I am attempting to gift a Wall Street Journal
article. I hope it works, but if not, all you really need is the headline: “The Average Cost of a Family Health Insurance Plan Is Now $27,000”. Think about that. Then consider that US health care is generally considered to be twice as expensive as health care in other, comparable, countries for worse results. Think what corporations, never mind employees, could do with an additional $6,750/year per person.
You might follow that by listening to this
podcast. A researcher is asking people to send her redacted hospital bills so she can attempt to figure out what hospital care costs. We know that bureaucratic overhead is one reason for our inflated costs – what other country has a degree in medical coding? – but high and undiscoverable hospital costs are another. A hospital can’t tell you what your elective surgery will cost, even if you ask, and you are certainly not going to spend an ambulance ride after a car accident or a heart attack calling around asking about the price of care.
An anecdote: Back in 2005 I fell and broke my wrist in Murren, Switzerland. I wound up in an emergency room in Interlaken. I was the only patient – it wasn’t ski season, so I was the only injury, but there were no uninsured people using the ER for primary care, either. Compare that with your local hospital any time of year. The doctors attempted to set the bones using X-ray, before taking me to the OR to insert pins under anesthetic, and then to a bed in a six person ward where I spent the night. Fortunately, I still had good retiree medical insurance, but the really interesting fact about the bill was that it was almost exactly the same as the bill for ten minute out patient surgery to remove the pins in the US. And Switzerland is one of the most expensive countries in the world.
Paying for health care in the US is a mess. Some people have no coverage. Some people have expensive employer coverage. Some people have reasonable coverage because they are over 65 or disabled. Some people have Affordable Care Act coverage that may or may not be affordable. Meanwhile the “system” piles on costs, some of which go for unnecessary or even dangerous care. Too much is spent trying to keep the frail elderly alive for a few more days. Too much is spent on unnecessary tests – no other country uses colonoscopies as the first line test for low risk people.
I understand that this “system” is the result of wage controls during WWII leading employers to offer health insurance in lieu of wage increases. That was eighty years ago. Isn’t it time for something better? I’m not advocating for the UK’s National Health System, although it worked well for me, but the system in France, or Germany, or Switzerland would require fewer changes.
Here is my solution, based on my 45+ years in corporate employee benefits:
Basic concept:
(1) Individuals should be responsible for that which is budgetable.
(2) Society should be responsible for that which is not budgetable.
Funding what is not budgetable:
A national stop loss/reinsurance system with a $25,000 per capita, per year attachment point, where provider charges are limited to either the Medicaid or Medicare allowable for expenses in excess of the attachment point – funded by general revenues from a per capita premium. That is all American citizens, and all non-citizens who are lawfully present, are automatically covered by the stop loss (part of an individual mandate) and each must pay the per capita stop loss/reinsurance premium collected as an income tax (where all the regular income tax rules apply, and where non-payment accumulates with interest).
Should be something like $500 a year, or ~$40/person/month (revenue of approximately $200 Billion). Employers and not-for-profits could pay the premium on others behalf if they so chose to.
One estimate of cost for stop loss for an employer-sponsored plan: https://ethosbenefits.com/how-much-does-stop-loss-insurance-cost/
Funding What is Budgetable:
Each US Citizen, and all lawfully present in the United States are individually responsible for medical expenses up to $25,000 a year. Where individuals purchase insurance, there would be no point of purchase cost sharing (deductibles, copayments, coinsurance) on preventive care and primary care, and individuals could contribute to a Health Savings Account on a tax preferred basis (same rules as today).
Coverage could be provided by employer sponsored plans, individual insurance, options available in the public exchange, Medicare, Medicaid, VA (as all are available today) or an individual could post a bond and self-insure. The only difference is that the “individual mandate” applies to all, there are no free riders, and there is a $25,000 cap on covered expenses per year.
All are automoatically enrolled in a public exchange coverage default option each November – no free riders. Those who can show other coverage (individual, employer, exchange, Medicare, Medicaid, VA or post a bond) can opt out of the default option. Those who can’t show other coverage are covered, and premiums would be paid via income tax withholding (either from wages or estimated).
The cost of $25,000 in coverage per year is likely to be less than $1,800 per person, or $150 a month, on average – with age-based, unisex rates, ranging from about $500 a year for a child under age 18, to $5,000 a year for those age 65+ (who are not yet eligible for Medicare).
The result is “affordable”, universal coverage, where the coverage prior to the attachment point is “equitable” (both vertically and horizontally equitable, treating similarly situated individuals the same, and differently situated individuals differently, proportionately) relative to the anticipated cost.
All non-citizens who are not “lawfully present”, including those who are here on vacation, or business, as well as those who are here awaiting processing of their claims for asylum, are individually responsible for their own medical needs – other than stabilization per EMTALA. They are not eligible for exchange coverage, Medicare, Medicaid, or Stop Loss.
Bottom line, Americans want the best health care coverage YOUR money will buy. And, so long as we let Congress asserts that health care coverage is a right, and so long as Congress has authority to subsidize coverage, by running $1 – $2 Trillion a year in annual deficits, sending the bill to Americans too young to vote and generations unborn, we won’t solve this problem.
Since Health Reform was signed into law by President Obama, March 23, 2010, we have added $27 Trillion to our national debt.
Oh Jack, a recipe for confusion and chaos. The problem is lack of universal coverage. Universal risk.
We need a system as simple as possible that recognizes that people do not view obtaining or paying for healthcare as they do a car and never will. All health care is paid for with someone else’s money, that’s why it is insurance and if you are lucky you will pay and pay and never use a penny in health care.
Right now I wish I could say that. In an hour we will be headed to Connie’s first chemo treatment. I don’t know what it costs, I don’t care what it costs, I don’t care what I pay in premiums. I just want it to work … and that is how we humans think about health care. We are not consumers, we a patients.
Best wishes Dick and Connie.