The devastating effects of Health Reform are just becoming more and more clear. As companies are able to review how this will impact them, a very common theme is recurring again and again. Basically an Employer who is not offering health insurance to its employee (singular) will be fined $2,000 dollars per employee (singular).
Considering how most families (plural) are on a company’s insurance plan where they work, the likely cost to a company is far greater than $2,000 dollars. Let’s say a family of four gets their full insurance policy from an employer. If the cost of the premium is $3,000 per person, or $12,000 per family, companies will gladly opt out and pay the $2,000 dollar penalty, saving them $10,000.
Even if the cost to the company to insure the person is a mere $3,000 for an entire family it would still be cheaper to drop them and they save $1,000. Even better is that when they drop them, there are no preexisting conditions, and they must be accepted no matter what to an insurance plan. One more piece of evidence this will happen is that a family of four making less than $80,000 will get the insurance subsidized by the government if their employer doesn’t offer insurance.
I will predict that a cascade of employers dropping insurance plans will come. Look for the first few to do it and be crucified in the news, but after the initial stigma wears off, all the other companies will follow suit. It will be a matter of time, before there is no such thing as Employer Based Health Insurance.
The reason I say this may be a mixed blessing is in the worst way, it will make what I have been calling for come true. I didn’t realize it at the time, but it will end the employer based insurance coverage. This part is a good thing, but the way it is set up and the incentives used, is the worst way to get there. I have my own insurance, and plan on paying for it, because I am afraid of a mass exodus to sign up for individual plans. Companies may not be allowed to deny coverage, but as far as I see, the application period to get that coverage will be indefinite.
This new health care bill which has passed does not help reform any of the issues regarding cost. Though I am a Libertarian idealist, I can think of ways which provide state support for those who may need financial assistance. I understand in the ideal world, all government programs ultimately hurt individuals and I associate the programs that are intended to help those in need as reason those same people are in need. The reason is the cost. Government is a terrible system of allocating resources. Here is my Libertarian fix to this health care reform I hope those running for election in November will consider and try and implement.
The ultimate goal of any government program should be to lower the amount of individuals using assistance not grow it. With that goal in mind, first we need to look at where we are in order to create a plan of where we are going.
In scouring the internet to figure out the average cost of a Medicaid recipient since this is how the most of those not covered will be covered under this healthcare reform. This report gives us a quick idea of what the average cost per Medicaid recipient is. Keep in mind most doctors are now not even accepting new Medicaid patients even with the average cost being $10,918 per year in Arizona.
Rather than spending $10,918 per person on a plan that then requires the individual to not pay any money out of pocket, we can simply issue a voucher to that individual for that amount, deposited directly into an HSA. The Health Savings Account should be able to be used to pay any medical expenses including premiums as well as deductibles and medications. So now that we are depositing this money into a savings account, let’s now look at what a non government option would look like for individuals.
Using www.ehealthinsurance.com I simply did a quick look for insurance plans for someone who I consider expensive. So I could make this very difficult I used a female who is 55 years old living in Arizona. We can find the highest deductable where we can get the most bang for the buck if you will. This would be the United Health One Plan 100 policy. The choosing the highest deductible that this person could use the voucher with this plan makes the deductible $7,500 per year and has a monthly cost of only $156 dollars.. What this means is that after $7,500 is spent, the insurance company will pay for 100% of all medical expenses beyond that amount. This plan also covers prescription drugs in it as well. It would be important, that any money saved and not spent after one year from the HSA would be allowed to be withdrawn by the individual as earned income or rolled into an IRA. This way it is their money if they do not waste it rather than use it or lose it.
Ok so here is how it will work. Individual would be given the voucher for $10,918 instead of being forced to take an expensive government plan. This private insurance plan will only cost $1,872 per year. Subtract that cost from the voucher cost and the difference; $9,046 would be deposited into the individuals HSA.
Over the course of an entire year, under the policy above the most an individual could have to pay if they are sick would be the deductable of $7,500 leaving $1,546 left over to start since this is above what 100% coverage with all co-pays and deductable covered. I just saved America $1,546 per person already.
What is better about this plan is how it would empower individuals to save. The individual will be rewarded for living a healthy lifestyle. Those who smoke, eat unhealthy foods, and do not work out, are also those who need medical care more often. This means they will use their deductable money for health care. Those who live a healthier lifestyle will be rewarded financially. Consider if a married couple is actually healthy and just need their regular checkups. They may only spend $500 dollars for the year on medical expenses total. This would actually reward them for being healthy with over $15,000 dollars in additional income for the year.
Anyone wanting a free power chair will think twice about the cost since it will come out of their HSA savings and they will receive that much left in income at the end of the year. This plan would also lower lawsuit issues with doctors since individuals will decide for themselves if they should use their savings for medical tests. Doctors and patients will make decisions together rather than insurance companies or bureaucrats. If an individual decides not to get a treatment, they own that decision; therefore they will not likely sue the doctor since they made the decision themselves. This is who should decide if a service should be rendered or not.
