Well, folks, I was having a discussion on FaceBook regarding what's wrong with the American system of health insurance/care and it got to the point where I figure I might as well flesh out my thoughts here on the blog.
I know I've done so before... but frankly going back over weeks... months... yes, even years of postings seems silly. I might as well just place my thoughts in this new stand-alone.
Anyway... here goes!
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First... let's define a few terms, shall we? "Insurance." What is insurance? Insurance is a wager. It's a bet. This bet requires two players - the insured and the insurance provider. For the insurance INDUSTRY to prosper the system must be weighted to FAVOR the industry... to allow the industry as a whole to make a PROFIT.Yes, folks... it is like gambling! (Or at least it should be!) Yep... individuals are gonna win; yep... individual casinos are gonna get "broken"... but at the end of the day in order for Americans to be able to gamble there needs to be some sort of gambling industry supported via profitability. The same applies to "those evil insurance companies." If the industry doesn't make a profit it can't exist as an industry and therefore it's products and services won't be available! (Forget affordable!)
Now I be right now some "educated" reader is saying to himself or herself, "but what about non-profits, Bill; non-profits don't require profits."
(*HEADACHE*)
No... that's not correct. Not really. The only difference between a "for profit" and a "non-profit" is that there are no stockholders who "own" the latter - only stakeholders. Instead of investors profiting, in a non-profit it's the employees who profit via salaries and perks. And as to their "needing" to be profitability (in the sense of meeting one's payroll) this is indeed true with both "for profit" and "non-profit" entities - though of course, to an extent, as long as there are willing creditors out there willing to "fund the gap" I suppose it's fair to say a year after year after year true "profit" is absolutely necessary to maintain either "for profit" or "non-profit" entities.
We're getting off track, though... bogged down. My point is that in the end... whether we're talking "for profit," "non-profit," or even ultimately government entities, without profitability (or bail-outs) there's simply no business... and with no business (or no government when it comes to that) there's no service.
Next point... insurance pricing has to be LARGELY based upon actuarial reality. (Meaning the stats... the odds...) By and large, younger and healthier people should be paying less for insurance than older and sicker people.
Furthermore... insurance should be "individual" in nature. Yes... like our liberties! Of course parents should pay for children, but childhood ends at 18 - with the onset of the Right to Vote - in our country. (Or at least it should!) (Does this mean parents can't continue to pay for their children's insurance throughout their later teen years? No! Be my guest! "Gift" your child with insurance! Same with 20-somethings! Heck... same with 30-somethings and 40-somethings if you wanna be a schmuck - after all it's your money! My point is that the largest possible pool of our population has to be treated as "individuals" and in my mind that pretty much covers all legally competent adults.)
Now we come to the next KEY point: Insurance should be catastrophic in nature. (Yes... because of the nature of aging a certain amount of pre-payment of future medical care must be a part of the mix... but we'll talk more of that later.)
Lifetime Bumper-To-Bumper coverage - the type of coverage most of us have - is a ridiculously irresponsible Utopian nightmare! It always was, but as technology (and government mandates) have grown its become more and more apparent over the past decades that the current system is simply a Ponzi scheme heading for a gigantic fall.
We've had the "affordability" debate here. Yes. In absolute terms my personal "couple" coverage is "affordable" at $1,327 out of pocket for just the premium per month, but no... paying almost double my joint car payments per month... paying approximately my rent per month... this is not "affordable" in the sense of a rational investment/purchase absent the sheer scam of "the system."
So what is "affordable?" Is it premiums representing 5% of one's income or 10% of one's income or 15% of one's income? (We pay approximately 23% of our take-home income for health insurance absent dental - is this "affordable?")
In any case, what we need - at least for the average reasonably healthy American - is truly affordable catastrophic medical (including dental) insurance that would kick in at 100% after hitting a pre-determined out-of-pocket expenditure ceiling. This insurance wouldn't be cheap, sad to say. Quite frankly, I can see such insurance - coupled with 'average" yearly medical expenses - as being a major hit on many of us depending upon each individual's health measured via each year's aliments and necessary doctor's visits and treatments, BUT... such sane catastrophic medical insurance - especially coupled with Health Savings Accounts - would by any logical stretch have to work out being a heck of a lot cheaper than the current system.
Note... I've now brought HSA's into the discussion. (This is what I foreshadowed via my aside concerning "the nature of aging.")
With an HSA and catastrophic insurance one should be able not just to deal with "life" as it "may" come during one's healthy years, but via the glories of compound interest and rational investment returns yearly HSA contributions throughout "the healthy years" should add up to quite a tidy sum to serve as an individual "safety net" for one's later years... one's "declining" years of peak medical expense.
Folks. For the moment put aside questions and comments about the outliers. I'll come back to the poor... I'll come back to the rich... I'll come back to the chronically ill... I'll come back to all these "out of the norm" cases. First, let's get the basics... then we'll deal with the non-basics. Fair enough?
So in Bill's world you're born. You start life with insurance provided by your parents and your very own HSA. Your parents pay for your "normal" medical care expenses... er... normally - just as they do your housing, shelter, food... etc. They pay your minor catastrophic healthcare insurance premiums. If at any point during your childhood you (or the family as a whole) hits the catastrophic threshold ceiling, then, catastrophic insurance payment of 100% of ongoing yearly expenses would kick in. (If the condition turned out to be chronic... that too would be factored in to when and how the insurance would work... but, again, right here, right now, let's stick to "general" rules and workings.)
