Monday, February 22, 2010

A different way to obtain a health care mandate

President Obama will be announcing his idea, again, for health care reform today. The plan is rumored to include the constitutionally debate mandate on all Americans to have insurance. Obama is missing a great opportunity to get a mandate implemented. The Constitution does prohibit the government to dictate citizens to purchase any item. Now, some will attempt to argue that car insurance is required to drive a car. Correct, in order to have the privilege to drive a car in Minnesota one must carry car insurance. This is not true of the rest of the United States as I am learning in my insurance classes. If Obama really wants to implement a mandate on health care he can easily accomplish it through Medicare and Medicaid.

To move closer to a mandate on health care, the President will need to come out with a plan that phases out Medicare and Medicaid for those younger than 55 years of age. As he phases out these two entitlement programs they are replaced by a Medical Savings Account (MSA). The MSA will become a bookkeeping change on our paychecks as the amount currently being deducted would go into our own MSA versus the big pool of Medicare and Medicaid. After the switch is made, President Obama can enact the second half of Universal health care. The second half is to have Americans use that MSA to purchase inexpensive health care option offered by the Federal Government.

By phasing out Medicare and Medicaid through the implementation of a MSA it will achieve the mission of Obama in regards to health care reform. The reform will be easier as well and would not see the same Constitutional fight that an outright mandate will. Plus, going this route will be less expensive and more subtle to the average citizen. Then in his final year of his term in office Obama can launch a federally run health care option that people can use with their MSA. This way we will all have some money in the MSA and in comparing the costs of escalating premiums in the interim; Americans will be more accepting of Universal health care.

16 comments:

  1. "The Constitution does prohibit the government to dictate citizens to purchase any item"

    Viper where does it say this and where in constitutional case law is this addressed? People study constitutional case law for decades and you decide that right here?
    I hope that you realize that mandating everyone has insurance is the piece that insurance companies get to prevent heavy lobbying against anything being done. I'm not so sure I agree with it fully, but medical insurance companies are going to have their say.

    One thing that strikes me is your MSA account idea. Sounds good, but do you not think that this is just another version of social security? True, we get rid of a large bureaucracy, but what exactly prevents the government to borrow against that like it does the current entitlements?

    I've had MSA acounts before. With my health issues I would really have to sock a lot of my earnings away into it if I wanted care after I retire. I think those things are great for covering things that insurance doesn't typically cover, but for regular medical care? Not so sure.

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  2. Article 1 Section 8 does not stipulate where Congress can mandate the purchase of anything by the citizens in the United States. I do not need case a court system that attempts to legislate from the bench to tell me that mandating anything is not a power granted Congress or the Government.

    I do admit a short fall of the MSA is that not everyone will benefit equally from it at the start but we need to start somewhere. The MSA will build and will not become a slush fund like SSN has become. People can then purchase long-term care and catostrophic insurance while using their MSA to pay for clinic, ER and hospital visits that do not require lengthly stays.

    If everyone had a MSA then clincis and hospitals would have to display their costs like McDonald's or Burger King does. One can also add money to the MSA if they like as well. Companies can contribute as well instead of paying $1000 for a health insurance program.

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  3. So...your argument is that because article 1 section 8 doesn't implicitly say anything about mandating insurance. So by your standards then, we can assume they can't do it?
    The Constitution doesn't so much say what Congress can't do as it does what they can. If you think about it, this restricts the Congress a lot more than if it spelled out what it is prohibited from doing. By reading section 9, I really don't see where that could be infered. Maybe the prohibition on passing a bill of attainder? I guess I am not sure.

    Anyway, are you trying to do away with insurance companies all together in favor of MSA accounts or is this just for after you reach a certain age, like Medicare? In MSA accounts you can use the funds while you are paying for them.

    I'll will continue after I hear your answer

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  4. Both sides of the mandate coverage of health care insurance are pointing to the Commerce Clause as well. I think there are 12 AG's looking into the Constitutionality of the mandate as well. To which if it is included could tie it up for years.

    Now, the MSA. The MSA is not going to do away with insurance companies. The MSA makes insurance portable and gives the consumer greater flexibility. The MSA will replace Medicare as Medicare and Medicaid needs to be phased out. Funds from the MSA will be able to be used to purchase long term care insurance and castrophic insurance.

    MSA will force insurance companies to fight for customers because businesses will no longer need to offer health insurance. They will need to obtain a risk pool someplace. Plus, it will force clinics and hospitals to compete against one another for those MSA dollars. Competition is always good and will drive down costs.

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  5. Personally, I think you are living in some kind of fantasy land.

    I do want to see the end of Medicare and Medicaid, thats for sure. However, how much flexibility would a dish-washer making minimum wage have?
    If you are upper middle class to wealthy working for some fortune 500 company that can match MSA donations, sure, I agree that my healthcare would be good. But to suggest that just because insurance companies will fight for the dollars of a college-age Target employee is pure fiction.

    I have 5 cell phone companies to choose from...they all cost me $50 per month for service. Competition? Not really. However, if I want a cell phone I can choose the kind of service I get. But if I don't have 50 bucks per month to spend, I can't get a cell phone.

