A Modest Health Care Proposal

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The American health care debate has gone completely off the rails.  The Right, ostensibly in defense of small government, is acting as if we have an option to not address this issue.  Meanwhile the Left is unable to present a coherent vision.  Even worse disinformation is flying from all directions and it’s difficult to have an informed opinion.  It could easily make a person tune out this conversation.

Why You Should Care About the Health Care Debate

One of the biggest reasons that you should care is that unless you’re on Medicare, you’re already footing the bill of socialized medicine.  Medicare is socialized medicine and right now about 27% of the population is on some form of government health care.1 If you’re not one one of these programs, every dollar of over-consumed or overpriced affects you personally.  However, the situation becomes much more untenable in the near future.  By 2030 it’s estimated that twice as many people, 80 million, will be on Medicare and in the meantime the population will not have grown nearly be nearly as much, bringing the percentage of people on Medicare to 22%, without any other government programs considered.2 Then you consider how many people are being added to Medicaid and other government programs due to the economic downturn and you can see the problem growing.  Unless you’re for abolishing Medicare, and that’s not a very popular view, you probably need a solution to the demographic bomb that’s headed our way.

I’ve already covered that we have high costs and outcomes that don’t justify the expense in America.  Almost any method to cover people’s medical bills is going to have a component of “socialism.”  Quite simply, those who are older or have chronic illnesses are terribly expensive to insure.  We know these people are going to have health problems.  Insurance at that point isn’t really providing insurance but simply giving them money for their health care.  If you want people who are older or have chronic illnesses to be able to get healthcare if they aren’t rich, others are going to have to pay for it.

If you’re healthy right now, you should care about healthcare because you’re subsidizing those who aren’t.  If you’re not healthy you probably already do care about healthcare reform.

A Modest Proposal

I thought I’d put out there what I consider to be a reasonable proposal and see what my readers think.  If I were going to address the situation in this country here would be my plan:

• Catastrophic health insurance subsidized by the government for those who can’t afford it.  Everyone will have this but it will be truly catastrophic insurance.  At least $15,000 for example of yearly expense before it applies.   I don’t really care if it’s privately or publicly implemented and the premiums should cover the expenses.
• Some type of Health saving account that everyone must contribute a percentage of their pre-tax income to until they’ve reached the level of their catastrophic insurance.  Thus if the catastrophic insurance kicks in at $15,000 you have to keep contributing until your HSA is at $15,000.   This is how you pay for everything that isn’t catastrophic.  You can borrow against this account as much as you want, so you can have a very negative balance if you have a lot of broken bones or other procedures that don’t reach the catastrophic level.

The reason I like this plan is addresses several things.  It turns the insurance business back into insurance. They are simply around to pool risk and deal with catastrophes.  Obviously those of us without chronic conditions and the young will subsidize others.  That happens already and is part of a well-functioning society if you ask me.

The HSA makes payers actually care about what a procedure costs.  If they want to go spend $2,500 on an unnecessary MRI, that’s their choice, but it’s coming out of their HSA.  You’re never unable to go to the doctor because you can always borrow against this account, but the more you spend the longer money is going to be coming out of your paycheck.  Thus anyone can get medical attention, but they are aware of what it’s costing.  It also turns the patient back into the customer of the doctor, instead of the insurance industry.

I’m not sure this benefits any special interest enough to get any traction, but I think it achieves some of the goals of reform.  It should reduce overconsumption and lead to universal coverage.  There are more issues like tort reform and other changes that could improve things more, but I think this would be a good start.  I’d love to hear your take.

1. As Private Insurance Declines, Medicare and Medicaid Pick Up the Slack – WSJ.com [↩]
2. Medicare Beneficiary Demographics [↩]

2 Responses to “A Modest Health Care Proposal”

1. tattoo kits says:

   December 30, 2009 at 8:54 am

   I like your idea about a “Health Savings account” that seems like one of the few ways to make it fair for everyone. If you don’t pay in, why should you get something out of it?

2. insurance help says:

   February 3, 2010 at 10:36 am

   People are on Medicare because they cannot afford private health care. The health reform bill will make private companies compete with each other for policy prices so prices will lower to give better competition. The reform will also make health insurance companies take people with pre-excising conditions which will take people off Medicare and get more people paying for health insurance.