None of the existing or proposed healthcare plans are actually free market systems; and none of the healthcare insurance proposals are free market systems. Contrary to popular opinion, government is involved in employer paid healthcare plans both through regulation and through subsidies to both employers and employees. With Obamacare, government involvement in individual healthcare insurance became the law of the land. Medicare, Medicaid, and Veterans healthcare were already the law of the land. Currently, government controls every aspect of healthcare. Nothing remotely resembling a healthcare free market exists in the United State of America.
A brief history of insurance provides context for this discussion. Marine insurance covering ships and cargo, one of the first types of insurance, appeared in the early 13th century. Originally, groups of marine shippers cooperated to underwrite, or insure, the ship owners in the group. By 1712, a group of about 150 shippers met at Edward Lloyd’s Coffee House in London to underwrite the groups shipping efforts. The first fire insurance predates marine insurance by about 100 years. While the predecessors of life insurance were offered in 1588, it took about 100 years for the first life insurance company to start the industry. By the middle of the 19th century, life tables were the basis of premiums, life insurance was offered as an employment benefit by a few companies, and companies started selling individual policies available to all who could buy them.
Healthcare insurance started as a means for employers to cover the costs of on-the-job injuries to their employees by about 1875. In the United States, the first employer paid healthcare insurance was for Texas teachers. Initially, individuals established and funded prepaid hospital accounts to cover major healthcare costs negotiated for the teachers. By 1929 the idea evolved into the first Blue Cross plan. The healthcare insurance industry grew rapidly immediately before and during WWII when the National wage freeze was enacted. Employers were allowed to offer healthcare insurance as an employee benefit to attract and keep employees. The employers were allowed to deduct to cost of the programs as an expense, and the cost of the benefit was not added to employee taxable income. These tax benefits are a government healthcare insurance subsidy or entitlement. Both employers and employees continue to benefit from this government entitlement.
Before healthcare insurance was available to the majority of the U S population, healthcare was practiced in a basically free market environment. Patients negotiated the cost of care with the doctor providing care on a case by case basis. Hospital and clinic costs were established, but patients could negotiate costs and or payment plans when they were not able to pay the costs when treatment was completed. Patients could easily determine all the costs for the doctor care, medications, supplies, and hospital or clinic. Patients could also learn about the quality of care provided by their physician and the hospital or clinic they used. This is a simplified description of a true healthcare free market. Nothing like this has been the general healthcare experience in the United States for at least 100-150 years.
Establishment of a true free market patient based healthcare insurance system would require drastic changes. The first and most critical change would be to provide individuals and families complete control over the choice of their healthcare insurance plan. This would require elimination of employer provided healthcare insurance as part of employee benefit plans. Consequently, all healthcare insurance would consist of individual and family healthcare insurance plans. To accomplish this, legislation must require that employer contributions for employee healthcare costs be added to employee gross income at the start of the program. This change in the healthcare insurance system would be an important first step in establishing strong patient doctor healthcare relationships and patient centered healthcare.
The second, and equally critical change in our healthcare system, would be a means of ensuring that the young and healthy contribute to the financial stability of healthcare insurance pools without imposing œmandated healthcare insurance. One idea to accomplish this is “The Healthcare Responsibility Act.”The idea is that every individual or family would be responsible to ensure that they have the ability to pay for all of their healthcare costs either with their personal assets, appropriate insurance, or a combination of the two. Enactment of a healthcare responsibility law like this would make every individual, family, or their estate legally liable for payment of their entire healthcare costs without bankruptcy relief. With severe consequences like this, people would be far less likely to avoid securing adequate healthcare financing or insurance. Finally, the linked discussion of healthcare responsibility ends with this statement, Every good and effective economic plan should consider all the alternatives, including the wild and crazy idea that everybody should be financially responsible for their healthcare and the healthcare of their family.
A third requirement or change necessary to ensure viable free market healthcare insurance would be the requirement that each provider attract a group of young, healthy clients consistent with the proportion of these clients in the general population. This should ensure that insurance providers would have adequate financial stability to provide unlimited healthcare coverage for life. Under this concept pre-existing conditions would not be an issue since the individual and family carry their healthcare insurance for life. The same continued insurance provisions required for employer based coverage existing now would continue for people changing from plan to plan under the new individual based system. Pre-existing conditions would not be an issue. Under this concept each healthcare insurance provider would be required to provide a range of catastrophic healthcare insurance plans and healthcare saving and investment accounts for this critical group of clients. The saving and investment accounts should require a minimum balance in each savings account, a top rated bond account segment with a required minimum account principle, and allow an account for more aggressive investing. This idea would allow individuals to grow their personal healthcare savings account quickly to the required level. This group would also be eligible for traditional healthcare insurance plans.
