There will come a point in time when we start talking about the financial realities of healthcare correctly. That is to say, there are two very distinct pieces of what we call health insurance.
- There is the true insurance, which would be covering you against the very rare and/or life threatening.
- The prix fixe buffet to cover your occasional stuff, like infections or the accidents like arm breaks, etc.
These are two distinct issues. The former is the bankruptcy causing stuff. The latter is to not let something that shouldn’t be bankruptcy causing become bankruptcy causing. Also, it is the former that I believe is better suited to government, due to the nature of not having limits on payouts. The latter, however, may be best handled in the private sector, whether through tax refundable self insurance (for those who can handle anything that comes along short of cancer or debilitating physical accident) or through AGI reducing prix fixe arrangements, be it with doctor/hospital organizations or with a BCBS or such. If you limit the upside risk to the insurance companies by having catastrophic paid by Medicare via taxes, you may have a working model.
A few questions were brought up by commenters on the initial facebook post. I’m going to paraphrase what they said for the sake of expediency:
- What about chronic conditions, like CF, asthma, MS, diabetes, etc.?
- How do you continue to provide incentive to the creators of chronic treatments if they are limited by having one buyer (which according to my model would be the federal government)?
- What do you do about acute issues such as mental health, reproductive health, or drug abuse?
I provided broad strokes, something like guiding principles, so while I would think of chronic conditions as falling under the true insurance (mostly because the bargaining power of the treatment providers is far too great. See Martin Shkreli), I may be off my rocker there.
The other two I haven’t really thought through.
The thing I am certain about though is that medical expenses should all be reductions to AGI and not deductions (what we accountants call “above the line” for taxes). Right now, employer-provided health insurance is for the most part above the line (it isn’t reported as wage, and it isn’t taxed) but I take it a step further and include in that all medical expenses, not just the premium and certainly not just the amount of out of pocket expenditures above 7.5% of AGI.
The other thing I haven’t thought through is how to handle what could potentially be a donut hole between the max benefit from an insurance provider in a given year and the Type 1 Fed coverage. That’s because I’m not sure if it’d be best to limit that coverage to the life-threatening and chronic (cancer, body shattering physical events, deadly infections, and diabetes, CF, MS, RA, asthma, etc.) or does it instead pick up after the max benefit is met. I just haven’t gone that far with the idea yet.
I look forward to any comments, ideas or issues with this. I’m not a healthcare professional and I don’t work in healthcare so I may have no idea what I’m talking about.