Category Archives: Healthcare/Insurance

Understanding Why Employer Provided Health Insurance is at the Center of America’s Healthcare Mess

 

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              And How to Get Rid of It!

 

In the course of debate concerning American healthcare policy, rarely is it suggested that the employer provision of health insurance is anything but a good thing, but is it really?

In 2016 49% of all Americans, according to Kaiser Family Foundation (based on census data) who were not receiving health benefits through government Medicare, Medicaid, military, or VA programs (another 35%), were insured through their employer. 9% had no insurance coverage. Only the remaining 7% had non-group individually owned policies. While employer sponsored insurance, or ESI, as it is commonly known, is thus heavily dominant apart from government programs, it’s popularity belies the unappreciated harm it causes, to the extent, it can be argued, it is at the center of America’s healthcare mess.

Fortunately there is a path to ending the toxicity of ESI, yet maintaining the employer connection that has evolved as a favored device to lure and retain employees, but first let’s consider why ESI is so harmful.  In doing so, it’s important to remember healthcare comprises not one but two distinct markets, one for insurance and another for medical services, both of which are corrupted by the presence of third party payers acting as agents for the buyer, and the first corruption sets up the next.

It’s also important to see employer provided insurance as an employment cost to the employer, and thereby part of an employee’s total compensation that could otherwise be paid in wages. When this is realized it can be seen that when an employer provides insurance what is really happening is the employee implicitly granting permission to the employer to spend a portion of their earnings on a financial product that may not be (and most often is not) in their best interest.

Now stop right there! Don’t people in the aggregate, allowing for those who often seem to do otherwise, always make choices in their best interest? So why aren’t they begging employers to end the provision health insurance if it’s so harmful and there’s a better alternative for them?

Often pointed as the culprit, is unequal tax treatment, where employees, on their own must use tax reduced dollars verses untaxed dollars if they have their employer provide health insurance for them. While this is a factor, in this author’s opinion there is more going on that would not restore rationality by simply equalizing the tax treatment, even as much as it would help.

Indeed employees think they are acting in their best interest when they really are acting in their perception of their best interest, which has been distorted by the separation from cost that happens with the employer provision. This has nothing to do with a rational assessment of tax implications or alternative provision of compensation by the employee but everything to do with an emotional “feeling” response to getting something as a benefit without knowledge of the true cost. Just ask and find out how many employees know how much their employer is spending on their behalf!

This has led to employees asking, even demanding, coverage of a wide array of medical services from the first dollar, never thinking they are willfully immersing themselves in paying for the incentivized overuse by others of what can normally be afforded otherwise. It’s not insurance, but a costly wasteful prepayment scheme. Yet they like it because they have been separated from what it costs, so remain ignorant of the implications. Again, ask a handful of employees the cost of medical treatment they’ve received, and if anything they may mention their copay! It’s allowed healthcare to become the only thing in our entire economy where almost every transaction involves, at least in part, the use of someone else’s money.

Often it’s pointed out that with car insurance we don’t expect things like oil changes, other routine maintenance, even larger mechanical repairs, to be included. Yet if car insurance had evolved to be employer provided chances are nearly certain we would!

Another seldom considered problem with ESI is individual suitability. Everyone’s financial situation is different, yet we’ve become accustomed to one size fits all cookie cutter approaches that few question when they think they’re getting something for nothing. More coverage is better when its cost is not a common consideration.

On the other hand, if employees were connected to the cost by buying individual insurance directly, they would quickly discover the fallacy, false comfort, and prohibitive expense associated with a cover everything approach. This would guide many to true insurance that only protects against unexpected high cost needs as they would become aware of the benefit of covering the small stuff directly out of pocket. Additionally they would free themselves to pursue job opportunities without the thought of losing or interrupting health insurance coverage.

At this point it’s not difficult to see how corruption of the market for health insurance by employer provision disconnecting the user from the cost then spills into the market for medical services. It’s not the user there either who is paying the bill, but a third party insurance company agent of the buyer who will never share the same self interest as the buyer directly. To the user, the cost is what they have to pay out of pocket, not the full charge, now inflated with considerable administrative costs added into the mix.

So how do we fix this mess? The answer is always to maximize direct payment in each of the two markets, insurance and medical services. Just as the corruption in the first leads to corruption in the second, direct payment in the first will lead to more direct payment in the second, as employees connected to the cost will quickly discover the problems inherent in the cover everything approach.

The good news is that a solution is at hand in the only bill introduced by the GOP in response to Obamacare that entirely makes sense. This is the HSA Expansion Act (HR247 & S28) introduced by Dave Brat in the House and Jeff Flake in the Senate. Unlike most legislation it does everything right.

Not only does it expand the contribution limits to HSAs, more importantly it allows HSA accounts separate of any insurance, thus allowing the purchase of insurance or medical services through an HSA as the single tax advantaged conduit. This opens the door to employers to maintain the incentive connection to employee health needs, while breaking the toxic provision of health insurance by shifting to a defined contribution model, where employers by direct or matching contributions to an employee’s HSA can become as common as to a 401k for their retirement needs. So long as states would follow by relaxing cumbersome regulations and mandates, employees could then decide what is right for their unique medical needs at costs truly subject to the discipline of the marketplace.

To this could be added an unique voluntary universal access approach that could replace both Medicare and Medicaid, maximizing direct payment, both actual and simulated, by a system of incentives, as previously discussed here and here, that, by trusting market forces over bureaucratic control, would have the power to strip out wasteful costs like nothing else I’m aware, as it supplants the growing Leftist desire for universal access by single government payer.

As many large employers with entrenched HR departments, are curiously wed to the provision of employee health insurance, one addition to the HSA Expansion Act that may get them to move toward defined contribution may be a provision to give employees the right to opt out of employer insurance with full transfer of the cost to their salary and/or HSA, as opposed to now, where declining employer offered insurance, say, to be instead on the policy of an employed spouse, results in little or no benefit to the declining employee.

Solutions are indeed at hand. We need only to identify and encourage elected officials to act on them, and the sooner the better!

