A U.S. Healthcare Proposal – RGM
The United States, as a compassionate society offers universal healthcare to everyone within its borders. Any person who gets hit by a car, or passes out on the street due to diabetes, will be taken to an emergency room and treated. We do not allow people to die from neglect in public places.
What the U.S. lacks, is a sane method for financing universal healthcare.
Because healthcare expenses for individuals can be unpredictable and devastating, those who can get healthcare insurance usually do. Most people are insured through thousands of group plans sponsored by their employers. Many elderly people are covered by government plans. But 47 million Americans, for a variety of reasons, have no health insurance at all. As a result, the U.S. has the most expensive, but not the most effective, healthcare system in the world.
Employers got into the role of providing healthcare insurance in a time of wage freezes during World War II. There were labor shortages and companies needed a way to compete for workers. Since they could not offer more money, they began offering healthcare insurance. Today, such insurance affords little competitive advantage to recruiting companies but does offer considerable cost. As the cost of insurance has risen, companies have tried to pass more of the cost on to the employees while shoping for less expensive plans which usually come with reduced benefits and poorer service. The employees have bad experiences and tend to blame the employers. Employer sponsored healthcare insurance is now more likely to detract from worker perceptions of the company than to add to them.
Insurance companies like to sell insurance to groups, the larger the better. This makes sense because the purpose of insurance is to spread risk. The larger the group, the more predictable the risk. However, someone who is not part of a group is evaluated base on their own risk of requiring healthcare expenditures. If they are young and healthy and have no medical history whatsoever, they can buy insurance. But if they are over 30 years old, have ever been in a hospital (like when they were born), or require any medications, insurance companies are free to decline them coverage. Why should they take on a bet they are likely to lose?
The president’s recent proposal to change the way healthcare insurance is taxed is, as they say, rearranging the deck chairs on the Titanic.
What America needs is larger risk pools. These pools could be constructed at the state or federal level. Since Americans are fairly mobile these days, I would suggest working at the federal level. Here is the Munden plan:
Put everyone in a single pool. Everyone is covered. No one can opt out because we don’t let anyone die on our streets. This means everyone gets to pay. Of course not everyone can afford to pay the full value but most people can so we can deal with that. One thing the government is efficient at is collecting money. This does not have to be deluxe healthcare insurance. It has to cover preventive care and it has to cover catastrophic events. People would be free to buy better coverage from private companies as they see fit just as Medicare recipients do today.
How should the plan be administered? Based on our experience with Social Security, not by the government! A few, not thousands, of insurance companies could compete for the business. They could offer several, not hundreds, of plans that families could choose between. As a nation, we can calculate our costs fairly accurately. With a single pool, the risk is spread thin enough that costs per family should be reduced. Finally, when everyone is covered, medical care can begin at the preventive level where it is most cost effective.
Being compassionate does not have to lead to closed emergency rooms and bankrupt hospitals.
Could this plan work? Tell me what you think.