Thursday, September 10, 2009

Creating the Public Option as an MS&L

One interesting compromise in the health care debate would be to make the "Public Option" a medical savings and loan instead of an insurance pool.

The difference between a Medical Savings and Loan and Pooled Insurance is the model used for calculating medical expenses. Pooled insurance calculates expenses for a group over a year's time. The Medical Savings and Loan calculates expenses over the life time of the individual.

This model says nothing about who runs the program. The government could run the program as easily as private company.

The premise behind a medical savings and loan is that people would save their resources for their medical expenses but could take out an interest free loan if expsenses pop over their savings.

The interesting thing about the MS&L is that creates the dynamic where individuals own their personal health resources.

Creating the Public Option as a medical savings and loan would be a very interesting compromise in that the framework of the system would be owned (and supplemented) by the government, but individual people would own their own resources.

The Medical Savings and Loan works by giving people a loan when their medical expenses exceeds savings. The patient pays back the loan as a percent of income.

There is a high default rate on the loans as people retire without paying back the loan in full. This system actually creates a buffer where people with high medical expenses pay substantially more for their care than people with low claims experience, but the system stops before driving the person into bankruptcy.

Creating the Public Option as a Medical Savings and Loan would be like extending the Whole Foods system to the public at large.

I think that a large number of Conservatives (and even Libertarians) would be open to the idea of a public option that was run as a Medical Savings and Loan.

On a strategic note, creating the public option as a medical savings and loan would prevent the government from using it as a stepping stone to socialized medicine. What would happen is that most the people in the MS&L would have a positive balance in their account. Socializing the system would involve the politically unpopular step of taking this money away from millions of low and middle income people.

Progressives would reject the idea as it gives ownership of one's medical care to the individual. The progressive ideology is built on the notion that individuality is an illusion. There is only the whole and pieces of the whole. The idea that an individual owns and controls their body is a sin against gaia and is the source of the problems that ever have or ever will exist.

While the right would probably be willing to accept a public option modelled on the Medical Savings and Loan, I can't imagine the left favoring the model even though it makes the government the owner of the framework.

BTW, I would like to point out that modeling the public option as a pool is pretty much doomed to failure. Pooled insurnance is based entirely on commonality of experience. The whole idea of pooled insurance is that the members of the pool share something in common.

As outlined in the President's proposal, the public option would be a pool of all the bits and pieces that don't fit in private pools. By definition, this group has very little in common. It will have college students, people with high claims experience in their later years, drug addicts who can't hold a job, etc.. The pool would have people of such wildly different life experiences that the pool would ultimately bog down in conflict.

What do you do? Pay for the drug addicts by taking textbook money away from starving broke College students?

The Medical Savings and Loan structure would be a better model for the Public Option as making people the owner of their care would allow greater customization of the system for an extremely diverse group with different experiences.

No comments: