During World War II, healthcare shifted from an individual responsibility to a right. This is an inadvertent by-product of government price controls, requiring companies to find other ways to attract talent other than increased wages. Because employers could not pay more, they offered “free” healthcare as a form of compensation. This changed the market, from a consumer market to third party payer, in the case of many citizens, the employer decides what insurance is good for their employees. In the case of the poor, the government decides what coverage is appropriate. Regardless of how healthcare is purchased today, it is no longer a consumer purchase. Change it.
On the lower end of the employment ladder, both employees and employers have shirked their moral responsibility and look to someone else to bear the burden. From an employee perspective, they expect the employer to provide the care. Employers need not offer additional compensation (which is what healthcare is) to attract unskilled labor. More skilled employees are not more responsible just higher compensated. Skilled employees still have their compensation modified and reduced as employers try to manage cost and benefits.
Solution: return healthcare back to individual responsibility.
Step1: Increase minimum wage by $4.00, through a distribution of income and benefits as described below.
- $2.00 per hour will be deposited into employee healthcare account. This is a minimum that needs deposited. Employers may deposit more funds up to a max.
- Individuals working full time would earn over 4K to purchase healthcare. A family with two working adults would have over 8K to purchase healthcare from the employer.
- Individual would use insurance funds to purchase major medical coverage and customized private insurance to provide desired coverage.
- Short fall in employer provided coverage could be subsidized be personal funds.
- Should there be excess funds after coverage is purchased, surplus funds would be returned to the employee.
- Insurance funds would be swept for individuals who do not purchase any insurance and major medical would be provided regardless of contribution.
- $.50 per hour for retirement saving. Although this article is targeted at solving healthcare, segregating compensation for specific purposes is a unique concept. Not a tax but also not total liberty. Retirement system of today will need to morph from a state retirement age of 65 to something closer to mortality index retirement. The forced saving could help bridge desired retirement (65?) and state supported retirement.
- $1.50 per hour could be used to increase minimum wage, phased in based on congressional timing.
Step2: State would provide insurer of last resort.
- Some illnesses are inappropriate for the market to bear.
- Major Medical risk should be spread over a lifetime. Only the State has a sufficient timeline to reasonably manage risk. Medicare cost are high because risk is spread in a compressed period.
- State would create a high deductible limited major medical policy. This would be the default policy. Major medical coverage may be outsourced by the State.
- Because the Major Medical risk would be minimized by a high deductible, large pool and extended time frame, its cost should be minimized.
- Tax subsidies would be considered to cover extreme medical cases not appropriate for insurance (even major medical) but consistent with our compassion.
- Free market would provide “gap” insurance covering an array of services far beyond major medical scope.
Step3: Healthcare providers
- Truth in pricing: Healthcare providers would be required to sell services at one price regardless of the individual/insurance company purchasing services
- Provider (doctors) would provide complete service cost. Cost included would be hospital, operating room, anesthesiologist, support services and testing costs. Service providers, doctors are in the best position to negotiate with hospital etc. quality services at reduced pricing. Individuals are the wrong consumers of advance medical services. They pick the doctor.
- Transform medical liability. Eliminate compensatory damages except in extreme cases but include lifelong care if necessary. Also, include increased criminal and license revocation for marginal providers
Step4: Market Insurers
- Create a national market not a state market for medical insurance.
- Make purchase of insurance illegal by third parties (companies) on the behalf of employees and individuals, thus transforming the insurance market from a corporate market to an individual market. This should be done gradually.
- Encourage employers to provide generous tax free insurance retirement benefits.
- Shift obligation from a corporate to a funded individual responsibility.
If individuals can afford insurance and are compensated by employers instead of looking to the State, low income families could be empowered. Healthcare insurance is a form of compensation not a corporate entitlement. High value employees should have the same responsibility and flexibility we expect and demand of lower income earners.