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Healthcare Continued...

Benjamin Franklin once said, "Any society that would give up a little liberty to gain a little security will deserve neither and lose both." I think this quote is something to keep in mind as we consider the health care debate? How much involvement do we want our government to have in very personal decisions of our health. And, for that matter, how much of our personal information do we want our government to have? How many decisions do we want made for us?

In our last discussion Marti brought up several great points concerning some of the problems that exist in our current system. I would like to put forward, for your consideration some free market rather than government solutions to the situations Marti described.

Marti wrote: "Yesterday at the pharmacy, a mother asked me a question about her one year old. I told her she should contact her pediatrician. Her response was that she was between insurance right now & couldn't afford it. I think the number of people who are in that situation is completely ridiculous. You shouldn't have to worry about health care because you recently lost your job. Not in the United States anyway."

This situation is a greater problem than many people realize. The number of uninsured in the United States is roughly among 47 million people. There are close to 305 million people in the United States making the number of uninsured a little over 15 percent. Breaking these numbers down to see who these people are is difficult, but the Congressional Budget Office has made an attempt and they came up with something like this (I apologize for repeating myself a little here).
All of these numbers are approximations...

10 Million Illegal Aliens
17.3 Million who make between 50,000-75,000 per year and choose not to be insured (these are the mostly very young and healthy who would like to keep more of their income rather than paying their portion)

There are between 13 million and 8.2 million who are those who are sometimes or usually employed, but have no coverage through their work, but make too much to qualify for government assistance.

The rest ( between 7 million and 11.8 million 2-4 percent of the entire population) are those that face the situation Marti describes. They are mostly hardworking Americans who go without insurance just because they are between jobs. Cobra payments are a fortune and for many who take the risk, there is no problem, but it can also be a disaster. According to the Kaiser Family Foundation, most of these folks will be insured again within 4 months, but it can be as long as 2 years.

Around 1950, a Federal Law made it so that employers could purchase insurance for their employees tax free. But, health care has never been tax free for the individual to purchase.

This single law is one that has caused the costs of medicine to sky rocket. We hand the responsibility of purchasing health insurance off to a third party, our employer.

There are many Americans that don't even realize that they pay for their own insurance. They just think they have a nice company if they receive good benefits, or a bad company if they don't like them. They never realize that their health benefits are part of compensation, it is part of what your company thinks you are worth to employ. They don't pay for benefits to be nice... they can't afford that.

From this law, ideas like managed care have come along that further remove the patient from their own health care decisions. The management will only pay for in network docs and they will only compensate the docs at a certain rate. All this was meant to bring down costs, but the effect has been the complete opposite. Now our health care bills reflect the care AND the management of the care. If you manage your own care, you can bring the costs of health care down for everyone including yourself, this is one reason HSA's are such a good idea.

My least favorite plan is something called "flexible spending". This is a plan almost designed for waste. You get a certain amount of dollars in your account.. the rule is spend them or lose them at the end of the year. Of course people are going to run in at the end of the year and spend what is left on whatever they think might need to be done... just in case. Often, since they are removed from this money, they don't realize that they are spending their own money and making medical costs higher for their employer and everyone else in the company. If I were an employer, I would never even consider flexible spending.

The answer I think is found HERE...
"All individually purchased insurance and out-of-pocket expenses would become tax deductible for persons who have at least catastrophic insurance coverage. The tax deduction could be taken by persons who claim the standard deduction on their tax returns and those who itemize deductions. All purchases of health care would receive the same income tax treatment."

I also think that people ought to be able to open a tax-free HSA at their local bank. Then, there would be no lapse of coverage when a person was changing jobs. Back in the 50's-60's when this Federal Law was enacted, people often started and stayed with the same company for their entire career. Life is different now with Americans changing jobs on an average of every 3-4 years. We are a mobile society and this law no longer serves the people.

If we have health insurance that stays with us from job to job and moves from state to state or even over-seas... We don't have to be as concerned about Marti's second point

"... loses health care, and gets some sort of catastrophic disease before the new insurance is in effect. The new insurance will claim that the disease is a pre-existing condition & refuse to cover that patient."

