Healthcare simplified (and dramatically improved!)

The big question nobody seems to be asking on healthcare is this:  What exactly are the reasons why we feel we need employers to be the primary channel of access to health insurance? Is it because we think we need them to cover a large measure of the cost?  They don’t.  They never have and they never will.  Oh sure, they pay much of the premiums, but they could as easily pay that same money out to their employees, who would then buy their own coverage.  Either way, it’s all just part of what they pay employees for their services.  See this piece by Thomas McClanahan.

Here’s what we should do.  Please read this carefully, and explain to me why it would not be better than anything else being considered.

Universal access/universal coverage –  First, we provide access to coverage to each and every person in the country legally.  The insurance is provided by for-profit insurance companies, who compete for your business.  We do not allow the government to both set the rules AND be a provider of either care or insurance.  By government mandate, no one able to pay is turned down or to has their preexisting conditions excluded.  Everyone either buys the insurance or pays a tax penalty or fine for failing to do so.  By allowing everyone to deal directly with an insurance company, coverage would be completely portable.  Employers would not be required – indeed they would not even be allowed to arrange coverage for their employees under group plans.  We ensure they don’t by taxing the premiums they pay for employer-provided plans as dividends, so they’re taxable to both the employer and the employee.  There will be outrage from the people covered for free by gold-plated executive plans, but we just do it.  We do allow employers to bonus the premium money or count it as salary, which means they deduct it, and the employee receives it as ordinary taxable income.  But nobody is turned down, and everyone has to pay for coverage.

Regulation overhaul – Next, we have to scrap the system of state regulation of insurance and its byzantine patchwork of regulations, and have federal regulation only.  With a system of federal regulation, we conduct hearings to determine what the plan design features should be, then every company has to offer those plan designs exclusively, or be taxed out of the business.  Universal regulation means nobody has to move or stay where they are due to health insurance.  A move to federal regulation would have to take place over a number of years, and until complete, there will be differences from state to state, but we cope with them as best we can.

Cost Control – We have to give people two kinds of financial incentives.  First, the plans would cost them more for more comprehensive forms of coverage.  They would actually start to care about things like whether to cover routine doctor visits, or medicines.  Second, the plan designs must provide the patient (or parent in the case of a child) with financial incentives to make decisions that provide reasonable care at a reasonable cost.  Some of these choices will be tough to make, both by the patient and the insurance company.  Both should have a financial incentive to think twice before allowing any and all treatment expenditures.  Every person should have to decide whether to buy a comprehensive pay-everything plan at a very high cost, or a more modest plan that only covers the catastrophic situations.

We absolutely must give up the notion that health care should always be free at the time of service, and that we should never have to decide whether to take the cost of a particular treatment protocol into consideration before deciding which treat option to use.  There are though choices in life, and it’s highly likely that at some point, we all will have to make some, either for ourselves or for a loved one.  What we WANT is the right to make those decisions ourselves, rather than having them made by someone else, regardless of whether it’s insurance bureaucrats or government bureaucrats.  End of life decisions would make everyone put their money where their ideology is.  Do you want aunt Tillie to live an extra six months?  Fine, but you may have to decimate her finances (or yours ) to make that possible.  The often emotionally charged decisions families have to make at the end of a loved one’s life are always difficult.  They are made more so by having to make morally sound decisions on care that are also cost-effective.  But by attempting to shelter people from having to make these difficult cost-control decisions, we have abandoned all hope of controlling the cost of care.

Lifestyle – Next, we require people to start making healthier lifestyle choices.  Want to smoke?  It’ll cost ya.  Hate getting checkups?  Fine, skip ’em but pay a penalty surcharge.  Hate working out?  Fine, but fail a body fat ratio test and pay a surcharge.  Again, there will be outrage, but over time, many people will start to get healthier.  Want to get serious about wellness?  The insurance companies may want to give you a discount if you enroll in a wellness program.  Under the current system of employer-provided plans, no such incentives are possible, because the employers are the ones who would reap all of the financial rewards, not the employees.  We could also start a dialogue about other lifestyle choices, like free-climbing, or poisonous snake handling, or skiing in wilderness areas where avalanches are a real possibility.

