Whiting column: The innovation nation can improve health care

It’s our duty to act.

Our country’s issues aren’t new arrivals. Present for decades, national action has been absent. Presidential action, until recently, has been rare. Congress, rather than initiating solutions, has become bound up defining and promoting partisan extremes. Timely overt action isn’t occurring or even desired.

Everyone stays in their lane. Afraid of losing votes by offending someone or making a mistake, both executive and legislative branches have decided the status quo is not only desirable, it’s the goal. No one is willing to swerve into the other lane, even if it’s the right thing to do. New solutions aren’t generated let alone supported and implemented.

Pushing the problem down the road is the preferred bipartisan strategy as if ignoring it will make it go away. This serves to magnify the problem. No different than an infection or deferred maintenance, the need grows until it becomes a crisis. By this time choices are gone. The resultant action is never cheap, desirable, or effective.

The origination and adoption of any solution won’t occur until we realize the genesis of action begins with us. Old proposals have been debated, attempted, adjusted to death. New unique and innovative approaches are required.

Our most complex issue is health care. Historically, no system has worked. Pre-Obama Care, health insurance was employer or private based; too expensive, too many uninsured, inequitable coverage.

Obama care was designed to lower premiums. Nice idea, but was predicted to be financially unsustainable and was, but it fulfilled the goal of attracting voters. When financial losses mounted, maintaining lower premiums necessitated Congress passing subsidies paid directly to insurance companies not policy holders. This increased governmental costs but successfully pushed the problem down the road until the legislated sunset clause took effect this year.

The socialistic approach hasn’t worked any better. Witness Canada, which assesses both provincial and national tax rates ranging from 8-40% depending upon income. The average wait for doctor’s appointments is 29 days; 7 months for specialized treatment. 42% said they would go to the USA for specialized treatment. Internationally, 1.9M came to the USA from a foreign country for medical care.

Other problems associated with any system are bureaucratic costs required to administer it, potential for fraud, no incentive for industry to control costs or individuals to make healthy decisions.

We also require the industry to provide health care to everyone regardless of insurance, ability to pay, citizenship or residency. A local hospital reported 31% of patients don’t pay. This adds to the cost for those who have insurance or do pay. A significant percentage of people don’t intend to pay. They don’t care about credit records or the healthcare ramifications of not paying. If we’re concerned about equity, it isn’t present in respect to funding medical care.

We need an innovative system to meet these concerns. There are three givens:

1. Health care will always be expensive. It requires expensive equipment, specialized employees. Hospitals, by definition, have too many beds and is overstaffed, 24/7 because they must be prepared for a catastrophe. There isn’t any solution that isn’t going to cost significant money.
2. We and insurance companies both fear the catastrophic medical bill. It’s why we buy insurance and they have high premiums.
3. Republicans want choice; Democrats want universal coverage; We want a good product at a reasonable price.

An innovative, “out of the box” possibility: A Three-Part Shared System.

PBS reported total medical expenditures in 2023 were $4.83 trillion or $14,220 per capita.

Expenditures varied widely.

• 5% of the population incurred 50% of the total averaging $112,400 per person.
• 50% incurred 3% of the total averaging $630.
• 45% incurred 47% of the total averaging $11,500.

Consequently, 95% of the population incurs half of all expenditures and 5% the other half. That 5% incurs the extra-large bills(over $11,500) most individual budgets can’t handle and insurance companies fear.

Part 1: Instead of $100/month premium subsidies the government establishes a $100/month HSA(Health Savings Account) for each individual.

Part 2: The individual purchases insurance at whatever deductible portion of $11,500 they feel they can afford. Using 2023 figures a:

• $2,000 deductible requires premium of $171/month,
• $4,000 deductible requires $136/month,
• $6,000 deductible $85/month.
• Or one could also choose to cover the entire $11,500 themselves and incur no premium.

Part 3: The government needs $2.4 trillion to cover the expenditures over $11,500. A 4.2% increase in corporate and individual income tax rates would generate $2.5 trillion. For example, a person making $50,000 would pay an additional $2,100 ($175/month).

Advantages

Choice: Individual chooses which level of Part 2 to utilize, whatever doctor/hospital they desire.

Universal: Everyone is covered.

Catastrophic: The large expense is off the plate of both the individual and the insurance company.

Affordable: At a $50,000 income, the $4,000 deductible generates a total $346/month expenditure ($171 premium, $175 additional income tax) compared to Obama care premium of $792.

Affordable: the HSA provides $1,200 per year for medical expenses, which provides two advantages:

• The medical provider is encouraged to keep annual costs under $1200 by reducing bad debt accounts because the money is there.
• The HSA is invested, earning a return until spent, accumulating if unspent, motivating individuals to make better self-care decisions.

Competition: With catastrophic expenditure off the table, insurance companies would

actively compete for Part 2 business, further reducing premiums;

Reducing Costs: Everyone has insurance, eliminating the average 31% bad debt expense.

Equity: Everyone pays something; Everyone receives something.

Compatibility: Part 2 could still be an employer-based benefit.

Disadvantages

4.2% Tax rate hike. No one likes increased taxes. Higher incomes will pay a higher total.

Mandatory, but effectiveness requires us to work together.

I’m sure there are additional advantages, disadvantages, and other aspects I haven’t considered. But the Three-Part Shared System has enough possibility and merit to bear further examination by those more knowledgeable than I.

It’s our personal responsibility to develop an efficient health care system and insist our legislators support it in a bipartisan fashion. Wouldn’t it be nice to take health care off everyone’s plate?

Bryan Whiting feels most of our issues are best solved by personal responsibility and an understanding of non-partisan economics rather than government intervention. Comments and column suggestions to: [email protected].