Pooled insurance is, by its very nature, an act of intellectual dishonesty. The basic idea behind the scheme is an attempt to ignore the unfortunate reality that some medical expenses are unpredictable by jumbling up everyone's health care savings into a common pool.
Nor surprisingly, this little active of intellectual dishonesty leads to monumental corruption, waste and a great deal of angst. Even worse, it totally destroys the pricing mechanism which makes it difficult for health care providers to provide care where it is most needed.
This may seem counterintuitive to members of the political class, but the cure for intellectual dishonesty is not new layers of regulation, but a little bit of honesty.
The Medical Savings and Loan replaces pooled insurance with a system of structured savings coupled with interest free loans. The interest free loans anticipate a high default rate.
This elastic structure allows for self-funded health care but can cover unanticipated costs and does not overburden a family in case of catastrophe.
The main thing the structure accomplishes is a person by person accounting of health care costs.
By restoring honest accounting into the system, people will be in a better position to see their health care expenses in the proper context of their entire life. This necessarily will improve preventive care and might encourage people to make diet and lifestyle choices that reduce long term costs of care.
Restoring the self-financing mechanism also will restore price negotiations between doctor and patient. This will restore the pricing mechanism and bring costs down.
Finally, by honestly accounting for people's health care expenses, our society will be better positioned to identify those needing additional help with care.
The Medical Savings and Loan is not antithetical to the concept of redistributive care.
The system actually aids in the redistribution process by providing the information that separates those needing additional resources from those simply skilled at gaming the system.
The dishonest political process that we see going on in Washington is unlikely to improve the integrity of the health care system. A new business model for funding health care based on providing quality information about individual health care needs would restore the integrity of the system.