education to a doctorate degree and beyond or trade schooling.
Long term care without limit in assisted living or nursing home.
Typical social security pension benefits approximately equivalent to US. (1,075 euros or     $1,526 per month)
Typical 401k work insurance benefits.
Almost 1.5 years of unemployment benefits.
Plus so many other benefits it would take a book to fill like dental care, day care assistance, per diem for sick time, etc.

What does the typical American get for paying Federal taxes: basically - nothing.

All benefits that are received are due to separate payments of some kind.
The basic difference is that the American pays individually for all the services that Finland provides through taxation.

So now let’s present a comparable US situation. But first let’s establish some basic ground rules so we don’t have to make a life long study of this.
Federal taxes:
For the given annual salary of $53,250 (37,500 euros) the Federal tax table of 2006 the income tax is $9,876 for a single taxpayer. (18.55%)
Medicare tax is 1.45% of $53,250 which equals $772 dollars. (1.45%)
Social Security withholding (FICA) is 6.2% of $53,250 or $3,302 dollars (6.2%).

State taxes: Most states have an income tax but there are a few that do not. The tax rate varies from state to state. Therefore it becomes impossible to figure out an average. I chose North Carolina for this example since I conveniently happened to have those tax tables on hand from 2004.
On an income of $53,250 a single taxpayer pays $3,598 to the state of North Carolina.
This is the equivalent of 6.75%.

Cost of primary education and local services: The major chunk of primary education funding is derived through property taxes supplemented by state and federal funds. But for this example we will use only the property tax portion since that part only becomes a direct tax on the individual. There are low tax towns, high tax towns, variations in geographical locations, small houses, big houses, rental and condominium properties where the taxations passes from the renter through the landlord to the county.
Therefore for this exercise we will assume an annual property tax of $3,000.
Take note that this payment is from actual disposable income. The Finns do pay an annual personal property tax on their owned residence of approximately 200-300 euros but due to its small amount it is disregarded here.

Cost of secondary education:  It is absolutely impossible to place a monetary value to this. Some go to private universities, some to public, some go as far as a bachelors degree while others go as far as a doctorate and beyond. Some do not go to college at all while others choose a trade school. There are families with more than one child while there are those with no children. So for this exercise let’s assume there is one child in a family who goes to college for a bachelors degree at 4 years and for the cost we will split the difference between a public and a private one using national averages.

College cost for 2007:
Private $33,300 per year including room and board x 4 years equals $133,200 total.
Public college $16,400 /yr x 4 years = $65,600
Median  =  $99,400 for a 4 year college education.

We will therefore use $100,000 for a secondary 4 year degree and divide that into a 20 year student loan repayment plan.
$100,000 divided by 20 years = $5,000 per year in payments from disposable income.

Long term care: Most individuals do not place too much emphasis on this item until later in life when assisted living or nursing home care becomes timely. Nevertheless this item is considered here because it is a major part of life. True, one may bet on getting hit by a truck before retirement but for the average individual long term care will be necessary. That cost can either be saved during one’s lifetime or an insurance policy purchased to cover a set amount. Regardless, one does not know ahead of time what life brings forth and therefore a fixed figure cannot be inserted here either. Insurance policies may have a maximum payment cap and one does not know how many years will be spent in a nursing or assisted living facility. For this exercise we will assume that the individual will spend 4 years in an assisted living/nursing home environment. Again, the costs vary based on geographical locations and the standard of care and the class of the facility.
The 2007 average cost for a nursing home is $75,000 times 4 years equals $300,000 that needs to be saved during ones lifetime to cover this cost. As stated in the beginning no allowance for inflation or the cost of living is considered in this example.
Note that this $300,000 is taken from disposable income. We will spread the accumulation of this over 40 years.  So $300,000 divided by 40 years equals $7,500 per year that is set aside into savings to cover long term care.  
                                                                                                                                                                               
Health care. Again, it is impossible to put a fixed amount of cost that an individual has to bear to cover healthcare. People are of different ages, pre-existing conditions, employers share costs for some, others carry all of it while 45 million Americans are not covered at all. Different plans have different deductibles, co-pays and coverage limits both annual and lifetime.  Therefore I have selected $500 per month as a premium to cover a health care policy with no deductible* that would cover all health care needs.
At $500 per month times 12 months results in an annual cost of $6,000. In reality that is a low figure.
That’s all from disposable income.
* The Finn pays about 22 euros per year for unlimited access to health clinics and about 26 euros per day for hospital stays - all inclusive including operations. Due to this small co-pay these figures are not included in this comparison. These small co-pays are used to discourage nuisance visits to health clinics.

