HEALTHCARE SOLUTIONS

Healthcare in America is a puzzle that is an accumulation of many historical decisions. The development of employer paid healthcare was due to price controls during WWII in which competition for employees via wage differences was not allowed. Thus employers started to use employee benefits to substitute for wages. During the 1960’s the government could not get retirees to enroll in Medicare so they made it illegal for retirees to have primary insurance other than Medicare. These two events separated the user from the providers of healthcare.

Today we only speak of deductibles and how much we must pay for out of pocket expense with no regard to the total cost of healthcare. With the goal of reconnecting the user to the cost of the service, we regain decision making in healthcare that is driven by a cost benefit calculation. Is it not better to have each individual make a decision as to what cost he places on what benefit?

If we broke down the problem into two parts, catastrophic health care coverage and primary coverage, the problem is much more solvable. The cost of healthcare is broken down into 2 major categories: catastrophic health care and normal preventative & day to day health care of routine sickness. The uncertainty that most families face is catastrophic health care. That is why the government should make it mandatory that all citizens have catastrophic coverage with a very high deductible. A deductible of $10,000 or so would be high enough to make the cost relatively low. For those that fail to procure such coverage it could be paid through a tax. For the low income they would be provided with the same basic coverage as those who fail to procure coverage.

Since we already have said that all benefits from employers would be taxable income, there is no reason to buy healthcare from your employer. To insure that there were no inequalities in the insurance marketplace it would be illegal to charge different amounts to those who bought policies individually versus from groups. In addition, there would be a requirement that all healthcare providers charge the same for the same services.

These three changes would produce totally different outcomes than under today’s system. For instance, with all employers paying cash instead of benefits, a dual income couple would choose to get only one policy, not dual dip. Further because each employee would be buying coverage outside of there employer, they would be able to choose the correct policy for there needs and not be hostage to the “company” plan. An example of these differences would be a family with children may want good preventative care while a young single person might only desire the lowest cost. These types of decisions lead to better shaping of needs to coverage.

Under the current setup, health care insurers might charge an individual many times the cost they offer for a group policy. This leads to the “lucky” few having better choices because they belong to a “better group”. This inequality would be eliminated if all insurers were forced to sell the same coverage for the same price regardless of affiliation. It would also be a good idea to require that all employers offer payroll deduction for third party benefits. Likewise, the federal government should also allow all employees to pick there health care coverage just like private industry. This would eliminate any difference between governmental and private employers, thus insuring fairness in legislation.

Finally, with all providers charging the same for the same services we eliminate the current state of affairs where the poor pay substantially more for services than the fully insured. Typically the fully insured might pay as little as 50 cents on the dollar versus the poor who are charged full price. With all comers being charged the same, then there is no discrimination due to method of payment. With all citizens covered for catastrophic expense, hospitals will not carry a disproportionate financial burden.

Buy keeping healthcare private, we avoid the types of distortions we see in today’s marketplace. When Medicare was first passed we had far more general practitioners than we do today. One of the reasons is that for the same office visit the government originally paid more based on there medical degree. Therefore we had an internist being paid more than a general practitioner for the same services. This caused many more doctors to pursue advanced degree regardless of demand. It also gets the government out of the business of deciding what coverage should be available to which citizens. We already pay for the low income to have health care coverage; we now just allow them to pick and choose with there limited government provided resources which ones are most important to them.

Some people will decide to take out a policy for routine preventative and sickness care. Others may choose to pay out of pocket. Some may choose to be partially insured for sickness but pay cash for preventative care. In all situations, the decision being made is not distorted by place of employment, self employed versus employer paid, or private versus public care.