January 27, 2010

Health Care | A Simple Solution For Congress To Consider

Tucker Hart Adams was the chief economist for US Bank. She was also once the chief economist for United Banks of Colorado. She is president of a prestigious economic consulting firm and she serves on several boards and is active with numerous professional and community organizations. I had an opportunity to hear Ms. Adams speak at a lunch I attended a few weeks ago. She is engaging, intelligent, and takes a no-nonsense approach to addressing the issues we are all facing.

Ms. Adams is retired so she indicated her remarks were just some thoughts she had. It was her "Non-Economic" forecast for 2010. When she was done, she answered questions. One of the first question asked for her views on the health care proposals currently before the Congress. I'm very interested in this topic, more so after tonight's State of the Union Address. A lot of what Ms. Adams said, rings true with me. A lot of what I've read and heard about this issue makes no sense. I believe the President said tonight that he will not raise taxes this year. I believe he said no one, rich or poor, will have their taxes raised. I also understand the current proposal before Congress provides for tax increases to start in 2010, although the actual plan won't start until 2013 or 2014. So we will be paying for services that we won't be getting for four years.

Since this debate began I've wondered if we are talking about reforming health care, or reforming the health insurance industry. I'm still not sure. I am sure that Congress is taking a very complex problem and trying hard to come up with a complex solution. Maybe something simple is in order. Maybe the final bill should focus on the problem and not address all the special interests of the Congressmen and Women voting on the proposals.

Citing a National Health Interview Survey, "USA Today" reported on December 17, 2009 there are more than 45.4 million Americans of all ages - or 15.1% of the population - with no health insurance. 58.4 million (19.4%) people of all ages had been uninsured for at least part of the year prior to the interview, and 31.9 million (10.6%) had been uninsured for more than a year at the time of the interview, according to a report from the U.S. Centers for Disease Control and Prevention's National Center for Health Statistics. Ms. Adams stated that of the 45 million uninsured people, 15 million of them were uninsured because they had pre-existing conditions, and 30 million people were uninsured because they can't afford the insurance. Many of the 30 million uninsured people are in there 20's and 30's and can't afford the insurance because they live in expensive homes, drive expensive cars, and have big screen televisions in every room. They don't believe they will every get sick. Their children won't get sick or injure themselves. They prefer to have nice things instead of purchasing medical insurance. And when they do get sick or their child does break a bone, it is you and I who pay for the medical attention they receive.

The proposals before Congress to resolve this problem are thousands of pages long. Maybe there is a simple solution. First, let's agree we are trying to reform the health insurance industry, not health care. The health insurance lobby is just going to have to back off and face facts. Next, let's require every American to purchase health insurance, regardless of age or economic circumstances. We are already required to purchase car insurance and pay into Social Security and Medicare. Why not require everyone to purchase health insurance. Even if that means owning one less big screen television set or driving something other than a Mercedes.

This will eliminate those people who simply choose to be uninsured. There will still be some who simply can't pay the premium, and we'll have to provide subsidies just like we do for so many other things right now.

Next, this mandatory insurance will have to have a large deductible to keep the price down. I believe Americans must take responsibility for their own health care expenses, just like we are responsible for paying our mortgage, our credit card debt, and our car payments. Health insurance needs to be something every American puts in their personal budget. Some people still won't be able to do this and will need our help, but that number is significantly less than 45 million.

Finally, health insurance companies need to be regulated and required to provide a basic policy at a set price to anyone and everyone who applies for it. Even those with pre-existing conditions. The price of this insurance needs to be low enough for people to afford, while still providing a small profit for the insurance companies. In addition to this basic policy, insurance companies should then be permitted to offer additional bells and whistles to those who want to pay more for these benefits. They should be able to charge whatever the market will support. The wealthy will get the insurance they desire while everyone will at least have a basic policy.

This idea takes care of the 15 million people who have pre-existing conditions and are excluded from the market today. It also takes care of 20 million or so who can afford health insurance but have decided to spend their money on other "necessities" like cars and television sets. There will still have to be a pool of money available to assist the truly poor, but we will all have better health care for less money than we are spending today.
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TheBAFSignal by Bradley A. Friedman is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.
Based on a work at www.bafman.com.