The American Way: An Economic Approach to the Health Insurance and Health Care Crisis in the United States
The United States' health care and health insurance crisis permeates and corrodes the very essence of American existence. Our politicians and lawmakers are scurrying to find state- and nationally required answers to one of the most costly crises confronting our nation today. Numerous documentaries, including Michael Moore's "Sicko," as well as innumerable television reports and newspaper pieces, shout the need for reform. As the price of medical services and prescription medications continues to climb inexorably, the bureaucracy of insurance providers increases rates and reduces the quality of coverage for the majority of Americans' health plans. Drug corporations are under continual inspection to offer more competitive pricing, but they are subject to very minimal regulation compared to other nations that have chosen to implement cost limitations based on the perceived requirements of their own cultures.
How does a capital-driven nation like the United States restructure its health care system while maintaining the religion of "choice" and "capital market competition" in the face of such a negative equation? How can we accomplish this without murdering more Americans?
To address these concerns, it is vital to consider what works and what does not in the United States and in other countries where socialized medicine is the norm. The issue that Uncle Sam and many self-made American businesspeople have with socialized programs is their ability to depreciate a society's growth and lead us away from our financial and health-related independence. To continue allowing health insurance providers to protect their billions of investment dollars (a key pillar of our financial structure) and still take care of every sick American, we must radically alter how the risk of such health problems is transferred while continuing to collect regular premiums from taxpayers to fund the system. My suggested approach will be outlined in very basic words in this post, building a fundamental architecture that would allow independent insurance carriers, independent hospitals and physicians, and competitively successful pharma businesses to stay while still covering every American.
Proposal Architecture
I would suggest a three-tiered structure for health insurance, prescription medications, and all forms of medical providers:
I. Insurance Procedure
To keep insurance companies successful and give 100 percent basic health care to all Americans at the same time, you must combine the net impact of socialized medicine with free trade in the United States. The federal government must establish a fund that closely resembles a reinsurer. The majority of health and commercial insurance businesses have big reinsurance arrangements and policies with major funds. In its specialty, Berkshire Hathaway's "General RE" underwrites some of the largest worldwide insurance contracts in the world. The federal government must take the opposite strategy of a non-profit, heavily taxed Medicare and insurance system by establishing the greatest reinsurance vehicle in the world. The reinsurance department is supported by A) a portion of all health insurance premiums from all health insurance businesses and B) an increase of 1.5% in the federal income tax for all Americans. All health insurance companies are now required to offer a BASE INSURANCE LEVEL that includes a) complete prescription coverage, b) all covered doctor visits, and c) full major medical coverage with no deductible.
Actuarially speaking, your actions do not eliminate health insurance premiums for Americans. All employed Americans earning more than $16,000 per year are required to pay a scale-adjusted premium of the same category and type for the "basic policy." The premium scale is determined by total family or individual income depending on current employment. However, you have simply transformed the whole insurance sector into a massive "group plan" that spreads risk over the entire nation. Using the ratio of healthy Americans to those seeking services at any one time, this straightforward technique reduces the base insurance's premium to a reasonable level for all wage earners and provides the base coverage for free to low-income individuals and families. Low-income individuals receive the same basic insurance as everyone else and are forced to file for insurance with a private insurance company of their choosing. The government RE fund compensates all insurers with a minimum base amount equal to what they would get from a paying customer. 30 to 35 percent of the private insurance company's basic premiums for all policies are allocated to the "Federal RE" model. The basic premiums and the amount each individual must pay are decided by an actuarial committee of the new federal RE fund, but adjustments should be made seldom. Once the percentage is determined, it becomes legislation, and the 1.5% tax rise across the board largely serves as a buffer for low-income and disadvantaged individuals.
As part of their marketing and packaging, insurance firms then attempt to differentiate themselves by adding features to the fundamental policy of their clients. As it is mandatory, they do not differentiate themselves by providing inadequate insurance. The standard coverage for everyone is a California-standard major medical insurance policy that covers all co-payments and deductibles in full. To earn extra insured dollars, the health insurance must give more elite services that guarantee clients who are prepared to pay for additional features a position that is even better than the standard position. This allows the following to follow a logical sequence:
Insurance firms earn from their reinsurance departments in the same manner that the federal government gains from investing insurance premiums. All Americans who can afford to pay premiums bear the risk. Due to the exaggerated group size and reduced insurance company risk, premiums are modest. Combining a tiny government tax increase to encourage hedge-fund volume and bolster the account with receiving RE premiums and investing them makes this federal program somewhat lucrative, with the opportunity to modify policy as necessary.
* Insurance firms can lower their risk by streamlining and reducing the complexity of their primary medical coverage.
Since all rules apply to all insurers (new and old), companies can compete on the basis of "ancillary" goods that enhance insurance quality for those who can afford additional advantages. Due to RE participation on the policy's base components, major rewards will be drastically decreased.
Costs of Prescription Drugs
By making Federal RE the "co-payer" in the majority of medical transactions for both medication and medical services, you have necessitated a private-sector strategy to managing the cost of pharmaceuticals and other prescriptions. This is a thorny issue due to the perception that drug research expenses are out of control if they cannot be later recouped through high pricing.
