If you haven't heard the latest proposal for healthcare reform, I'd recommend you take notice. The requirement to BUY your individual healthcare from insurance companies is full of promises that this will deliver lower prices because of competition. The California Nurses Association has proposed a plan that essentially gives Medicare to all, even ILLEGAL AILENS! This would be an expensive entitlement that we would live to regret and it's a big spending plan with tax increases that will never get the support of the American people, or congress. In short, it's a FAIRY TALE. The AMA plan, which I use as a comparison in my own plan below (and also similar to the one endorsed by the California governor), mostly benefits insurance companies. In addition, it provides ZERO minimum insurance or provisions (maximum benefits payable), and no controls on what insurance companies can charge.
Many members of congress are so busy living off their expense account that they've lost track of what it cost to live in America, especially in coastal cities. So, before I present my Healthcare reform plan, I'd like to show you what purchasing individual insurance might look like for your family:
Imagine the disastrous economic impact if families were suddenly REQUIRED by federal mandate to spend $700, $800, $900 or more per month to purchase health insurance. And NOBODY is talking about giving subsidies to people in this income level, NOBODY.
I call MY Proposal CARE, NOT COVERAGE
AND I BELIVE IT'S THE BEST CHANCE HEALTHCARE REFORM!
There are nearly 50 million without health insurance coverage. These uninsured generally do not receive basic preventive care because of cost concerns and end up seeking non-emergency treatment in an emergency room, or waiting until medical conditions deteriorate to an emergency situation and the burden of more expense treatments fall on hospitals and taxpayers.
AMA Proposed Solution
Require "those who can afford it" to buy insurance.
Age 18 and under – 11.2% of the uninsured. Children are reliant on an adult parent or guardian to ensure coverage according to AMA plan mandate.
Age 18-24 – 30.6% of the uninsured. Young, generally healthy population, not generally responsible enough to be relied upon to comply with this mandate when they wish to spend their money elsewhere. No penalty for non-compliance will solidify a minimal consistent participation.
Age 25-34 – 26.4% of the uninsured. Period where other family responsibilities such as marriage, starting a family, re-paying student loans, buying a home will place significant pressure on incomes. Generally healthy age group will not feel life pressure to prioritize compliance with this mandate in comparison to other more immediate life needs and desires.
Age 35-44 – 18.4% of the uninsured. This is the age group where common middle age ailments (high blood pressure, diabetes etc) will begin to set in creating higher insurance premiums. This is the group most motivated to comply with the mandate and they will be higher risk than the preceding age categories, increasing the cost for ALL those who chose to comply. Financial difficulty can be expected as families are expected to make premium payments of up to 50% of their disposable income (net of rent/mortgage) while attempting to 1) Save for increasing college costs 2) Save for retirement 3) Accommodate divorce/blended families, child support and alimony.
Low compliance among the 18-24 and 25-34 categories will create catastrophic cost burden for this group making common missed premium payments and lapsed coverage likely and common resulting in excessive litigation over cancelled policies when members fall ill.
Age 45-64 – 18.4% of the uninsured. This group will meet many of the same is the age group where common middle age ailments (high blood pressure, diabetes etc) will begin to set in creating higher insurance premiums. This is the group most motivated to comply with the mandate and they will be higher risk than the preceding age
Age 65+ - 1.6% of the uninsured. This small group has EVERY incentive to be insured and lack of insurance is most likely a lack of ability to obtain or remotely afford insurance. They should be incorporated into our current Medicare plan.
AMA Plan flaws
The reason I focus on this plan is because it provides a very detailed roadmap of the "tax credit" system that is gain more and more bi-partisan support among lawmakers.
The AMA plan to disrupt the tax treatment of the coverage of 250 million Americans to accommodate 47 million is well meaning but overkill. My experience working with employer sponsored plans suggest that Americans will be confused, not empowered by a smorgasbord of health plans from which they will be required to choose (especially when taking into account the growing immigrant population who count high numbers of uninsured amongst their ranks). This proposal will also result in either a huge burden to employers in providing communication to educate employees about their choices, or a huge new government bureaucracy to do the same.
In addition, if employers will be expected to handle payroll deductions for dozens (if not multiple dozens) of health plans and the resulting group premium billing, reconciliation and payment to vendors, it will require MASSIVE Human Resources Information Systems (HRIS) and Payroll Systems reprogramming as well as additional staff to manage eligibility reporting for employee choices.
The AMA Plan assumes that a tax credit/voucher system would INCENT families to purchase insurance, but I believe this is a false assumption. Families already have an overwhelming incentive to purchase health insurance; it's the love, care and concern of their family members, however, if the tax credit doesn't equal or exceed the cost of insurance, there is no further incentive for healthy individuals.
Instead of focusing on facilitating market innovation in healthcare, the AMA should focus on setting guidelines and education regarding the most successful preventative care regime and treatments. I reject the AMA assertion that they should design a voucher or tax credit system to "control" the way in which consumers use, or as they call it, "overuse" healthcare services. Not only is there little likelihood of this becoming a widespread problem, it creates problems of interpretation of "overuse" of the patients who face the more complex medical situations. This is something that should be managed at the physician patient level. In my reform proposal, it is clear why this provision is unnecessary.
