A Modest Proposal for Reforming Health Insurance


The Patient Protection and Affordable Care Act, is a legislative title which provides three lies for the price of one, since it doesn’t protect patients, is not affordable and has no provision for improving or expanding patient care but only acts to limit patient care.  As a bonus, it is also patently unworkable and as proof it is observably not working.

The declared purpose of the Affordable Care Act (or as it is more commonly known, Obamacare) was to provide access to medical insurance for those Americans who were unable to either afford coverage under then current health insurance rules and premium levels, or who were unable to purchase health insurance because of pre-existing medical conditions.  Before the Obamacare legislation was passed, and the President was touting the need for its passage, the number of people caught in this web of unfortunate circumstances was claimed to be approximately 30 million Americans, although as with all numbers coming out of the White House, that number can change depending on what propaganda point is being made.

As written, however, Obamacare attempted to go far beyond the goals that were stated and attempted to impose on the average American citizen controls over their access to health insurance that were in no way advertised prior to its passage on purely partisan votes in Congress.

The law, as written, determined that certain methods of treatment would only be allowed if a panel of “experts” (selected by the President and his administrative staff members) determined that they were both effective as well as economical.  If these experts preferred a different method of treatment than that which the patient’s doctor selected, it would not be covered by Obamacare.

One might assume that these “experts” would all be physicians, would all be knowledgeable in a specialty which would be germane to the illness being treated and would have been appointed to the panel making these decisions without regard to political philosophy.  However, based on how other administrators have been selected by President Obama have been selected, relying on selection based on expertise alone seems unlikely.  After all, the President and his fellow travelers in Congress have approached science, not as a search for truth but rather a search for consensus, as witnessed by their approach to questions regarding climate change (née Global Warming).

If consensus regarding science were the rule in the 19th century, Louis Pasteur would have been termed a denier and children’s lives would still be at risk if they drank a glass of milk.

While crying out against health care decisions being made by heartless insurance company bureaucrats, Obamacare has replaced them with compassionate and caring Washington, D.C. health insurance bureaucrats, just like those in the EPA or the Justice Department.

Health insurance, like any form of insurance, depends on having a large enough pool of insureds to be able to function properly.  So the real question is how to increase the number of customers within a given pool so that risk is spread over the largest number of people.

Employer provided health insurance solves that to a certain extent, particularly when speaking of a General Motors, IBM, or other enormous enterprise.  Insurance companies offer much more attractive rates on insurance coverage to large groups than they would to groups of less than 100 employees for example.  And the cost for individual families is higher still.

But having the Federal government mandate their solution to the problem of uninsured and the cost of purchasing health insurance appears to be the worst of all possible alternatives.  (Yes, please feel free to call me Captain Obvious.)  But what should the Federal government do?

I would suggest several steps that require no technical innovation, no website development and no interference with the current doctor/patient relationship.

First and foremost, the Constitution provides no authority for any part of Obamacare.  The Constitution does, however, provide Congress with the ability to regulate interstate commerce, regardless of the numerous abuses of that clause by this and earlier Congresses.  By allowing health insurers to sell across state lines, the potential “pools” of insureds could grow geometrically.

Next, Congress should exempt businesses from anti-trust legislation where they might work cooperatively to form significantly larger insurance “pools.”  For instance, allowing all three auto companies, and ALL their suppliers to form a single entity for negotiating rates and covered benefits with competing insurance companies would certainly create both a huge pool of potential insureds for the health insurance companies as well as being able to negotiate better pricing for the benefits that these mega groups define as required by their members.  Note the word “required”, not necessarily “desired.”  Just because 5% of the group want tattoo removal as a benefit, the 95% who don’t see tattoo removal as a “life-or-death” need would not be required to pay for it just to benefit that 5%.

They could even negotiate multiple plans along the lines of Obamacare’s Bronze, Silver and Platinum plans, although I would suggest that they take a page from Sears, Roebuck and Company’s time honored “Good, Better, Best” labels to avoid any connection to the disaster that Washington and this administration has wrought.

But how does one address the concerns of those 5%?

Congress’s legislative language in this matter should allow any organizations that desire to create their own pool and negotiate with insurers for the members of that pool, regardless of whether the underlying structure of the group is commercial or not.  For instance, a group could be created for model railroading enthusiasts, or every chess player in the country.  These groups might have very specific additional benefits that are required by their members.  And they could negotiate for just the benefit that the 5% wanted but the vast majority didn’t.  Perhaps it could be treated as an option, just as automakers have with new features they might introduce such as automated parallel parking or automatic braking systems.

In addition, we, as a nation, should eliminate completely the concept of employer provided health insurance.  If you have the maturity and intelligence needed to vote, you should be able to determine what plan suits your needs, and buy your own healthcare.  The government doesn’t mandate what kind of car you should purchase, or what sort of house you can own does it?  There are some in government who no doubt would like to mandate those things, but they can’t at the present time.  Buying a car and buying a home involve much more money than the cost of a reasonable health insurance policy, but the government doesn’t minutely regulate their options when they are being built (the Chevy Volt being a notable failure, er, exception).

