Can we really have a plan that will do all that? Yes we can!

The plan is built on two of the most basic economic principles- competition and incentives.

Under this plan, the government will be responsible for creating competitive mechanisms for the business of health care. Every American will receive a stake, as incentives (in the form of “Medical Allocation Credit” or MAC), in the system.

Health care providers, under the government established competitive frame work, will automatically find ways to improve quality and become more efficient so they can thrive in their business.

We, the people, as not just the consumers of health care, but also contributors and part owners of this new system, will become more involved and responsible for our own health.

Finally, businesses in general, will become passive participants of this plan. Released from the burden of health care, they will become more competitive globally, which will be good for the U.S. economy as a whole.

Sounds good? Here is how the plan will be set up.

The Government will take the lead and do the following…

・ Set basic standards, rules and regulation for health care providers. Define what constitutes minimum coverage based on proven and established medical procedures.

・ Set up a Medical Allocation Credit (MAC) account, which as the name implies, will only be used for health care related purposes, for every American. Initially, MAC will be assigned to individuals based on their age. (15x Age, for example)

・ Require every person living in the U.S. to purchase health insurance at the government defined minimum coverage, using their MAC as deductible.

・ Set up a web site for the consumers to “rate” the services they have received from their health care providers (insurance companies, doctors, hospitals, etc…).

・ Update and publish the result of the ratings along with additional information about the service provider such as type of service, pricing, location and hours of operation in a simple standard format on the same site.

・ Purchase insurance (for people who cannot afford it) from the best consumer rated insurance provider(s) at bulk discount. The contract for insurances will be reviewed and renewed periodically (annually, for example)

・ Give preventive care (such as mammogram) credit for qualified individuals.

・ Give contagious disease exceptions. (Treatments for diseases such as SARS or any diseases that can potentially threaten public health will be paid for by the government.)

Health insurance providers will-

・ Be required to offer minimum coverage (as defined by the government) to everyone who wants it. Extra coverage can be offered at additional premium.

・ Be required to have premiums that are based on age, sex, deductible and coverage only. No one can be denied from the minimum coverage for any reason.

・ Have the option to offer discounts based on only positive results of a physical examinations. (For example, provider could offer free physical to interested customer above certain age. If he/she meets a set healthy standard, the customer could use the result to apply for a discount.)

・ Be required (like all other health care providers such as doctors, clinics and hospitals) to include a standard “rating” questionnaire along with every bill or invoice.

And we, as the consumers will -

・ Be required to purchase health insurance with the government defined minimum coverage from the insurance company of our choice (as an individual or a family). Additional premium coverage can be purchased at individuals own discretion.

・ Be able to shop for the preferred insurance companies, doctors, clinics and hospitals using the information provided on the new government health web site.

・ Use the MAC as the base deductibles to lower health insurance premium.

・ Have the option to further reduce our premium by purchasing insurance with deductibles greater than our MAC (but we must pay out of our own pocket before the MAC kicks in.)

・ Have the option to contribute into our own MAC account via pre-tax payroll deduction thereby reduce our premium even more.

・ Updated and renew our policy annually on our birth month. Premiums will be based on our MAC at the time of policy renewal.

・ Have the option to barrow against our MAC to preserve the lower insurance rate.

・ Have the option of withdrawing the money we (and /or our employer) put into our MAC, minus the income tax, before we renew our insurance policy on our birth month.

・ Have the option to have our premium deducted directly from our pre- tax income or pay directly and have the premium be tax deductible from our income tax.

・ Get assistance from the government for insurance payments for those who cannot afford it.

・ Be encouraged to “rate” the service we have received from their provider via phone, internet or mail whenever we receive a bill from our service provider. The result of which will be updated and published on the government site.

Businesses will-

・ Be release from the obligation of providing health insurance. But employers must first redirect, dollar for dollar, what they pay to the insurance companies to their employees.

・ For those employees who select the option, deduct (pre-tax) and pay the premiums for the employee’s health care insurance from their pay check.

・ Pay a fixed sum ($10 or so, pre-tax) into the general MAC fund per employee, per month.

・ Have the option to deposit money, tax free, into their employee’s individual MAC account as an employee benefit. (The employee will have the option to withdraw that money on the yearly bases on their birth month, before they renew their insurance. Income taxes will have to be paid, of course.)

