The Health Care Stakeholders Plan

Only a few simple federal legislative actions unleash forces to lower health care costs.

1. Allow employers to deduct contributions to each individual Health Savings Account (HSA) equal to the amount they have been sending to insurance companies.

The employee, not the employer, becomes the owner of the policy, thus making it portable.

The tax implication for the employer, employee and government remain unchanged.

By purchasing a high deductible HSA with the employer’s contribution, the employee becomes a more conscientious health care consumer and accumulates tax-free what he or she does not spend.

2. Require all health care providers to post prices and outcomes, which gives the employee knowledge and the power to drive down prices by choosing judiciously where he or she spends their health care dollars.

3. Give those without employer paid health care the same benefit of purchasing health care with pre-tax dollars.

Contributions to his or her HSA or to an individual plan of up to $7,500 per person or $15,000 per family may be deducted from taxes.

4. Legislation should allow sale of insurance policies across state lines that are devoid of mandates determined by governments. The desires of purchasers and offerings of insurance companies will determine policy features making them more affordable. They will not saddle purchasers with the requirement to buy policies with state-issued mandates which include aromatherapy, hair implants, in-vitro fertilization, chiropractic treatments, acupuncture, Viagra or other services they might not want.

A young single male saw his monthly insurance premium soar from $250 a month to $550 a month when he moved from near D.C. to Massachusetts, where state legislators are unable to resist adding mandates insisted upon by special interest groups.

All in all, these mandates raise the cost of premiums by 20 to 50 percent. While other factors to increase affordability are of value, none compare to the impact of mandate free policies. Imagine the cost of auto insurance if tire replacement, tune-ups, oil changes, lube jobs and gas refills were included in your auto policy? What would happen to the price of groceries if someone else picked up 80% of the tab at the checkout counter?

The HSA approach will not be appropriate for all Americans, but by creating 215 million cost control centers who now have the incentive to accumulate tax-free value in their HSA, it would drive down prices for everyone else.

The dramatically expanded public health clinics and private Christian medical ministries can also address many of the needs for whom HSAs are not applicable in a far better way than the fall back position: the emergency room visit. The Good Samaritan effort in Tulsa, Oklahoma, for example, treated 7,500 patients last year in cooperation with 14 different churches, with encouragement and cooperation from the Hillcrest Hospital system.

The supposed 46.3 million uninsured people include an estimated 14 million illegal immigrants and a perhaps larger segment of 18 to 32 year olds, who because of high premium costs, opt for a flat screen TV instead. It is estimated that the core problem we need to resolve is the approximately 8 million people, who, because of preexisting conditions or being without insurance for more than two years, need support. The ‘Safety Net’ discussed later will take care of this group. The ‘Young Invincibles’ will also be more inspired to purchase voluntary coverage, as you will see by our concept of four group pools.

Using Wyoming as an example, individuals enter one of the following privately run group pools, regardless of pre-existing conditions. These pools would be independent of any government or employer involvement.

The four groups are:

1. Wyoming Health Association of Young Invincibles

2. Wyoming Family Health Association (with children under 25)

3. Wyoming Empty Nester Health Association

4. Wyoming Health Association of Individuals with Wounded Wings (which would include individuals with existing high medical costs, such as chemotherapy, dialysis, etc.)

Individuals buy into their appropriate group’s high deductible plan with their HSA funds. What they don’t spend on medical care can be kept in the HSA to continue to build its balance. Once a certain dollar amount is reached, individuals can withdraw funds (subject to taxation) for other expenditures. The value accumulated can be passed along in one’s estate.

Individuals could choose from other voluntary pools aside from the four mentioned above, such as Rotary Club, your church, or “Taxi Cab Drivers of America.”  The four groups, and these voluntary pools, allow the insurance companies to deal with larger groups, rather than the thousands of individual HSAs that get spun out from corporate plans.

The fourth pool would pay increased premiums limited to 150% of the ‘Empty Nester’ pool. 5% of each of the first three pools’ premiums, as well as 5% from other policies issued in the specific geographic areas, would go into the fourth pool to help create the Safety Net.

If this subsidy does not create an adequate safety net, additional federal block grants would be given to each state to subsidize the ‘Wounded Wings’ pools by reallocating the Drug Benefit program from Medicare (which would extend the point in time when Medicare goes “Bernie Madoff,” currently estimated in 2017). Since the time Medicare added this Drug Benefit program, many pharmacies began offering $4 a month prescriptions for 130 generic drugs, lessening the need for this benefit in Medicare.

Additional funds could be reallocated from the Stimulus Bill, such as allocations to ACORN, The Comparative Effectiveness Research Institute, and the amounts of money that the federal government has been sending to hospitals to reimburse them for indigent care.

The “Middle Majority” of America would favor a stronger safety net, thus eliminating medical bankruptcies, rather than allocating money to these other causes and entities.

The Safety Net available to each person once the private 5% subsidy and the insurance protection was exceeded, would be means tested. Someone with a $600,000 income, for example, would only receive support if his out of pocket medical costs exceeded $400,000, but someone with a $40,000 income would get support if his out of pocket costs exceeded $4,000 (exact scale to be determined at a later date).

This Safety Net eliminates medical bankruptcies.

Any American, regardless of pre-existing conditions, could enter any one of these four pools set up in specific geographic (statewide, congressional or regional) areas, if other voluntary pools were not available to them.

The plan deteriorates if individuals go in and out of the plan and insure only when a serious health need arises.  The plan incentivizes individuals to stay in the pool they have chosen in order to avoid higher premiums for re-entering should their health status change.

Insurers should be encouraged to give discounts to non-smokers, people maintaining proper diets and exercise, and those whose body mass index is within acceptable levels. Premiums in the auto industry are lower for people with safe driving records versus those that have had an accident or speeding tickets. A physical exam every 24 months would not go against the policyholder’s deductible.

Wyoming’s Business Coalition of Health’s “Project Spur” program demonstrates how effective health coaching can be to employees with illnesses such as diabetes or asthma. Diabetics were encouraged to have feet and eyes checked and have the A1c test periodically performed. By encouraging employers to pay $50 a month for these individuals’ coaching, they discovered that they could ward off more advanced and expensive treatments through simply teaching about the power of exercise, or how to pair their proteins and carbohydrates for a balanced
diabetic diet.

These have been highly successful and offer prices dramatically lower than emergency room visits. (Full disclosure – one of the Obama supporters in this collaboration operates such a center and one of the Republicans has a friend who owns a chain of centers).