Morality and Health Care: the argument for something better

Is it moral, or ethical to make money off of someone's health? The idea of a person making money off another person's health seems an antiquated idea, like the lawlessness of wild west movies.

The core agreement of health insurance is that you, a person or a family, pay someone else money every month in exchange for that person paying a doctor, nurse, hospital, etc. when you go see them.

The core business principle for that someone (ie-the health care insurance company) is to have more healthy people than sick so that you have enough money to pay for the sick people, and enough left over for you to live on. This doesn't seem so bad.

But then the business principle gets sticky. You want to pay as little money as possible, so you draw imaginary lines to delineate when you have to pay and for what services you have to pay. The trick is to draw the lines in such a way that the person or family paying you still thinks they are getting a deal - so they keep paying you, but you pay as little as possible.

But then the whole thing gets sticker. Enter geographical lines where some health care companies can do business here and there, but not there and over there. You start to get monopolies where, even if you don't like how little that company is paying and if you don't like how much you are paying them, they have the power to force you, or at least heavily influence you and the market around you, to stay with them. Now we are on morally shaky ground. A health insurance company can actually say, "no, I am not going to pay for this or that" for whatever reason, but mostly they say no due to those imaginary lines.

Now, if this situation was actually haggling over the price of a car I wanted to buy I still would not like it, but there does not seem anything inherently wrong about the practice. HOWEVER, if you are dealing with an operation or with any care that a person gets or does not get, if their health is on the line and the reason a health insurance company says no, we won't pay is those imaginary lines, this is wrong. A company basically says we won't make money off you if you have this operation, or if you have a pre-existing condition and we know we'll lose money on you. Money becomes more important than the person.

Take this to the next level where BILLIONS of dollars are spent by these companies to influence or pay-off those people who can balance out this unfairness, just so these companies can continue to make money, and I think this borders on human rights violations.

Even if these were not acts of pure greed and human rights violations, the core agreement of health insurance has been severely broken. A person or family must pay a significant portion of their income - tens of thousands of dollars, likely for years, to a company who has lost the focus of saving that money for the day when you, or others around you, may need it.

The over-arching, basic idea of health insurance is that we all put money into a pot for the eventuality of having to pay money for health care. This is not just a fine idea, it is a very, very commendable one. And if a health insurance company wants to try to make a living off of it, I think this is also a good idea. This is the idea of a free market health insurance industry. But this is not the America we live in, is it?

The sad fact is that health insurance companies refuse to regulate themselves. Maybe it is the whole market that is unable to regulate itself.

I doubt that anyone in America on the second to last day of February, 2010 actually thinks that the market will right itself and nothing should be done.

That leaves us with a quandary: do we fix it with more laws to make the industry lower its prices or do we make more laws to enable and encourage competition in the industry? The first solution is an oversimplified view of the Democrat's solution and the second is an equally oversimplified view of the Repulican's solution. I would encourage both sides to keep in mind the industry is pouring BILLIONS into stopping any change - do we really think they won't pour BILLIONS into finding new loop holes or BILLIONS into creating new monopolies?

For these reasons and more (see the rest of this blog), I think balance must come from a government sponsored plan that has these two goals: to stimulate and regulate competition without dominating it and to be a safety net for the sick, the poor and the veterans (includes Medicare and VA).

I think 8% Health Care is the answer. It is a positive answer. 8% does not say to the free market health industry, "you can't do this, you can't do that." This is not plan that is full of laws. It is a plan that says, "if you can beat the 8% plan either in service or in cost, or both, you are free to do so. But for 8% of a person/family's income, capping out at $6k, the government will make sure that person/family receives all basic health care through all your regular doctors, hospitals and other health care providers." See the other blog entries for more.

This is where health care reform needs to start. From 8% all other reforms can be set to that goal.

Can health insurance companies compete with 8%? They will or they will fail, it's easy as that. But the purpose of reform is to reform the moral inequities discussed above, not to make sure health insurance companies will still have BILLIONS left over to attack the reform.

The full idea of 8% Health Care

8% Health Care is an idea about how to pay for health care in America.
Here is the basic idea:
Every person in America will have to have access to health care via the following options: the Government Health Plan, health insurance companies/cooperatives or a self-insured option. Once a year you have the choice of moving to a different plan during an open enrollment period. None of these plans are employer based - your employer pays nothing for your health care. You pay for the plan, it is yours, it goes where you go.

• Government Health Plan. Anyone may join the GHP and receive full basic health care, as determined by primary care doctors (physicians, dentists, eye-doctors). In return, every person will pay 8% of their taxable income, capping out at $6,000.00 per family. The GHP is for everyone in America and wraps in all federal funds for medicare, veteran's benefits, SCHPS, etc. - in short all federal funds currently directed at health care. The GHP would replace those programs. If it is determined by the number crunchers that this is not enough, the plan could add a deductible of $1,000.00 per family that may be taken out pre-tax and put into a health savings account. The deductible goes towards anything (dental, vision, regular checkups, co-pays for medicine, etc). The only exception to paying the deductible is for those on social security, who would not have to pay the deductible (but still would have to pay for the GHP or other plan out of their taxable income). The GHP is set at 8% and cannot be moved by anything other than an act of Congress. The deductible method of paying for medical services (not medications), as opposed to the co-pay method, would put the first $1,000.00 of every family's health care at their own disposal, and hence health care providers (even Dentists) can compete for those dollars. After the deductible the GHP kicks in and the GHP negotiated rate applies. Every health care provider must accept GHP. The government portion of GHP is essentially to take the money in, pay the money out and act as a net for any short-fall. Contractors like MSPRC (Medicare Secondary Payer Recovery Contractor) with medicare may still be used.
  

