Health care 2

The question in the news about Obama care is what happens if the court rules it unconstitutional. The administration admits they have no plan B but they claim the Republicans don’t have plan either. If this happens we will be back where we were before Obama care where most people had coveage Polls show that 85% of Americans have insurance and most of these are through their employer. Polls also show that most are satisfied with their plan except for the rising cost. The problem we face is two-fold. First, is how to cover the 15% who are not insured and second, how to keep the cost from rising at twice the inflation rate. Let’s look at the 15% or the 50 million who are uninsured. One fourth of these are young people who work and could afford health insurance but choose not to buy it. One fourth are people who are eligible for Medicaid but do not sign up even though its free because they can sign up after they get sick as it has no preexisting conditions clause. These are not included in the 50 million people who are currently on Medicaid. One fourth are illegal aliens and finally one fourth are people who need coverage but cannot afford it. The solution is now in two parts. First is getting money to the 12 million who cannot afford insurance and second bringing the cost under control for the 85% who have insurance. I will cover the second problem first as it leads to the solution to the first problem. In three words the reason health care cost increase at twice the cost of living are “third party payer”. To explain what that means consider having a food insurance policy. You buy a food insurance policy and you pay a stipulated monthly premium just as you would for health insurance. You go to the super market and pick out your food and at the checkout counter you present your food insurance card and the store sends a bill to the insurance company. As time passed you would become more and more concerned about the quality of the food and the location of the store and less and less concerned with the price. This is just what has happened with health cost. I know people who actually joke about the 4 dollar aspirin and the 2 dollar cotton ball on their hospital bill. They don’t care about the cost since there is a third party that pays the bill. In order to present the solution to this problem I will use a typical large private company as an example. This company pays about $15,000 per year per family for health care. It is a typical plan with a small deductible, a co-pay and a stop loss. Putting in numbers the employee pays an annual family deductible of $200 and 10% co-pay and when the out of pocket expenses reach $1000 the co-pay stops. This means the maximum any family will pay in a given year is $1,200. The company sets up a new plan. The employees will now be responsible for the first $5,000 of health care expenses each year. Everything over $5,000 is paid by the insurance company. The company will put $5,000 into a tax deferred savings account for each employee, the money to be used to pay for medical expenses. This is called a Health Savings Account. The company saves the other $5,000 and that is their incentive to set up the plan. Now let’s look at the plan from the standpoint of the employee. He has $5,000 in his account to cover medical expenses and he knows that if he doesn’t spend it all he gets to keep it for retirement. If a child needs a tonsillectomy they don’t just go to the doctor and sign up. They start to shop around to find out who has the best deal both price and quality. In other words they start shopping for health care the way they shop for other services. This brings competition into the market. Take a look at laser surgery. This was not covered by insurance and the free market was allowed to operate and the price has come down dramatically. Is the employee happy? How about the doctor? Does he like getting paid up front instead of going through the insurance company and waiting a month to get paid. Now let’s get to where the real savings come from. Last year the US spent 2.7 trillion dollars on health care and it is estimate that 27% went for administration. That totals 729 billion dollars for paper work. Since 90% of all claims are for less than $5,000 this eliminates 90% of the cost of paper work and saves 656 billion dollars per year. Here is where we go back to the 12 million people who cannot afford health insurance, the 12 million young people who refuse to buy insurance and the 12 million eligible for Medicaid. We put $5,000 each year into their accounts and buy a Major Medical Plan for each of these families. In 36 million people there are about 20 million family units and the cost to cover them is $10,000 per year. This comes to 200 billion which we take from the 656 billion in annual paper work savings. Now we have everyone insured and they are purchasing their medical care using the same method they buy other items. Competition and paper work savings are keeping the price from rising faster than inflation. The doctor’s office no longer has one or two people just filling out insurance forms. The hospitals and clinics have eliminated entire departments. There is one central insurance company likely Blue Cross that now handles all claims over $5,000. All the other health insurance companies are out of business and this is why it won’t pass congress. To many lobbyist paying off too many officials. Now what is the downside to this plan? There will be about 10 million people who will lose their jobs as paper pushers and insurance executives. These people are mostly computer savvy and most have a high school or higher education. They have been working and they know how to work so they will eventually find new jobs. In the interim the government can add them to the health insurance pool for another 100 billion taken from the paper work savings. PLAN 2 The way to get this type of plan passed is to use the single party payer that Obama care originally wanted but could not get through congress because of all of the complicated pork projects that were included in Obama care. In case you are not convinced that Obama care was not complicated consider the fact that many say it is like the Romney plan in Mass. If that is the case why is Romney care 75 pages and Obama care 2,700 pages. It is all the hidden stuff on Obama care that caused people to turn against it. In order to get a plan that will pass we must take a perfectly good Plan 1 and rip it apart. First we replace the Blue Cross with government administrators similar to Medicare which has about 5% administrative cost. Second the government will put $5,000 in to every families medical savings account at a cost of 750 billion dollars. There are 150 million people employed as single and family. Each family unit will repay the government in the form of premiums on a sliding scale. Those with income at or below the poverty level will pay nothing. Those at twice the level will pay $200 per month, those at three times the level $300 per month and all others $400. That will bring in 600 billion leaving the government short by 150 billion. The 22% savings in administrative cost over the current system would be 600 billion and that is enough to pay for part of the shortage and the claims over $5,000. The government will still lose about 150 billion per year. The government would ration care based on age and condition. They already do a lot of this but it is not well known. Sara Palin created quite a stir when she mentioned death panels but it is true. As long as people continue to live longer and as long as medical treatments continue to be developed, the cost of medical care will continue to increase. Until some new technology comes along we will have to depend on rationing.