It is important to understand what the insurance industry does because they are often vilified in the press.
This is the definition of insurance:
"coverage by contract whereby one party undertakes to indemnify (to secure against hurt, loss, or damage) or guarantee another against loss by a specified contingency or peril"

If a person comes to an insurance company and they already have cancer. To pay for their treatment would not be selling them insurance or insuring them, it would be defined as charity. Insurance companies would not be able to stay in business operating that way or able to help the millions they do help. Insurance is a bet that a company takes on a whole bunch of healthy people, knowing that a certain percentage of them will become ill/hurt. If a person is already sick.. that's not a bet any longer.
Car insurance is the same. When someone purchases car insurance, the insurance company will take everything they can into account before they decide what they will charge. If you've already had a wreck and a couple of tickets.. it doesn't look good for you. Insurance companies are in business to make a profit, that doesn't make them evil.

Marti brought up a really good point here when she said, "Or take my neighbors. They're little 2 year old was having trouble breathing. They took him to the Doctor. Turns out he has a hole in his diaphragm. He had surgery to repair it & was in the hospital for 2 weeks recovering. They have insurance. They have to pay 10%. That doesn't sound bad until you realize the hospital bill is about $500,000. Who has $50,000 lying around to pay for that sort of thing? It's absolutely crazy."

I don't know what kind of insurance Marti's neighbors have. The old Blue Cross classic policy was to insure you 80/20 and it sounds like they have a 90/10 policy. Because health care cost have become so astronomical, these types of policies no longer work on their own.

There are 2 solutions to this that I can think of.. You can pay for secondary insurance (there's AFLAC you know that duck.. that's what he's about), but you may never use it and thus it's peace of mind, but you are out of lots of money over time. Or, you can also use an HSA. The catastrophic insurance portion of an HSA guarantees that you will only pay a up to a certain cost within a calendar year. With ours that number is $4,000. However, the savings account portion makes it so we have been able to save more than that amount so that after the first year or so, you are really covered %100 for several years.

Then, the more you are able to save, the more you will have for care, when most people really need care in their older age.

I really appreciate Marti taking the time to make so many intelligent and thoughtful comments and hope that this further discussion is helpful to those of you who are interested. I would also like to recommend THIS article which has many more solutions that are mostly market based and involve the Federal Government as little as possible, which I really think is the ideal.

We need to take care of each other as much as possible. We need to help and watch out for our neighbors. We don't want large bureaucracies trying to take over that job. Government takes a little freedom promising solutions, but in my opinion usually whole trillions of dollars get spent without real change/solutions being made. Liberty requires more of every American, but it's worth it.


Raquel said...

Thank you for writing this out. I've been enjoying this discussion and I think you and Marti have done a great job at seeing all sides of the issue.

Alicia said...

I am having a hard time understanding this because it is a little advanced for me. Have patience with me while I struggle. My question is this: Brandon and I get really great, comprehensive insurance through his work as part of his compensation. And like you said, Wayne (Brandon's boss) doesn't do it to be nice, it's how he attracts good employees. But our work won't cover our child. And we consider ourselves lucky that it even covers me because only the doctors like Brandon get their spouse covered as well as themselves. The non-doctor employees only get coverage for themselves. We initially signed up for an HSA for Gloria and were really bummed that we had to pay for her deductible twice so we considered putting her on our own plan, which would cost us $400/mo. to add her and each child after her would be an additional $400/mo. Anyway, to my understanding we kept Gloria on the HSA plan. I'm wondering if Brandon and I should "opt" out of his work provided insurance and get our own plan. Would it save us money? We are glad for the comprehensive because we both had a lot of medical expenses this last year. Anyway, talk to me about this more sometime. Hopefully in SV, you can help me and Brandon with this. Love you!

love.boxes said...

I will talk to you more in Sun Valley, but if you have Gloria on an HSA I would leave her there. It should have a catastrophic insurance component to it. Just make sure that you understand that your benefits are part of Brandon's compensation including those that you use. The insurance company is not just covering you to be nice either and costs that you use go back to your employer... something to be aware of.