Health Care Reform

I’ve been seIf-employed as a health insurance broker / agent for the last 20 years. I have laid out my own vision for health care reform. Although most of my ideas are not original, I know I have not seen this entire spectrum of comprehensive reform promoted anywhere else. I’d like to share it with you, and would appreciate your opinions and feedback.

It has taken 45 years of “entitlement mentality” to arrive at today’s “tipping point”. When it comes to “health care,” it is such a personal issue to each one of us. Even people with a good degree of “common sense,” at times, cannot see beyond their own circumstances when discussing solutions. On top of that, so much of our population cannot fathom the concepts of personal sacrifice and personal responsibility, that I feel it will take a generation to re-instill the character that once signified our country.

It is my belief that the first priority is persuading enough people that dismantling of government control and bureaucracy will do the most initial good for preserving our private health care system. Otherwise, even if Republicans regain the majority in the House and Senate, a “patch” will be no more effective than “the little Dutch boy putting his fingers in the dike” to hold back the tsunami of regulations and costs about to be unleashed on the American people!

It is very distasteful to my more conservative and libertarian nature to suggest that health insurance companies be required to guarantee issue without underwriting pre-existing conditions, let alone the amount of government subsidies that will be required by my “blueprint,” and potential taxes to kick-start it! Regardless of any ideological perspective, the pragmatic strategy has to be understood and seriously considered.

• Employer-based health insurance plans originated during the 1940’s as a way to side-step wage and price control laws of that era.

• Both Democrats and Republicans, at both the Federal and State levels, are responsible for injecting government regulations into the health care system. The private marketplace is now at the mercy of elected politicians and unelected government bureaucrats.

• We are at the tipping point. Our current system is not sustainable, and a Federal government takeover is not acceptable to a majority of Americans.

• Republican Party proposals, so far, are just a “patch” for the system. They only offer to reduce the size of increase in government involvement, not the actual dismantling of government bureaucracy itself.

• Most employers would eliminate employee health care plans if given the opportunity. Rapidly rising costs of health plans have placed an unfair burden on businesses.

• Individual health plans are severely underwritten, unfairly priced due to individual State mandates. Those who are declined due to health reasons have few options available to them, except high risk pools, which were mandated by HIPAA. These policies are more expensive and generally, have fewer benefits included.

• Fraud is rampant within the Medicare system, as the responsibility to handle claims falls on the government bureaucracy.

• Prices of medical products and services for Medicare patients are set by elected politicians and unelected bureaucrats.

• Medicaid, administered by the individual States, is not a completely funded mandate from the Federal government; forever creating budget crisis within State governments.

• The Federal government has trampled on the privacy rights of individual Americans under HIPAA, sold to the American electorate in 1996 under the guise of “portability.”

• The Federal government has set the coverage rules for terminated employees of company health plans (COBRA).

• The Federal government has created rules and regulations detailing how large employers must offer health insurance policies (ERISA).

• State governments create mandates for health plans and a myriad of rules and regulations on how employers offer small group health plans.

• State governments massively regulate which insurance carriers will be allowed to offer health insurance products within their individual jurisdictions.

• State governments massively regulate what health insurance products will be allowed to be sold by insurance carriers within their individual jurisdictions.

• State governments massively regulate benefits mandated in each small group and individual health insurance policy sold within their individual jurisdictions.

• State governments massively regulate what prices can be charged on small group and individual health insurance policies sold within their individual jurisdictions.

• Hospitals and Providers cost shift. Medicare and Medicaid reimbursements to hospitals and providers are set by elected politicians and unelected bureaucrats. Much of the artificially low reimbursements are simply cost-shifted to the privately insured and the uninsured, another hidden cost of the marketplace.

• Another example of a hidden cost to the marketplace is the administration of COBRA and State Continuation plans. The ARRA, aka the “Stimulus Law,” mandates that private businesses and insurance carriers administer the 65% subsidy offered to employees who are involuntarily terminated. This administration cost has been totally absorbed by the private marketplace. Some insurance carriers are now presenting terminated employees a nine-page document, whether they’re even eligible for the subsidy.

• COBRA administration itself is a massive inconvenience to businesses, especially small businesses. A business can be held hostage to a specific insurance carrier due to adverse health issues of former employees or former spouses.