Imagine THIS Obamacare Replacement & Understand WHY It Makes So Much Sense [GOP!]

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The Bipartisan Solution ALL Could Accept?

It’s been almost 10 months since I published “The Case FOR Conservative Market-Based Universal Healthcare Reform“.  I’ve wondered if “The Voluntary Universal Access Public Option” wouldn’t have been a more effective title.  Either way, the words are intentional for a purpose, which should become obvious without further explanation.  For those unfamiliar, reading the original post may prove useful but not essential.

The March, 2016 post has achieved over 800 views.  Response has been mostly positive but mixed, with some of the harshest criticism coming from hyper sensitive market allies who trip up on the word “universal”.  I remember one response simply said, “This just makes so much sense!”  Of course, though biased, I agree!

I know it’s been viewed by several very influential thinkers as evidenced by re-tweets or likes of tweets with the link, including Sally Pipes of Pacific Research Institute; Dr Scott Gottlieb, American Enterprise Institute; John Goodman, Goodman Institute & father of the Health Savings Account; and Michael Cannon, Cato Institute & inspiration for Rep Dave Brat’s and Sen Jeff Flake’s Health Savings Account Expansion Act HR5324 and S2980 respectively (114th congress), the only proposal from the GOP so far that completely makes sense.  None have criticized (or publicly praised) the Market Universal concept, but Michael Cannon did surprisingly say in my  presence “What’s not to like?”.  I’ll attempt to confirm his observation by explaining the many advantages of this unique concept.

Market Universal (or The Universal Access Public Option), is an expansion of a suggestion to fix Medicare in David Hogberg’s 2015 book, Medicare’s Victims.  In that regard it should be called the Hogberg solution.  By simply putting people in charge of the money, with incentives to be frugal in its use, it more than any other proposal from the GOP,  most effectively addresses the simple three word solution central to any meaningful healthcare reform – Maximize Direct Payment.

It combines actual direct payment with money a voluntary participant must set aside from income into a personal HSA, with simulated direct payment beyond that from a shared 3 tiered participant funded pool, used only when the personal HSA is exhausted. Incentives to use pooled funds wisely are in the form of percentage rebates of unspent portions annually.  Because participation is voluntary, the mandate to contribute to an HSA is not, as some have suggested, coercive, anymore than the requirement to make payments when voluntarily entering into an insurance or mortgage contract.

Since annual pooled fund availability totals $75,000 it is the minimum even the poorest participant has available each year.  Note that the risk to the pool is limited, but the need to ration is eliminated by creation of very low cost private personal stop loss insurance to cover any really big events.  While $75,000 can be consumed very quickly currently, it will go much farther with the change to direct payment by individuals making choices in their self interest.

The advantage of mostly direct payment leads to huge cost elimination on many fronts….

Imagine the difference when doctors no longer have to incur the considerable cost of getting paid for their services, that some estimates claim reaches 30% or more.   This figure becomes quite believable listening to subscription-based direct primary care pioneer Dr Josh Umbehr of AtlasMD in Wichita KS state (at ~6:30) overhead at their practice, completely third party payer free, runs less than 30%, while overhead at insurance involved primary care practices hovers around 60%.

Imagine when ever more complex coding is a thing of the past and practices no longer have more employees dealing with third party payers than clinicians treating patients.

Imagine  when doctors or surrogates no longer waste time with pre-authorizations and fighting off rejections, before finally getting permission to treat and then paid, which often itself involves long waits and then arrives in bundles that make it difficult to identify individual case reimbursement errors as opposed to being paid directly at the time of service by the patient at a mutually agreed price.

Imagine how a new paradigm of near ubiquitous direct payment will direct everyone to honest transparent pricing and competition for patients based on price and quality, without being forced by law, like all medical services not traditionally covered by third party payment, such as Lasik, cosmetic surgery, or dental implants, where quality has gone up as prices (often seen on billboards or newspaper ads), have come down.  It would not be unreasonable to see the combination of eliminating the cost of getting paid and effects of innovation driven by true competition drive prices down by at least half.

Imagine when third party payer network arrangements with doctors (effectively cartels) become a thing of the past, especially for those with Medicaid, where in some locations accepting doctors can be very hard to find.  This means doctors will price their services based on what it costs to provide them, and the same price will be paid by anyone who walks through the door. Each will enjoy the same dignity of access as anyone else.  With each doctor currently having a separate network arrangement with each different plan from each insurance carrier, as well as dictated reimbursements for Medicare and Medicaid, and differing cumbersome regulations and requirements imposed by all, it’s no wonder doctors have so little time to spend with patients.  It doesn’t have to be this way, but continuing down a road of embracing what has become traditional third party payment will only continue our enslavement to it and its considerable costs to treat no one, both for doctors and the rest of us as patients.

Imagine when the lowest earners among us can participate in the same Market Universal Access Public Option as anyone, instead of another demeaning program (Medicaid) with its benefit cliff adding another cage of dependency.  After all, in America most earners do not have to stay low earners and should never be encouraged to do so.

Imagine a voluntary program based on expanded health savings accounts that allow for passing to a beneficiary upon death.  Within or without participation in Market Universal, this can present the potential to build family healthcare trusts that also further protect pooled funds by those who continue to opt for Market Universal.

Imagine we can reverse another troubling trend.  Fewer and fewer doctors are willing or able to put up with the increasing burden of third party payers and their and government payer regulations, paperwork, and cost to get paid.  I’ve heard doctors say 1/3 of their time seeing a Medicare patient involves government paperwork.  To escape, they are becoming employees of growing hospital systems, where they feel some relief but are still trapped in a system that demands they see more patients in less time and only make referrals within the family of connected practices, further challenging those who wish to remain independent.  Again it doesn’t have to be this way.

That these highly trained professionals we depend on so much can serve our medical needs better at lower cost in a system of freedom and markets is not just fanciful theory.  It’s being proven by market pioneers who have been rejecting the third party payer juggernaut for the clarity and peace of honest cash priced practice.

