The U.S. has a compassionate history its health care policy with its Medicare and Medicaid programs. However, neither program is directly aimed at the biggest cost-risk issue in health care; catastrophic events. This is the consumer risk that needs to be pooled and the largest pool size possible develops the lowest per person cost. The percentage of households/persons that can actually afford a catastrophic level medical care expense is so small that it is fair to say that this is the one area where all health care consumers can agree that risk should be pooled in the largest fashion possible.
By funding universal coverage of catastrophic risk through a public controlled risk pool; the balance of medical cost risk is made vastly easier to price- in the private sector. Further, this move puts the most onerous potential results of private insurance to bed- the largest financial incentive to deny or limit care is in high expense medical care events (short and long term).
We already know people spend more at the end of their life on medical care; this is not going to change whatever we do, higher costs at end of life are highly predictable. We already know that people that don’t have any money can’t pay for insurance and can’t pay for care upon demand, whether in an emergency room or a clinic. Medicare and Medicaid are compassion based program, not risk based, and insurance like in form only, not in substance. Private insurers cannot take in less money than paid out every year like our Federal programs do.
Many of the buzz items in the debate are business practice in nature; including pre existing conditions, loss of employment, portability, competition across State lines, uniform forms and understandable coverage, elder care, and tort reform. In my view, these items are regulatory in nature, made considerably easier to regulate if you take catastrophic coverage out of the “traditional” private insurance equation. The fact of the matter is that consumers do need protection in purchasing and utilizing health insurance and some standardization will help the confusion.
The new program to cover catastrophic medical cost risk would be day 1 coverage and pay-in; universal to all participants. The pay-in would be analogous to social security. The program could be “overseen” by the Federal government and managed by private agencies on an administrative cost mark-up basis. The catastrophic care fund would be a sinking fund; sinking funds require political and economic discipline. There is no valid argument that future generations should pay for current medical costs.
There would be no need for Medicare under this program; you are either poor and can’t pay, or can’t pay full price, or the medical expense is catastrophic in nature, thus otherwise covered. Medicaid would be reformed- a tall order, to administrate for no pay and subsidized citizens, including specialized services that are involved (e.g., elderly, young mothers).
By removing catastrophic risk, in conjunction with appropriate regulatory reform; private insurers should be better able to develop a la carte and consumer class programs. Consumers would be able to buy what they want, or don’t buy at all. We should take employers completely out of the equation, it is a false notion that millions of U.S. companies purchasing and administrating health insurance is efficient. There are far larger natural groups of consumers that can be used effectively as buying co-ops than individual private employers.
The debate paradigm shift suggested by this re orientation of the Federal government’s role in health care is radical, but its implementation builds on the best care system and most innovative free market economy in the world. Our system is too expensive and not inclusive enough- but the solution should be based on a rationale analysis of medical cost risk and a pragmatic perspective on what people and business will do and not do
Scott Hardy lives in Bow Mar.