Since the federal government, in the shape of Federal RE, is now a payer and consumer of pharmaceutical businesses, pricing for pharmaceuticals must strike a balance to enable for development and free commerce, but with reasonable buying limits. The federal government is responsible for preventing monopolies. Monopoly is not defined as a single manufacturer of a product (or medicine) being the exclusive supplier for that product. A monopoly is defined as a single-source manufacturer that charges a price that is detrimental to society and may impede competition. (generic medicines) Standards must be created for the maximum payment amount authorized for each type of pharmaceutical and medical supplies. Employees of the Federal Reserve will be accountable for this comprehensive and ever-changing piece of work on an ongoing basis. The aim is never to fix costs but to decide the maximum the fund will enable an insurance business or itself to jointly spend on a prescription, taking into consideration all features of the newness of a product by employing variable actuarial and monetary scales. If a pharmaceutical provider is unwilling to satisfy these maximums, the drug will be unavailable until they are prepared to compromise. This is a fly in the ointment that cannot be corrected any other way owing to the way pharmaceuticals are genuinely created in the United States. Americans who supplement their "base policy" with supplemental insurance that covers pricey cutting-edge medications may be able to obtain the prescription, but base-only consumers will not. In the majority of normal circumstances, pharma companies will be compelled to decrease their prices at least to the point of scale due to consumer demand. This aspect of the plan cannot be amended to satisfy a specific party, as doing so would cause the entire purchasing system to collapse. However, organizations that are now supporting low-income victims may change their attention to those few who are unable to obtain the most advanced goods in time. The funds cannot be covered by federal RE, period. That does not imply that another vehicle, whether private or public, cannot be redirected to aid the small fraction of patients who require cutting-edge pharmaceuticals that are not listed as "buyable."
Medical Care Subject to Federal RE Conditions
Currently, all Americans have access to medical care, and in virtually all situations, their medicines are covered as well. But now that we are prepared to load up every clinic and big hospital with patients, how do we control the clinically crazy costs of running that clinic or hospital? We can stave off socialized prescriptions by creating a powerful buyer in the market through federal RE and having straightforward cost-overrun requirements that are non-negotiable and constant. However, clinics, hospitals, and emergency rooms did not get less expensive. Since (at a minimum) all Americans are now insured by the greatest big medical insurance that money could buy, billing processes and related bureaucracy are automatically simplified over time. Medical expenses, regrettably, have little to do with the real cost of a service and everything to do with what various hospitals and clinical administrations CAN demand in each case. If we unduly restrict the cost of each surgery, we will be replicating the socialized policies of nations we do not wish to live in.
I would argue that the same way maximums were set in Item #B above, a regionally mapped approach to avoid overcharging might be implemented. What constitutes an overcharge is again determined by a committee at Federal RE, same to how medications are banned when their costs are deemed excessive by both insurers and the government. Due to the fact that the whole American population is covered by Basic (unless they foolishly "opt out"), the consumer is now both the Federal RE and the private insurance carrier in each case. If, by today's standards, a clinic's cost constraints are ridiculous, the operational units' ability to charge whatever they want or what they formerly believed an insurer would pay would have a devastating effect on the quality of treatment they provide. When medical organizations attain 100% payment continuity via a single-payer-style system with few incorrect delays in the streamlined processing, they will earn far more than they do in the current environment of continual claim disputes and zero consistency. As with the prescription committees, the monitoring committee is formed of competent Federal RE specialists who comprehend the underlying economics of a hospital or clinic. Extremely excessive overcharges that exceed the scale cannot and will not be honored. The key to reducing pricing as the system matures is not price regulations, but rather the reduced cost of operating a hospital or clinic when payments are received in real time. That is correct. There is no need to withhold money under the new scheme once services have been rendered. Medical billing will be a breeze, and the enormous sums of money each institution spends on remedial systems may be reduced. The rate of payment to medical institutions is a significant contributor to the overall performance. Having a broad and detailed accounting system to track abuses is also essential. Audits will replace much of the annoyance associated with billing insurance companies and will become a routine occurrence at hospitals. The regular auditing of each institution by the government is a foundation of this approach, and we shall elaborate in subsequent sections on who and how this occurs and how often.
The American dream is a marvelous thing. Professionals that seek their fortune in reputable health businesses, medical employment, and insurance work do not need to have their profit motivation removed. Simply outline the principles of a new system that use the age-old insurance principle of "big numbers" to form a national group. The talent necessary to be a chosen doctor, dentist, or insurance provider still remains, but in an expanded form. The new approach eliminates state programs along with the unending bureaucracy that surrounds them. Welfare moms and low-income households are completely sponsored for the coverage they require, while Federal RE investments over a long period of time cover the majority of the inherent shortfall. Hospitals, clinics, insurers, and drug firms must compete on the basis of the quality and product offered, rather than the HMO or PPO they belong to or the minimally selected "degree of care." Once the dust clears, federal RE will actually generate a small profit, and medical care will improve through TRUE COMPETITION, as opposed to the bureaucratic version most of us are familiar to.
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