Non-Government Solutions to Healthcare: Possible?

Just a little while ago, a friend of mine posted a new blog entry on his Geeky Political Musings site that threw out some free-market solutions for reforming our health care system in this country. Currently, as you know, the President and Congress have their own idea(s) about how this should be done and have crafted nearly 2000 pages of legislation in order to handle the reform. I'm with most Americans in that I want reform, but not that kind of reform.

Here's his post, "Geeky Political Musings: We can't do ObamaCare, but we SHOULD do something", but I'll take each one of his ideas and offer my thoughts on them below, and then follow up with some other ideas I have or have heard. I am not necessarily in total favor of any of them, and no one idea will be the end-all be-all solution. My goal here is to take these ideas, allow them to be critiqued in the open, and refine them into potential solutions that could be enacted in the ultimate goal of reform. Let's not mince words here: ALL AMERICANS should want their fellow Americans to enjoy the best health they can. NO AMERICAN wants their fellow American to go without proper health treatment or to have to make a decision like, "Should I get this test done or should I eat next week?" So if we all have those basic underlying goals, and we can come up with ways that the free-market can solve the problems without excessive government intervention, then why shouldn't we investigate their soundness?

Ok, here are his proposals:

Remove the restrictions on health care insurers that prevent them from selling out of state policies. This has been touted by many, and should lead to more competition, and the ability for people to purchase health care from many other sources.

I think this is an excellent proposal. There are many examples of people that live practically next to each other, but in different states, that have to pay drastically different health insurance premiums. Why is that? It's because there is no competition between the two states' insurance providers. Think about it: if neighbor A in New York could purchase the same insurance as neighbor B in Connecticut, the insurance providers in New York would necessarily have to reduce their premiums to remain competitive. This, as Tim said, is just common sense. Incidentally, this is how it works for automobile insurance, and it works quite well.

Stop insurers from denying people based on pre-existing conditions. However, this is a two-way street. Why did the original insurance carrier all of a sudden dump someone who was in dire need of care? If they dumped them because of their condition, the should be liable to pay a premium to their new carrier. Too many people have paid long and hard into insurance policies only to have the rug yanked out from underneath them as they developed a life threatening condition.

On this one we differ a bit, but by his own admittance he's unformfortable with his own idea as well. For me, I'm uncomfortable forcing a private business to cover someone they would not ordinarily cover. However, I'm OK with them coming up with their own plans to spread the liability among those with conditions, thus allowing them to cover those people with minimum risk to the company. Look, they know that they will lose money on someone with a pre-existing condition, and in the end they are running a business. If you're against paying for those people as a taxpayer then you should be against forcing a business to pay for them. Without creative solutions in the insurance company (which they are capable of making on their own), every other 'well' customer is going to be impacted by every 'known-unwell' customer.

Tim brings up an obvious problem with how health insurance is handled today - if a person was to develop a condition during the year, then when they renew their insurance at the end of the year, their rates would either skyrocket or they would just be refused coverage. This is unfortunate and is a side-effect of how the system is structured. I think that a simple tweak to the structure would help in this, and is already used successfully in life insurance. Why don't they just make the terms longer? Think about it - if you buy a 20 year term life insurance plan, but then take up smoking or drinking, enter a high-risk line of work, or any other number of factors that would necessarily increase your rates at that point, it doesn't matter because you're locked in to set rates for a period of time. I think the same thing could work for health insurance. I will say that one key difference between life and health insurance is that your need for life insurance typically goes down as you age (since your debt typically goes down), but your need for health insurance typically goes up. This is where something like catastrophic insurance would come in (more on that later).

Tort reform. Yes, some lawsuits are legitimate. However many are not. Our doctors and hospitals are drowning in the costs of their own insurance protecting against lawsuits. We need to punish those who are in the practice of frivolous lawsuits.

I agree with this, and its unfortunate that there is no mention of tort reform in any of the legislation being proposed today. It is ESSENTIAL to put as many barriers as possible to frivolous lawsuits in place in order to reduce the fear doctors have of being sued. The result is that they have to pay loads of money in liability insurance, they overprescribe medication and tests 'just to be safe', and scumbags work the system because they know that the doctor's insurance will pay out rather than fight the suit since it's cheaper.

I think a simple solution here would be to simply make the loser pay. If the loser was going to pay all court costs for the winner, then the insurance company has a reason to fight a frivolous charge if they feel the doctor is in the right. If they win, the loser will pay their court costs and they are out no money. If they lose, then at least the judge or jury felt they were in the wrong. Everybody wins (except scumbags). Scumbags would be less eager to sue if they knew the insurance company had an incentive to fight back.

Tax breaks for employers based upon the total number of employees they employ that are also insured.This could be percentage based. I believe this would not only help employers give employees insurance, but may help them hire more workers.

Technically, this is already done. Health insurance benefits that come from your employer are not taxable.

Employers should be liable to carry a persons insurance exactly the same as it was during their employ for a prorated amount of time, or until they find a new job if that employee is laid off. For each year of employ the employer should be responsible to carry that persons insurance for 1 month. Fully covered by the employer. This cost will be offset by tax breaks. This should help people who get laid off until they can get back on their feet. If the employee finds a new job with health care then the employer can at that time cancel the coverage.

These might be nice steps, but I prefer a different tack. I would like employers to remove health insurance as a benefit altogether. I would prefer the employer to take the money they are paying for your health insurance and instead just increase your pay by that amount. They only gain by this by reducing paperwork on their end and hassle in dealing with a group provider, and the burden is placed on you to find the best health care plan for your family or place in life, which is where it should be. How many employees are trapped by their employer offered healthcare that may not offer the benefits they want/need?

Now, in addition to my comments on Tim's suggestions, I have some others that I've either come up with or have heard others mention.