    Look, I know what you are suggesting. I am not a fan of Medicare/Medicaid either. Nor am I a big fan of employer based insurance. But hospitals and clinics have to pay for their MRI machines somehow. What you are proposing really isn't much different than how some people can afford BMW's and some of us are stuck with taking the bus. My apologies to you but government might have to take more of a tax-based role in fixing healthcare.

    There is no quick fix to this, both sides need to share in some pain.

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  6. Anon...

    I am not sure how long you have been reading the blog site, one of the pitfalls of allowing Anonymous comments, but I have touched on a frame work several times to move health care in the right direction.

    The MSA and phasing out of Medicare and Medicaid is just one aspect of the required change. You are correct in your example of cell phone companies but ask yourself what it would cost without competition. There will always be a floor price to competition as the company needs to turn a profit. Now, think back 10 or 20 years and compare the price and services you get. That $50 you pay now, you have more options with the cell phone - ipod, mp3, digital camera, digital recorder, internet, instant messaging, gps, and a phone - plus the plans are affordable now and offer enough minutes that one can dump the land line.

    You are correct that hospitals must pay for those MRI machines but one has to admit that if we have three hospitals to choose from, and with all things equal, the hospitals will fight, via price, to get your business for that MRI machine. I am not naive enough to believe that the cost of using the MRI machine will drop below $100 but it may become more affordable; say $300.

    In addition to the items listed above, we need to rid the health care industry of their anti-trust exemption, establish real and lasting tort reform, allow for intrastate purchase of health insurance, and do away with pre-existing conditions in so far as eliminating someone from coverage. Take these items and mix them together and I think we move toward a health care system that retain free market principles, removes government intervention, becomes more affordable, and reduces costs.

    The point of my blog entry on MSA too was it is a backdoor way for Obama's Administration to entrench the mandate without calling it a mandate. We already pay for socialized medicine to a degree and we have seen how allowing the Government to interfer is bankrupty the system. So, why not allow the consumer and free market forces dictate action with little government intervention. The government will still need to ensure patient rights, fair market ideals, and bird dog for collusion or another anti-competition.

    As the old adage goes: If two sides come to the table with their ideas and both walk away angry then a compromise was reached.

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  7. I think the main problem is that we started down that road and now its become too entrenched with the status quo.

    67% of the public actually likes their employer-based plan (from USA Today). I like mine, until I see what it actually costs who I work for and me. But what choice do I have? The main thing to this whole debate, is to educate the public on how insurance company AND government entitlement abuses are slowly killing the system of healthcare in this country. Until that happens you and I are going to watch politicians battle it out to create legislation that does very little to control costs, cover 100% of Americans, and curb insurance company abuses.

    As far as a free-market philosophy, I think that if you were to start from scratch it would work. But we are not starting from scratch. Insurers are very powerful and aren't going down without a fight.

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  8. I don't think we need to scrap our current system; rather we need to enhance it. The trouble we face is that our society has become dependent on entitlement programs. Not to mention that our politicians are hoping that Americans stay dumb and complacent so they can slowly grow government and make everyone of us co-dependant on government.

    I agree that employer based health care has been very successful. I reject the notion that every America be required to carry health insurance. Does it make sense to have health insurance? Yes. That being said, if more people were educated on Health Savings Accounts (HSA) and High Deductible insurance plans then Americans would understand that alternatives do exist within our current system for lowering premium plans.

    The cost structure that drives prices skyward is Medicare and Medicaid because of their low reimbursement rates. Phase out Medicare and Medicaid and drop those dollars that we already pay into a HSA/MSA for the individual taxpayer. The medical cost for those 18-30 is far less than those over 40 on average. Since medical costs would be lower for those 18-30 they would be able to accumulate funds to assist them in later years.

    The way that Government can give this traction is by phasing out Medicare and Medicaid (loss generator for health care providers), remove the anti-trust exemption and establish comprehensive tort reform. Then step back and allow the free market to take off. Going this route will reduce the budget, alleviate the burden Medicare and Medicaid places on States and will allow our government more money to pay down our debt.

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  9. I don't agree that low Medicare and Medicaid rates drive prices that high. I look at my insurance reimbursement break down and I am amazed as to how little they actually pay for services.

    I think that if you were to research a little harder as to the costs associated with our healthcare system you would see that hospitals and clinics really only have about a 4% profit margin. Insurance companies themselves say their profit margins are low as well(I don't know the exact number). Why is that?

    Just think of all the things that go into what doctors and nurses do everyday. Administrative costs, research and development of medical products, all the way down to the janitor sweeping the floor.

    Now, we live in a society where everyone has the right to receive healthcare. But, fewer and fewer of us have the ability to pay for it. The number one reason for bankruptcy in this country is from medical bills. Someone has to pay for all of the people that the hospital treats but are unable to pay for their services. If you were a hospital administrator, what would you do?
    So, really now, you are going to remove two programs that provide limited coverage, but coverage, and expect that the hospital is going to lower their costs? If anything their going to go up because simply not enough people are going to be able to pay for services that the hospital provide. EVEN with enrollment in an HSA or high deductible plan.