In primary care this rejection of the third party payer is being done both by fee for service and subscription based direct primary care arrangements.  Without the considerable overhead of engaging the external payers they can offer services at greatly reduced rates and spend much more time with patients, so important at the primary care level especially.  Many use their extra time to run in house pharmacies, labs, or imaging at a fraction of the usual cost, or arrange low cost services with outside vendors.  Many make house calls and offer direct access by email, cellphone, Skype, etc.  Appointments are scheduled in excess of half an hour for the same or next day.  They also can perform the wide range of procedures they are trained to do but which are often offloaded to specialists when they must see 30 patients in a day for 10 minutes each to make ends meet.  To easily find a direct primary care practice go here.  For one example of the growing number that offer remarkably affordable pricing go here.  Most importantly these doctors, without exception are happy.  I don’t want a mechanic working on my car who hates his job!

Yet how many, in our current system, on their own, can afford specialist care and complex surgeries for cash?  As it turns out over 60% of employers that provide health benefits self fund.  They are simply bill payers and, even as the plans are set up to look just like insurance to the employee, they are really not.  Led by pioneers like Dr G Keith Smith at Surgery Center of Oklahoma, whose practice has posted low honest bundled cash prices on the internet since 2009 and lowered prices five times, they have been able to reject third party payers entirely by contracting directly with self funded employers (while also accepting individual cash payers), under arrangements where the employee saves as well by having their copay and deductible waived when they choose to use their high value option.  In fact, in this report from Dr Smith, he explains how SSO saved their self funded county (and hence taxpayers) over $1 million in the first 9 months and a new contract with the state may save state taxpayers $95 million.  Even though it’s not quite like the doctor and patient dealing directly, the benefits of this form of direct payment are enormous and it’s become a growing movement, with cash priced facilities even competing against each other at sites like pricinghealthcare.com.  With Market Universal as an option, more individuals will be in the position of self funded employers to choose where to spend based on price and quality.  It’s time politicians take notice of these positive developments and understand good policy that lowers costs resides in trusting markets and free choice rather than bureaucratic control.

It’s important to understand Market Universal (or the Universal Access Public Option) is proposed as a voluntary program that precludes nothing else.  It starts by putting the Expanded Health Savings Account concept of the Brat or Flake bills, themselves inspired by Cato’s Michael Cannon’s Large HSA concept, at its core.  Thus replace should start with expanded HSAs, which alone can inspire many positive changes as employers likely will voluntarily and gladly move from defined benefit to defined contribution health benefits, thereby keeping (but not requiring) the employer connection to health insurance while removing its toxic provision. Employer matches of employee contributions to a personal HSA will then likely become as common as to 401k plans.  Whether employees choose to use their HSA to fund medical services only, purchase medical insurance products they own independent of employment, or become a participant in the Market Universal Healthcare program is entirely up to them.

Market Universal is intended as a lifetime commitment, and following an open period upon initial availability, participants would have to sign on after age 18 and before age 25.  The mandate to contribute to an HSA, up to set balance limits, is within an entirely voluntary program, thereby a freely accepted obligation.  Participants only would be flat taxed sufficient to fully fund the shared pool, which could be kept separate from government hands and administered by private contracted book keepers much like the Federal Thrift Savings retirement plan.  Participants would have the opportunity to exit at any time but reentry would not be allowed.

Keep in mind Market Universal is an option that at once replaces Medicare and Medicaid so the current Medicare tax ends, and states no longer have to tax to fund  their portion of Medicaid.  Since networks become irrelevant, low earning participants have the same access to care as anyone, but the same obligation to direct a portion of earnings, including any government transfer payments or unemployment compensation, to a personal HSA.  While low earners pay less into their personal HSA, they will be more likely to use pooled funds, as higher income participants contributing more to HSAs will be less likely to take from pooled funds. Likewise those with higher incomes will contribute much more to pooled funds but, since also contributing more to their HSA, will less often use pooled funds and more often be rebated incentive payments for what they do not spend.  Beyond the pool’s annual limit, all will have the option to buy ultra high deductible (pooled funds + HSA balance + other personal savings available) personal stop loss protection, which due to its infrequency of use, should be very inexpensive, even at the minimum $75,000 deductible level and be much less vulnerable to the negative effects of community rating, which itself would be tempered by many older individuals having accumulated more in their HSAs, sufficient to safely allow its inclusion.  Guaranteed issue though would still require restriction past initial entry into the program, possibly by surtax to the pool or some other mechanism for those who wait.

No one would be forced into the Market Universal program.  Traditional insurance could coexist.  Those who now enjoy the Obamacare exempt faith based medical sharing arrangements could continue as is, and new ones, faith based or otherwise could be formed.  In many aspects, Market Universal is an institutionalized version of such arrangements.  As stated earlier, Market Universal precludes nothing else, as it provides an attractive option, especially with the ending of Medicare and Medicaid programs.

While socialist aspects are admittedly present, as they are by degree in the health systems of every other nation (and indeed are central to insurance itself), they will be under a layer of market discipline and individual responsibility first and foremost.  Market Universal can be an uniquely American concept that dares to trust market forces and personal choice to set prices, lower costs, and best direct scarce resources in an area where fellow humans’ lives and health are at stake.  It’s not the same as losing a car or house to lack of insurance or inability to pay, and it’s time conservatives recognize this.  A great overview of how countries around the world approach healthcare can be found in Chapter 3 “In Search of the Best Health Care System in the World” of James Bartholomew’s intriguing new book “The Welfare of Nations“.

To conclude, perhaps the biggest advantage of Market Universal (or the Universal Access Public Option) is that such an Obamacare replacement proposal would almost certainly garner some support from the Left, allowing passage in bipartisan fashion, as it supplants and roadblocks their otherwise never ending desire for single payer universal healthcare in a way no other suggested replacement plan can do.

The Right has said they seek a market solution, while the Left screams for universal coverage or at least a public option.  Under unique Market Universal alone, it is possible to do both!

