Jan 21

The Duty of the State of a Free People. Universal Healthcare and Life

The Duty of the State of a Free People. 

Universal Health Care and Life.

In “Freedom Defined” we put forth as a duty of the State of a free people is to enhance and facilitate the ability of the individual to exercise responsible authority over him or herself.   One area of action that lends itself to this duty is the issue of health care.  While the State should never be a direct provider or insurer of health services or procedures it can and should be an appropriate regulator and facilitator of access to such services and the economic empowerment thereof.  How can this be done without direct involvement in some socialist mechanism and the usurpation of individual authority and responsibility from the citizen at large?

The answer has been with us almost from the beginning.  Capitalism’s equivalent of socialism is an insurance company.  Private insurance is superior to socialism due to the more efficient management of specific risks.  The problem has been the ever increasing cost of medical services and the insurance premiums that drive a very significant minority of the population away from participation in this relationship,  instead relying only on mandates placed on services by the State resulting in a limited range of access to the health care system usually in the least cost effective ways.  Capitalist mechanisms work only when the devices of fraud are effectively deterred and when individuals are incentivized to manage their access to the products of capitalism in their own economic best interests.  The success of any enterprise is a function of efficient and effective management.  Efficient and effective management is a function of incentive.  Incentive is a function of self interest.  These principles must predominate in every market for economic success and harmony to prevail.

One problem that must be overcome in the insurance industry I call “the squeeze”.  It is the practice by health insurance companies of pushing a succession of “books” of insurance.  It works this way.  Company XYZ opens a book of health insurance policies dictated by its actuarial statistics and marketing appeal.  It markets and sells this product throughout a given region permitted by local laws.  Clients who qualify by virtue of acceptable health conditions allowed by the company are encouraged to purchase such policies to protect themselves against potential health hazards such as illnesses and accidents requiring expensive health care services.  Those with pre-existing and potentially chronic health problems are excluded from these policies and must rely on special and expensive policies subsidized by the state they live in, if at all.

Here’s the catch.  As the “book” ages, along with the clients in it, more health problems begin to appear among the subscribers to that book.  Premiums rise among all clients retained in that book.  As premiums rise, clients who are still healthy seek less expensive plans, sometimes with other companies, but often with the same company which has responded to this situation by opening another “book” of insurance for which still healthy clients of the old book still qualify for.  And the process repeats with the clients in the old “books” facing the choice of unaffordably higher premiums in their old “book”, which has fewer and fewer clients sharing premium costs,  or dropping their insurance and, since they are now uninsurable, going without, i.e. going bare.  If they are lucky they have reached, or are near to, retirement age and are eligible for Medicare.  If not, they may be faced with bankruptcy and fall on whatever merciful services the state may, or may not, provide.  In other words, once responsible people who accepted the burden of purchasing self insurance against such untoward circumstances have been effectively “squeezed” out of the system.

Outline of Possible suggestions for insurance protection against the hazards of life and liabilities thereof:

The following comments are in part deliberately redundant for ultimate clarity.

  1. The key is to provide the availability of low cost basic insurance products with high deductibles that could be waived or reduced on a cost deferred basis if circumstance require.  Such a health insurance standard could provide a minimum threshold of access by using the following formula:
  2. Availability of Major medical insurance products for catastrophic injuries and illnesses with up to a $2 million dollar upper limit of  services and a range of deductible expense from $1500 to $3500 dollars.  Such policies are already available in most markets at relatively low cost.  This, along with suitable life and disability policies, would maintain the liability protection the employer enjoyed under Workman’s Compensation.
  3. Premiums shared between employer and employee at a ratio reflective of the employers Workman’s Compensation insurance costs per employee.  If the employee also carries a basic amount of life, disability and long term care insurance and the employer also shares these premium costs then the employee could be removed, by contract, from the employers Workman’s Comp coverage allowing/requiring that the savings be used to pay for his portion of the employee’s benefit or insurance premiums. It must be remembered that the purpose of Workman’s comp insurance is not to protect the employee, but to protect the employer from liability.  The same dollar could and should be used to do both. 
  4. Continuous coverage of all clients and their immediate family members regardless of age.  Once covered, always covered.
  5. Tax incentives for insurance companies for acceptance of pre-existing conditions with possible premium subsidy during build out of these regulations.
  6. Interstate marketability of all health insurance products and services to achieve maximum portability.
  7. Individual ownership of all insurance policies and the elimination of preferred group policies.  The American people are the “group”.  Premiums would vary according to personal lifestyle choices and regional cost of living indexes as well as deductibles selected.
  8. General Economic Goals: Promotion of ubiquitous ownership of insurance by all citizens by favoring employers who pay a substantial portion of the premiums for health insurance and other policies, such as life, disability, long term care and even individual unemployment policies that would serve to replace the inefficient, redundant and costly Workman’s compensation policies.  By doing so the savings from elimination of Workman’s comp policies could be applied directly to the totally portable individually owned policy premiums of the employee.  This in turn would result in more productivity on the part of the employee and his employer thus making both more competitive with their foreign counterparts and increase job security.
  9. A required health savings account that would be invested in a suitable index fund and grow over time such that the eventual earnings would supplement or even replace almost all premium payments on the part of the employer thus increasing the productive value of the older employee and job security for the same.  The employer would maintain a self-insurance fund to cover deductibles for workplace incurred injuries or illnesses.  Mandatory deductibles and/or waiting periods would discourage frivolous access to benefits since out of pocket expenses would be incurred first.
  10. NOTE: In the case of the younger employee or individual that incurred a catastrophic accident or debilitating health problem it would be more cost effective for the state to provide a program that would continue to pay the premium package for the victim than to assume total expense for his or her care upon bankruptcy.  However, an appropriate disability policy within the individuals personal health care trust should render this problem moot.  In addition, premium funding in such cases might become a proper role for remaining Workman’s Comp. duties.
  11. Such long term policies would not have age related limits and continue until death. Premiums could be required to contain a cash value account or the individuals health savings account could fund premiums into retirement as an annuity.  Any assets otherwise left in the individuals health care savings or trust would pass to the health care trusts of any and all direct survivors or descendants tax free, thus growing health care security in generations going forward.
  12. The individual could exchange any current policy contract for that of a more competitive company without loss of seniority or any such conditions at any time.
  13. These changes, when combined with a program of funding of an equity based individually owned retirement program for every child within the first year of birth, would eventually convert every citizen into an economic asset to the nation going forward instead of a liability requiring the forced servitude of others.  This or a similar approach would facilitate ownership of the economic destiny of the free individual by the individual. 
  1. (Note: the cost of deductibles might legitimately be mitigated by withholding payment of same until the health provider submits the unpaid debt to a collection service from which a lower payment may be negotiated without jeopardizing the deductible requirement.  This would depend on a providers unspoken willingness to defer up-front payment against the deductible in whole or in part and acceptance of differed and reduced compensation at a later date.  This could not, however, be a pre-arranged agreement between the patient and the provider.  The better solution would be payment of deductibles directly from a Health Savings Account or from a similar fund held by the employer and/or the employee for the purpose.  Certain economic conditions may deter collection agencies from purchasing such debt thereby rendering this approach unworkable. Workman’s Comp might be modified to cover upfront deductibles if private insurance is maintained by both parties. i.e. employer and employee. )

