The Definitive Solution to Healthcare

So we are again in the midst of a nasty and personal debate about healthcare, accusations of nefarious motives are flying yet again. The right is accusing the left of class warfare, the left is accusing the right of murderous intent. Yet neither side is actually proposing a solution that will do what the American people want.

What do the American people want? That is a difficult question, because most people are not listening to anyone with even the slightest variance from what they want. I think we can agree, if we calm down just a little, that most people want these three things:
-Affordable healthcare that doesn’t jeopardize our life’s work.
-Equitable access for everyone.
-Benefits that fit our needs.

Not that hard, right? As it turns out, maybe impossible. Why? Because giving us this will be difficult politically, and doesn’t serve the interests of our political and chattering classes. So even though I know we will never get what we are asking for, I feel it only fair that I present an outline for my plan, a plan I believe would deliver on the promises made by our politicos. So here goes.

First we must truly reform the insurance industry, this means restructuring the products offered. We need to standardize insurance products, people should know what they are buying or at least be able to know. So we should establish three classes of insurance, Primary Care, Major Medical, and Catastrophic. Primary Care would handle your normal office visits, this would be available in three tiers. The first tier would only cover preventative and office visits to your primary physician, the second would add family care and visits immediate care facilities, and the third would add coverage of most outpatient procedures as well as mental health. Major medical would provide care for chronic and expensive medical conditions. Catastrophic would cover costs that accumulate above a certain level. People would be able buy plans that bundled all three classes or any combination of them. Part of this reform would have to be adding a requirement that the patient be copied on all correspondences between his doctors and the insurance providers that directly relate to them. People should know what is going on behind the scenes, there is no good reason we should not be a party these important decision making conversations. These reforms would make the patient an integral part of their own care, and allow us to know what is covered by the insurance products we purchase. No more surprises. (As a tip of the hat to liberals, I would also keep the contraception mandate for all insurance products, also because of my rather militant opposition to abortion, I like the idea of everyone that doesn’t want to get pregnant using contraception.)

I would establish a national standard for Mutual Insurance. Mutual insurance is a form of nonprofit insurance where unused funds are returned to participants. Qualifying Mutual plans would be able to be sold nationally, this would drive competition. It could also be a way to lead insurance to eventually migrate to nonprofit as an industry.

Next I would establish a national HSA (Health Savings Account) program, everyone would be granted a durable HSA. You could put pretax money into the account and pay your medical bills from the account. I would require employers to match the first one and half percent of your income if they provided access to group policies. If an employer did not provide access to insurance, they would be required to provide a higher matching contribution. People would be able to use the HSA funds to buy insurance. Younger people that contributed would build a pool of funds to cover them as they grew older. If you decided to withdraw funds for some reason you would pay the highest personal income tax rate as a penalty. These accounts would have survivorship to spouses and disabled children. They could also be willed to immediate family, but the highest personal tax rate would have to be paid, and the funds would have to be transferred to another HSA. The withdrawal penalties would go into the federal subsidy program, along with all funds not passed onto a family member upon death.

I would leave Medicaid in place to cover the disabled and poor or uncovered children.

The federal subsidy program would be funded from Medicare, which would require raising the Medicare tax. However the only way to not shift the cost of the subsidy program to the middle class is to fund it from a flat tax on all income. We simply can’t take these programs that are all of our responsibilities and think someone else should pay. I will let the politicos argue about income levels.

At age 50, I would allow people to receive their Catastrophic insurance through Medicare. When you reached age 55, you could start buying your Major Medical care from Medicare. At age 60 everyone could buy Medicare through a means tested program.

There, you love this, right? It is highly doubtful that all of you do, however, I think this plan would accomplish what most people want done, and isn’t that what democracy is all about?

  • Robert Cocco

    Very thoughtful solution to Healthcare. A few modifications:

    – First (and maybe this is implied in your plan) I don’t see any way of getting around the individual mandate.

    – Employer-provided insurance premium dollars would not be paid by your employer directly to the insurer. They would be paid to you, and you would be responsible for choosing and paying for your own insurance. Even if this payment was given to you as some form of “credit” that you could apply to your premium, it would make you much more aware of what you’re buying and would give you a greater sense of responsibility for how to choose and use it. You would be allowed to add/subtract to that credit with your own money to buy the perfect plan(s) for you. Competition for your premiums would ensue.

    – The premium dollars you receive from your employer (other than that put into the HSA) would be treated as ordinary income and taxable. This tax revenue would be used toward funding the programs covering insurance for the poor. The current tax-exempt status of employer-provided premiums is nothing but a giveaway to the insurance companies, by diminishing the “pain” of the premium’s cost.

    • Thanks Robert.

      I don’t think you would need the mandate, becasue people would be able to actually choose their coverage levels. The employer mandate would effectively stay in place, but instead of paying a penalty to the government the penalty would be paid to the employee, through a required higher match to their HSA. I suspect that most employers would move to this option over time. I would allow people buy insurance using their HSA, and some forms of aid could go to a persons HSA. This would allow them to plan for their future and control their destiny to some extent.

      I think the insurance companies would become more accountable as people began to actual shop the products themselves, and as people gained visibility to what the insurers are doing behind their backs now.