What is the current state of health care
in the U.S.
Currently our government is subsidizing health
care in many ways, such as with the programs of Medicare (for those of
retirement age) and Medicaid (for the poor), and other health-care
laws passed by Congress, such as Obamcare. In addition most people still get heath insurance
from their employer. And anyone who walks into a county hospital can get
medical care.
Medicaid is not a very
well-run program. The amount it reimburses doctors is so low that many
doctors do not take Medicaid patients. My doctor takes Medicaid patients
but only if they pay up front for the services provided. The patient can
then send the paperwork to the government to get reimbursed.
There are a number of unworkable and undesirable
other things about the way the health care is handled. One is that these
programs are underfunded by over $40 trillion. This means that the
government has made health care promises but eventually not enough income to
meet them, so some changes will have to be made. Even so, not everyone is
covered. And we spend about 16% of our Gross Domestic Product (GDP) on
health care, higher than almost all other countries in the world.
Most people receive health-insurance subsidies
from their employer, which creates its own sets of problems. For instance,
if a person quits their job or is fired, they must find another company to
work for, or they must soon find their own health insurance. And if they
have any pre-existing health conditions, this insurance could be
prohibitively expensive.
The only reason employers got involved with
providing health insurance for its employees was that during World War II,
the government made it a tax write off, as an encouragement to employers.
It no longer makes any sense to have employers involved with health
insurance. It creates many inefficiencies and problems.
On the other hand,
most Americans are happy with the quality of health care that they receive.
Therefore, we want to maintain at least the same quality, while providing
good health care to all, and at an affordable price to the taxpayers.
Therefore, for the
foreseeable future, I think that health care, like education, should be
subsidized for all Americans (and permanent residents). And Americans
should be able to choose their own doctors, chiropractors, osteopaths,
ophthalmologists, dentists, etc., that they believe best meets their needs.
What is the best way
we can provide pretty good health care for all?
My proposal will 1)
Provide health care for all Americans, 2) Do so affordably using taxes, 3)
Remove the pre-existing condition problem, and 4) Be fully funded, so that
we don't pass on more debt to our children.
The essence of the
proposal is to provide and fund a Health-Care Account (HCA) for each
American adult, paid for through taxes. Some of this amount would be used
to purchase a high-deductible health insurance policy, and the rest
would be used to pay for medical services until the deductible is met. For
most people, in most years, the deductible won't be met. Keep in mind that
money for the deductible is part of the HCA and would be paid for using a
patient's HCA card.
How much money should our government spend on healthcare?
Most of the advanced countries spend 9 to 12% of the U.S. Gross Domestic Product (GDP) on healthcare. I suggest the
government take 12% of GDP, which grows virtually every year, and provide an equal amount of this to
every adult (age 18 or older). With a GDP in 2017 of about $20 trillion,
and 240 million adults, this comes out to over $10,000 per year per adult that the government would provide as a subsidy.
Each adult would
use their HCA card buy a $6,000 per year (in 2017 dollars) high-deductible
health-insurance policy, and would have $4,000 per year to spend, using their HCA card, for their deductible. This very high deductible
greatly helps to keep the insurance premium down. Also, the
health-insurance companies that wish to be involved in this would also be
required to provide insurance for any children the adult may have.
Here's an example as to
how this would work. We'll assume that all Americans and permanent
residents already have been given their HCA card. You have the flu and go
to the doctor of your choice. Say the doctor charges $150 for a visit. You
would provide your HCA card and $150 would be deducted from your $4,000
deductible. And that's it. It costs you nothing, and your doctor gets paid
immediately.
Now suppose that
something catastrophic occurs, such as a fall resulting in two broken legs
and a concussion. Say the medical costs would be $12,000. The hospital would first use whatever deductible was left on
you HCA card, and then your insurance company would pay the remainder of the
costs at 100%.
