How to pay for it

I promised to open more discussion of the physician-patient relationship, but first, a visitor raises the important question of how to pay for universal health care, should the heavenly kingdom ever arise and that become possible here in the land of the radically individual. Due to some weird technical problem, her comment did not appear in Haloscan, so I append it here. (Yes, response first, comment later!)

I agree with many of the key points: universal health care, particularly within a system that emphasizes prevention, can be expected to save society money in the end. Economic transactions with substantial externalities should be taxed to reflect their real costs to society, e.g. sales of cigarettes, petroleum etc. However, I'm not sure that using such taxes to fund health care is quite right.

First, if government becomes dependent on taxing stuff we want to discourage, it develops a serious conflict of interest. Tobacco taxes are great if they discourage smoking, bad if they put state governments in a position where they don't want to discourage smoking because they're dependent on the revenue! Also, such sales taxes are generally not progressive, and fall hardest on the poor and moderate income people. The best method, in my view, is a sliding scale whereby affluent people pay full cost and progressive income taxes provide subsidies for the less well-to-do. We should still have sin taxes, but dedicate the revenue only to ameliorating the direct effects of the sins, e.g. petroleum tax to renewable energy research and development, and pollution abatement; cigarette taxes to tobacco control.

Finally, I would not give people a write off for being phyiscally fit, etc. That's a real can of worms, with a lot of counterproductive consequences. But we do want to promote fitness. Anybody else want to weigh in on all this?