Next, we never, ever pay for cosmetic surgery unless it’s to correct damage done in an accident or by disease, or a significant birth defect.  But as with all of the things that are covered, we have to be rational. We also look long and hard at abortion – not whether is is moral or should be legal, but “Who pays?”  If the law of the land says plans must cover abortion, that means you and I do.  Is that what you want?  Not me!  And make no mistake, right now, we are!

Medicare – Retirees and those within say ten years from retirement should have the assurance that their benefits will not be reduced.  Everyone else should be transitioned into the same plan options as pre-retirees.  Plans such as Medicare Advantage plans (which President Obama wants to eliminate) should be continued without taxpayer subsidy.

Coverage for those who can’t pay – This is where probably the biggest challenge comes in, and I am not knowledgeable enough of the issues to feel strongly about the specifics, but there are a few principles I think we should incorporate.  Obviously the taxpayer will foot the bill here, but we need to ask how we pay and we need to be assured that doing it that way is the best option.  We need to give poor people different kinds of cost-control incentives.

President Obama wants the government to set the rules AND provide the benefits AND control the costs.  He wants these things because he never met a government he wouldn’t prefer to a private sector program hands down.  What I think makes the most sense her though, is a plan with ruled set by the government, but run as a public-private partnership.  Innovation and hard work are behaviors that flourish when people are incentivized to innovate and work hard.  It’s hard to do those things – to provide those incentives – within a government infrastructure.

You no doubt have opinions on this.  If so, go ahead and post.  You don’t need to register.

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10 thoughts on “Healthcare simplified (and dramatically improved!)

  1. Vince S.

    Great ideas John! Keep ’em coming.

    I believe that a national referendum should be held on this critical subject, I don’t think that a majority of Americans want to reform our health care systems.

    1. I like the idea of a national referendum, but people in general are far too uninformed at the moment. What’s need is a lot more discussion, debate and exchange of ideas before we collectively “get it”. The current rush that assumes we need to do something, even if it’s wrong, is dangerous.

      Thanks for your thoughts!

  2. Pete

    Some of your ideas sound pretty decent, John. There are a few assumptions about Obama that I don’t particularly like, but hey, it’s your blog…you can say whatever you want. The only point I’d like to make is that it seems that everyone agrees that we have to do something to fix healthcare…..I’m grateful that he (Obama) has the guts to try…very few have. At least people are seriously thinking about what to do…..we’ll see if Congress has the political guts to actually get something done (I think they will…but less b/c of guts and more to keep themselves from looking like a failure). Our president is taking a big hit, politically, for trying, and I think that that is a shame. I say good for him. He is forcing us all to think, write, post, email, talk, about this issue. And he is forcing Congress to do something. I think he’d sign a bi-partisan bill, happily, if he got one. Personally I trust his intentions much more than those in Congress. -Pete

    1. Point taken about my assumptions on Obama. Maybe it’s the Democrat controlled congress who assumes up front that government-provided solutions are the only alternative, when there is abundant evidence that fiscally sound government programs are the exception, not the norm.

      I do applaud his courage and initiative in making reform a priority. He should get credit for that. I just want to see real solutions to the fundamental problems.

      Congress can and must set policy, but a fundamental tenet of all policy is the promotion of free enterprise. But “free” does not mean a complete absence of oversight. I do not agree with the Libertarian or extreme right ideology that says government should just stay out of the marketplace. The policy set by the government should provide an opportunity for business to succeed, so long as it can do so while bearing the risk. We as a country have failed dismally in that regard. If we were to start paying that ideal its due, we would see that we would need fewer laws, fewer police and other compliance employees, fewer lawyers, fewer prisons, and on and on it goes. We would all be willingly complying with the laws, because doing so would be in our own financial interest.

      Yet every time we decide we need a new law, we find that we need a whole new raft of people on the payroll to enforce it. So government grows bigger and bigger, and we all become more and more dependent on it. And that dependence saps our freedom.

      Republicans generally have it right when they say we need less government. But where they have failed in the past is in establishing the kind of environment where there simply is no reason to hire more people, because business are doing the job with more innovation, more creativity and more efficiency. That’s the kind of enviromnent we had in the early years after 1776. And that envornment allowed human flourishing the likes of which the world had never seen before.

