Five action items to begin lowering costs and increasing access to high quality medical care.
1. Separate insurance from medical care.
Health plans should not be in the business of providing, supervising, or rationing medical care. We need to go back to sickness insurance as a form of casualty insurance, reimbursing subscribers (not “providers”) in the event of substantial loss. Most medical care should be paid for directly by the recipient, not the plan. This would immediately decrease prices substantially, by 50% to 60% or more, and make fraud self-revealing, like credit-card fraud. Because doctors are justifiably concerned that some patients will pocket the insurance check and stiff the doctor or hospital, payent could be by dual-payee check unless doctor waives the requirement for a second signature because of prepayment or trusting relationship.
2. Make the tax code equitable, and stop favoring third-party payment.
A certain amount of medical expense is expected, just like food expense. So why should it get favored tax treatment? And why should payment funneled through third parties under an employer-owned plan be tax free, while direct payment or payment through an individually owned policy is not? Let’s call an expenditure of > say 7.5% of gross income, whether as direct payment or insurance premium, a casualty loss, and shield it from both income and payroll tax, just like employer-owned insurance today. We might want to cap the amount of insurance premium that can be excluded. Get rid of all federal insurance mandates and allow buying across state lines to escape costly state mandates.
Health-sharing ministries and membership or subscription (“concierge”) practices are NOT insurance and should not be regulated as such.
3. Stop the Medicaid hemorrhage.
Medicaid is bankrupting states, while providing very poor care. Medicaid should be block-granted to states without expensive mandates or incentives to game the system. It should be recognized that it is cheaper to buy care when needed rather than to prepay through a third party.
4. Relieve the pressure on Medicare without imperiling access.
Allow seniors to forgo Part A without losing Social Security. Greatly simplify ways for doctors t opt out of taking Medicare payments for part or all of their practice.
5. Drastically reduce overhead by reducing regulation.
Repeal most of the federal regulatory code, then add back only regulations proven to have a substantially positive cost:benefit and risk-benefit ratio.
Additional Action Steps and Talking Points:
Restore true insurance.
- Repeal all federal insurance mandates.
- Repeal any federal impediments to cross-state purchase of insurance.
- Repeal all federal laws that advantage managed care.
- Remove the federal tax advantage for third-party payment of medical bills. Increase the personal exemption to federal income tax to keep initial promise that income necessary to cover basic needs would not be taxed. This should include food, decent but not extravagant housing, and a reasonable amount to cover expected routine medical expenses. The federal poverty level might serve as a guide. The costs of care for extraordinary illness or injury (say > 5% – 10% of AGI) should be deductible as a catastrophic loss. If purchased with pre-tax dollars, health insurance costs perhaps twice as much as if purchased with after-tax dollars, giving a substantial incentive to overinsure and thus increase costs.
- Insurance is voluntary. If premiums are not based on risk, low-risk persons will not enroll. If insurance is underpriced, companies will not be able to meet their obligations.
- Many risks are uninsurable. Attempting to provide for them through a mechanism called insurance is dishonest and destroys insurance.
- Direct-pay or retainer practices or health-sharing ministries are NOT insurance and must not be regulated as such (and thereby destroyed).
- Physician practices and hospitals do NOT have the resources to act like insurers, and turning them into risk-bearing entities will bankrupt them, or force them to destroy their ethical foundation. Insurance and medical care cannot ethically be combined. The effort to do this is one of the key fallacies in ObamaCare.
Reform and phase out Medicaid
- Block-grant Medicaid funds to state, by formula based on percentage of impoverished residents and cost of living, with annual cuts starting in year 1 (without the cost of compliance with federal regulations, less money should be needed). Eliminate the verb “to Medicaid” (i.e. to game the system to increase federal dollars) from the lexicon.
- Encourage the funding of actual care rather than managed-care plans, as well as putting control of allocations in the hands of beneficiaries.
- Care of those unable to pay is a community, not a federal responsibility.
Repeal all federal regulations concerning the practice of medicine, which is outside the constitutional authority of the federal government. States, not the federal government, properly regulate the practice of medicine. States can consider enacting those that have a proved favorable cost-benefit ratio. Candidates include:
- Restrictions on physician-owned hospitals
- Clinical Laboratory Improvement Act
- Medical waste disposal rules, such as one requiring inventory or tracking of routine garbage
- Requirements to provide translators and foreign-language materials at facility expense
- Unfunded federal mandates to treat illegal aliens (if such persons were arrested, the federal government would have to pay)
- Any federal incentives for hospitals, insurers, or licensure boards to impose Maintenance of Certification requirements
- Repeal the HITECH Act
Reduce the strains on the Medicare system, while phasing it out.
- Recognize that all pyramid schemes eventually collapse. Inform the public honestly about the true state of the “trust fund.” Set a termination date.
- Allow seniors to decline Part A without forfeiting Social Security payments.
- Offer seniors a “buy-out.” For example, in exchange for waiving all future claims, pay a monthly annuity of half (?) the actuarial value of the benefit.
- Repeal the claims-filing requirement for physicians. Pay the subscriber for all claims (i.e. do not allow assignment of benefits), as this will make fraud self-revealing, like credit-card fraud. Send an Explanation of Benefits (EOB) to the physician so he will know the patient has received reimbursement.
- Expedite the opt-out procedure for physicians and insist that carriers not obstruct it.
- Make it clear that a service for which no claim is filed is not a covered service and is thus not subject to reporting and other expensive, confidentiality-compromising requirements.
Repeal the payroll tax
- It is probably unconstitutional.
- It discourages work.
- It is a first-dollar tax, no exemptions, which hits the poor the hardest.
- It is unfair by any standard, taxing young workers to benefit older retirees, who are on average wealthier.
- It is dishonest, being portrayed as a contribution to the worker’s own retirement.
- Payments to make good on promises to today’s retirees should be funded by general taxation, not by taxes on workers only. As payroll tax revenues are already insufficient, billions of dollars from general revenues, used to redeem IOUs in the “trust fund,” are already being used in this way.
- There is no right to retire at the expense of the younger generation. Individuals have a responsibility to prepare for their own retirement, and care of persons unable to work because of age or infirmity is a family and community responsibility, not a federal government responsibility. It should be noted that the savings of thrifty persons have effectively been confiscated by the government’s debasement of the dollar and zero-interest policy. Even if we cannot find a way to compensate them for the loss, there is no excuse for continuing this insidious form of taxation without representation.
Repeal the capital gains tax, or at least index it to inflation
- It discourages the movement of capital to its best economic use.
- It has driven much of our industry abroad.
- It is dishonest, because a large fraction of the nominal gain is fictitious owing to debasement of the dollar.