A Solution to the Health Care Dilemma

Last week I wrote briefly about the current legislation snaking its way through Congress. Both the House and the Senate bills are 1,000 page cluster FUBARs. Both are likely unconstitutional as they impose specific burdens on some individuals and but not others. Neither solves the health care dilemma completely.

That dilemma is the conflict between our desire for freedom to live our lives as we choose and the de facto acceptance by all that we don’t want to see or let people die in the streets or suffer from untreated illnesses or injuries from poor choices or unlucky events in their personal health and finances. One can characterize that modern emotion as a combination of empathy and fraternity. Libertarians might rant against it, but it’s inarguably there.

The current system is a mess with multiple prices for the same treatment depending on who pays, huge administrative costs, and incredible complexity. Pre-existing condition restrictions on coverage cause massive employment immobility. Random costs are borne unfairly by those simply unlucky. Employers impose proto-fascist, “brave new world” style behavior restrictions. The US health care system is both inefficient and immoral.

What to do ?

Establish a simple (relatively) National Shared Health Benefit that would cover everyone in the United States. Concurrently, it will replace Medicare, Medicaid and all other Federal health plans (except service related Veterans benefits, which would remain separate).

Expressly covered would be: preventative care (physical exams, cancer screenings, etc.); all child bearing costs (pre- and post delivery for the mother’s health and well-being), vaccinations, illnesses, wounds, injuries and defined mental illnesses; all prescription drugs; cancer screening for early detection and the treatments; hospitalization, etc. Coverage will be determined by starting with Medicare coverage and adding those treatments and procedures and services necessary for all persons less than 65 years of age. A Medical Senate composed of one medical professional and one public member (non-medical) from every State shall determine coverage and payments for new treatments by majority vote under the National Shared Benefit Plan.

A per-visit co-pay of $20 will be required as well as similar, reasonable co-payment for drug prescriptions. This is very necessary to deter hypochondriacs, etc. This would be waived for the truly indigent.

Competitive Structure

National Shared Health Benefit would be priced and administered by competitive private enterprise. The Federal government would conduct Dutch auctions for the program. Insurance companies, doctor & hospital groups, corporations, non-profits, coops or even States would submit one or more bids to provide the Specified Coverage for any person in their designated region at a fixed price for each year up to a specific number of persons. The Dutch auction would act similar to the auction of US Treasury issues. The cut-off price necessary to insure all persons in that region would be awarded to all the winning bidders who submitted prices at or below the cutoff price. Out of territory claims (due to travel, etc.) would be handled by simple cross-remittances.

Last, every winning bidder – and only winning bidders - would be authorized to offer “gap” policies and premium care policies at any price in any package. That fine business opportunity would encourage quality operations to participate in the National Shared Benefit Program.

Person in the region would choose coverage from the winners; if not choice is made, the coverage is assigned randomly. If a winning bidder has too many persons selecting that program, the prior persons covered by the bidder get priority with random selection thereafter.

Fairness & Free Enterprise

This plan disallows both the cherry picking of low risk persons and refusal to cover pre-existing conditions. ALL persons are covered, pooling ALL the risks; ALL share these costs in the spirit of national fraternity. Anti-freedom corporate lifestyle restrictions would be prohibited. Genetic screening would be prohibited as a determinant of coverage, but importantly, not for treatment or preventative care. This plan brings clear benefits to the working man and woman; it promotes families and children. This system would bring the spirit of competition and initiative to the medical system that is not in the existing program.

Price discrimination would be prohibited from any service provider participating in the program. This means the existing system of charging one person covered by plan X a different price than a different person covered by plan Y would be ended. Prices for all services would be required to be posted publicly on the Internet. Persons willing to pay for some extra tests, examinations, home visits or screenings would thus be offered fair price for such services.

How to Pay ?

The existing Medicare tax will be broaden to be a simple one rate tax on Gross Total Income, defined as the sum of (a) the current “Total Income” [line 22 in the 2008 Form 1040] plus municipal bond interest income [line 8a of Form 1040], plus any untaxed Social Security benefit [i. e., amounts not included in line 20b]. The existing Medicare tax and Medicare payments by current beneficiaries will be eliminated. Any other income now not reported shall also be taxed. This principle here is that this is a shared benefit for all and absolutely no free riders will be permitted.

One tax rate is set based on the plan’s “average cost” to raise the necessary amount. The rate will be adjusted automatically for cover the “average cost” computed on a five year moving average basis taking into account the trends of prices. The revenues from this tax pays for the insurance coverage for ALL priced by the competitive Dutch Auction bid process.

Employees will receive a credit against this tax based on the per person cost of the “net benefit” of any plan of their employer up to the cost of the National Benefit. This credit amount will be reported in the W-2 form. The Health Care Tax will be withheld from employee pay in the event the employer does not provide any health care plan. No double taxation.

That’s it. Simple and Fair.

Secondary Benefit: This is a model for true tax reform. Combine the existing income tax (personal and corporate), Social Security tax and Medicare tax into a single tax structured like the Alternative Minimum Tax.

Market Actions

I took profits early yesterday in the 1-2-3 Fund on the calls on PG, UTX and ITW. Profits were around 80% on each. Remaining call options are on MMM, BA and MT. Why did I sell ? Easy. UTX and ITW reported good earnings yesterday. The strategy behind the option plan was to capture gains from good earnings due, in my thinking to their overseas operations. Once the numbers were in, why keep holding ? Both stocks had ramped up be fore earnings and were up a bit on the news. For PG, it was ramping up, too, in anticipation of good earnings. Hence I sold all three.

I'm not a hog ... Je ne suis pas un goinfre.

Word of the Day

"Maieutic" - adjective [$10]
Maieutic means (I) of or relating to the dialectical method used by Socrates in order to elicit or clarify the views of others; (II) (of the Socratic mode of enquiry) serving to bring a person's latent ideas into clear consciousness.
Example from "The Pragmatic Theory of Fallacies", page 221, by Walton:
Use of a Straw Man fallacy can "prevent proper maieutic insight into one's own point of view from developing."
Application: The debate on that national health care plans suffers from the lack of maieutic insight that critical discussion using proper and fair argumentation techniques could bring out; thus a national consensus is not fostered.