In the bigger picture having a voucher will freeze the growth of medical costs. Clearly in this plan there is plenty of money to be saved. Giving the poor and needy vouchers rather than a plan they do not control savings leads to over use. They will think twice before going to an ER rather than waiting until the next morning to see their doctor. This will begin to turn this massive ship around. We need to control health care costs.
As a libertarian, I can support this because I have realized the transition is more important than an all or nothing battle. This model makes it easier to scale back the amount of subsidies i.e. vouchers are given based on need. If someone makes enough money, it would be reasonable to see the voucher amount decreased accordingly. The ultimate goal of this would be to get all individuals to the point of prosperity where they do not need subsidies. Attaching the welfare checks into the subsidies like this would be far more beneficial to society by rewarding healthy behavior.
This is a scalable plan that gets a handle on costs and will help unleash the free markets for health care. This will be good for individuals.
Matt
So health care reform has basically passed through the final turn and is making its way across the finish line. I have seen many sides to the debate and there are a few things I have observed. I watch those on the left asking why anyone could possible be opposed to this legislation? Here are the top 3 reasons this reform is so loved on the left. On the surface they all seem like good ideas, with the swipe of the magic legislative wand, all these issues will be fixed. Not really, here is why.
- No preexisting conditions.
- Coverage until age 26 on parents plan
- Prevents major price increases.
The three different issues that are being addressed are all intertwined. To keep this short and simple explaining number three, preventing major price increases is really just another way of saying price controls. The bottom lines with price controls are they create shortages. If insurance companies do not have any pricing power to bring in more money, they will not be able to pay more for needed services. This means rationing of care. It will happen; anyone can reason that if there isn’t enough money to pay for the expenses, limits on spending must happen. Who decides where money is better spent, that will now be someone in Washington. Good bad or ugly, without being able to raise premiums means there is not an unlimited supply of money for services. Prices will continue to shoot through the roof because of the crown jewel of this reform bill, preexisting conditions.
Our incredible intelligent law makers figured out they simply needed to write a law saying no more preexisting conditions, and that will solve all of our insurance problems as a nation. It all sounds great, why didn’t they do this a long time ago, because it just isn’t that simple. The reason it isn’t simple is because the mish mash of insurance companies and how we get coverage. Our current system is a patchwork of coverage inter tangled through ridiculous regulations.
Consider the first crazy way we get insurance…….. from our employer. It is ridiculous since if you lose or quit your job, you lose your insurance. Why would anyone purchase based on an employer? We do because of taxes and other regulations requiring companies to provide it. Next it is even more complicated with the ridiculous idea that we can’t shop across state lines. This means if your employer is in NY, then your insurance plan has to be purchased by your company in NY. If you live in a different office of the company located in a different state, you still have NY insurance. If you lose your job, by law you must give up your coverage since you are out of state and shopping across state lines is illegal.
The problem with a preexisting condition is when someone with it, has not been paying into an insurance pool. There are many reasons why this happens. Because most insurance policies are attached to the job, as soon as someone gets very sick, they will likely have to resign losing their current insurance policy, now with the new law, they will simply buy in to a new plan. The problem is that the old insurance company got all the profit while the new company will get all the expenses.
A likely outcome of this new law is the disappearance of individual policies. Why would an insurance company cover individuals now since the only people who will be seeking insurance not from an employer will be a sick person? With no fear of losing insurance from your employer, people will become sick and quit their job to take time off to focus on their health and becoming healthier, this sounds good, but will lead them to an individual policy. Again it will be a new policy that must cover them regardless of history or cost.
Eventually this will break down the system. Any smart insurance company will exit this dangerous pool of customers. That will start forcing over people to the state rolls. This will lead to a complete breakdown of the insurance industry, and eventually everyone will find themselves on a single payer insurance pool. That is the final outcome with regulations that are too onerous. It will distort the insurance market place until it breaks.
The final proof this new plan addresses none of the problems and leads to more of the above, being 26 and still needing to be on your mothers insurance. This is the case again because we have employer driven insurance coverage. If individuals bought their own insurance policy from the start, they would never need to be on moms insurance.
The reason this even needed to be included is because of how foolish our system is. A person has their family’s policy. The new health care reform will now force coverage on moms insurance until the age of 26 instead of just 18. That sounds great, but just pushes back the same problem; they will have to change insurance companies. It doesn’t address the real issue, the fact we change insurance companies way too much for easily fixed reasons.
This is my case for why health care reform will fail. It fails to address the fundamental issues plaguing our health care system. It will continue to raise the costs and will eventually run out of money.
Matt
http:.//talkofliberty.com
