Health care

One possible solution to the health care problem The problem with the private health care system is two-fold. First is the rapidly rising cost of health insurance and second the many people who cannot afford insurance. In solving the first problem we first look at the existing system. About 85% of people are currently insured and most through their employer. Polls show that these people are satisfied with their coverage but unhappy with the ever increasing cost. The question to ask, is why is the cost rising faster than the inflation rate and the answer is the concept of the third party payer. To understand this concept, consider having a food insurance company. You pay a monthly premium for your insurance and you are issued an insurance card that you present at the super market when you make your purchases. The supermarket sends a bill to the food insurance company. As time passes you will become more and more concerned with the quality of food and the location of the store and less concerned with the price. Most people have either experienced or know someone who has experienced the hospital bill with four dollar aspirin or a two dollar cotton ball and laughed it off as ridiculous. Since the bill is paid by a third party it is not important and therein lays the reason why health cost rise faster than inflation. So how can this situation be remedied? To answer that we look at a typical employer plan. Company A pays $20,000 per year for a family plan which has a small deductible, a co-pay and a stop loss. The company decides to introduce a plan that has a high annual deductible say $10,000 per family. This means that every family is responsible for the first $10,000 of annual health care cost and the company plan covers everything above that at 100% with no limit. A plan like this will cost the company about $5000 per year so they take part of the savings and set up a tax deferred health savings account for each employee and agree to put $10,000 per year into that account. The employee is now responsible for how they spend their health care dollars. Any amount that is left over at the end of the year remains in their account and continues to grow and at retirement they can use the money for whatever they choose. This now introduces the free market into the health care business. When a person is in need of health care they will shop around like they do for other purchases and this brings in the market forces. An example of how this works is laser surgery which is not covered by insurance. Not too many years ago this procedure cost over $5,000 and today it is $500. This is how competition works to bring down prices. The administrative cost under the current system is 25 to 30 percent which equates to 650 billion dollars per year. Since 95% of all claims are for less than $10,000 the proposed plan will eliminate 95% of all paper work and save over 600 billion dollars per year. This savings comes from the elimination of 10 million jobs in the insurance industry. These people have at least high school degrees and most are computer literate and will over time find new jobs especially in an expanding economy. When a physician is paid like any other service and no longer has to wait three months for a check from the insurance company and when he no longer has to have person on staff just to handle insurance claims he can charge less. When clinics and hospitals no longer have rooms full of people handling paper work they can charge less. There will be one company, something like Blue Cross, which will handle the over $10,000 claims. The second part of the problem was the 15% who are not insured. These roughly 50 million people fall into four mostly equal categories. 12 million are young people who are working and can afford to buy insurance but do not do so believing that they are indestructible. They will be encouraged to purchase health care using anyone of a number of ways. The next 12 million are people who are eligible for Medicaid but do not sign up because there is a small cost and since there are no preexisting conditions they can just wait until they get sick and then sign up. They can be brought into the system by introducing a 30 day waiting period. The next group is illegal aliens and they will continue to use the emergency room until they are either made legal or deported. The final 12 million need some government assistance and that will be based on income. At an average cost of $20,000 per year for a family plan this will cost $240 billion and for the additional people going into Medicaid add in another $240 billion. This money comes from the paper work savings of 600 billion leaving 120 billion left over.