Summary of taxes and payments that would equal what a typical Finnish citizen receives from paycheck deductions. (Repeated from above)

Federal taxes: From the Federal tax table of 2006 the income tax is $9,876 for a single taxpayer. (18.55%)
Medicare tax is 1.45% of $53,250 which equals $772 dollars. (1.45%)
Social Security withholding (FICA) is 6.2% $9,876       of $53,250 or $3,302 dollars (6.2%)
State tax: $3,598 to the state of North Carolina. (6.75%)

               
** Payments from disposable income ie. after tax income.

To get about 80% of the benefits of a Finnish citizen the American pays almost 68% of his base pay whereas the Finn pays only 32.46%.

Discussion points:

The differences between the two systems are obvious. It is unfortunate that the media does not present the situation correctly but merely resorts to misleading sound bites.

What have not even been discussed here have been the numerous other benefits that tax revenues provide to the Finnish population. The law mandates vacation time that runs from 2 to over 8 weeks. The US does not even mandate vacation time. The Finns get dental care, though not entirely free, while the US does not even mention that in most discussions. The Finns get almost free drugs as well. The list is endless.

Tax money provides free education to the Finns without limits. And that money is effectively used. For the last several years Finland has taken the top spot in the world in the PISA exams (The Programme for International Student Assessment (PISA) is an internationally standardized assessment that was jointly developed by participating countries and administered to 15-year-olds). US performance has been mediocre at best.

Looking at the figures provided herein one obviously asks the question “something here does not compute?”  The numbers are indeed terribly askew. But from the wage earners perspective they do appear correct. The average person makes do with less and is ok with that since he does not know any better. The leaders of this country, with approval from the electorate, have created this disaster.

The US spends two to three times the money on a per capita basis as do the countries with socialized medicine. As a percentage of gross domestic product the US expenditure on healthcare is double that of most civilized countries. Where is it all going considering we have 45 million with no care?  Profits, profits and profits.  Let’s not forget the bribes, bribers or perhaps the politically correct term “lobbyist”.

The constitution of Finland as well as that of other civilized countries places the responsibility on the government to furnish quality health care to all citizens. It is a basic human right similar to freedom of speech.

The constitution of the United States does not even address health care. Hence the business community is using the misfortune of illness for profits.

How to fix it?  It cannot be fixed – it’s too far gone for any kind of corrective action without causing a national catastrophe like a major depression.

First, the people need to be educated with correct facts regarding universal healthcare.

Second, they need to be told of the consequences of correcting the inequalities that are inherent in the current system. Consequences? Yes. A major depression. Why?
One needs only to do a quick count of the number of people who do not contribute one iota to society’s well being and are involved in the health care delivery system. Who are they? They are the insurance agents that sell and write policies; they are the billing staff and coders at each and every doctors office, laboratory, hospital, etc.; they are the thousands employed by insurance companies who review and process claims and payments; they are the thousands who review patient insurance applications for
conditions that disqualify them for being imperfect human beings or who may have inadvertently omitted some minor detail in their application; they are the coordinators at doctor’s offices who schedule work elsewhere to match particular insurance policy requirements; they are the thousands of lawyers who are involved with various cases of shortcomings in the healthcare system; the thousands of advertising firms and people involved in touting health care services and drugs; and the list goes on. All of these people would become unemployed since they do not contribute a thing to real healthcare. Dozens of insurance companies would go out of business; profits and investments would disappear.

And then there would develop a huge shortage of genuine healthcare professionals such as doctors, nurses, therapists, lab technicians, etc. who would have to take care of the 45 million additional Americans without healthcare and all the “baby boomers” reaching retirement age.

The total number of people who would become unemployed will number in the millions. Where would they get new occupations and jobs? With them being unemployed the government would have to pay them unemployment compensation, retraining, etc. Simultaneously the government would lose them as a tax base thus further eroding the national balance sheet. And of course the shareholders in health care companies and businesses would lose their investments.

This would become a bitter pill to swallow since the disease has been allowed to spread way too long. The bribes the politicians take from drug companies and health care delivery organizations will prevent any meaningful reform. Profits are the over-riding factor. People and their well being do not matter.
                                                                                                                                                                               
Is there another option to leave things as they are? Do nothing? No, that is not an option since it is plain suicide for the USA. The cost of private healthcare is already a burden on American people and products. The cost of this inadequate healthcare is already folded directly into the products produced here. This makes American products that much more expensive on the world markets. The competition will put the US out of business because of the increased production costs.

So what is the solution? Swallow one, two or more bitter pills!! Or better yet, take some “smart pills” and find a solution. The solution may lie just around the corner if only the selfish American would stoop to ground level and see how intelligent on unselfish people do it. With the availability of the internet there is no excuse for staying ignorant and stupid at the same time.

The contents in this document are the sole opinions of the writer.
John Saarikko, Sarasota, Florida