In the last Responsibility paper we enumerated the problems with our ailing, if not failing, health care system. How did we get where we are? What should we do about it?

"What is the root of our current cultural position? In 1942, the War Powers Act froze all salaries and wages in the United States for the duration of [World War II].

This obliged unions to bargain over benefits rather than wages. Pensions came first, followed soon afterward by health. By the mid-'80s, more than 85% of all fulltime, salaried workers in the USA enjoyed full coverage for health benefits, generally without either copayments or deductibles.

Meanwhile, the IRS had codified these benefits as tax free to the employee and deductible to the employer as a cost of doing business.

In a word, health care not only became essentially free to the great majority of the American public, but access to it became their 'right'.

This situation was seriously aggravated in 1965 when Congress bought off the opposition of the American Medical Association to Medicare by assuring that all services rendered under the program would be fully reimbursed.

If one believes he has a right to health care without paying for it--and at the same time the full cost of delivering the care is assured--it follows that there will be an explosion of expenditures on health care. That is precisely what happened in our country after 1965.

All subsequent efforts to control these expenditures have failed. While hospitals are subject to prospective pricing and physicians are subject to fee constraints, such measures cannot solve our problem because they are targeted only to the supply side of the health delivery system.

No one has bothered to tell the public that, until it controls its appetite and expectations, supply-side constraints cannot succeed.

We can choose to follow the example of Great Britain, where both payment and production of health services are socialized. Or we can emulate Canada, where the production of health services is wholly private, although constrained, and only the financing has been socialized.

But before we can make even this choice, we must find the courage to decide which two of the three goals of universal access to all medical service at affordable cost we wish to pursue--at the expense of the third."

What shall we do about it? None of the above cited foreign examples, nor any of the schemes being bandied about by our politicians, should be pursued per se. Instead let us consider what, for want of a more descriptive brief title, we will dub "The American JUST Health Care System".

As we will develop further in a later essay regarding taxes and appropriations, the health care system that has evolved in the USA is unjust. It is in conflict with the objectives of our Constitution as stated in its preamble. That is, it is contrary to the "establish[ment [of] justice" and it promotes the particular as against the "general welfare". Further it violates the Bill of Rights property rights (Constitution Amendment Article V) in that all consumers and taxpayers pay for the health care of businesses' covered employees without necessarily "just compensation" of health care of their own.

This injustice is removed, by having the law recognize that employee benefits are merely another form of wages and salaries. They would then be subject to individual income taxes. Other taxpayers would no longer have to make up for these lost taxes. The cost to consumers would be more equitably spread. In effect covered employees would, by accepting their health care benefit, have elected this use of part of their disposable income (without any subsidy from other taxpayers).

If we are to have universal health care with womb to grave coverage, then we must also strike the other fundamental fallacy of our present health care system. We must go to a system that approximates "pure" insurance for all (250,000,000 plus) citizens and residents of the USA. Pricing, for degree of coverage and insurability risk of each insured, must be based on the "universe" rather than the employee group of each subscribing company. In effect we would have the insurance industry go to individual policies except possibly for administrative cost savings of group arrangements.

The medical policy with the particular insurance company would go with the covered employee, with the same coverage, and with no risk of having to cope with a newly recognized pre-existing condition. The price schedule would stay the same as with all other insureds with that insurance company, and with the same insurable characteristics (except possibly for the small additional administrative charge of individual versus group arrangement).

With the levy of this requirement on the insurance industry, each individual's health care program is virtually unaffected by: job changes; employers' bankruptcies, reductions in work force, mergers, going out of business, curtailing of benefits; unavailability or excessive cost of medical insurance to small businesses; etc. The displaced employee would have to pickup responsibility for the premiums, deductibles, and charges under the existing policy that were previously part of his compensation.

Policy holders must be protected against another risk. By law the insurance industry must be required to provide for the continuance in force (with little or no change in cost schedules) of policies issued by companies that go out of business, or otherwise would default on the policy terms. Most States have set, a not necessarily analogous, precedent for this in their protection of certain insurance policies through a reserve drawn on insurance companies doing business within a State.

In the next paper The American JUST Health Care System will be further outlined. The hard decisions that will have to be made for a transitional time period will also be discussed.