• Health insurance is (or should be) a very customized thing. When you open a program to any number of people that have any number of conditions or end up getting into any number of situations requiring healthcare, you necessarily reduce the effectiveness for each person that does not have the condition or does not get into a situation. What if there was an insurance plan out there that offered some basic plans, but you could add certain benefits a la carte? Say you have a child with speech problems; why not add the Speech Therapy package? What if you have asthma? Better add the Respiratory Illness package.



• How about a plan similar to automobile insurance? You pay a little each month and you have to weigh each time you ding your car if you want to get it fixed for free (and have your rates rise) or deal with it (and your rates remain the same). That puts the power of decision in your hands, requiring you to be responsible for yourself. People don't typically drive their car recklessly unless they're OK with not getting it fixed. People DO live recklessly (unhealthy diet, no exercise), and most are secure in the knowledge that their health insurance will cover them if something turns up bad.
  
  One of the things I don't like about how we purchase health insurance is that we essentially are pre-purchasing healthcare. It's not solely 'insurance' that we rely on in cases of tragedy, but instead it's a bucket that we routinely put money in so that we don't have to pull money out when we go to the doctor. When you go to the doctor and they say, "You should probably run these tests," (probably because they don't want to get sued) you don't hesitate because it's not coming out of your pocket. The doctor knows it and in everybody's mind, nobody gets hurt. The doctor is safer from prosecution, the insurance company is making loads already off of you and others, and you get 'free' healthcare. Technically you've already paid, but the direct association is lost, so you don't care.
  
  Here's an experiment for you: next time you go to a doctor, tell them you're paying in cash. I guarantee you they will offer the same services to you at a cheaper rate than they would bill your insurance provider. It might still be a large sum, but it will be FAR cheaper than your insurance is charged. It will also be cheaper than they would end up receiving from your insurance provider in the end. When a doctor accepts cash from you, that removes so many headaches from their billing department that the lost hassle more than makes up for the lost revenue. Many doctors are switching to 'private-pay' (i.e. cash) only for this very reason.



• A doctor in New York has a few practices open across his area and in all of them they offer a healthcare plan that is truly unique. It costs $79 per month (think: gym membership) and patients can come in at any time. They do pay a modest visit charge per visit, but other than that, their healthcare is free. It's not just visits that are free, but also basic tests and preventative care as well. His business is flourishing and patients love the system. If such a system were employed nationwide by many doctors, and the patients secured catastrophic insurance to cover major illnesses/tragedies, then they could rest easy knowing they were covered.



• I heard this one on the radio the other day, and it seems very reasonable. How about offering tax deductions for doctors that treat unable-to-pay patients? If a patient comes in and needs care, the doctor can elect to charge cash, charge insurance, or do the service(s) for free. If they do so for free, they can deduct what they would have charged in cash. This would free up people from worrying about having enough money to see a doctor, and it would probably encourage doctors to shift to a more 'non-profit' role. This would, in turn, put pressure on insurance companies to act fast in order to increase their usefulness. This, in turn, would probably open more doors for people to get covered, which would in turn cause more doctors and patients to utilize their service, and...well, that's the free market at work, baby.



• I also like Health Savings Accounts (HSAs). These are essentially a savings account that you can direct payroll funds into in order to have a stash of money specifically keyed for paying your health expenses. You will typically utilize very little of this when you're young, and will need more as you age. Likewise, you will earn more as you age and thus contribute more. On top of this, it will have been earning interest your entire life. Anybody who has even remedial knowledge of how compounding interest works can immediately see the potential benefits of such a plan. Their obvious problem is that they are effectively closed to non-income or even low-income people, but using components of some of the other proposals mentioned above would help there. As I said in the beginning, there is no one solution for everyone, which is yet another reason why a universal health care plan can't work; at least not fairly or efficiently.

President Obama mentioned a story a few weeks ago during a press conference. He said, "This is about the middle-class college graduate from Maryland whose health insurance expired when he changed jobs, and woke up from the emergency surgery that he required with $10,000 worth of debt." Sounds like a sad story, doesn't it? It should, because it is. But let's look at this scenario: the man is in between jobs and is not covered. He has an emergency and ends up owing $10,000. So?!? HE'S ALIVE. I guarantee you that if he were to have been asked on the operating table, "Look, son, I am 100% sure you will die if we don't operate, but because you're uninsured, you'll owe the hospital $10,000. Your call.", he would have ABSOLUTELY said to go ahead. Who wouldn't?!? He's not going to say, "Uh, gee...well, I wanted to really get a new apartment next month, and I've been checking out this sweet car down at the lot for the past week. Hmm..." NO! So he owes $10,000? Does that suck? Yes! Do sucky things happen to otherwise non-sucky people? Yes! Should every other sucky and non-sucky person have to foot the bill for every sucky thing that happens to someone else? Your call.

Look, I know there are free-market solutions to our health care problems. I know we can find a way to help everyone out that wants to help themselves. I know that we don't (and shouldn't) have to depend on the government to solve our problems for us.

I'll leave you with one final thought. Yesterday, in a town hall meeting, President Obama himself released the single most damaging statement against a direct government involvement in healthcare (like a public option). When defending against a common attack that a government option would eventually crowd out and eliminate private insurance, he said, "My answer is that if the private insurance companies are providing a good bargain, and if the public option has to be self-sustaining…then I think private insurers should be able to compete. They do it all the time. I mean, if you think about it, UPS and FedEx are doing just fine, right? No, they are. It's the Post Office that's always having problems."

Wow. So the two possible scenarios here are 1) it's like every other government program ever enacted and offers no substantial competition to private insurance because it's ineptly run and managed and consistently is over-budget, or 2) it's very successful and effective as designed, so private insurance goes the way of the dodo.

Sign me up.