A Simple Replacement for ObamaCare
The obvious solution to the health care problem is self-insurance. The Obama Tax is designed to effect those who are young, healthy, and can afford insurance. Who makes the decision about what someone else can afford? But that is beside the point. The point is that if one is young and healthy and can afford insurance, then one can probably afford to pay their medical bills, and in fact they probably DO pay their medical bills. Under the Affordable Care Act they will be punished for being responsible.
The folks running up the tab at emergency rooms are people who are young, healthy and CAN’T afford health insurance, but don’t yet qualify for medicaid.
If we really want what we say we want, patient centered affordable health care, driven by market forces there is a very simple solution; self-insurance.
Average lifetime medical cost per person was roughly $360,000 in 2004 according to a report by Health Services Research. If one were contribute $266.00 per month into a modified Health Savings Account, even at a modest 3% return, they would have enough money to cover their lifetime medical expenses. That is less than the cost of an average insurance plan these days.
Certain areas of the health care arena are already driven by market forces. Those areas are for elective procedures that most insurance doesn’t cover.
A good example is Lasik eye surgery. This is a technique for correcting vision via laser surgery. Lasik is not covered by most insurance, since it is an elective surgery. When it first became available, it cost on average between $2,000.00 and $3,000.00 per eye. Today the cost is about half.
Why the price drop on a highly skilled high tech procedure? Market forces. Most insurance companies don’t cover this procedure, so the customer must pay for for it out of their own pocket. As more physicians have become proficient in the operation (increase in supply) the price has gone down (to meet demand).
A study of any elective procedure which is in demand, but not covered by insurance, will show similar cost reductions.
The easiest way to reduce medical costs is to get rid of insurance altogether. The insurance companies won’t like it, and government fiat may not be the way to go here, but if everyone was invested in a medical savings account that they had control of, was tax free, and could be used for any health related expenses, not only would everyone have coverage, but they would put downward pressure on the cost of entire health care sector. The account would accumulate year after year, so that when the money was really needed later in life, it would be there. There should also be a provision that whatever is left in the account after the owner expires becomes part of the decedent’s estate, thereby providing incentive to leave some money in the account. It could also be used to defray burial expenses. Since everyone is paying for their own healthcare out of their own pocket as it were, they would tend to take better care of themselves. Everyone would have skin in the game. Therefore this type of system provides an inherent incentive toward better health.
A program could be structured so that one savings account could cover a family, in the same way insurance does now. This eliminates the removal of children under 26 argument. It also eliminates the pre-existing condition argument, since the money from one’s health savings account could be used for any health-related costs, including prescription drugs and other medical devices.
For the truly incapable, some system for funding their Health Savings Account could be worked with a refundable tax credit. Those who are at or below the current income level for medicaid insurance could have an amount equal to the requisite contribution credited directly into their health savings account, with a sliding scale up to 150% of that income level. As for employers who currently pay for some or all of their employee’s health insurance premiums, they could use pre-tax dollars to contribute to the employee’s account.
Medicare would need to be left in place for anyone at or above the age of fifty-five, but for those younger, a refund of the amount they paid into the medicare system could be credited to their savings account.
As for catastrophic occurrences, the insurance companies could offer low cost, very high deductible plans, those formerly referred to as major medical plans, to cover high cost, unexpected illnesses. More importantly, though, it should be possible to make a charitable contribution to someone else’s health savings account to help them defray the cost of an expensive unexpected illness. If we are our brother’s keeper, we should be able to be so without government intervention.
The question is one of belief. Do we believe as the founders of this nation did, that the individual is wise enough to make his or her own decisions and provide for his or her own needs, or do we believe that the citizens of this great nation need the government to make all their decisions for them, that they do not have the intelligence or wherewithal to care for themselves? If we believe the latter, then the Affordable Care Act is perfect. If, however we believe the former, that liberty is worth having and that the fruits of our labor should be our own to decide what to do with, then perhaps a health care program such as the one laid out above is the way to go.