This would provide very
good coverage for all, and would save money at the same time, since we would
be spending 12% of GDP on health care instead of 16% which we currently spend. And it would still
keep the advantages of a free-market in health care, because patients could
choose their own doctors, hospitals, insurance companies, etc. This is what would make it better
than the "single-payer" plans that most developed countries have, because
they dictate the cost of doctor's visits, as well as the costs of various
procedures, and lead to many delays in obtaining health care.
What would health-insurance companies need to do to qualify to be
part of this program?
The United States
Congress would certify participating insurance companies who would have to
agree to accept the amounts given above and would have to agree to accept
any person, regardless of any pre-existing conditions. They would also have
to agree to insure any children of the covered adult. As is true now, they
would also have to be fiscally sound.
Also, once a person has met the deductible, their insurance company would
have to agree cover 100% of covered medical costs. There would be no more
co-payments for the year.
Would health
insurance companies want to participate in this program?
Yes. Keep in mind
that these payments start at age 18. Usually, people up to the age of 40 or
50 would not meet their deductible, but the health-insurance companies would
be getting premiums during this time. People who are older or are
frequently ill would be using the insurance most years, and so essentially
insurance companies would be making money on most young or healthy people,
and losing money on older or less healthy people. The difference should
provide a reasonable profit for an insurance company, so that many would
want to be a participant in this program. This cushion of starting to get
premiums at age 18 should also provide enough money to be able to handle the
costs of pre-existing conditions. The specifics
as to what is covered and what isn't would need to be worked out so as to
insure that insurance companies would want to participate.
Q and A's
Since this would be a new government program, would it require a tax
increase?
All things being equal, it would require a tax increase. But the overall
cost to individuals would decrease. This is because they would no longer be
paying their part of the health insurance provided by their employer. Also,
companies would be saving money because they would no longer be providing
health insurance, and they would no longer have to have large human resource
departments to deal with this. Thus, they could afford to give raises to
their employees.
Would eye care
and dental care be covered?
Yes, this would be
required of all participating insurance companies.
Would all
medical conditions and procedures be covered, and would coverage be
unlimited?
No. Just as now, certain conditions are not covered by Medicare, certain
conditions would not be covered by this plan. For example, a heart
transplant would likely not be covered. Similarly, cosmetic surgery would
not be covered, although one could use the cash portion to pay for it. Also, a person could accumulated
cash in their account which they would be able to use this for such procedures.
Probably a lifetime
maximum of around $1 million would be in place. It's important to get good
coverage for all, so some limitations must apply for this to occur.
Would this
program replace all other government health-care programs?
Yes, and that is one way
the government will save money on health-care programs. No programs such as
Medicare and Medicaid would be needed. Taxpayers would also save money
because they would no longer have to pay for county hospitals because
everyone would be covered. (A possible exception is that veterans who are
injured in the line of duty would not have the limitations mentioned above.
They would have the same essential plan but any injuries they sustained
would be covered, and the lifetime maximum would be increased. There would
be no more need for Veteran's Hospitals, since veterans could get their
health care at any hospital).
Studies have shown that people who take care of themselves
physically spend less on health care. Would there be incentives in place to
encourage this?
The government would not
directly apply such incentives, but insurance companies would be allowed
to. For instance, an insurance company could say, "If you keep your weight
in the ideal range for your age and sex, and if you keep yourself reasonably
fit, and if you get regular physical, eye-care and dental checkups, we'll
refund a portion of your monthly payment, and you can use that money anyway
you wish."
This would be a valuable
incentive to keep ourselves physically healthy. And of course there would
be the additional benefit that healthier individuals are happier and more
productive.
Are you sure it would be a good idea to sever the relationship
between employment and health care?