• True reasons for rising premium costs are not understood by the general public. It is therefore very easy for politicians, and their willing accomplices in the media, to manipulate the electorate in focusing their anger of rising costs at private businesses. Up to 40% of our population now believes that health care is a “right,” meaning someone else is responsible for paying for their care.

• A non-partisan study group, The Congressional Research Service, released its findings for 2007. Of over 2.2 trillion dollars of health care expenditures, it was found that 1.3 trillion of it, 60%, was attributed to public sources.

• Elimination of employer-based health plans. True portability will be established once every individual “owns” their own plan.

• By eliminating Medicare and Medicaid plans, individuals will not be “branded” in restrictive plans, whether by provider or by benefits.

• Dismantling of most Federal and State bureaucracies that oversee our entire heath care system, beginning with the Department of Health and Human Services.

• Establishment of a new Federal agency, in charge of disbursing funds of a new, needs-based subsidy and voucher system.

• Waste, fraud, and abuse should be massively reduced, as claims will be totally processed within the private marketplace.

• By eliminating the cost of health care from a business (other than a potential tax), wages/salaries could be adjusted upward to some degree.

• Specific businesses or industries should be put in a better competitive position against foreign competitors.

• True competition should emerge, triggering more efficiency, and cost control within the entire system.

• Encouraging consumers of health care to become more cost conscious, as they shop “price” as well as “quality.”

• Relationship between doctor and patient should be preserved, if not strengthened.

• Jobs within the private sector should grow, as claims departments within the health insurance industry should expand, as well as sales/marketing staffs.

• Specific insurance carriers could team with clinic systems specializing in specific illnesses or diseases, tailoring a health plan catering to specific needs.

• Politicians and government bureaucrats are stripped of a portion of their power and control over ordinary people and the private marketplace.

• Veteran benefits as offered through the Veterans Administration remains separate.

• The cornerstone of health insurance plans is a High Deductible Health Plan with a Health Savings Account attached. The individual deductible will be established as $5,000, family deductible will be $10,000, 100% coinsurance. In other words, the individual out-of-pocket maximum is $5,000, and the out-of-pocket maximum for families is $10,000.

• A commission will be established by the new Federal agency to establish mandates; what benefits will be included in the policy. It will consist of a cross section of all interested parties of the health care system.

• Pricing will also be established by this commission. It could be broken down into different tiers; 20-year age brackets for all adults over the age of 21 (21-40, 41-60, 61+).

• Another age division could be 21-50, and 50+, thus making it easier to establish benefits mandates, such as maternity.

• Another pricing consideration could be basing premium on the cost of living in specific areas. It might be feasible to break down cost of the Base Plan into a couple of categories, whether based on population size or access to metropolitan facilities.

• Renewals for the first five years are to be pegged at a 5% annual increase, January 1 of each year.

• The Base Plan deductible is based on the calendar year, January 1 through December 31, as are the Health Savings Accounts contributions.

• The system of tax credits, vouchers, and subsidies is based on the Base Plan charge.

• Individuals/families that are paying the entire premium themselves will get a tax credit for each month of a calendar year they’ve paid premium, not subject to any income limits.

• They are also eligible to contribute into a Health Savings Account for the full deductible amount, which is fully tax deductible.

• Any adult 21 or older residing in the country is eligible to purchase a policy, no longer eligible to be considered a dependent. (Exceptions are to be made for disabled adults to remain on a parent’s / guardian’s policy). Only U.S citizens and legally documented residents are eligible for the tax credit.

• For individuals/families that can afford to pay the premium, but not able to cover the deductible expense, those who qualify will be offered a voucher system, to be established for insurance carriers to submit for reimbursement from the Federal government.

• Again, only U.S. citizens and legally documented residents are eligible for vouchers.

• For individuals/families who also are unable to pay the premium itself, those that qualify will be directly subsidized by the Federal government.

• For those individuals/families who find themselves in sudden economic hardship, such as lay-off, extended illness, or death of a spouse, 90-day vouchers and subsidies can be made available for those that qualify.

• “Qualifying” would be determined using poverty level guidelines; percentages to be determined.

• Enrollment is totally voluntary. Pre-existing conditions are waived, if enrollment is done timely (such as a 90-day requirement).

• If an individual chooses to remain uninsured, life threatening situations will still be treatable at an emergency room, but subsequent medical bills will not be dischargeable in bankruptcy.