The efficient delivery of the above also requires cost stabilization procedures such as aggressive tort reform.  The health care environment can no longer sustain the gross expense of costly malpractice premiums that must be met by all those who are engaged in health care services and passed on to their patients. Life is not without inherent risk.  When the individual submits him or herself to the paid care of others they do so by their own authority, i.e their consent.  But the responsibility for the consequences remains with the individual giving that consent.  Only when behavior of the parties rendering such services rises to the level of gross and knowing negligence tantamount to fraud does reasonable cause for tort arise.   The Courts must cease to function as dens of legalized piracy by clever opportunists.   Eventually, with nearly everyone covered by their own full benefits package, the need to resort to litigation should subside except in the most egregious and compelling circumstances.

The management of risk  is the fundamental reason for the existence of the insurance industry in the first place.  It is a legitimate mechanism for reasonable compensation, not a mechanism for redistribution of wealth.  When we submit ourselves to treatments that are standard in the pertinent areas of endeavor we do so by our own authority.  The risk for untoward consequences remains with us.  We are therefore responsible as individuals for managing that risk rather than the presumption that some court of law will feel obligated to burden others with that liability even though compelling circumstances may be tenuous or even absent.

Many of the advances in medical and drug technology have their genesis within American based companies and research facilities.  As a consequence the use of the products of such research is highly costly domestically while available at much lower cost internationally.  Several remedies to this situation might be available.   We might consider extending the life of patent rights for effective new treatments and drugs to companies that reduce their initial domestic costs substantially and eliminate or greatly reduce income taxes earned on products and devices that are not redundant in the market and have a high proven efficacy.  Research on commonly available remedies should be studied and effectively enhanced and made available for use over the counter.  The barrier between highly advanced and expensive remedies and more commonly available agents such as aspirin and other possible compounds such as turmeric, niacin, or artemisinin, etc. should be aggressively evaluated and modifications, enhancements, and applications expanded wherever possible.

(E.G. It is ironic that artemisinin, for example, has proven to be a highly effective naturally occurring agent for curing malaria.  As such it has been available OTC over the internet for very low cost for several years.  There is some evidence that it may be useful in treating some types of cancer in animals and even humans.  However, in order to make it available to populations living in tropical malarial ridden environments a well known pharmaceutical company combined it with its older, less effective anti-malarial compound to make it patentable,  marketable and profitable.  This is similar to combining aspirin with caffeine or other ingredients, branding it, and marketing it at much higher prices than a more generic counter product even though the effectiveness is the same.)

Perhaps an intermediate level and more generic drug industry needs to be funded for research purposes to produce low cost products with evaluated efficacy and potential benefits over a broader range of maladies.  This is in keeping with the goal of empowering the individual with accurate information, inexpensive testing technology and more commonly available resources at lower costs thus enhancing his or her ability to exercise responsible authority and the choices thereof over themselves.

Note: artemisinin is a natural substance derived from the sweet wormwood plant, just as aspirin was derived from the bark of the willow tree.

Attention: Notice this in not a whine site.  This is a site for ideas. I do not suffer fools or naysayers well.  If you cannot make serious and thoughtful contribution to these ideas, begone.  I have no use for those who already “know everythingl” but seem to understand nothing.  Without understanding effective wisdom pertinent to any endeavor cannot be acquired.  I am about understanding.  Someone once said “success comes in cans, not in cant’s”.  I agree.

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