On one's 18th birthday one becomes a full citizen. You have a HSA hopefully with some money in it - but in any case you have an HSA. Now you need your own insurance. If your parents want to continue paying for your insurance that's fine... but legally they're no longer responsible. (The thing is... if we base catastrophic insurance on actuarial reality... unlike with your auto insurance your health insurance should be relatively cheap because you're young! In other words, you should be able to afford it for yourself and if not then it should remain affordable for your parents to pay for it for you till you can afford it.)
From age 18 onward... you live your life! You keep your HSA! You marry... or don't; have children... or don't; but in any case each new year brings new HSA contributions which will serve as a safety net which grows and expands with you as you get older... year by year... decade by decade.
YES... you're expected to keep up with basic medical screenings and care! (And if you don't then THAT should adversely effect your actuarial-based premium costs!) You're expected to pay out of pocket for routine medical expenses... yes... even if some years include more rather than fewer of them! Yes... you're potentially - and worst case you're REALLY - gonna be open to taking a huge hit (year by year... some years... all years... no years) on medical costs coming straight out of your pocket... but THAT'S LIFE! It's like any other bit of lousy luck in your life, including major unexpected home and auto repair costs and other emergency expenses that pop up now and then. Grow up... you're a big boy or big girl! Sometimes life sucks; deal with it! The thing is... for true catastrophes... true medical catastrophes... you've also got a light at the end of the tunnel... a safety net... in he form of both your HSA savings and the total 100% catastrophic coverage of ongoing expenses provided BY the catastrophic plan!
Here's what I'm saying, folks... instead of cost shifting... instead of smoke and mirrors... what we need is a system of health insurance coverage and medical which operates like any other market - both in terms of real "insurance" and real medical care. I'm talking a system whereby you get what you pay for and you know what it is you're paying for.
We need a system where insurance can be bought across state borders and accessed across state borders. Pricing must be listed and transparent. The entire population must be "the market" so no "volume discounts" for some vs. over-charging of others. Let the market work on supply, demand, and free choice!
Anyone ever get - or even consider - Lasik surgery? Heck... let's make it easier... think braces! Think car repairs! Think buying clothing or furniture or food shopping. Medical care should be priced just as transparently; and once it is competition will further lower prices of both care and insurance!
While we're on this topic, let me throw out something that is going to sound "unfair," perhaps even "punitive" to some, but it's something that needs to be addressed because it's at the center of fairness just as it's a KEY cause of some much of the mess we're in. This "something" is the tax code!
Health insurance should no more be "linked" to one's employer or employer status than is your mortgage or anything else you purchase. The reason our employer-based healthcare insurance system developed as it did traces largely back to World War Two and the wage and price controls of the era. Back then - with millions of men (and women) in uniform - labor was tight. Factories wanted to entice the best and brightest workers to work for them, but with wage controls that took away a "carrot." But... if you couldn't raise wages to attract the highest quality workforce... you could use "benefits" as the new "carrot." And businesses did! Businesses employing tens of millions of workers, huge percentages of which were union workers!
After the war Congress removed wage and price controls, but kept the disparate (and unfair) tax treatment of "benefits" in place.
Now... first... to backtrack... why do I say "unfair?" Simple. Think about it. Let's say the Mr. Smith is paid $80,000/yr. He pays taxes on $80,000/yr. After he pays for his insurance... say a family policy that runs him $20,000/yr. ... $60,000 remains of his compensation. (Yet again... he's paid taxes on the full $80,000 of cash income!) Now take Mr. Jones. He is paid $60,000/yr. He is also "given" insurance benefits costing his company $20,000. Mr. Jones ends up paying taxes on "only" $60,000 of "income," not taxes on his actual compensation of $80,000. Now ask yourself... how the heck is that fair? Answer: It's not! Money is fungible. This is an obsolete loophole in the tax code dating back to World War Two! That war has been over for over 58 years; let's adjust accordingly!
OK... so... were are we? No more divisive tax treatment with "winners" vs. "losers" dependent upon where one works. Individual responsibility. Competition. HSAs. Transparent pricing. Recognizing actuarial reality. Insurance returning to insurance and catastrophes insured against as such.
We're doing pretty good!
So... where's this leave us? Oh, yeah... with the poor. With those with "special circumstances" that don't fit a one-size-fits-all program. In other words... we're left with the outliers.
Between private charities and governmental safety nets I'm guessing we can deal with the outliers without destroying a true free-market system that seems to work pretty well for the rest of us - not just as medical insurance and care issues are concerned, but over all throughout everything we do in life!
Not that I'm in favor of expanding the welfare state, but if it's got to be done, I'd rather it be done directly and transparently... not via income redistribution and smoke and mirrors accounting.
Just because there are people who can't afford housing or food or closing doesn't mean that there's a rash of nude homeless people starving and dropping dead on America's streets. Just because we have food stamps and housing supports (and both are rife with fraud and mismanagement - visit a ghetto if you don't believe me) doesn't mean the government should control (via federal mandates) how, when, where, and how regarding the overall housing market or for supermarkets and restaurants!
Help people locally! KNOW who you're helping! Give the LEAST help necessary so as to spur the MOST self-sufficiency! But, yes... all this said... there will be people whose healthcare will be subsidized.
(Note, though... I say health CARE... meaning clinics and the like. Remember, with the type of sane system I'm proposing "insurance" costs will actually be going down... no bumper-to-bumper care, no bumper-to-bumper costs... so even though no doubt government will be subsidizing some portion of individual (poor) catastrophic premiums, well, wouldn't that be cheaper than what's happening now with Medicaid and ObamaCare?)
Anyway... I've rambled on enough.
(*SMILE*)
I've given you a "taste" of what I would view as true "reform."
Questions? Comments? I'm open! (Indeed... you folks reading this might wanna direct other of your friends to com'on over and consider what I have to say - not just about this topic, but in general... newsbites as well as stand-alones.)
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