My Plan for Health Care Reform

Jul.29.09 | About: iShares U.S. (IYH)

Health care is on everyone’s mind these days. Our administration and representatives are negotiating the terms to take over our health care system, in the belief that it is too expensive and will cripple our economy if the costs are not controlled. The human element is the plea to cover people that do not have insurance, so they will have access to the best health care money can buy.

I encourage you to take the time to read an insightful article by Clifford S. Asness Ph.D. Mr. Asness is the founding principle of the multi-billion dollar hedge fund, AQR Capital Management.

Mr. Asness has a great wit, and insightful comments that bring some of the myths of the health discussion into focus. His article is titled, “Health Care Mythology.”

Rather than plow ground that has been plowed by writers more gifted than I, my focus is how to provide health care to uninsured citizens. If this is a national priority, let’s not destroy the health care system that stands between us and the grim reaper in the process.

As a former County Commissioner, I had the responsibility to oversee and fund the county health department. This health care facility provided basic services to many who could not afford (or chose not to pay for) access to private health care.

County health departments exist throughout the nation, working quietly to benefit society’s poorest citizens. Free or reduced price, health care is already being provided depending on your ability to pay.

The present discussion is about building a new bureaucracy and restricting health access for everyone. Why not increase the funding for County Health Departments around the nation?

In exchange for this added charitable benefit, the uninsured could only be treated at hospital emergency rooms after hours, and only if hospitalization was required. Hospitals would bill the county health department for any services provided, at the lowest negotiated group network price. Hospital emergency rooms would no longer be required to accept anyone who walked in their door.

Funding should be allocated by population on numerical bases, and disbursed to each congressional district. The Federal Government’s role would end at this point. Each Congressional District would have a local board, composed of one commissioner from each county.

These district boards would be responsible to distribute the funds to each County Health Department for the best impact in their area. County Health Departments would have to expand to enhance services, but continue to provide basic health services for the uninsured or poorest citizens.

To access these services, citizens would have to:

  • Prove citizenship (are we going to provide free health care to THE WORLD?)
  • File a copy of last year’s 1040 (verifies income)
  • Prove residency (avoids shopping location)
  • Develop other local regulations sensitive to local voter wishes.

To increase insurance participation, let individuals deduct insurance premiums up to $3,600 per head of household, and $2,000 per dependant on their federal taxes. Let companies deduct insurance benefits on the same schedule.

Require insurance companies to accept citizens with pre-existing conditions. This would have two caveats:

  • 90 day exclusion period if the pre-existing condition was not covered by insured’s previous policy, or if they did not have insurance.
  • Citizens would not be able to “insurance shop” for better coverage on pre-existing conditions. Previous coverage would apply for 90 days on any pre-existing condition.

In exchange for society offering this benefit, health care has become a responsibility to everyone. If society is providing “free” health care to the poorest citizens, then those that can afford health insurance must be required to:

  • Purchase basic insurance in the open market, or
  • Pay an insurance surcharge on their federal income tax return of 25% the maximum health insurance deduction available to those that buy insurance.

With this health reform plan, we accomplish a few beneficial goals, and avoid some the worst outcomes.

  • The costs are clearly stated in the federal budget, as a transfer to congressional districts for health care.
  • We stop health care for non-citizens.
  • We eliminate cost shifting onto insurance premiums.
  • The health care benefit is restricted to county health departments, and basic health care.

This benefit is not intended to grant access to the “best health care money can buy” for everyone, but to put in place a safety net under our poorest citizens, until they get back on their feet and can afford the health care they would like for themselves and provide for their families.

Some may have a concern about the exclusion of non-citizens in our coverage by the nation’s taxpayers. If a non-citizen seeks medical assistance at any county health department or hospital, they must first sign an “agreement to deportation” document.

After being treated, they will be immediately deported by the County Sheriff. The county health department will fund the cheapest transportation to a hospital in their home country.

A few general points need to be emphasized:

  • Health care is expensive because of government expanding coverage to new illnesses: i.e.: alcoholism, mental illness.
  • Health care is expensive because of tort lawyers.
  • Health insurance is expensive because of low deductibles.

Addressing these three issues will slow the growth in health care costs. Removing non-payers from the health care system will eliminate cost shifting, lowering health care costs to everyone.

Medicare and Medicaid should be required to pay the lowest negotiated network price for any services. This would further reduce the cost shifting that currently distorts the market. It also sets reimbursements at a localized cost rate, rather than a one-size-fits-all standard. It takes the power away from the government to promise more and pay less by force.

A side note: If Oh! Bama is successful in gaining a public option for health insurance; it must be a standalone agency without any support from taxpayers. Wouldn’t it be fun to watch bureaucrats try to compete with private insurance companies? I always laugh when politicians say the government needs to “keep the insurance companies honest.”

Government subsidies should be equal to the “premiums” they do not collect from citizens covered. In other words, only the premiums would be subsidized by the government. The public option (government bureaucracy) would have NO legislation that tilted the playing field for them to compete. They would have to negotiate fees with health care providers, just like everyone else. If they did not pay fairly, providers could choose not to do business with them.

With an absolute wall to legislation or money, this charade would be over quickly and we could return to a free market in health care.

Disclosure: No positions