 

 

The Case FOR Conservative Market-Based Universal Healthcare Reform

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Not Only Possible but Preferable to Anything Put Forward to Date

 

Say what?  Again?  Universal coverage?  Is Bernie Sanders on to something?  Well, in a way yes, as far as good intentions go.  What will be explored here, is the possibility and preferability of achieving the good intention, not by methods of command and control central planning, but government policy that embraces market forces and trusts individuals, making free choices in their self interest, enticed, even when using the money of others, to act as if it is their own, thus avoiding the proverbial road to hell.

The Inspiration

The policy concept presented here, though original, does not deserve to be called The FreeMktMonkey Solution.  It is the expansion and adaptation of  a seed idea presented in the final chapter of David Hogberg’s 2015 book, Medicare’s Victims: How the US Government’s Largest Health Care Program Harms Patients and Impairs Physicians.  In deference to Hogberg’s brilliantly simple but arguably far too timid, solution to Medicare’s flaws, the idea of conservative universal as a replacement to Obamacare, will be presented as the Hogberg Solution, from which it arises.

Starting Points

  1. Just because it’s a policy of the central government does not preclude the possibility of protective legislation that insures and embraces natural forces of voluntary free exchange in the marketplace to achieve desired solutions superior to central control.
  2. The market best achieves optimal setting of prices, and allocation of scarce resources through the direct interaction of the seller and the buyer,  not via the seller and a third party agent of the buyer, who will never share the same level of self interest as the buyer directly.
  3. A person’s life and immediate need for necessary treatment to maintain and extend it is not the same as losing a car to a crash or a home to a fire, or investment to bad advice of a broker.  It’s a tough position for anyone of compassion, including conservatives to stand for denial of treatment in someone’s moment of need, when life is at stake, due to inability to pay.  Accepting this, is to make a strong argument for an individual mandate, that “shared responsibility payment” thing in Obamacare, as an acknowledgement of the implied responsibility of each individual to accept their part, to the limit of their ability,  to protect their neighbor from the potential to have to pick up after their inability to pay.
  4. Medical science has made very rapid advances over the last century.  There are many more treatments, medications and devices available that have drastically improved both quality of life and longevity.  This alone will involve more spending simply because of availability.  It’s sometimes hard to believe that routine use of antibiotics, did not commence until the early 1930s, still about 15 years from being one century ago.
  5. While condition of health is clearly within control for most, it is certainly not for all.  Thus the ability, by healthful living, to protect others from an obligation to have to cover one’s own inability to pay for treatment, is limited.  Sudden unexpected disease, injury, or congenital defects can affect anyone.
  6. As outlined in what remains a gold standard June 1994 study, by Stan Liebowitz, writing for Cato Institute, Policy Analysis No. 211, Why Healthcare Costs Too Much, central to the mess we have in costs of US healthcare, is overreliance on third party payment.  The illusion of free or almost free, in coverage of what can normally be afforded otherwise, adds significant cost by promoting overuse (that must be baked into premium) along with expense to interact, often combatively, with third party payers, to obtain payments that should be made efficiently, directly, at the discretion and choice of the buyer, in direct dealings that preserve the purity of the doctor-patient relationship.  The Cato study suggests the solution is utilization of the highest level of direct payment possible, by health savings accounts and catastrophic insurance.
  7. Only a small percent of healthcare spending is for emergency situations, where there is no time or opportunity to check prices or treatment options, and make informed choices on how to direct resources.  Even this Brown University study that claims previous reports of emergency spending have been far too low, at most estimates emergency spending does not exceed 10% of our total $2.6 trillion.  This argument is often made by those favoring a government single payer system as evidence of why a market in medical treatment cannot exist.
  8. In both the Medicare and non government civilian healthcare markets, use is heavily concentrated into a very small percent of the respective populations, with little of that being priced by normal market forces through the direct interaction between the buyer and seller of services.  This argues for insurance or some backstop protection for the big items, even as the vast majority in most years would have no trouble paying their entire bill without it, and over the long haul, most would be better off by banking premium otherwise spent.
  9. Only small minorities of buyers need to be active in finding the best deal possible to elicit response from sellers that benefits all market participants.  Hogberg notes this as the concept of “marginal consumers” that drive the market, producing price and quality benefits for the non-marginal majority.  This truth is central to the viability of Hogberg’s solution for Medicare (and its extension to universal).
  10. It may not be necessary for buyers to spend their own money to achieve the benefits of the marketplace,  if means can be employed to entice them to spend the money of others as if it was their own, through a system of rewards, that more effectively produces desired results than schemes of central planner bureaucrats.

The Solution

Hogberg comes to the conclusion in Chapter 8, after noting typical failed attempts to get a handle on Medicare spending involve politicians, bureaucrats, and all manner of experts, engaged in elitist planning, at the exclusion of spontaneous order that arises through market forces of individuals freely making choices in their best interest.  He states, “It never seems to occur to them that the best way to align incentives is to let the patient control the money that pays for the care.”  But how to do that in a way that does not promote waste and abuse when it may not be their money?

This is where Hogberg encounters sheer brilliance, that if not so timid with the idea, could have led him to propose an extension of his Medicare Solution pre-Medicare to the entire healthcare sector of our economy, opening the potential to achieve the universal coverage goal of the left in a way that does not make healthcare a right without obligation.

Hogberg’s solution is simple.  Pay the patient, through incentive rewards, to do a better job than various schemes, by CMS, to fix prices, assess quality and value by questionable metrics, determine reimbursement, even direct treatment, all by artificial means far worse than a free market would accomplish on its own.

To do this Hogberg suggests, since we spend all this public money anyway, provide each Medicare beneficiary with 2 annual accounts: a basic account of $5000, and a major medical account of $70,000.  For anything not spent out of the basic account the beneficiary would be paid 10% at the end of the year to use for any purpose whatever.  For anything not spent out of the major medical account 1% would be paid to the beneficiary.

Here is where Hogberg makes a flaw, as he suggests the 1% from the major medical account would only be paid if that account was reached following total depletion of the basic account.  He recognizes the moral hazard of this in producing an incentive to spend out the basic account ($500 max rebate) to get to the $700 max rebate of the major medical account’s 1% rebate.  The obvious way to correct this would be inclusion of both rebates, so the individual who spent nothing in a given year would get $1200, with perhaps only the $500 going to any purpose and the $700 dedicated to an HSA for future medical expenses, also protecting future rebates.