But critics of such an idea (usually Democrats, Progressives, Socialists or RINOs) will ask “But what about employers who want to make sure that their employees are provided excellent health insurance for their employees?”

I really hate to burst their bubble, but no employer actually wants to provide health insurance.  No employer truly wants to pay for an employee to take national holidays off.  No employer yearns to provide a paid vacation.  But no employer is stupid enough to try to eliminate any of those fringe benefits should they already be in place.

Well, no employer would have been in the past, until the advent of Obamacare at least. Now, of course, employers are being forced to think carefully about what was, in the past, utterly unthinkable. Unthinkable only because it would result in telling their employees that they’re on their own, but wishing them lots of luck with that health insurance thing.

So how might employers deal with the need to continue providing some form of health insurance coverage while requiring individuals to acquire their own health insurance?  Instead of offering a “one-size-fits-all” benefit, offer instead a monthly allowance to each employee that must be paid to a health insurance company.

For instance, if the ABC Widget Company determines that they won’t go bankrupt if they limit their financial assistance for employee healthcare to $350 per month per employee, and each employee selects a plan that they feel is adequate, the employer would then transmit that $350 to the selected insurer and identify the employee/policy holder by Social Security number, the insurer would be able to identify that amount as a credit to the policy holder’s account.

If an employee selected the Platinum level plan, for example, and the cost for that plan happened to be $650 per month, then the ABC Widget Company would deduct the difference from the employee’s paycheck each week or month to cover the difference and wire transfer the total to the insurer.  If a particular employee wanted additional coverage for tattoo removal or abortions or whatever else they can think of, he or she could purchase an augmentation policy from a different insurer, and simply have the premium deducted from their paycheck and forwarded to this second insurer.

The company would only have to provide this wire transfer service, but would not be required to increase the total amount that they are liable for beyond the $350 a month that they offer to all employees.

This would result in companies being assured that their contribution would be completely controllable, eliminate the need for people who do not have expertise in the health care arcana needed to really negotiate knowledgeably with insurers, and end their expenses dealing with the administration of company sponsored health insurance programs.  Most firms would clearly view this as a benefit to themselves.

Employees would be able to compare employment offers from two different firms, since they would be able to clearly evaluate how much a potential employer would subsidize the health insurance plan which they chose to meet their needs which would be unique to their personal situation.

This would involve Congress again, and for the last time, by requiring legislation to make the employee portion of the total premium treated as not subject to income tax.  That is, although the amount would be noted on the employee’s W-2 each year, taxes withheld would exclude that amount, and it would not be subject to the government’s normal confiscatory tax rates on total earned income.  Companies now treat their benefit costs as a tax deduction, so the employee, or in the case of people purchasing policies individually, should be allowed the same tax benefit.

Those same Democrats/Progressives/Socialists/RINOs who worry about the loss of tax revenue by allowing deductions for an individual citizen’s health insurance coverage should be reminded (with a blunt object if necessary) that whatever the revenue reduction should only be compared to the elimination of the costs of Obamacare.  Just getting rid of the 16,000 IRS functionaries who will no longer be needed should make a serious dent in the fear of lost tax revenue.

There is no doubt that this proposal could be expanded and improved.  It is however a workable way to get government out of the health insurance business, and return control of one-sixth of our $14 trillion national economy back to the private sector, the sector that knows what can work, how it can work and are not blinkered by ideological baggage.  On that basis alone, it’s worth a try.

 

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I want this blog to be a forum to discuss the issues of the day (or week, month, year…whatever).  But you, my friends, need to respond.  A discussion where only one person is speaking is not really a conversation; it’s merely a lecture…or worse, it’s a sermon. 

Please feel free to use the comments section or even rate this particular blog entry.  I can’t improve my ability to communicate without honest critiques, and only the reader can note where I might have communicated more clearly or where I should have expanded the ideas. I will even admit (in the theoretical sense, anyway) that it might be possible that I might be wrong about something.

Thanks for reading and I hope you’ll join the conversation. If you liked the essay, please forward it to others that might also get something out of it.

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About Jim Yardley

Retired after 30 years as a financial controller for a variety of manufacturing firms, a two-tour Vietnam veteran, and independent voter.
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5 Responses to A Modest Proposal for Reforming Health Insurance

  1. J-M says:

    I want the COST to come down to something within reason. It’s all well and good to worry about risk pools, but why should it be sooo important? I have some ways to bring down costs, get rid of waste, and make the medical bohemeth more subject to patient controls (which would be good for bringing down costs as well)

    #1 issue as I see it is the lack of true “informed” consent. We as patients need to be able to exercise control over what the medical minions are allowed to do. We need a line item veto and REAL informed consent. Hospitals et al are using informed consent as a carte blanche hold harmless document for their own benefit, not the patient. “Standard of Care” has supplanted informed consent and is strictly for the hospitals benefit. Even the so-called “Patients Rights” documents are usually documenting that everything is all the patients fault if anything goes wrong. This needs to change.