  3. Becky

    I love the thinking behind Universal Access/Universal Coverage and Cost Control. However, I am only knowledgeable of insurance from two perspectives – I have it, and I grew up with a father who sold it. So from my armchair quarterback position, it seems to me that your suggestions are pretty thorough, yet I have a few questions:

    Lifestyle – While in theory I like the suggestion of calling folks into greater responsibility for taking charge of their well-being, I can also see how this kind of muscle can lead to group-think ways of healthcare, and the democratic ideals in me shrink a bit from this possibility.

    Regulation – How do you both federally regulate and leave “differences from state to state?” And then “cope with them as best we can.”

    Coverage for those who can’t pay – Isn’t this really what the whole issue is about?

    I personally believe seeking to level the field in healthcare so much, means we no longer leave any room for “accepting our lot”, and we have little reason to rely on the Great Insurer of Life.

    1. Thanks for your comments Becky! As to your Lifestyle point, I’m unsure of what you mean. What’s group-think, and why do you fear it?

      The way you do regulation is to pass laws that supersede state laws, but have a transitionary period allowing states to unwind programs that would need to be unwound. During that period, a state could elect to continue it’s programs and policies, but would be required to wind them up by some deadline.

      on your third point – I suspect Obama and his people think this IS what it’s all about. That’s why I posted this. While a noble ideal, it is not what is fundamentally wrong with our system. Read my reply to Pete for more.

      Also, I want to introduce the legislation introduce by Rep Paul Ryan of Wisconsis called “The Patient’s Choice Act.” It’s at http://www.house.gov/ryan/PCA/index.htm.

      There’s a lot to like in his plan, not the least of which is breaking the link between healthcare and employment.

      Also, people should be aware of the Newt Gingerich-led Center for Health Transformation. It’s at http://www.healthtransformation.net/. It starts with these ideals:
      # Stop Paying the Crooks
      # Move from a Paper-based to an Electronic Health System
      # Tax Reform
      # Create a Health-Based Health System
      # Reform Our Health Justice System
      # Invest in Scientific Research and Breakthroughs

      Everybody should go there and click the link that says “Sign our Petition“. It’s about the idea that Congress gets cradle to grace healthcare that covers nearly everything, and that is paid for by the American people. The petition says that if Congress votes for government run healthcare, they should enroll in the same plan!

  4. Bernard McLaurin

    I truly agree with Pete statement that at less Obama is trying. And the last I saw of the polls about healthcare most people agree also. Canada and other countrys have a good healthcare system we are the most powerful country in the world and we don’t have a healthcare system. I believe that Obama and the congress will put together a healthcare package for this country. And I am glad we finally have a president that is at the less trying to help our country.

    1. Canada’s healthcare system is exactly what we should avoid. Think it’s hard to get an appointment with a specialist here? Try waiting six months.

      I applaud Obama for trying. Yet, I shudder at the notion that the gov. should be both the rule maker and the provider of healthcare. The Medicare system has been great for seniors, but it is bankrupt. There is so much fraud and waste, because the government simply has no accountability. That’s why you can track a FedEx package as is makes its way around the world, but the government can’t catch a crook who bills Medicare for over 900 procedures in a single day.

      In addition, the fundamental flaw in both the current system and the one on the table is that patients and doctors are not incentivized to make treatment decisions that take costs into consideration. Until we deal with that, we will continue to see the red ink flow.

  5. Becky

    I heard today that Obama said he isn’t advocating Gov’t run healthcare, just choice (I guess the gov’t healthcare plan is one of choices)

    By group-think under Lifestyle – think 1984. Or any other totalitarian-type society.

    I think if Congress is going to pass such a monumental plan that will affect how I currently get/pay for my healthcare, they ought to mail me the document for my review, so that I can tell my representatives how I feel. It doesn’t seem yet, that the American People are getting unbiased facts.

    1. Yeah, but the government-run plan will not be playing on a level playing field. It will eventually assimilate most of the competition, because it does not have to balance the books.

      I still don’t get your thinking on group-think. 1984 characters were all being watched and ultimately controlled by Big Brother. What I’m advocating is the opposite of central control – it would give patients the ability to decide on treatment options, albeit with an eye on cost, which he or she would have a proportionate interest in. In other words, if I know I have to pick up, say 20% of the cost of treatment, I will look not only for treatment protocols that are effective, but that are cost effective as well.

      If you really want to read the document, here’s a link. 😀
      http://edlabor.house.gov/documents/111/pdf/publications/AAHCA-BillText-071409.pdf

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