Whiting column: A two-part, shared system for health care | PostIndependent.com

Whiting column: A two-part, shared system for health care

Bryan Whiting

Maybe leopards can’t change their spots.

After the election, regardless of outcome, most were hopeful politicians realized we are fed up with partisan politics as the status quo. But no; every bill or potential solution is supported or opposed solely on the basis of whether it was proposed by Republicans or Democrats.

Common sense dictates that every proposal is neither all good nor all bad. A legislator always voting party line is telling constituents the party is more important than what is best for the country or its people. The last eight years saw little of substance accomplished in Congress, and the first months of the current presidential term indicate we are traveling more of the same road.

We are tired of juvenile legislative behavior. The Democrats oppose the Supreme Court nomination of Judge Neil Gorsuch because Republicans all opposed the nomination of Merrick Garland. Democrats don’t debate Gorsuch’s qualifications because there isn’t a basis to do so. It’s the “you didn’t like our man so we don’t like yours” game. They’re taking their basketball and going home because they didn’t get chosen first for the pickup game. Republicans did the same thing, but the past is the past, and if the country is to progress and move forward, merit must replace partisanship.

It seems the only way out is to propose out-of-the-box solutions foreign to both partisan extremes.

Health insurance, for example. Obamacare isn’t working; the pre-Obamacare system didn’t work either; the recent Obamacare replacement didn’t solve all the issues and was defeated. There are givens in regard to health care:

1. Health care is and always will be expensive. There isn’t any insurance solution that isn’t going to cost a lot of money.

2. We and insurance companies both fear the massive medical bill. It’s why we buy insurance and why insurance companies have high premiums.

3. Republicans want choice; Democrats want universal coverage.

An out-of-the-box possibility: a two-part, shared system.

1. Individuals buy insurance covering annual medical bills less than $10,800 and

2. The government handles those in excess of $10,800.

PBS reported total medical expenditures in 2015 were $3.35 trillion, or $10,345 per-capita for a population of 324 million. Expenditures varied widely among the population:

• 5 percent of the population incurred 50 percent of total expenditures; average $103,400 per person.

• 50 percent of the population incurred 3 percent of total expenditures; average $620 per person.

• 45 percent of the population incurred 47 percent of total expenditures; average $10,800 per person.

Consequently 95 percent of the population incurs half ($1.675 trillion) of all expenditures and 5 percent incurs the other half. That 5 percent incurs the extra-large bills (more than $10,800) that most budgets can’t handle.

In part one of this proposal, the individual purchases insurance at whatever deductible portion of the $10,800 he or she feels they can afford. Using the 2015 figures, a:

$1,000 deductible requires premiums of $200/month to cover an average of $2,321 per person in claims.

$3,000 deductible requires premiums of $154/month to cover an average of $1,847 per person in claims.

$6,000 deductible requires premiums of $95/month to cover an average of $1,136 per person in claims.

One could also choose to cover the entire $10,800 themselves and incur no premium.

In part two, the government needs $1.675 trillion to cover medical expenditures topping $10,800. A 5 percent increase in corporate and individual income tax rates would generate an additional $1.6 trillion in revenue. For example, a person making $50,000 would pay $2,500 ($200/month) in additional income taxes.

Advantages:

Choice: the individual could choose which level of part one to utilize and whatever doctor/hospital he or she desires.

Universal: Everyone is covered.

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

Affordable: Given a $50,000 income, choosing the $1,000 deductible generates $400/month in total premiums; $3,000 deductible $354/month; $6,000 deductible $295/month; compared with an average 2017 Obamacare premium of $643/month and deductible of $6,092. The poor even less.

Competition: With the large expenditure off the table, insurance companies would actively compete for your part one business, which should further reduce premiums.

Reducing costs: Everyone has insurance, eliminating the average 24 percent bad debt expense the medical industry currently covers through costs.

Fairness: Everyone pays something.

Compatibility: Part one could still be an employer-based benefit; employer cost would be lower.

Disadvantages:

Tax rate hike of 5 percent: No one likes a tax hike, but remember our given that health care is expensive.

Mandatory: It won’t work if some people choose to be irresponsible and don’t buy insurance. Any system must eliminate the bad debt expense of health-care providers.

Higher incomes will pay more: someone making $250,000 would pay an additional $12,500 (approximately $1,000 per month) in income taxes for part two, but they would most likely choose to cover the sub-$10,800 expense themselves.

These numbers have been rounded so things may not exactly balance. There are probably aspects I haven’t considered as well as additional advantages and disadvantages. There may be a better threshold than $10,800, but the basics of the two-part shared system seem to have enough possibility and merit to bear further examination by those more knowledgeable than I.

It is our personal responsibility to develop an efficient health care system and convince our legislators to support it. Currently, neither the Republican nor Democrat extreme is workable nor adoptable. It is our personal responsibility to convince them to be adults and their respective agendas are included.

Wouldn’t it be nice to take health care off everyone’s plate?

Bryan Whiting believes most of our issues are best solved by personal responsibility and an understanding of nonpartisan economics rather than by government intervention. He’s retired after 40 years of teaching marketing, entrepreneurship and economics. Email him at bwpersonalresponsibility@gmail.com.


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