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

Posted on October 6, 2017 | 2 comments

 

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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!

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

Posted on January 9, 2017 | 4 comments

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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!

 

 

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GOP Stuck in ACA Replacement “Plan Trap” as Magic Bullet Solution Hides in Plain Sight

Posted on July 2, 2014 | Leave a comment

MagicBullet

Best Plan is NO Plan

Whether by reaction to charges from Obamacare supporters on the Left, or by their own lack of faith in freedom over planning, Republicans, not one of whom voted for the Affordable Care Act, along with conservative allied groups, think tanks, or prominent individuals, are, by last count, now promoting close to a dozen different concepts of how to replace one version of federal government planning with another less abrasive one.  Despite many replacement proposals, Republicans in congress seem unable to coalesce around any one approach, still leaving the impression they have none.

Some of the proposals are introduced bills. Others are wish lists of items to be in bills.  All have myriad suggestions that either move money around by extending tax deductions or refundable credits, allow formation of small business associations, require price transparency, reform medical malpractice, enhance health savings accounts, shuffle money to states for high risk pools, or various changes to Medicare and Medicaid, among others.

Far away the most popular inclusion is selling health insurance across state lines, itself a dangerous (and here) invitation to Federal micromanagement under the twisted  modern interpretation of the Commerce clause.

Such is the pressure and propensity for government to “do something” that bears on both sides of the political spectrum.  This is the plan trap.

Rarely is there a peep from anyone suggesting that no plan is the proper path, that simple policies to promote, restore, and support the proper functioning of the free market, usually by removing government intrusion rather than supplanting it, should be the goal.  One lone voice, Association of American Physicians and Surgeons past-president Dr Alieta Eck, GOP candidate for the 12th Congressional district from New Jersey, wrote an article defending freedom over planning in January 2014.  She opens:

We constantly are told that “while ObamaCare might not be perfect, the right has not come up with a better plan.” Is it possible that we do not need a “plan” at all?

Think about it. Has the federal government set up a food plan for all? A housing plan? Is the Secretary of Whatever empowered to decide what and when we eat? What kind of house each of us lives in? Of course not. We work, we plan and we buy what we need, saving up for the big-ticket items. Government does not control us, nor should it.

Yet one element contained in a few of the plans and wish lists can be the basis for a market revolution.  Unfortunately, no one seems to have grasped the power of its singular focus.  Had Dr Ben Carson simply stopped at Step 1 of his still in progress 5 step plan he would be almost completely there.

Relatively simple modification, enhancement, and expansion of tax policy surrounding HSAs, done right, has the power to be a true game changer by its potential to encourage employers to drop their long standing provision of health insurance in favor of a defined contribution approach.  It is the magic bullet.  It hides in plain sight, and here is how to get there:

Please follow these simple policy modifications:

1) Decouple HSAs from the requirement to be attached to any insurance policy.  While HSAs could still be attached to insurance (suitable for many), anyone should be allowed (and perhaps even required) to have an HSA.  Monies in HSAs receive rare triple tax advantage and protect others from the owner’s potential inability to pay for needed medical services.

2) Allow the purchase of health insurance or medical services through an HSA.  This establishes favored equal tax treatment without the need for separate legislation.

3) Greatly expand contribution limits to allow #2 to happen.  The HSA can be the tax advantaged conduit for all medically related purchases allowed under it.

4) Allow employers to contribute pre tax to an employee’s private HSA.  This is the crucial trigger for a spontaneous move of employers away from policy provision to defined contribution.  Resulting individual ownership solves portability and suitability issues for those who choose to buy health insurance in the open market through their HSA.  Employers could offer direct contributions or matches to employee HSAs.  Contributions from several employers could be combined, as well as HSA assets among family members’ accounts to purchase one insurance contract if desired.

5) Establish a permanent mechanism whereby Americans can look to each other rather than government for assistance by allowing gifting from one HSA to another both within and beyond family connections.  This is similar to the medical sharing ministry concept without the structure of membership or formal organization.  Any groups could pledge to come to the assistance of each other as needed. Such transfers could keep some people away from Medicaid, where access problems are well known or safely allow lower cost policies with higher deductible amounts.

6) For those in need fund a portion of all government assistance transfer payments into personal HSAs to be used ahead of Medicaid.  The power and influence of ownership is stronger than artificially concocted restrictions on use.  Funds from HSA extend dignity of choice and equal access until exhausted

Nothing more at the federal level may be necessary.  States would have to do their part by discovering their proper constrained regulatory role, requiring sufficient reserves to pay claims and enforcing rather than defining terms of health insurance contracts buyers and sellers find right for them.  All this, of course, requires and follows total Obamacare repeal.