    I understand your obsession with the anti-trust exemption and tort reform. But these fixes are just drops in the bucket. Lowering costs associated with healthcare can ONLY be achieved if everyone had a way to pay for the care. And the free-market has never demonstrated an ability to include everyone.

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  10. Last year the Mayo Clinic reported they lost $840M due to carrying for those with Medicare and Medicaid while only writing off $160M in uncollectable accounts. I agree that bankruptcy is on the rise due to medical bills but I wonder how many of those people have other circumstances.

    It is not secret that Medicare and Medicaid reimbursements are below costs and if the Mayo situation is representative then I the bigger problem is the government run entitlement program. I do reject the notion that health care is a right. It is not a right. Morally it makes sense but it is not a right.

    I have always lived under the notion that if the person has no insurance or cannot pay for services rendered then the hospital ought to be able to turn them away. I understand this goes against the oath they take.

    If we shift dollars from Medicare and Medicaid deductions that currently come out of our paychecks toward a HSA, people will have money available to buy insurance. By removing the anti-trust and crafting tort reform, we will see a reduction in costs and premiums. All of these elements need to play their part as anyone part cannot accomplish the goal of lowering costs and making health care affordable on its own.

    The reason why the free-market struggles with providing affordable health care is two-fold. First, the anti-trust exemption. Secondly, the entitlement programs that reimburse at rates lower than costs. Remove these two government hindrance and you will see the free-market forces work properly.

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  11. "I have always lived under the notion that if the person has no insurance or cannot pay for services rendered then the hospital ought to be able to turn them away. I understand this goes against the oath they take."

    Then what is the point of this debate? Under any free-market plan, not everyone will be able to afford it...so I guess then that healthcare can only be given to upper middle class and wealthy people, right?

    But, in reality, I have said what I've said. You know as well as I do that the free-market can only go so far in covering people because the free-market is not interested in people who do not have the ability to pay. Unemployed, or unable to work...those people are screwed if they get sick.

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  12. I would like to see some hard-evidence that removing the anti-trust exemption would lower premiums.

    The anti-trust exemption deals with abuses that insurers can do against the insurance buying public. So, by removing it, you are allowing the federal government to prosecute those abuses. Interestingly enough, the states already have those kind of regulations in place, because the antitrust exemption only applies to the federal government. However, the states rarely ever take action on antitrust enforcement--think of the legal entanglements.
    This is why buying insurance across state lines is a lame idea, because what insurance company wants to sell insurance in a state that has strict price-fixing enforcement?

    So...show me where such action will actually lower premiums?

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  13. Under the Free-Market everyone has an opportunity to purchase but it will not be free or on the backs of others. The trouble we see right now with spiraling costs and premiums is primarily due to government intervention through anti-trust and entitlement programs.

    If we phase out Medicare and Medicaid for those under 55 and replace it with HSA we enable everyone to obtain insurance. By creating a HSA we make insurance portable. Also, the HSA will not put current employer-based insurance programs at risk. By going through with more entitlement one can kiss their employer-based insurance good-bye!!!

    As I said, and I think you agree, there is no silver bullet. That is why several elements need to put in place.

    1. Phase out Medicare/Medicaid for those under 55
    2. Convert M/M payroll deductions to individual HSA's.
    3. Remove the Anti-trust exemption
    4. Craft tort reform
    5. Allow for intrastate purchasing of health insurance
    6. Eliminate pre-existing conditions

    Combining these six elements will not cost us money and it will allow the free market work. Why do we need a 2700 page bill that raises taxes, places an unconstitutional mandate on us, and increases entitlements thus increasing government.

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  14. Anon...I always understood the anti-trust arguement as to the price fixing and strangle holds that insurance companies had over hosptials and clinics. Am I not understanding the issue correctly? This is always how it was explained to me by people in and out of the industry.

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  15. No, that is incorrect, or partially correct I guess.
    The antitrust exemption grants insurers a limited exemption from federal antitrust scrutiny. Meaning the ability for the federal government to investigate things like price-fixing, bid-rigging, and market allocations. Some states already have those laws and some states enforce them thouroghly. I'm sure Minnesota is one of those states. Most states don't have the resources, and some just don't really care. It has nothing to do with any control over hospitals and clinics. They really have nothing to do with insurers besides receive the money that they bill.

    Now, removing the exemption does place the burden on insurers to prove that they don't fix prices to the feds who do have the resources. I don't consider that a bad thing. I think that insurance companies need to be more accountable just like everyone else.

    But lowering premiums on healthcare insurance? The CBO says that it won't happen. I also know that there are articles in the American Enterprise Institute have said the same thing.
    I guess since the exemption has been in place since 1945 (well before healthcare insurance) this is all speculative. But still...

    I hope that helps.

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  16. Anon..no thanks. I appreciate it. Part of the reason for the blog is that I know I don't have all the answers and there will be times that my understanding will grow.

    That being said, we can all agree there is no silver bullet and government option or entitlement only makes things worse. If we incorporate a number of issues, like the six I stated prior, I do believe we will see what we all hope to see; reduction in costs and affordable health care for all.

    Would you agree? Or do you feel that another entitlement is required?

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