True Health Insurance/Health Care Reform

It ain't rocket science, folks.

You want some "talking points" regarding what true health insurance/health care "reform" would look like? Fine. Here ya go:

1) Restore the concept of "insurance" to... er... insurance. By this I mean we need to link insurance costs to actuarial reality. As for subsidies, "safety nets," these need to be balanced against fiscal and economic reality. At some point the books need to balance, the math needs to "proof."

2) In line with Point 1, America needs to jettison the concept of "bumper-to-bumper" health insurance providing coverage for routine, usual, and otherwise to be expected medical expenses. The only medical insurance Americans should have - and must have - is catastrophic insurance.

3) Catastrophic insurance from birth till death must be a mandate. Period. The premium costs for minors will be the responsibility of the parents.

4) Insurance must be decoupled from employment and refocused as an individual responsibility. "Employer provided" insurance must be stricken from the American lexicon.

5) Actuarial realities will be and must be "smoothed out" to a certain extent; a social safety net must and will continue to exist. This said... we must as a society recognize that for most there can be no "free lunch" and that medical care must be paid for just as we pay for food, shelter, housing, transportation, entertainment, clothing, and all other human wants and needs.

So... to tie these "talking points" into a (hopefully) more coherent whole...

We're all going to die. Most of us will be hospitalized at some point during our lives. There's a good chance that end of life care - the last weeks, months, or even years of one's life depending upon individual circumstances - will result in extensive health expenditures.

As a general rule of thumb, with age comes illness - at least comparatively. At the same time, reality is that the young are particularly prone to broken bones, woman in their 20's and 30's are likely to have babies, men tend to come down with a variety of "middle age" health complaints in their 40's.

All of this is normal! It's to be expected! It's the cost of life! Americans must accept all this and accept that "insurance" is not for protection against common occurrences, but rather a protection - one funded via premiums, premiums that make economic sense according to the best actuarial science available - against economic catastrophe in the face of extraordinary calls upon normal individual and family economic resources.

There's a reason we don't buy "gas insurance" to keep our cars tanks full.

There's a reason we don't buy "food insurance" to keep the fridge stocked.

There's a reason why when your boiler craps out or your roof needs replacing that you're expected to either tap your savings or borrow in order to deal with the situation.

Americans need to grow up. Grown men and women need to wake up to reality!

One thing President Obama and the Democrats say which is absolutely correct is that the present system is unsustainable. The problem with their arguments is... they're right... but they don't understand why they're right. They don't understand that their proposed "solution" of more socialism and less personal responsibility is the wrong solution, one which builds on the mistaken policies of the past rather than reverses them as is necessary if we're to get out of the mess government policies have steered us into.

It started back during WW-2. With wage and price controls shackling employers with regard to using pay incentives to keep and attract the best workers, employers instead used "benefits" as the carrot with not only the full approval of the federal government, but the subsidization of the federal government. You see, these "health insurance/health care" benefits, unlike case wages, were non-taxable to the employee and a write-off to the employer.

After the War... for political reasons the government stuck to this subsidy policy and today, more than half a century later, we're still sticking to this system that almost everyone of all political and ideological stripes sees as unsustainable in the long term.

My God, think how unfair it is to tie tax free health insurance benefits not only to employment, but worse yet, only certain employment - employment which provides such benefits in the first place. Think about it... such a system creates circumstances where you may have a single mom working three separate part time jobs - none offering paid benefits - to support herself and her children. Let's say this woman's total yearly salary compensation for her 70-hour weeks is $60,000/yr. With no tax free company provided health insurance she pays out of pocket for health insurance - let's say $8,000/yr. Sure, she gets a partial benefit of being able to pay for her out of pocket health insurance premiums with "pre-tax" dollars, but that's a far cry from situation faced by a corporate executive. Consider... you're an executive at a Fortune 50 Company. Let's say you make ten times the single mom's salary - so you're pulling in $600,000/yr. On top of this the company provides you with top of the line family health insurance - the finest money can buy - at say... oh... $25,000/yr. This means that in truth your total compensation is $625,000/yr., but because the health insurance "benefit" is tax free... that additional $25,000 health insurance compensation is tax free to you - to you... the guy making over half a million dollars a year. That's insane! That's irrational on the face of it!

Bottom line... we need less government involvement in health care and particularly health insurance. President Obama and the Democrats will tell you that we need more government regulation of health insurance and health care. Nothing could be further from the truth. We have too much regulation as it is! Think about it... 50 states... each with it's own insurance department... each with it's own insurance commissioner... each with it's own insurance regulations and onerous mandated micromanagement of coverage requirements. Here in New York State I can't even purchase a true catastrophic plan and link it effectively to an MSA/HSA. New York State government denies me this option - this choice! (And folks... New York is not alone...)

Sure. State regulation to ensure transparent, understandable contracts between the insurer and the insured, but that's it. That's where state regulation should begin and end. As for federal regulation...

The federal government should do two things:

1) Mandate catastrophic coverage for all Americans with adults being allowed to opt out only if they are willing to sign away any and all "rights" to government paid for heath care as long as they remain uninsured. (And for those adults who opt out and then choose to opt back in... sure... but this gap would be addressed in higher premiums when they do opt back in - and they could only opt back in after a physical that they paid for showed that they had no pre-existing conditions; pre-existing conditions would not be covered unless they were pre-existing conditions that originally existed prior to the opt-out.)

2) The government subsidized employer provided bumper-to-bumper employer provided insurance must give way to individual and family Medical Savings Accounts/Health Savings Accounts that are coupled with catastrophic care policies which kick in once a certain threshold of yearly or periodic medical spending has been covered out of pocket by the individual and/or family.

Now as much as I may believe in the philosophical case against using the tax code for social engineering purposes, this being the real world and not just "Bill's World" I'm willing to concede that in order to switch from the present dysfunctional system to a MSA/HSA system coupled with catastrophic coverage it might be incumbent to provide for favorable tax treatment of such health care payment and catastrophic health care insurance vehicles. Fine. My basic thrust... we need to create a self-sustaining system to finance health care as opposed to the insurance focused debate presently at the forefront of political discourse.