Healthcare is a large complex issue that too many politicians try to encapsulate into one all-inclusive solution.  Here we will deal first with the funding of health and the topic of containing costs later.

The Funding of Healthcare

Healthcare is a large complex issue that too many politicians try to encapsulate into one all-inclusive solution.  Here we will deal first with the funding of health and the topic of containing costs later.  Our current system of healthcare funding is a result of government manipulation.  During World War II, the government artificially froze wages.  Industry, in an attempt to attract talent during a difficult time, offered benefits in lieu of wage increases; transforming healthcare from a personal to a corporate responsibility.  This needs undone.

Healthcare, the selection and purchase should be a personal choice not a corporate decision.  Companies and unions obtain purchasing power through the massing of lives.  These entities also are able to manage costs by spreading risk across several lives.  Healthcare is not a service where quantity drives down costs; instead healthcare is personal and individualized.  Discounting this cost shifting between the powerful and the weak.  This needs to end.

The best way to minimize the cost of healthcare in any given year is to spread the cost over a life. Likewise, risk can best be minimized by spreading it across a large group such as a country.  Private insurers try to minimize their risk by managing down their exposure.  The industry has evolved that risk pools are small often state-by-state and recovery are short usually a year.  This environment makes insurance expensive.

Here is an opportunity for government to assist the free market, in part; thru reversing the damage it’s imposed by creating a national market with consistent laws, standards and expectations and in part by creating time horizons sufficient to recover costs at a reasonable rate.  Something the market alone cannot achieve.  Today, included in our premiums are discounts given to large groups including the federal government, coverage for indigent, uninsured and underinsured.  In order to keep healthcare costs reasonable and equitably priced, we need to spread the cost and risk as broadly as possible.

Establishing a public-private partnership is a reasonable solution.  In order to manage the catastrophic costs the government with industry could develop a joint venture entity.  The entity would be charged with managing risk and cost in excess of … $250,000 … for example.  Medical coverage below $250,000 would be managed in priced by private insurance the insurance premium a consumer would purchase would be comprised of catastrophic coverage and customized medical coverage.  No medical insurance could be marketed as medical insurance without catastrophic coverage.  Catastrophic coverage would be managed and priced through the joint venture but administered through private insurance.

The entity, in an attempt to manage down catastrophic illness, could logically offer discounts for healthy lifestyle practices such as healthy weight, substance free and tobacco free lifestyles.  Those not qualify for initial discounts could still receive reduced rates, if under care of a physician.   To obtain the discount, individuals would have to have an annual physical.

To encourage participation in medical coverage some protections should be strengthened.  For those people covered by insurance, once their deductible or copayments are met.  Their financial responsibility is over.  Practices, such as balance billing seize.  In order to obtain the financial protection, insurance coverage must be constant in uninterrupted.  If there is a break in coverage financial protection could take several years of consistent coverage to be reestablished.  Personal financial responsibility for medical costs should be strengthened for those not choosing coverage.

To obtain the lowest premium, costs and coverage needs to be maintained without interruption.  Over a person’s life, statistically in America, they will incur $X dollars in medical costs.  Over a person’s life, this cost needs to be recovered.  The cost is most affordable, is spread out over an entire life.  If there is a break in service, the total cost still needs to be recovered over the balance of one’s life.  Too much of a lapse in coverage, could result in significantly escalated premiums.  In addition, to escalated premiums.  Those not opting to purchase coverage would be exposed to greater personal financial responsibility.

Healthcare has been an obligation of corporations and government not individuals for far too long.  Healthcare is very individualistic and personal.  And the acquisition there of … should only be done by the individual.  Companies, unions and governments; all of whom look to leverage volume to obtain discounts … in an industry where discounting can not occurred due to efficiency but solely due to cost shifting from the strong to the weak, should be abolished.   We would still expect our employers to continue to contribute to healthcare costs, just not purchase it.

Increasing the protection of medical subsidies provided by employers should be closely considered.  Making them virtually impossible to attach.  Individuals acquiring healthcare could select products that meet their personal needs.  As the industry morphs to address individual needs versus big buyers, the requirement to manage costs with service will drive cost-containment.

The joint venture should create an in transit product that could be purchased for brief periods of low cost to bridge periods of transition and avoid premium escalation due to breaches in coverage.  States could determine the degree of subsidy they would offer during periods of transition.  Likewise, the state could determine the level of subsidy to be offered to those in need as they work to pull themselves to a state of self-reliance.  Care providers could expect even demand coverage before providing service.  If it is the intent to make coverage affordable of all then demanding coverage is only a reasonable expectation from responsible citizens.

Finally the price of care must be universal.  We would not tolerate charging different rates to different consumers at a retail store nor should we tolerate this practice by the medical industry…  one rate for the service, regardless of the consumer.  This would allow consumers to shop and competition to flourish especially if cost-sharing and savings are involved.

Creating an environment where free-market principles thrive will always produce a more responsive, cost-effective solution.  However, you must create the environment first before you can reap the rewards.

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