He points out that in 2012 25.7 million of 37.7 million (68%)  Medicare recipients spent <$5,000, and only 3.9million (10%) spent over $25,000, with their average about $57,000; so a $75,000 total account would be more than adequate for most beneficiaries in any given year.  Expenses beyond that could be covered with a private personal $75,000 (or greater) stop loss policy.  This, due to its low cost due to low use, would likely attract widespread voluntary choice, thereby allowing limited government exposure without the need for rationing either by availability or delay.

Hogberg also missed, or was too timid, to entertain a logical extension of his concept pre-Medicare as a solution to the entire national system, unique in all the world, and compatible with extra governmental market solutions being developed and growing rapidly by efforts of pioneers such as Surgery Center of Oklahoma in transparent honest competitively priced surgery or Atlas MD in Wichita KS, leading development of models of Direct Primary Care, both now entering into direct cash relationships with self paying individuals and the approximate 60% of employers who self fund health benefits they provide their employees, bringing competition, quality and value as seen nowhere else.

Indeed, Hogberg’s suggestion of a demonstration project for Medicare, belies his otherwise strong faith in the power of market forces, such that it is Medicare itself that may better serve as the demonstration project to extend his seed idea to the entire healthcare sector of our economy.

Such an extension would also be compatible with the single best reform proposal of any to date that respects freedom, that of Cato’s Michael Cannon, with his 2008 Large Health Savings Accounts concept, or as published here in July 2014,  after noting the failure of Republicans or conservatives, now in almost 8 years following the election of Obama, to develop a plan of their own that doesn’t dictate purchase of a qualifying product to obtain benefits from the government or retain a large proportion of third party payment, the post “GOP Stuck in ACA Replacement ‘Plan Trap’ as Magic Bullet Solution Hides in Plain Sight“, written prior to any knowledge of Cannon’s proposal, but very similar in approach and expected outcomes.

The Hogberg Solution as applied to the whole US system, as presented here, would require modification to Dr Hogberg’s seed concept, but allow market based universal to become a reality that would significantly, instantly create a system of near ubiquitous direct payment.  This is the game changer, as no other proposal to date has suggested such a virtuous possibility exists, and assuming sufficient popularity, could allow for voluntary participation.

Here’s how it would work.  Every participant would be required to pay a percent of all income into a personal health savings account to a limit.  To start, then periodically adjusted for inflation,  this may be 7.5 of all income to a $50,000 balance, then 5% of all income to a balance of $100,000, which would from that point only have to be maintained.  Employers, as enticements, could agree to match employee inputs.  A national tax would be required to cover additional expenditures, but factoring in market induced competitive savings plus elimination of 3rd party payment processing expense, may be little more than total taxes required to fund Medicare and Medicaid currently, and would replace those taxes.

Hogberg’s suggested Medicare accounts would be modified for the universal system.  For working people they would be accessed, only after exhaustion of personal health savings accounts.  One modification would be the creation of three layers of account.  The basic $5,000 with 10% of any unused portion rebated for any use would remain.  Then an intermediate account of $25,000, followed by a $45,000 major account would apply.  Unused portions of these accounts would be rebated at 2% ($500), and 1% ($450) respectively, but not for any use.  These rebates would apply to the personal health savings account, both providing future protection to the public accounts and allowing reaching one’s mandatory individual funding limits sooner as well as protection of future rebates.  Of interest, $950 is sufficient to fund unlimited direct primary care at many of the growing list of doctors offering this choice.

For anyone still working who exhausts their mandated HSA and taps the government pool, continuing work related payments to their HSA would always precede any government pooled funds in paying for services as used and bills come due.

As percentages of any other government cash assistance transfers (welfare) would be directed into individual health savings accounts as well, both Medicare and Medicaid would be rolled into the new universal system.  Opt outs could be allowed but then initial entry or reentry would be have to be prohibited lifetime.  The idea in the mandate is a requirement to buy nothing, just forced budgeting to protect others in a system where we can agree no one will be left “dying in the streets”, as Donald Trump has stated.  It raises the question also if a tax is not a tax, when that set aside is available for that person’s and their immediate family’s exclusive use.

The game changing nature of this extended Hogberg Solution should be obvious.  Price transparency would happen organically overnight as well as huge savings just from elimination of the cumbersome third party payment mechanism in place now.  Providers of treatment and devices would be instantly responsive to concerns of price and quality.  Even well past normal working years for many, into what are Medicare years now, carried HSA balances would continue to protect the government pooled funds, themselves limited without the need for rationing, by personal stop loss private insurance.  Any remaining HSA balances at death could be transferred to a beneficiary.

Private insurance protection expense beyond the government pool could be further lessened in cost by allowing stop loss policies in excess of $75,000 by including other personal sources, such as one’s HSA balance or other assets willing to be spent first.  Thus a person with $100,000 in their HSA and $25,000 in other assets available for medical expenses, along with the $75,000 government funds, would only need a personal stop loss policy to cover expense exceeding $200,000, very unlikely and very inexpensive.

By trusting individuals with control of the money, acting freely in their self interest, and having faith in the predictability of their response to properly presented economic incentives and constraints, along with a system of rewards, we can create a government devised system that respects the marketplace, innovation, and choice, while keeping government command and control decision making out of the equation.

For more please see followup Jan 09, 2017 article here.

Does Obamacare Contain a Serious Violation of the 14th Amendment?

InjunsAndObamacare

Is another challenge in its future?

While I’m neither a lawyer nor a legal scholar I do have an interest in things legal.  I also have an interest in the healthcare issue and have posted many original articles and op-eds on this blog.  So when I noticed something at Healthcare.gov that seemed weird and just not right it stuck in my mind.  I bounced my thoughts around with friends and organizations via social media.  Finally when Pacific Legal Foundation tweeted that they were combing through the issue and would address it in a weekly podcast, I felt validated, humbled and eagerly await their opinion.