• In a life threatening situation treated at an emergency room, where the patient happens to be an illegal immigrant, and cannot pay, the cost of the treatment will be turned over to the Federal government to present to the home country of the individual.

• If an illegal immigrant secures coverage through a health insurance carrier, and subsequently is deported, on the day of deportation the insurance contract with the individual is terminated, with no further liability assessed to the insurance carrier.

• In regards to “tort reform,” an arbitration panel will be established within each State to adjudicate grievances from individuals, or their estates, with a legislated maximum for non-economic damages to be established.

• An individual / estate can waive their right to arbitration for both economic and non-economic damages, but a “loser pays” system will prevail within our civil court system.

• Insurance carriers are to be allowed to market in all 50 States, subject only to licensing and bonding requirements, in order to market health insurance products.

• Standardized language in respect to coverage of medical conditions, and payments schedules will be adopted.

• As long as the Base Plan is offered, an insurance carrier may offer any combination of pricing combinations with benefits, with standardized language in respect to medical coverages and exclusions. With any deviation in coverage from the Base Plan, a separate waiver form will be provided for the consumer.

• All organizations that market health services or products directly to the public will be required to post those prices directly on a Master Website. Whether that website will be under the purview of the Federal government or through a private clearinghouse-type organization to be determined.

• Health care services and products that are not marketed directly to the public do not have to be published.

• Providers would also be required to post procedure and testing prices at their business location. “Surgical” procedures will be allowed a percentage of leeway of price deviation due to potential of complications during surgery or post-op.

• Possibility of “outcome-based pricing” to be negotiated between insurance carriers and providers.

• Pharmacies will also be required to post pricing information on the website, and provide “counter” access to pricing.

• Claim disputes between insurance carrier / policyholder or carrier / provider can be assigned to arbitration after a specified period of unresolved issue.

• An insurance carrier who has generated claim awards due to arbitration or lawsuit equal to 75% of their bond in a given State, must increase their bonding by that given percentage, or cease doing business in that State.

• A temporary or permanent tax on business has to be considered, in order to kick-start the funding for the entire country. A declining tax for a set period of years is one possibility. Another possibility is a two-tier tax system; maybe 2% payroll tax for businesses with gross revenue less than $5 million, 4% for over $5 million.

My main intention in posting my “blueprint” is to generate a “real” conversation amongst people to first understand what our health care system is, how it got there, & to address the issues with “reason,” instead of simple “slogans.”

The health care system to which we have grown accustomed is about to implode; regardless if ObamaCare is actually implemented. Just re-electing Republicans to majority status isn’t going to fix it. Remember, it was a Republican President, Republican Senate, and Republican House that gave us the fiscal monstrosity of Medicare Part D in December, 2003.

At least half of all employers that currently offer health plans to employees would dump them in a heartbeat. Where would each of you fit into a new system, if “free market” principles rein supreme? If you’re a smoker, over 40, and on any meds, you’re declined! If you’ve had history of any heart issues, including high cholesterol or high blood pressure, if you’re diabetic, or used anti-depressants; sorry, you’re probably declined. That’s the free marketplace! Enjoy the “risk pool” coverage in your individual state.

The day isn’t that far off when you’ll spend an entire day in the ER waiting to be treated. Live in the countryside, need a quick ambulance/chopper ride for emergency care? Good luck in the future!

As far as individual suggestions contained in my “blueprint,” it’s all up for debate. I do have real world experience, though, in trying to structure a “benefits plan” for people looking for basic coverage. It has been a long battle just trying to help people understand the value of a health savings account. How much to charge for premium, who will subsidize part of our population, let the “numbers crunchers” weigh in!

I’ve tried to put together a workable solution to begin the dismantling of government bureaucracy in our lives. It’s not going to be free, though. For all of you small government “purists,” who think that “only” free market solutions are the answer, come up with your own solutions for our country, not just a philosophical argument that doesn’t translate to our current real world. It’s not that simple!

Mark Pauly’s vision is similar to yours in many respects, but far less regulatory: http://www.hooverpress.org/productdetails.cfm?PC=1397

One key difference is that of necessity, “catastrophic” coverage has to be income-related. Thus, low income families would have a lower deductible and out of pocket maximum than high income families etc.

Also, there’s no rational reason to “ban” employer-based coverage. Simply provide coverage subsidies on a level playing field and let consumers decide whether individual or group coverage is best for them etc.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.