    #2 issue is the “chargemaster” at medical treatment facilities. There is absolutely NO OVER SIGHT as to what price gouging goes on with the hospital chargemaster. This is where we get an “oral drug delivery system” with a five dollar price tag. Know what it is? The damn paper cup that your pills come in. The system is rampant with charges like this. Those electronic records? A hospital charged me $300 dollars for “electronic transmittal of data”. The previous time another hosptial charged me $280 to transcribe the words “general anesthetic” onto my chart. I said NO to the general anesthetic in the first place.

    #3 is having mid level providers provide care, ostensibly to control cost. Except that the cost savings are realized by the provider and not the patient. You as a patient will get cared for by a non doctor, but you will pay just as much. What a scam!

    #4 there is no way to check up on hospitals and/or doctors and see how many lawsuits have been brought against them or how many safety violations they have been charged with, preventable infections and the like. There is no price transparency where we can shop around. We really are going in blind. Our mechanics are held to a higher standard. We need legislation to provide INFORMATION on the medical treatment facilities. Sort of like they do for truck drivers. Trucks and truck drivers are held to a higher standard than doctors and medical facilities. You can see at a glance on-line how many violations a trucking company has, along with their drivers. They legislated all these rules and regulations for mechanics and trucking companies, so where’s something similar for hospitals? You are far more likely to be killed or maimed by medical care than truckers and mechanics.

    If the government wants to make money off of the health care system, then maybe that should be borne by somebody other than the hapless end user. Put some teeth into the “informed” consent laws, with some large fines, fees and penalties for not following the law. Legislate some control over the “chargemaster”. It’s an outrage that a paper cup which may cost the facility one penny, costs five dollars to the patient. Get some control over the mid level providers. We don’t need to pay $200,000+ to that nurse who sedates you, against your will in many cases. How many nurses does it take to do the job of one nurse? That issue needs to be addressed as well as the “tiers of care” whereby the same nurse in charge of the same patient gets paid more for doing the same job, just because of sedation or something. Just because he/she may have to take a blood pressure doesn’t mean he/she should get paid more. What is their job? Stand there and look pretty? If they do actual patient care they deserve extra?

    As you can see, I am attacking the health care problem from another angle. Maybe if the COST wasn’t so prohibitive (for no apparent reason) then we all could have insurance without breaking the bank. We are going about this all wrong, in my humble opinion. The media and the democrats have us all chasing after them and thinking that the ACA is an answer to anything. They want “viable alternatives” to their stupid rip off/medical bailout bill whereby everybody has to keep on paying higher and ever higher costs. I think we should look into getting health care costs back in line with the reality that we patients live in, not figuring out how to force us to PAY for it.

    Wow, I really went on a rant here didn’t I? Well Jim, you wanted a response! lol

  2. Jim Yardley says:

    Yeah, I have to agree. You really went on a rant. I’m impressed!

  3. Pete Morin says:

    Jim: Here’s Obama’s reply to your column. “Mr. Yardley, we’ve tried the free market approach and we know it doesn’t work. I’m willing to listen to anyone who has good ideas for improving healthcare coverage, but your suggestions are just more of what hasn’t worked.” In other words, Obama isn’t interested in any approach but government run healthcare.

    I can’t say that I understand your approach completely, but I will say this. We must start treating patients as consumers rather than simply patients, or numbers, for insurance companies and the government. The patient must in charge of purchasing his/her own healthcare. This would necessarily mean an increase in out-of-pocket costs for basic services I.e. doctors visits, physicals, blood tests etc. This could be offset by tax credits or HSA’s. It needs to be taken out of employer/employee benefit packages. We’re left with this mess thanks to WW II wage & price controls. Providing a credit to an insurer from an employer is a possibility, but why not simply give that amount to the employee in their paycheck? Ultimately, the employee is responsible for purchasing insurance.This approach has been very successful for home and auto insurance.

    The issue of coverage is complicated, but can become rational in its approach as to when insurance should be necessary. I’m not going to pretend I know anything about insurance, but a real free market healthcare insurance system needs to be given a chance.

    Great article. I’ll read it a couple more times. Maybe my thick head will finally absorb your logic.

  4. lfox328 says:

    It’s a fine idea, but I want to warn you, it will be opposed STRONGLY by women – who, BTW, make up a majority of the people working in “Employee Benefits”. If this did go into effect, their jobs would be on the line – no need for officious, make-work, paper-pushers in the office anymore. Back to the secretarial pool – IF they qualified, which many would not (too much “elite” education, not enough skills).

    • Jim Yardley says:

      Yes, those who actually work in benefits administration would more than likely have a problem, but the numbers of such workers is a small part of the total employment pool. And there are other “fringes” that would still need to be administered, such as company paid tuition reimbursement, and for that, the companies will need administrators. As you say, it’s a fine idea, so a majority would support the idea, dealing with the fact that some dislocation is unavoidable. Your point would apply equally to buggy whip manufacturers when Henry Ford began making cars, and cars completely replaced buggies, so certain changes, and certain costs, become inevitable.

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