Tuesday, February 19, 2013

'There Must Be A Pony In There Somewhere!'

The Pony in the Horse Manure Pile
One of Ronald Reagan's favorite stories had to do with two young boys, one a pessimist and one an optimist.

'A psychiatrist came in to treat the young pessimist. Trying to brighten his outlook, the psychiatrist took him to a room piled to the ceiling with brand-new toys. But instead of yelping with delight, the little boy burst into tears.

"What's the matter?" the psychiatrist asked, baffled. "Don't you want to play with any of the toys?" "Yes," the little boy bawled, "but if I did, I'd only break them."

Next the psychiatrist treated the young boy who was the ultimate optimist. Trying to dampen his outlook, the psychiatrist took him to a room piled to the ceiling with horse manure. But instead of wrinkling his nose in disgust, the optimist little boy issued the yelp of delight the psychiatrist had been hoping to hear from his brother, the pessimist. Then he clambered to the top of the pile, dropped to his knees, and began gleefully digging out scoop after scoop with his bare hands.

"What do you think you're doing?" the psychiatrist asked, just as baffled by the optimist as he had been by the pessimist.

"With all this manure," the little boy replied, beaming, 'there must be a pony in here somewhere!'*

If you look at the mess that is now known as 'Medicare' and the general American health care system, you simply have to be an optimist and figure 'there must be a pony in there somewhere!'

We just have to think clearly about what our objectives are as a nation when it comes to health care policy regarding 'insurance' versus pre-paid health services for everyone.  There is a huge difference between the two.

We have said this many times before: We can not continue along the lines of delivering health care under the current multi-variegated, quasi-private but mostly federal government-run and mandated structure dominated by Medicare and Medicaid and soon-to-be further complicated by a factor of 1 million under Obamacare.

Try to read the bill in its entirety and see if you can understand it.

Like the little optimist, we think there are seeds in this current broken system that can be part of the solution going forward.

Such as this one:
'Why not use the $300-$360/month Part B premium now paid by every senior citizen to buy catastrophic high-end insurance coverage? That is what 'insurance' is supposed to do, right? Protect everyone from being wiped out by the high costs of debilitating disease that lands you in the hospitals for months if not years on end?'
We saw in our last post that 1% of all citizens consume 35% of all health care expenditures each year. 5% consume 60% of every dollar spent on health care. We just don't know which individual is going to suffer such a catastrophic event and treatment each year which is why insurance was invented in the first place.

Ben Franklin established the first home insurance plan in 1752 in Philadelphia where homeowners made contributions to a plan that would help prevent fires. His fire company would send out teams of firemen to help put out fires in the homes with paid-up insurance. They would 'conveniently' pass by the homes where the tenant refused to buy his insurance in the first place.

There is an analogy in that story for modern-day 21st century American health care insurance, we just know there is.

But here is the beauty of this idea:  It is simple. It is fair. It can be easily communicated to the public. 100% of the seniors now covered by Medicare would be covered 100% for any catastrophic health care event that might afflict them going forward from Day One. Which is the main fear everyone has has they age anyway, right?

The younger taxpayers who know that Medicare is simply unsustainable in its current form will breathe a huge sigh of relief that their payroll taxes won't double for a program they will never get any benefits from as it stands today anyway.

Similar plans could be set up for Medicaid recipients out of existing resources in that second highest risk group of people for high-cost medical ailments and long-term treatment.

We have heard from health insurance actuaries in the past that catastrophic insurance, which presumably would include long-term care, would cost perhaps $300/month per person if the entire population of 310 million people were covered.  Perhaps the number for 100% of all seniors would be $350/month or $400/month; we won't know until we ask for a more complete analysis. But it is in the range of current Medicare monthly Part B payments by over 44 million senior citizens.

'And what we we do with the roughly $1 trillion of federal tax dollars now being spent every year on Medicare and Medicaid?' the harrumphers like Paul Krugman and other big government-spending addicts will harrumph.

'Well, for one thing, after we figure out how to build and support more community health centers to serve the under-served and poor populations better, why not return all the payroll taxes in the form of the ultimate payroll tax holiday as in 'abolish payroll taxes for Medicare'? General tax revenues can be allocated during the normal appropriations process as the need is determined.

Another option might be to eliminate the federal budget deficit in one fell swoop with this one single simple change.

'Ockham's Razor' posits that the best solution is usually the most simple solution. We have already proven the opposite of Ockham's Razor with close to 40 years of Medicare, Medicaid, a mountain of ERISA-regulated benefits plans and now Obamacare: 'The worst solution is the most complicated solution'

Let's look into this 'simple solution' and see if it will work before continuing down the path that we know will not work and may be heading us to financial ruin.

There might be a pony in there somewhere.

*Adapted from 'The Pony In the Dung Heap: When Life Buries You, Dig'-Peter Robinson

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