Very much so. Economist
Albert Brenner has said this about health
care: “
Industry and commerce are not well-served by a
labor force unwilling to change jobs for fear of losing health-insurance
benefits. I have seen little discussion of this issue in connection with
health care reform, but health-insurance benefits are a major reason for
individuals to accept employment and to continue their employment even if
they are not satisfied, challenged, or motivated by their job. The current
system thereby promotes an inefficient utilization of labor by restricting
labor mobility. This inefficiency reduces productivity, profits, and
economic growth and output. Since labor costs are by far the single largest
resource cost in the production of goods and services, a reform that
promises to make labor utilization more efficient promises to improve
productivity and to increase economic output.”
Would
health-insurance co-operatives be allowed to participate?
Yes, as
long as they meet the same regulatory standards that for-profit
health-insurance companies must meet.
(Health
insurance co-operatives are owned by those who purchase health-insurance
policies through them. Any profits made can be returned to the policy
owners, or can be used to reduce premiums. Thus, they may wish to provide
additional incentives for its members to be physically fit).
What could a person do with money that accumulates in their HCA?
They could do a number of things. A person could
choose to get a refund each year for any deductible money they did not use.
This would provide an incentive to find good, yet cost-effective doctors and
hospitals.
Also,
they would be allowed to transfer
their money to another's account. This could be useful if, for
example, a family member needed a heart transplant, or something that
wasn't covered by the insurance policy.
And they could stipulate
in their will that any excess money be given to another person(s). This would add more incentive to take care of oneself physically.
Could a person use their own money to get additional benefits by
increasing their health-insurance premiums?
Certainly. This must be the case in a free
country.
Can the well-off do something to lessen
the cost of this program?
Yes. There should be an easy way for someone to opt out of this program,
and those that are well-to-do would be encouraged to do so. For instance,
the government might ask those families who earn over $150,000 to opt out of
the program and pay for their own medical care. As our country becomes more
prosperous, more people would be able to opt out, saving the government
money. The government could send a nice thank-you letter each year to
individuals who opted out, to show their appreciation.
Would this program be constitutional?
Although the Supreme Court would likely rule it to
be, I don't think it would be constitutional. There is nothing in the
Constitution about the government providing health-care subsidies. Therefore, I would want a Constitutional Amendment passed to allow for this
program. The amendment would specify that up to 12% of GDP could be used for
the subsidy, and that sufficient taxes should be levied so that no debt
would arise as a result of it.
It would also state that this subsidy is not a right. This is because I don't believe one can have a right that requires someone else to pay for that right.
As an aside, are there other subsidies that you’d
like the government to provide?
Yes. Until our civilization advances enough, I
believe that government should subsidize both education and health care for
all.
Additionally, I’ve previously described a
Natural-Resource Dividend. This is an amount of money that would be given
each month to every American adult, to compensate for others’ use of our
common natural resources. Lately, this idea has been called a Universal Basic Income (UBI).
If each adult got a $1000 per month UBI, a
family of four would be getting about $2000 per month from the Natural-Resource
Dividend, plus government-subsidized health care and education. These
should provide a reasonable economic base for families, and
would also allow most mothers of young children to not have to work for
money.
Between these subsidies and the Natural-Resource
Dividend, we can eliminate all other subsidies that the government
provides, both to businesses and individuals. This would save a large
sum of money by eliminating all of the bureaucracy involved in these
programs.
Note also a very important point: every American
would be given the same amount of money for each of these subsidies. This
will save money by reducing the bureaucracy involved, and will satisfy the
“general welfare” clause of the Constitution as well as the 14th Amendment,
which are both meant to have laws that apply equally to all citizens.
Conclusion
Having a health-care subsidy that a) provides good
health care to all Americans without going into debt; b) that saves money as
well; c) that encourages us to take care of our physical health; and d) that
still allows individuals free choices as to how to obtain their health care,
is a plan that we should adopt as soon as possible.
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Tim Farage is a Senior Lecturer in the Computer
Science Department at The University of Texas at
Dallas. You are welcome to comment upon this blog entry and/or to contact him at
tfarage@hotmail.com.
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