So what is the issue and could it eventually provoke a fourth (more on that later) Obamacare challenge to reach the Supreme Court?  From the home page of Healthcare.gov, rolling over “Get Answers”, then under “Coverage for…”, finally clicking “American Indians and Alaska Natives” a story of unequal special treatment for one group over others unfolds.

The level of special treatment is shocking in regard to our Constitution’s 14th Amendment which requires equal protection under the law for all citizens.  Qualification comes with membership in a Federally recognized tribe or being an Alaska Native Claims Settlement Act (ANCSA) Corporation shareholder.

American Indians and Alaska Natives most favorably have no closed season under the ACA.  They can sign up for a health plan on the exchange anytime they want and even change plans once per month.  They can choose to have no insurance at all without paying the tax penalty.  On top of that, up to 300% of federal poverty level (up to around $70,650 for a family of 4) they pay ZERO copay or deductible.  How is this equal treatment under the law?

Every other group not exempted from the law by provisions in the law, generally based on religious beliefs, is subject to the same rules governing the exchanges as anyone else.  This includes a closed season three quarters of the year, a hefty tax for choosing to go uninsured, and reduced copays and deductibles only up to 250% of the federal poverty level on silver plans.

Closed seasons, when there’s guaranteed issue as with the ACA, prevent gaming the system exactly as the special provisions for American Indians and Alaska Natives allow.  No closed season opens the door to only signing up for insurance after the discovery of a serious illness.  This is precisely why employer provided health benefits, which have long been guaranteed issue, have an annual open season for about a month each year, barring specified life event exceptions.  For such plans to work time commitment at all times must be required of everyone.

There is an Indian Health Service already on reservations where Indians can get free healthcare from Indian healthcare providers or others if referred by one, but Healthcare.gov discusses advantages of additionally obtaining plans in the exchanges, suggesting better access to programs not provided by other Indian health programs.  They also suggest this will help the tribe by allowing more services to others, suggesting tribal programs run on a globally limited budget.  Think rationing of services or extended waiting times that accompany such approaches and perhaps the ineptitude of the Veterans Administration as well.

This raises questions of possible reasons if American Indians and Alaska Natives could or should be treated unlike ordinary citizens under the Constitution.  Are they citizens at all?  Aren’t Indians sovereigns within our country, nations within a nation?  The answer seems to be to a point.  The “FAQ” section of the Bureau of Indian Affairs website provides many clues and answers.

First let’s consider eligibility.  Described in the FAQ, membership in a federally recognized tribe is determined by each tribe.  It makes clear that “there is no single federal or tribal criterion or standard” and eligibility for membership “will differ from tribe to tribe”.

If this doesn’t seem loose enough, the FAQ tells us that “blood quantum” is not the only means by which a person is considered, including “how strongly a person identifies himself or herself as an American Indian or Alaska Native”.  As it’s becoming popular to identify outside one’s race or even gender, it appears any of the 561 recognized tribes could open membership to anyone willing to learn the history and customs and believe enough, perhaps even paying a hefty entry fee in the process, thereby granting them special benefits under Obamacare too!

Even among those with sufficient blood quantum, estimated by the Census Bureau to be 4.5 million in 2007, enrolled tribal members are around 2 million, less than one half.  Of the total population more than half do not live on reservations, and can be integrated into the larger society to any degree, while still maintaining tribal membership.

It’s worth noting some of the other facts provided in the FAQ as follows:

American Indians are citizens of the United States and the states in which they reside, and have been so, generally, since 1924.

American Indians have the right to vote.

American Indians can run for and hold any public office as any other US citizen.

American Indians do not have special rights different from other US citizens unless based on treaties or other arrangements.

American Indians do pay taxes like everyone else with the exception of state taxes when living or conducting business on a reservation.

Laws that apply to non Indians also apply to Indians except on reservations where only federal and tribal laws apply to members.  Only state laws do not apply to members when living on a reservation.

American Indians do serve in the armed forces of the United States.

So what is the takeaway of all this?  It seems proper application of the 14th Amendment would back and provide standing for any uninsured non Indian to be exempt from the individual mandate and its tax or require American Indians and Alaskan Natives to be subject to it.

It also seems that any uninsured non Indian tribal member who encounters a serious illness outside the open season without a qualifying event, would have standing to claim harm by being denied immediate access to insurance on an exchange as is afforded American Indians or Alaskan Natives primarily as a result of their ethnicity.  It’s with this I await what the legal minds at Pacific Legal have to say.

Pacific Legal Foundation, which has been defending against government impositions on property rights and liberty since 1973, is involved with another Obamacare case, Sissel vs HHS, that could invalidate the entire law as a violation of the origination clause, and is now under appeal to the Supreme Court.  If accepted it will be the 3rd challenge, hence the chance a possible violation of the 14th Amendment outlined here could eventually become number four.

Pacific Legal produces a weekly podcast each Wednesday and maintains an informative website, both with stories and updates on the many fascinating cases they agree to accept.  Importantly and impressively they represent every client and every case at no charge.  Liberty minded individuals would do well to consider supporting them with a donation.

King v Burwell, Marijuana, and a Path to Marginalize Obamacare in its Presence

USSupremeCourt

States Should Start It / If Weed is Worth it……..

Short of repealing Obamacare the next best thing would be finding a method to marginalize it in its presence.  Oddly King v Burwell, along with 23 states plus DC that approved medical use of marijuana and three plus DC that approved recreational posession and use of the plant, may provide a path to doing just that if King prevails.

King v Burwell is the case challenging whether government subsidies can apply to qualified health insurance sold on exchanges run by the federal government.  Proponents of King, led by Michael Cannon of Cato Institute, and Jonathan Adler of Case Western Reserve University School of Law, contend the law is clear that subsidies can only be applied in exchanges established by the states.  As the issue was raised, the IRS simply declared that federal exchanges too are eligible for subsidies.

Four separate but related court cases challenged this IRS decision, and in November the Supreme Court agreed to hear King.  The case is scheduled to be heard March 4th, with a decision sometime in June.  In the event King prevails, most agree there will ensue chaos of a sudden affordability vacuum if the approximately 5 million people who own qualified health insurance bought in states with federal exchanges lose their subsidies.  This will likely bring intense political pressure to find a fix, even as businesses, relieved of penalties triggered by employees obtaining subsidies will argue for other remedies.

