Part III: The Cheapest Way To Guarantee Health Care for All Americans
How would you like to never worry about medical bills crippling you financially? Would you say that’s a good idea? And to do so 50% cheaper than insurance based plans?
Ann Coulter argued we could have “universal health care” with just “one trick”, namely to have a free market for health care insurance just like we have for car insurance. I suspect many conservatives think it might be that easy, but currently health care insurance is very different than car insurance. You don’t buy a car with insurance, for example. You buy with cash, mostly borrowed money paid with interest. Same with a home, by the way, a very expensive purchase. You don’t use insurance to fix the car just because it got old. And you know the price of the car BEFORE you buy it and can go on-line and find the average price of what people in your area are paying for that car.
In other words, for the auto industry we have the basic ingredients for a functioning market, price discovery and transparency, no 3rd party payer and available credit. With health insurance, you mostly have none of that. You don’t know the prices because the insurance company’s prices are secret. You can’t easily determine what they are, and you have little incentive to do so since you are relying on a 3rd party, the insurance company, to negotiate that for you, and the listed prices are wildly inconsistent with genuine market prices (what the insurance companies actually pay).
With health insurance, you are not buying health care direct. You are paying for an extremely inefficient and cumbersome system that doubles or more health care costs for everyone and just happens to pay some health care bills, and which does not guarantee your bills will be paid; nor affordable. For example, if you lose your job due to being sick, you may lose your insurance as you would then have to pay for it rather than your employer, and guess what? It’s kind of hard to pay an exhorbitant insurance premium when you lose your job. The Kaiser foundation claims the average annual premium for employer provided plans for a family in 2016 were a bit over $18,000.
Still feel safe having health insurance? Could you pay $18,000 a year to keep it after losing your job?
Parts I and II lay out how we’d restore price transparency and discovery as well as encouraging HSAs so people can pay cash. But how would the available credit part work? The Kaiser foundation in 2015 found that 9% of people don’t have insurance; 7% have non-group insurance, and 49% have employer provided insurance. The rest are on Medicaid, Medicare or some other public option. This plan targets the 15% either without insurance or the individual insurance market who are most likely to use Obamacare. It also is open to the 49% of those on employer provided plans but is completely voluntary. If employers and their employees are happy with their plans, they can keep them, or they could switch to HSA funding without insurance and access available credit if necessary.
If a person does not have insurance, nor sufficient funds, when they go to a provider, the provider would be allowed to bill the proposed government funded program the cash price, and the provider would be paid. That’s the cheapest way to do it since the cash price is the lowest one by law in my plan (See Part I). Providers would no longer have to try to collect from people or write off the losses and then charge higher prices for everyone else to make up the difference. This process should be quick and easy but monitored by someone like Visa or Mastercard for fraud. They are very good at that.
The customer would then receive a bill with a payment plan to pay it back at 8% interest. If the payment amount exceeds 10% of their income, they can simply pay 10% of their income, which is less than they would likely be paying in insurance premiums. Everyone is covered then and can access all the health care they need without anyone facing financial ruin and without using insurance at all. No complicated terms like coinsurance, varying deductibles, in-network versus out-network, etc, etc,….
Now, one might think it would cost too much but this is the cheapest way to provide for health care since the price paid is the lowest one by law. Moreover, it could even pay for itself depending on the pool of people who use the program. Many don’t buy insurance because they are healthy and young. Others have preexisting conditions and are priced out of the market. If only the very sick use the credit and they have bills so high 10% of their income won’t cover it, then of course there is a loss for the program.
But plenty of people who can pay back their medical bills with interest are likely to also use the program. Some consider those that don’t buy insurance as reckless, but with this program that’s a good thing. Because that will increase the number of people involved who actually can and will pay back their bills at 8% interest. If a young uninsured college grad is hospitalized with a 20k bill, chances are they can and will pay it back with interest over their lifetime, and that interest subsidizes those that cannot repay their bills just like insurance premiums subsidize those whose health care needs are greater than their premiums. And it’s all at the cheapest price by law.
Over time it might also encourage more people to save via a HSA rather than pay back their health care bills with after tax money at 8% interest.
Lastly, we are already subsidizing insurance premiums via Obamacare, and GOP plans do the same with refundable tax credits, and of course, those who use the emergency room for regular care and never pay just force the rest of us to make up for that via higher prices for everyone else.
This plan saves us all a ton of money and actually guarantees every American the health care they need without the risk of crippling anyone financially, whether one has insurance or not.
Isn’t that what we really want?