• Health Insurance Companies, Co-ops or an Exchange. Companies in the health insurance industry will have to compete against the other plans. Anyone may choose them during the open enrollment period. They may charge clients more than 8% or less, whatever legal method allows them to compete. They may negotiate rates the same as they do today. Non-profit cooperatives that function like mutual insurance companies (ex. FM Global) might be a beneficial direction. In this scenario, should the premiums far eclipse payments, a refund or premium reduction in the following year would result. An immediate benefit of this plan to these companies is that they get to keep the same clients if they change jobs or start a business. Another benefit is that because everyone will have to choose one of these plans, companies will get the opportunity to compete for 40-50 MILLION more potential customers. A down-side is that the exclusion for pre-existing conditions will no longer exist.
  

• Self-Insured. If anyone wants to pay for health care themselves, they may choose a self-pay option, and any amount you choose would be deposited pre-tax into an interest bearing health savings account. These dollars belong to the individual or family and accrue as long as they are not spent. The money is for health care only, however. If the cost of health care for that individual or family exceeds 8% of their income, or even more than $6,000.00, unlike the GHP that individual or family must pay everything. One benefit is the ability to negotiate prices past the $1,000.00 deductible with which GHP holders will be able to shop and negotiate.

8% Health Care provides an affordable means for every person to be covered, stimulates the economy, pays for itself, allows for competition, choice and portability.

Additional details:

• Eventually, every person with any plan must have a primary care doctor listed, and must be known by that doctor. The goal is to get people out of the ER as their primary care.
  

• Standardized health forms approved by a Health Industry Regulation Panel, or HIRP, a panel of doctors, health care administrators and politicians who will also create a cost index by setting advised rates for services (that the GHP may not pay less than), establish cost regions for the index, mandate easy-pay methods with reasonable payment deadlines and initiate an appeal process for doctors needing more money for services rendered to a client due to extenuating circumstances. This plan assumes the amounts currently dictated by medicare will increase to a reasonable amount.
  

• Ability to deposit funds into health savings account in case $1,000.00 worth of services before the deductible accumulates (for GHP holders). Charitable organizations may be needed to help those who are not able to do this.

• Americans currently pay 1.45% of every paycheck to a medicare tax. If the GHP is chosen, the net increase would only be 6.55% (8% - 1.45%, capping out at 6k) over what Americans current pay (and likely don't use because they have other insurance). The medicare tax itself would be repealed.

• Medicare, as we know it today, to become the GHP, may begin to completely pay for itself.

• VA Hospitals can possibly become GHP hospitals, or maybe even regular hospitals.
  

• If 1/3 of the US population, 100M people, used the GHP, and the median income is $50,000.00/year, then the average family would pay $4,000.00 into this plan. That equals $400B (to be used by just those 100M). Add that amount to a $1,000.00 per family deductible (possibly an extra 50B) before those amounts are used in addition to the market stabilization that would be caused by this plan and I think you would have a plan that would easily pay for itself. The 8% might even have to be decreased after a while.

• Stimulate the economy. Businesses would immediately benefit from not having to pay anything towards health costs, to include the 1.45% medicare tax on businesses.
  

Note: This blog does not address many of the related health care problems in America that also need to change. Obviously many problems may be solved by fixing the money portion, but it is my opinion that paying for health care needs to be a separate issue, and separate solution, from many of the other health care issues.

8% Health Care

Last year President Obama asked Congress to come up with health care reform that pays for itself, encourages competition and is affordable. In the background of the debate on just how to accomplish these goals is the looming issue that, as more and more baby boomers start to retire, Medicare will be the next financial crises if it is not overhauled in this reform.

The old idea of a public option is dead on the floor of Congress. But what if there were a different kind of public option, one that paid for itself, encouraged competition and was affordable? What if every individual or family could choose to pay 8% of their taxable income, capping out at $6,000 dollars, to a government plan for whatever basic health care they needed? The option would exist to choose a private health insurance company for either more or less than 8%, more services or fewer, but the safety net of a public option for all basic health care that cost only 8% of an individual or family’s income would still exist. An 8% plan would replace Medicare, and make the services Medicare provided financially sustainable.

You may have heard the tag line from late night commercials, “but wait, there’s more.” With an 8% plan the tag line would be reversed, “but wait, there’s less.” Take a look at your pay stubs. You are already paying for a public option, whether you are eligible for Medicare or not. Medicare tax is 1.45% of every person and every business’s income. If you chose the 8% plan, you would only be paying 6.55% more than what you are already paying.

To many, 8% must seem so inexpensive as to be too good to be true. A couple months ago the PBS NewsHour did a piece on the Dutch health care reform that by all accounts is doing quite well. The average cost for health care in that country was reported to be 7% of a person’s income. The numbers for the US also seem viable for such a cost. The median household income in the US is 50,000.00 dollars per year. A family choosing the 8% plan would pay $4,000 per year. If only 1/3 of the US population, 100 Million people, used the 8% plan, there would be 400 Billion dollars per year for health care, just for those 100 Million people.

The economic benefits of an 8% plan are many. Besides being affordable, paying for itself and encouraging competition, the 8% plan is not employer based, so it goes with you. Another benefit of this plan is for businesses. In a time when businesses, especially small businesses, need a boost, not having to pay for an employee’s health care would be exactly the stimulus they need. But wait, there’s less. They would not have to pay the 1.45% Medicare tax, either.

Make no mistake; this idea is only part of the greater solution of health care reform. However, an 8% plan is vital to health care reform becoming a true reform.

Health insurance companies will have to become more efficient. They might even have to stop pouring billions of dollars into lobbying Congress to keep things the way they are and start working on how they can deliver better health care to their customers.