In addition, many individuals will find the cost of unsubsidized ACA triggering plans now exceed 8% of their income, relieving them of the individual mandate and its tax for not buying insurance, except they will then either have to scrape to find the unsubsidized premium or be left uninsured with no other choices.

Several Republican governors of federal exchange states, including rising star Scott Walker are feeling nervous about a King win, and don’t seem to know what they may be able to do.  At a National Governors Association event, they took to saying that it’s Congress’s job to deal with any fallout.  None expressed any ideas of what states may be able to do short of somehow restoring the subsidies.

So what if federal exchange states, rather than looking to Congress, switching to a state exchange or piggybacking on another state’s successful state exchange, as has been suggested, would simply make alternate, non ACA qualified, more affordable choices available off the exchange?

Since I had never seen evidence to the contrary and had been told by both Andrew Schlafly, attorney with the Association of American Physicians and Surgeons, and Oklahoma Attorney General Scott Pruitt, whose name is on one of the other three cases, that they knew of nothing in the ACA to prohibit states from making available non ACA qualified choices off the exchange, I heretofore thought this was possible and within the law.

My take had been that the ACA only defined what must be in health insurance plans to be on the exchange, qualify for subidy, and avoid paying the mandate tax, making possible, with or without King, state provision of a parallel free system along side the government control system, allowing states, with their retained authority to regulate insurance through their insurance departments, the potential to allow or even require the availability of alternate choices off the exchange, understanding non qualified plans would not avoid the mandate tax.

I thought this may be especially attractive to those individuals discovering low cost direct primary care arrangements, where an increasing number of primary care physicians are offering unlimited care for a monthly fee.  Here is a rapidly growing need for pure catastrophic insurance as a compliment, that ACA qualified plans have shut down.

I believed all this.  Then, February 9, in a twitter exchange with Phil Kerpen, President of American Commitment, he sent me a link indicating otherwise.  There is indeed federal code that prohibits what I thought was possible.  The office of my Congressman, also previously unaware, identified it as a law from the 1940s that had been amended by Obamacare.  Talk of leaving no stone of iron fisted control unturned!

So what to do now?  State offer of non ACA compliant health insurance off the exchange, no matter how welcome, or as immunization against the affordability aspects of a King win in 37 federal exchange states, would run afoul of Federal law.  It would be an act of defiance, but isn’t this what 23 states plus the District of Columbia did when they approved the medical use of marijuana?  Taking it further, isn’t this what Colorado, Washington, and now Alaska and DC did by approving the recreational use of marijuana?  So far, for those state actions, the feds have chosen to stand down.  If legal weed is important enough to risk federal admonishment, how is offering citizens, still willing to pay the mandate tax, the choice of affordable non ACA qualified options off the exchange not?  It would seem.

More likely, on an Obamacare challenge, the feds would push back hard, but states would have arguments in defense, as well as significant public support that may even exceed weed, especially if King prevails, subsidies are lost, and a sudden affordability vacuum ensues.  While the stand down on marijuana would mean nothing in a legal sense, it may help state defiance on Obamacare play well in the court of public opinion, giving state officials more backbone to act.

States can point to their continued regulation of health insurance where the feds have found it convenient to not supplant them.  State coverage mandates in excess of ACA essential minimum coverage rules still apply, as do their definitions of regional pricing zone boundaries.  They can question also why their regulation of all other types of insurance remains intact, without federal meddling.

There’s the argument McCarran-Ferguson 1945 still gives states the authority to offer alternatives, so long as they don’t attempt to eliminate the federally designed plans.  They could claim restriction only to such limited choices represents overbearing federal imposition and violates the Constitutionally protected freedom of their citizens to contract.  They could point to a long standing tradition of state regulation of insurance in return for insurance being exempt from federal antitrust law.

Perhaps as important, since the ACA unquestionably allows doing absolutely nothing upon payment of the mandate tax, any opposition would be forced into the absurd argument that doing something substantially more than nothing in protecting others from one’s potential inability to pay their medical bills should be prevented, so long as the tax is paid.  In fact, Congress, seeing this argument play out, may be motivated to specifically allow non ACA qualified offerings and reduce or eliminate the mandate tax for buyers, in recognition of their obvious reduction in potential liability to others by their actions.

If only one state or a few, federal exchange or otherwise, would boldly take this course of action, we would present, at least the opportunity to embark on a path to marginalize Obamacare in its presence.  A parallel free system, alongside the government control system could be created, and repeal would no longer be necessary as people could freely choose which system they prefer.

The sudden chaos of a King win would be the perfect time to have alternate choices available, as the potential to quickly attract sufficient numbers to spread the risk enough to insure viability would be most opportune.  If weed is worth it………

Don’t Be Like Me…Resolve to Get That Colonoscopy!

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Now over two weeks into 2015, those well intended resolutions, often centered around taking better care of one’s self, are no doubt already beginning to be forgotten.  Gym attendance is likely already on the slide.  Diets are being forgotten.  Tobacco revenue is recovering.  All as accepting return to the status quo proves easier than determined vigilance for many.

Most of us can take better care of ourselves and should keep tabs on the state of our health.  As I’ve learned the hard way, having that screening colonoscopy, especially after age 50, in spite of a family history, is one diagnostic test not to be avoided.

Not being one to worry or “run to meet trouble”, as an old friend used to say, for the 13 years that it has been available at no cost to me, I’ve avoided and made excuses for getting this most important procedure.  In spite of reminders and urging from my wife, as well as the fact that my mother had polyps removed, I took the position that only a small percent of those who don’t bother to get checked, will actually develop colon cancer.  While this assumption is true, I’m now facing what should have been caught in its earliest stages, likely as a  precancerous polyp, years ago.

The trouble with colorectal cancer is that it can grow without pain or notice until it becomes very serious, causing a bowel blockage or spreading to other organs.  Nor do tumors always bleed.  Fortunately mine did.  A couple months ago, when I noticed blood in my stool, I knew something was amiss.  I went to a primary care physician for only the second time in my adult life for a head to toe checkup.