While the benefits of defined contribution in a free market (not to escape or game Obamacare) have been recognized (tops list in American Doctors for Truth Plan) and discussed, no one has suggested a good way to transition. Less attention has been paid to the damage done by employer provision of health insurance, which itself was propelled by government tinkering with wage controls in World War II.

Frank Chodorov, in his 1959 book The Rise and Fall of Society, provides clues to understand why employer provision has been the enabling force of most of our problems.  He argues that a natural law of human behavior leads men to seek the highest degree of satisfactions with the least expense of labor to thereby pursue limitless desires, in order to obtain even greater gratifications.  This leads to efficiencies of effort and specialization of tasks via cooperation with others in forming societies.

Unfortunately this natural inclination also presents a weakness to seek something for nothing.  Such is the case when the employer provision of health insurance disconnects the employee from its cost.  As soon as the employee disassociates health insurance with being a part of his employer’s total cost of his employment, rather than realizing he is really giving his employer permission to spend his money in ways that may be against his best interest, he’s in trouble.  He will request or even demand more, without consideration of alternatives that would be likely choices if he was paying directly.

This then is the source of a gradual movement away from direct payment, even for that normally within the ability to easily afford otherwise, to prepayment schemes that defy the normal purpose and function of insurance to protect assets from expenses that are beyond the ability to pay.

This excess third party payment itself bolsters the illusion of getting “covered” services for free or almost free, even as the premium includes the incentivized overuse of others when not getting one’s own.  It is through these false satisfactions that we accept in healthcare what we don’t see anywhere else in our economy, a situation where almost every transaction involves, at least in part, someone else’s money, driving overuse from both the consumer and provider side along with the associated administrative costs to accomplish it.

It’s not hard to imagine how employer provision of car insurance over time would look just as ridiculous.  Oil changes would require a small copay and many other services would be “covered”.  The brake lobby would have used safety as an excuse to convince legislators to require brake “coverage” in every policy issued, all as employees, under the illusion of something for nothing, would keep asking and demanding more “generous coverage” from employers.

On the other hand, employees reconnected to cost through defined contribution, sparked by simple modification of tax policy related to HSAs, in states that likewise get government out of the way to allow multiple market choices, will make wise decisions that fit their specific financial needs.  The abuses of excess third party payment will naturally end and the free market magic bullet solution some say cannot exist will be a reality.  No one thing can accomplish so much by doing so little.

Note: This article shared to Watchdogwire-Pennsylvania

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Can Covering Preventative Healthcare Services WASTE Money?

Posted on April 6, 2012 | 3 comments

As I study and think about the healthcare issue, I’ve had this feeling that one thing simply could not be right.  Proponents of Obamacare have argued, and many Americans seem convinced, that preventative medicine, those checkups, tests and procedures designed to find something wrong can save money by nipping problems in the bud, saving tons of money down the road after a situation has become more serious.  This thinking is so strong that even in high deductible health plans preventative services often do not conform to the deductible and are covered in full or part on a first dollar basis to encourage their use to save others lots of money and reduce premium costs in the long run.  Is this actually a fact or more fallacious nanny state thinking?

Let’s say a checkup does find something wrong, even in someone with no symptoms at the time.  Then what?  When available, treatments would be applied, medications or even surgery would be administered to address the issue.  Yet these treatments themselves are often very expensive and that cost must be spread across all insured.  Whereas, had the condition not been discovered early, by the time the patient experiences symptoms treatment may no longer be an option and expensive end of life treatments may be incurred followed by an early death.  Yet even in this situation, treatments (expenses) that could have prolonged life have not been incurred, and while expensive end of life treatment did occur, it occurs for everyone not experiencing a sudden death sooner or later.  Then too, at the moment of death (which none of us will escape), medical expenses for that individual immediately drop to zero forever.  This all makes avoiding preventative care seem like it could be the cheaper, if even fatal, option.

None of this is to suggest that we do anything to discourage preventative care either, as there isn’t much argument that such steps and discoveries can prolong life, even if at great expense over time.  The point, it seems to me, is that in a society that subscribes to individual liberty what business is it of mine what the next person decides is the right approach for them, especially if it turns out that encouraging greater use of preventative care does not in reality save money as is so often claimed.

Another consideration is that preventative services are at the lower end of what is affordable and as such should never be included in insurance at all.  Doing so defies the purpose of insurance to begin with, that being limiting the risk of encountering the otherwise unaffordable.  Additionally, in a truly free market, with prices mutually agreed by the provider and consumer, preventative services would be the most likely to be heavily discounted as they are gateway transactions.  Any discovery that would require further intervention would often take place at the point of the exam.  This has not been lost on Pep Boys or recently Meineke when they advertise they will diagnose that check engine light in your car for FREE!  Of course in our convoluted system any physician who accepts Medicare or Medicaid would be committing fraud for extending such an offer.