AMA Plan fails acknowledgment or plan for addressing the SIGNIFICANT cost of living differences from state to state. For example, residents of states such as Southern and Northern California, New York, Miami and other high COLA area are currently SEVERLY HANDICAPPED by 401k limits because there is no accounting for an attempt to retire in the area where one has lived their life, and where they may have children or grandchildren they wish to stay near. Simply put, too many in government are out of touch with what is middle class. For example with more and more people having to save for their own retirement (with pensions all but disappeared in the private sector, college tuition skyrocketing and private school tuition due to poor public school performance and overcrowding. Demands on the middle class are more than ever and ever increasing, while federal adjustments continue to track a COLA that doesn't reflect the burden the middle class take on to remain so and provide it to their children.
Community ratings will predictability result in poor and minorities Americans paying higher premiums, not unlike auto insurance.
Provides THE EXACT same tax benefits to corporations for offering health coverage to employees, while potentially taking some or all of that benefit away from middle and upper middle class families. That just what America is tired of.
The AMA's proposal to implement incrementally requires a HUGE increase in spending first to provide tax credits to the low income. Right now, the US can't afford that, the middle class (who will NO DOUBT pay that tab) can't afford it and America will not trust Congress to follow through. They're rightfully afraid of simply getting stuck with another low income entitlement/welfare that never reaps the promised dividends of lower cost and better choice and coverage for all. Get it wrong, and you further divide the country and hurt chances of getting another chance. Remember during Bill Clinton's first term as president? He appointed Hillary to present a proposal that Americans OVERWHELMINGLY rejected and look how long it's taken us to get back to this issue. We can't afford to let this happen again.
MY HEALTHCARE REFORM PROPOSAL
A comprehensive proposal like what is presented by the AMA, is courageous. I applaud their attempt to take on this complicated issue, however, as much as Americans want healthcare reform, a proposal that calls for 1) Redistribution of wealth (in "reallocating the current tax subsidy for employer sponsored benefits) and 2) Upsetting the coverage for 80-85% of Americans to fix it for 15-20% will not pass muster with the American people. It's time to get realistic in proposing Health care reform that begins to provide coverage for the uninsured while allowing the insured to gradually review their options as they face being uninsured, for example, during periods of unemployment and when venturing into self employment. As mentioned above, it is not enough to provide incentive for health plan purchase, the incentive naturally exist. Advancing tax credits will result in huge government bureaucracy, lapses in coverage when making premium payments are a financial burden, and most importantly, puts the HEAVIEST burden on America's middle class once again. Worst of all, it's sets up the healthcare industry to become the next oil industry, with politicians promising and consumers hoping and praying that competition will create lower cost only to find twenty or thirty years down the line that healthcare companies are banking record breaking profits and Americans are stuck paying whatever is demanded by what is only a handful of giant, multinational insurers demand after one small insurer after another is bankrupted and bought out after a few very sick members that they are forced to renew. This AMA plan contains no provisions to protect consumers from the type of cost run away that we have seen in the oil and drug markets.
While the AMA proposes "tax consequences" for non-compliance, the enforcement would be reduced to battle with individual who fall ill between coverage (such as during a job switch). Not to mention, a tax consequence of a few thousand dollars is really not meaningful to someone who left tax payers with a $500,000 tab because they fell ill, while uninsured.
CARE, NOT COVERAGE
First and foremost, my proposal LEAVES ALONE the current, employer sponsored healthcare system for employers who choose to keep it. This lack of requirement to burden employers with MASSIVE restructuring of their health plan delivery system will garner important support from corporate interest for healthcare reform and will not threaten a currently fragile employment market.
Because conventional wisdom is that the insured (through individual and group plans) pay the cost of the uninsured because the ultimate healthcare they receive is the most expensive and inefficient method of treatment. We can immediately begin to curtail this by MANDATING preventive care, INSTEAD of health coverage. We should select any number of access points where in individual must demonstrate proof of having had a routine physical before they can access certain rights and benefits, not unlike schools require proof of immunization prior to enrollment. This proof should be required prior to:
Enrollment in school
Starting a new job – the employer will NOT receive any information regarding the health of a new employee, simply that they have had a routine physical exam within the last 12 months (or at the interval recommended by the AMA). An employee who has not, can be sent for such an exam before being allowed to start work and low or no cost services can be available for those who have no coverage and cannot afford it.
Both group and individual plans will be required to cover the cost of a routine physical exam, a virtual non-burden on plan since the lion share of plans already offer such coverage.
Drivers License Renewal
States (or at the federal level) can set additional points at which evidence of routine care must be provided to ensure that issues are treated early, and not when emergent, however in no case will health information be shared among agencies above and beyond a confirmation of having received preventive care.
For those who will object based on religious grounds, these people should also object to emergency care and thus should not present a burden to the system.