Obviously, from the political perspective, this plan will not be popular with health care providers. But then again, the business community should support this plan. I have worked on this plan for months. I ask for your support should you agree that this plan is workable.

An H. Lin
linanha@gmail.com
San Mateo, CA

Interesting perspective – and what happens if it doesn’t take this route – 26% of GDP by 2020. $6+ trillion in Healthcare spending. That really should position the US to be competitive on the global market.(NOT)

So what’s your grand plan that you’d propose in opposition – or are you just going to fight it because it doesn’t start on a particular side of the political scale?

 Andy Barada (F.A. Barada, Jr. M.D., President of AB Medsaver)

In your blog yesterday you made the seemingly uncontroversial remark, “And since health care costs are growing at twice the rate of growth of income, …” One hears similar remarks all the time. However, my impression is that those remarks are gross misrepresentations of reality and that a proper consideration of “costs” would lead to a very different statement.

What we see in the national data are ever-increasing total *expenditures* on health care. Expenditures have no necessary relation to costs. Health care is a luxury good, so increases in average income necessarily will lead to disproportional increases in health care expenditure. Those relative increases tell us nothing at all about “costs.” To know about costs, we need to know whether the same service requires more or fewer resources than in the past. Does an X-ray cost more or less today than it did 10 years ago? What about filling a dental cavity? How about a surgical procedure, such as hernia repair? I had hernia surgery a few years ago. It was laparoscopic surgery. It was an outpatient procedure, requiring only a few hours in the hospital one morning and only a couple weeks for full recovery. I was back at work the day after the operation. People I know who had had the same surgery a couple decades ago had had standard open-abdomen surgery requiring days in the hospital and months for full recovery. I don’t know how many dollars (inflation-adjusted, of course) they paid, but I bet it was a lot more than I paid. They definitely paid more in terms of time and inconvenience. Apparently, *costs* of health care are much lower now than they ever have been. If so, then what is the justification for any government intervention at all in the health care market?

The situation is exactly analogous to computers. A new computer may have a higher price than an old one, but it nonetheless may embody lower cost. If we think in terms of MIPS (millions of instructions per second), which is an objective measure of processor speed, new computers virtually always have more computing power than older computers. Thus paying more dollars buys more computing power, so it is not clear that “costs” are higher, only that expenditures are. To know if costs are higher, one has to find out how many dollars are being spent *per MIPS*, not how many dollars are being spent *per computer*. People spend more on personal computers now than they did 20 years ago. Do we need a crash federal program to rescue the nation from this unconscionable increase in computer “costs”? Similarly, there was a huge increase in national “costs” of buying automobiles in the 1920s, after Henry Ford’s mass production made cars cheap, compared to 1900, when autos were rare curiosities. Should we have had a huge federal program to contain those “costs?”

I am a macroeconomist and do not know the literature in health economics. If there is no proper study of true health costs, I suggest that you encourage someone with the proper background to do one. If your organization gives research grants, you might want to give some researcher a grant to do a study of health costs. A study showing that true costs of many common procedures and health services are lower now than they ever have been might help clarify and re-focus the public debate about health care policy.

The big thing everyone seems to be missing in this debate is that there aren’t enough doctors to provide care now, and incentives for America’s best and brightest to become doctors are rapidly disappearing. It’s why primary care residencies aren’t filling year after year, and foreign medical graduates are rapidly taking over family and internal medicine. That’s not to say they’re not qualified – but how much quality can there be in health care when doctor and patient can’t communicate effectively?

The dems don’t care about the uninsured any more than they care about the growing numbers of social slaves they have already created and continue to nurture. Thank God I am 72 but I fear for my children and grandchildren. Perhaps they won’t know how good it used to be like the Canadians and Europeans attitudes toward socialized medicine. And they too think it’s free.

Simple question:

Given all of your research, and your deep and detailed knowledge of the both the politics and the economics of the health care issue, what, in your opinion is the simplest, easiest change that could be made in the health care system of the United States that would move us in the direction of a free (or freer) market in health care?

They are not being realistic in their plans. They are simply looking for a power grab, a takeover of healthcare to consolidate their power base. I truly fear for the healthcare of this country!!