This then leads to the question of what about the poor who want preventative care but may not be able to afford it on their own.  Even here allowing market forces to work is a preferable approach.  Funding Health Savings Accounts to provide for normal health related expenses and allowing participants to eventually keep funds not used encourages wise spending and respects the poor’s discretion and dignity in making their own choices.

Of course the no cost preventative care of eating a balanced diet and exercising regularly is probably the most effective approach in reducing costs aside from direct payment and is not dependent at all on economic status or situation.  Yet here again respect for the liberty of others precludes requirements to exercise or eat a certain diet.  It is simply, although wise, not the business of others in a free society respectful of liberty.

Now you may and should ask if there exist any studies to support my thoughts presented here.  A Google search “does preventative medicine save money” says “yes”.  In fact there are so many sources in agreement that I will simply challenge you to do the search for yourself.  I’ll only note that sources include the New England Journal of Medicine, the Wall Street Journal, and ABC News among others.

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The Unspoken Barrier to Real Healthcare/Insurance Reform

Posted on March 30, 2012 | Leave a comment

I often say “I blame conservatives for Obamacare” or even write it on signs to provoke discussion.  Oh, it is not anything I’ve ever seen conservatives do.  This is purely an act of omission that is part of a much greater deception that has befallen perhaps three-quarters of our population.  There are two things that reveal the depth of the deception and provide the basis for the direction of my thoughts.

First, in the debate prior to Obamacare, one lame conservative rebuttal went like this: “Surveys show that >80% of Americans like the Healthcare they have!”.  In the first place they really meant Insurance.  This was repeated over and over, and was a major red flag of misunderstanding.  Second is the fact that adoption of High Deductible Health Plans with Health Savings Accounts remains only a small portion of the market share (<10%) after 9 years of availability, being another sign that the issue is poorly understood.

So just what is this deception or misunderstanding?  Quite simply we have embraced a product and approach that encourages massive overuse and benefits no one greater than whoever sold it to you.  Any attempt to “insure” the everyday, the expected , or that within the ability to pay otherwise is a fool’s game that always does insure one thing, that the incentivized overuse of others will be in your premium.  That most young people face a greater unexpected risk to their finances by a major car repair than health issues still does not make the purchase of recent attempts to sell car repair insurance a good idea for most who buy it.  Yet Obamacare seeks to build on this fallacious and flawed approach,  aided immensely by the many who’ve already bought into it by accepting low deductible, cover everything, third-party prepayment schemes and calling it insurance.

To this day the gold standard of research, a brilliant piece written in 1994 is as relevant today as it was then.  CATO Policy Analysis No 211 Why Healthcare Costs Too Much by Stan Liebowitz examines the effects of what happens when we create the illusion of free or almost free with low or non-existent deductibles or small copay amounts.  His study put a staggering estimate on the cost of the overuse this causes.  The amount was $300 billion in overuse plus $33 billion in associated administrative costs, for a whopping total of 1/3 of a Trillion Dollars in 1994!  Notably Liebowitz suggested as a remedy the greater use of high deductible insurance and health savings accounts.   In the time since 1994, into this toxic soup has been stirred more and more state mandated coverages providing even more opportunities to overuse.  Some of these are as silly as marriage counseling or massage therapy, things that should be questioned as whether they are healthcare at all, yet they are in our policies and premiums with billing codes to support them and schools to train the billing coders.  Where does it stop?

Conservatives need to recognize the powerful truths that have been hiding in plain sight and promote the simple solutions that are at our feet.  In addition to the Liebowitz study and others we have the results of a real world example in the state of Indiana that gets too little mention.  By only offering a choice to their 30,000 state employees and then getting behind it with education, Governor Mitch Daniels in his March 1 2010 op-ed in the Wall Street Journal revealed the results of getting >70% of their state employees to elect a high deductible health plan by their choice.  He said that Indiana in 2010 would save at least $20 million as satisfaction was high with only 3% switching back to the traditional PPO plan after having discovered the high deductible approach.

The times when Obama did provide an opening by saying he wanted to see better plans if they were out there, the ammunition was at hand.  Somehow we got caught up in their argument and never went full-bore into what does work and why it works.  It is no more difficult than the restoration of a functioning free market that comes from increasing direct payment and limiting third-party payment to its rightful place in the shadows of absolute necessity.  The low deductible cover almost everything approach is an expensive false comfort accepted by too many and why this illusion stands as a barrier to meaningful reform.  Folks do not like to admit how wrong they have been.  By peeling away politics and legalities and emotion and lately religion, and getting to basic choices on the Smart vs. Stupid Scale, based on facts and then the constant promotion of these truths, real reform may yet be achieved.  The role of education should be obvious.  Let’s get on with it.

Note: This post shared to WatchdogWire-Pennsylvania

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