The above will address a significant portion of the problem by steadily beginning to decrease cost associated with unnecessary emergency care. However, the cost of covering treatment of those conditions discovered from mandatory preventative screening must be addressed. I propose that instead of requiring the purchase of health INSURANCE, there will be a requirement of each individual to provide minimum funding to an INDIVIDUAL Health Savings Account.
The amount of the mandatory contribution to Individual HSA's would be determined by insurance Actuaries and adjusted annually (or as necessary) based on a individuals age, family structure, declared deductible and other factors deemed appropriate. Low income individuals will receive tax credits /subsidies based on a formula that combines the federal poverty level with adjusted regional COLA's determined at the state level. Employed individuals will be required to make HAS contributions through mandatory payroll deductions like social security and transmitted to individual accounts (like 401k monies, with the vendor of the employers' choice), but these monies must be permanently protected from being comingled in a national group trust like the Social Security fund.
Individual Health Savings Account (HSA) underfunding will be adjusted annually through income tax process for employed (W2) individuals as well as sole-proprietors (1099) and partnerships.
Individuals covered under employer group plans can voluntarily contribute to Individual HSA and tax will be deferred on the contributions. If voluntary contributions are used to pay for health care cost, there will be not tax, however withdrawals for other purposes will be taxed, but without penalties and once a minimum funding level is reached, they my chose to waive coverage in the employer sponsored health plan and have the FULL EMPLOYER PREMIUM contributed to their Individual HSA, or a percentage of the EMPLOYER PREMIUM with the balance going to the purchase of a stop loss policy, however an employer or employer sponsored health plan my require waiting until Open Enrollment AND Evidence of Insurability before allowing the employee to return to the insured group health plan.
Employees, whose healthcare expenses are paid through a Health Savings account will, along with their physician, determine the course of treatment for injury or illness with the freedom and flexibility enjoyed currently in Health Care Flexible Spending Accounts. Physicians and insurers will be required to disclose the Reasonable and Customary fees for services and employees can negotiate in addition to insurance carriers being allowed to extend the negotiated discount to their HSA members who use the physician in their network. This will eliminate the conflicts over what is and isn't covered. Americans will no longer be slave to the treatment that is covered under the health plan they happen to be covered under today. Education should be ongoing through public service announcements, employer cooperation and insurance companies and finally, Americans will begin to learn how to be smart consumers of healthcare treatments and care can be decided based on the sound medical collaboration between physician and patient and not based on what non-medical administrators determine is most "fiscally sound and appropriate".
Employers will be required to allow former employees to have their HSA administered through the companies selected vendor until such time as they have another place to "roll" the funds, however, the employer will NOT be required to pay administrative fees for such employers (if applicable) and payment for health services will not be required beyond the balance of the account.
Insurers will be allowed to develop credit standards and extend loans to HSA members to cover certain treatments which have a degree of urgency and when HSA balances are insufficient, but these loan programs should be at the discretion of the insurer and the capability should be reviewed after approximately 10 years, after the average American has sufficient balances to cover their needed health care.
The Government should setup a pool to provide advance HSA loans to cover urgently needed treatment for those who may not meet the credit standards of the insurance companies. The insurance of payback will be secured the same as adjustments for underfunding of HSA.
Our current Medicaid program should be continued at the present time, incorporating the reforms that best compliment the "CARE, NOT COVERAGE" program proposed herein. Individuals and/or Families who are seriously and/or chronically underfunded in their HSA should be subject to automatic review to determine if they are Medicaid Eligible.
PAYING FOR THE HEALTH CARE SUBSIDIES FOR THOSE WITH LOW INCOME
The US will fund the tax credits for to help fund HSA's for the low income through the savings realized from requiring preventative care. If our current assumptions are correct regarding the role preventative care plays in determining health care costs, then this should be a certainty. Over time, the unintended benefits is that large HSA's build up over time, will serve to fortify our current Medicare by either
Requiring HSA to be exhausted before Medicare is payable or
Allowing Medicare to continue to pay as it does today, but allowing an Individuals HSA to
Partially reimburse Medicare before being paid to a beneficiary upon the individuals death or
Paying the HAS balance to a beneficiary upon an individual's death, subject to income tax if that individual does not place the money in their own HAS.
THE INEVITABLE POLITICAL SIDE
It is quite unpalatable to have to include this paragraph, however the current proposals I have heard and read, scream of a political deal with big insurance companies to protect their interest in the healthcare market. Whether this is the case or not, I understand the protection to the economy by not implementing health care reform that destroys our current insurance company structure and puts thousands out of jobs is important. To provide a commitment that the insurance industry will benefit from certain interest payments and administrative fees (on group plans) by maintaining HSA trust and through interest on HSA advances will meet this objective and balance the need to service the American people FIRST, then provide protection and growth opportunity to corporations.
I welcome your feedback, questions and clarifications to my plan and hope that you will be willing to allow me a forum to discuss this plan in hopes of gaining public support for "CARE, NOT COVERAGE" Reform.
