Tuesday, June 16, 2009

The "New" National Health Care 'Insurance' Plan That Can Work

The annual budget for Medicare is around $436 billion.(2007 numbers)
The annual budget for Medicaid is approximately $191 billion.
The states' additional portion of the Medicaid budget is about $160 billion.
Tax expenditures for deductibility of corporate contributions for health care premiums are about $165 billion.

We 'only' spent approximately $2.2 trillion total in the entire health care industry in 2007 America and close to 1/2 of it was determined in some way by the federal and state government apparatchik?[1]

C'mon....we can and should do better than that in the United States of America, shouldn't we?

Here's what bugs me whenever I see politicians tossing big numbers around without any explanation or context: "They never tell the whole story!" How can they? They are just numbers and figures from dull and boring charts.

And money, in and of itself, doesn't have any animating value or emotions. It is a symbol of worth, a mode of exchange and shouldn't be treated as anything more or less than it really is. The real 'value" of money comes about for the purpose for which we spend it and that determines whether the effort is "good" or "bad", wasteful or well-spent.

The intrinsic 'value' of any health care-related program on which we expend taxpayer dollars should be judged on whether or not it covers people with the 'insurance' they need to avoid catastrophic losses, helps keep a person well and avoids complications from ill-health and bad habits.

This is where the current health care system in America has fallen down.

The September, 2007 Kaiser Family Foundation report points out that just over 50% of all health care expenditures go to hospital, physicians and clinical care expenses.

Where does the rest of the $1 trillion in "other" expenses go then? Waste, fraud, abuse, overhead, bonuses, IT?

Just 10% of the population accounts for close to 60% of the spending on health care in any one year. 1% of the population accounts for close to 20% of total spending. Those are the people we need to be "insuring against" each year with health care insurance programs.

Here's what we have to state very clearly as our national objective and then start doing: "Provide a means to fund true insurance plans for every family to cover the catastrophic health outcomes that can bankrupt them."

A clear national objective to provide direct payments specifically to help pay for the health insurance that will cover every American in the event of a catastrophic event will mean: 1) no family will be wiped out financially for an unfortunate health outcome by a member of the family and 2) the general population won't be burdened by excessive taxation to pay for all the health care spending we can not afford now.

And surely, with close to $1 trillion now being spent in some form or another in health care related programs from the federal ATM machine known as 'our government', we can find an efficient way to buy this insurance and move on to the next problem we face....like the budget deficits.

Here is the way to do it:

  • Combine all the existing cash resources of the federal programs Medicare and Medicaid plus the state share of the Medicaid into a new program called the "Freedom From Health Care Disasters Program"
  • Determine by actuarial means the amount of money it would take to fund an all-encompassing high-level, high-deductible, true health 'insurance' plan for each and every person across the gamut of income and age, adjusted for regional differences.
  • The private health insurance companies will compete for each of the new FFHCDP recipients to include them in their pool of clients since they will now have the economic means to pay for their own health insurance through a combination of direct federal payments and tax deductions.
  • Since we have already argued for the abolition of the corporate income tax code for economic recovery purposes (see "Abolish the Corporate Tax Code"), there would no longer be any tax deductions available for corporations to provide health care premium payment coverage to employees. Individual tax deductions would be allowed up to 400% of the poverty level scaled by income.
  • Allow people to buy supplemental health insurance on their own to the extent they want coverage for health care costs below the catastrophic insurance coverage level. The free market will be teeming with options to pay for it now that people have the means to do so based on their own decision-making, not the corporations.

The argument has been made that we need "group health insurance" because many people are 'too stupid' to buy it on their own and they can't understand it all. Are they too stupid to buy car insurance which is mandatory before they can drive the car off the lot? Are they too stupid to buy home insurance when they buy a house? I don't see any 'group auto insurance' plans out there or 'group home insurance' plans funded by third-party payors such as employers or the state and federal government, do you? People seem to get by pretty well in both of those 'confusing' insurance areas, don't they?

Is there any reason why people can not be trusted to do what is right for themselves and their families and buy health care insurance, particularly when the resources are allocated to them on a per capita basis based on their income if they can not afford it solely on their own? If need be, we can set up a financial management system to escrow these federally mandated vouchers to the appropriate insurance companies to cover those who truly can not make their own decisions.

This approach will finally break the now 45-year lock on universal Medicare eligibility based on age alone. Bill Gates and Warren Buffett surely don't need to be included in the Medicare pool just because they turn 65 in order to maintain political support for the program, do they? I think they would be glad to continuing paying their share of the Medicare payroll tax into the system to help pay for those less fortunate than they are regardless of whether they ever enroll in Medicare or not.

Eligibility for federal funding assistance will then be based on income and household financial wealth status solely from age 1 day to 100 years old.

This approach will drive down health care costs in the meantime due to more individual decision-making and vested stake in the purchase of health insurance and competition in the health care delivery market.

[1] Great Russian word basically meaning "agent of the Apparatus"...pretty ominous-sounding word

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