The fourth change necessary to establish a truly free market healthcare system would be abolishment of pricing contracts between service providers and healthcare insurance providers. This change would allow each individual or family to shop for providers based on the price and quality of healthcare services. This change would also result in real provider patient based care. Providers would have to publish the costs of their services for patients to compare with other providers. In addition, information regarding the quality of care provided by each practitioner, hospital, and clinic would have to be easily available to the general public. This concept would result in open competition for healthcare services creating true free market competition among providers. The result would be an overall reduction in the costs of healthcare. Two healthcare segments currently operate with a system of this nature, Lasik and cosmetic surgery although they are not insurance financed.
Replacement of employer based healthcare insurance with individual and family system and required personal financial responsibility for the cost of personal healthcare are unlikely changes to the healthcare system in the United States. It is my opinion, however, that without these changes nothing resembling a true œfree market healthcare insurance system is possible. These changes would be rejected by those on the left seeking single payer government healthcare who would also consider the harshness of the proposed personal responsibility as extreme and heartless. The healthcare insurance industry, physician groups, and conglomerate owners of hospitals and clinics would also be opposed to these ideas. Fiscal conservatives and other capitalists would probably applaud these ideas.
On the other hand, these changes could be a catylist for creation of a true œfree market healthcare insurance system. Other suggestions by conservatives for creation of a œfree market system could follow quite logically. High risk healthcare insurance pools should be an option if catastrophic plans do not provide adequate overall financing. Allowing interstate healthcare insurance markets to exist would increase competition and reduce insurance costs and possibly preclude the need for individual healthcare insurance purchasing pools. Allowing localized individual purchasing pools or cooperatives could provide for greater purchasing power if interstate plans do not adequately reduce costs. Perhaps the best application for creating pools of individuals would be to increase the purchasing power of the groups for prescription medications. However, taking advantage of insurance provider’s experience to negotiate prescription medication prices for their clients would be appropriate due to the large number of prescription medications and producers.
Three additional groups of healthcare clients must be discussed in relation to a true œfree market healthcare insurance system. The first group is senior citizens like me covered by Medicare. In my opinion, we should be included in the individual and family healthcare system being proposed. To be viable, current Medicare participants should be guaranteed that their premiums, co-pays, and deductibles would not increase. Since this system would increase the number of participants paying premiums in the individual healthcare insurance pool, it should increase the funding of the pools. Although seniors have high rates of catastrophic and chronic health issues, around $500,000 in my case, most of my friends and associates are relatively healthy. The actual cost benefit analysis of including this group in the general pool rather than a high risk pool would determine the feasibility of this idea.
The second remaining group deserving special consideration regarding formation of the proposed individual healthcare insurance system is veterans who fall into three distinct groups. The first group is veterans like me who are eligible for veteran’s medical benefits but never registered with the Veterans Administration. In my case, I had employer provided healthcare insurance for most of my adult life until becoming eligible for Medicare. The second group of veterans worthy of consideration for the proposed individual and family healthcare insurance system is veterans not suffering from injuries, illnesses, or conditions directly related to military service currently receiving their healthcare through the Veterans Administration. Moving this group into the proposed individual system would reduce the burden on the Veterans Administration healthcare system and increase the number of participants in the proposed individual healthcare system adding to the financial strength of the system. As with Medicare, this change in veteran’s healthcare must ensure that veterans do not pay any costs that they do not pay under the current Veterans Administration system. This change would also increase funding and personal available to care for the third group of veterans. Veterans who have documented conditions related to their military service. This would allow the Veterans Administration to concentrate on veterans with significant injuries or conditions requiring specialized treatment and care unique to combat and military service. These veterans deserve the best specialized healthcare available in the United States.
The final group to consider is individuals and families who require financial assistance to secure healthcare insurance. Most of these individuals are currently uninsured or are in the Medicaid system and receive government subsidies that pay most or all or their healthcare costs. This group should also be part of the proposed individual healthcare insurance system. Their premiums, co-pays, and deductibles should be subsidized at the level of their financial need without any increases in their present costs. This group, in accordance with their ability, should be required to enroll in the healthcare system or be held accountable for the cost of their healthcare even though government pays most of their costs when enrolled. Including this group in the individual healthcare insurance would also increase the size of the overall insurance pool providing a stronger financial base which should reduce overall participant costs.
Currently, most insurance is licensed and regulated state by state. States should have the latitude to develop their healthcare insurance system in accordance with the overall health of their population, cost of living, and economy. However, the system developed by each state must be compatible with the minimum national healthcare system requirements. The proposed system must require state to state healthcare insurance portability including pre-existing condition coverage guarantees and adequate cost information for participants to make informed decisions regarding interstate moves or transfers. Given these considerations, most of the systems detailed development and administration should occur at the state level, and most of the national funding should also be distributed to the states. This would allow states to adapt their systems to the needs of the citizens of each state.
Realizing how audacious it is for a young geezer like me to suggest a complete overhaul of healthcare in the United States of America, this œfree market healthcare insurance proposal is made without apology. Major changes to one sixth of our economy, affecting all of our citizens should consider all the alternatives. This proposal is an alternative to the mess of government control currently offered in Washington DC.
We the People need Washington DC to fix the system.
Just Geter Done Right.
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