Friday, June 29, 2012

Solving the Health Care Problem All by Myself

The obvious solution to the health care problem is self-insurance. The Obama Tax is designed to effect those who are young, healthy, and can afford insurance. Who makes the decision about what someone else can afford, I don't know but that is beside the point. The point is that if one is young and healthy and can afford insurance, then one can probably afford to pay their medical bills, and in fact they probably DO pay them.

The folks running up the tab at emergency rooms are people who are young, healthy and CAN'T afford insurance, but don't yet qualify for medicaid.

If you think about Lasik eye surgery, it is a technique for correcting vision via laser surgery. Lasik is not covered by any insurance, it is an elective surgery. When it first became available, it cost somewhere around $5,000.00 per eye.

Today you can have both eyes done for less than $1,000.00. Why the price drop on a highly skilled high tech procedure? Market forces. Since the customer must pay for this procedure out of their own pocket, they will only pay a certain amount. As more physicians became proficient in the operation (increase in supply) the price went down (to meet demand).

If you study any elective procedure which is in demand, but not covered by insurance, you will find similar cost reductions.

The easiest way to reduce medical costs is to get rid of insurance altogether. The insurance companies won't like it, and I don't for a moment suggest doing that by government fiat, but if everyone was invested in a medical savings account that they had control of, was tax free, and could be used for any health related expenses, not only would everyone have coverage, but they would put downward pricing pressure on the entire health care sector. In addition, since everyone is paying for their own healthcare out of their own pocket as it were, they would tend to take better care of themselves. Everyone would have skin in the game.

For the truly incapable, some system for funding their Health Savings Account could be worked with a tax credit.

This eliminates the whole pre-existing condition argument, since it is your own money you are spending on your healthcare.

Average lifetime medical cost per person is roughly $360,000 according to NIH. If you would contribute $390.00 per month into this account even at a modest 3% return, you would have enough money to cover your lifetime medical costs. That is less than half the cost of an average insurance plan these days.

For those with employer based coverage, employers could either contribute to your HSA or they could just pay you more.

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