Of course when I described the symptom that motivated my visit, a diagnostic colonoscopy was arranged a week later, on Christmas eve.  An “ulcerated mass”, confirmed as cancerous by pathology inspection, was discovered along with a polyp showing cancerous attributes.  A surgical resection of part of my colon was suggested.

Three days later I had a lower abdominal CT scan and chest x-ray that fortunately showed no obvious spread of my cancer to other organs.  Although that’s great news, if the cancer is found in surrounding lymph nodes that will be harvested and inspected during my surgery, I’ll certainly be facing chemotherapy follow up to try to attain a cure, often considered 5 year cancer free survival.  My odds of achieving that outcome are about 65%.

So, yes, my negligence to have regular medical exams, and a screening colonoscopy in particular, may yet prove a fatal choice.  I can’t begin to explain the feeling of personal complicity and stupidity that comes with my situation, nor the impact this has on friends and loved ones.  My hope, in writing this, revealing the details of my medical condition, is to spare others.  Don’t be me! Resolve to get that screening colonoscopy!  Don’t make excuses!

Even for those without insurance coverage there are options.  Healthcare Bluebook is a great resource to find fair prices in your area, that can be used to negotiate with providers.  In the Harrisburg, PA area where I live, the fair price for a screening colonoscopy, that amount normally accepted as insurance payment by network physicians, is listed as $1609.  This is broken down as $676 facility fee, $413 physician fee, and $520 anesthesia fee.  Also, colonoscopies can be, and sometimes are, done without anesthesia.

Another option is MediBid, a medical brokerage service started by a Canadian immigrant, Ralph Weber, to connect patients and physicians for specific procedures nationwide.  As one notable example, KATU, Channel 2, Portland, reported in September, 2013, the story of a Chicago man without insurance, looking for a colonoscopy.  Through Medibid he found a physician in McMinnville, OR.  His cost for the procedure, including airfare, lodging, and a rental car was less than half the average $3500 best price he could find in the Chicago area.

Three days from now I’ll be in surgery, beginning the process of trying to stop what could still prove fatal, and likely could have been prevented.  Again, don’t be me!  Resolve to get that screening colonoscopy!  NO excuses!

Stolen Health Data Threatens Pennsylvanians/Others With Identity Theft

CyberOuch

Chinese Hackers implicated

Monday August 18 CNN Money reported Community Health Systems, headquartered in Franklin, Tennessee, announced it’s 206 hospital system, spanning 29 states, had been hacked, exposing critical personal information of 4.5 million patients of its affiliated physicians.  Anyone who used the services of a linked doctor in the past five years, even if never seen at a hospital, is potentially at risk.

Pennsylvania is one of seven states identified as having the most significant presence in the Community Health Systems network, operating 20 hospitals in the Commonwealth.  As a rough estimate, 20 of 206 hospitals is 9.7% of the hospitals in the network.  9.7% of the reported 4.5 million patients suggests about 436,500 Pennsylvanians could be at risk.

It’s reported that the hackers, identified as Chinese, did not get any information related to medical history or credit cards, but information critical to obtaining credit cards and stealing the identities of those at risk, including names, social security numbers, addresses, birthdays, and telephone numbers.  Community Health Systems has said it will be offering identity theft prevention services when it notifies individual patients.

Spokesperson Jason McSherry, representing affiliated and affected Memorial Hospital in York, PA, provided the following statement, shared here in its entirety:

Limited personal identification data belonging to some patients who were seen at physician practices and clinics affiliated with Memorial Hospital over the past five years was transferred out of our organization in a criminal cyber attack by a foreign-based intruder. The transferred information did not include any medical information or credit card information, but it did include names, addresses, birthdates, telephone numbers and social security numbers.

We take very seriously the security and confidentiality of private patient information and we sincerely regret any concern or inconvenience to patients. Though we have no reason to believe that this data would ever be used, all affected patients are being notified by letter and offered free identity theft protection.

Our organization believes the intruder was a foreign-based group out of China that was likely looking for intellectual property. The intruder used highly sophisticated methods to bypass security systems. The intruder has been eradicated and applications have been deployed to protect against future attacks. We are working with federal law enforcement authorities in their investigation and will support prosecution of those responsible for this attack.

Many American companies and organizations have been victimized by foreign-based cyber intrusions. It is up to the Federal Government to create a national cyber defense that can prevent this type of criminal invasion from happening in the future.

In discussion with McSherry, he emphasized that stolen information resided in connected doctors offices rather than the hospitals.  For this reason, he does not think anyone using a hospital directly for emergency or any other reason would be at risk.  The Memorial Hospital website currently lists 267 affiliated physicians.

McSherry also said that not all network hospitals are affected by the breach.  For instance, the affiliated nearby Carlisle Regional Medical Center, although part of the Community Health Centers network, uses a different information system.  He did not know how many different information systems are used by Community Health Centers.

Back to the provided statement, it’s interesting that Community Health Centers looks to the Federal Government to “create a national cyber defense that can prevent this type of criminal invasion from happening in the future”.  There may be some justification to their position, as it’s the Federal Government that’s been dictating so much of what has been happening in medicine.

HIPAA, the 1996 Health Insurance Portability and Accountability Act; ASCA, the 2001 Administrative Simplification Compliance Act; HITECH, the 2009 Health Information Technology for Economic and Clinical Health Act; PPACA, the 2010 Patient Protection and Affordability Act all, along with regulations promulgated under them, address, in various ways, requirements concerning electronic medical records, their use, protection and transmission.  While purported to be money saving measures or patient protections, this maze of imposed regulations, with cost of compliance and threat of substantial penalties, has been driving doctors out of independent practice to hospital employment or out of the profession entirely, while exposing patients to hacking risks, as we’ve seen here.

In addition, can the same Federal Government that runs the Post Office or Veterans Administration really ever do more than stay one step ahead of hackers in protecting us, as the cost of the attempt must be born by all?

Note: This article shared to WatchdogWire-Pennsylvania