Monday, May 17, 2010

Repealing Obamacare

Now that we know what's in Obamacare, a majority have come to their senses and realize that it is a bad bill.

The premise of Obamacare is that insurance underserves the people; Therefore, they make it mandatory.

In the ultimate absurdity, Obamacare hires a legion of 15,000 IRS agents to enforce the new oppressive laws as if tax collectors somehow provide care.

Hopefully there will be a big push in the upcoming years to repeal Obamacare.

In order to repeal the bill, reformers need to come up with a free market alternative that is better than Obamacare.

Returning to state regulated employer based insurance is not that much of an improvement.

After all, Obama is correct in the premise that employer based insurance underserves the people.

Employer based insurance, however, is not the free market.

Employer based insurance was the creation of progressives past.

A true free market reform would make the individual the center of health care. Reformers seeking to restore the free market need to move beyond a smple call for repeal. They need a proactive paradigm that clearly shows the public how the free market can fund care and why the free market would do a better job in optimizing our health care dollars.

For this reason, I believe that the model of the Medical Savings and Loan could become a rallying point for a repeal effort.

The MS&L is simply a mathematical model that uses a combination of savings, loan reserves and lending accounts to mold health care financing around the lifecyle of the individual.

The idea is that one should save resources when they are young and healthy to use in times of need ... just as nature stores and releases resources in natural life cycles.

Obamacare was premised on the false dichotomy that health care dollars must either be controlled by evil insurance agencies or socialized government agencies.

The Medical Savings and Loans calls out this false dichotomy and shows that it is possible to form health care around the individual, and that the real question is whether health care should be about individual people or about the group.

The mathematics of the MS&L and Insurance is similar. It is a question of focus: Insurance makes risk pools the primary focus of care. The Medical Savings and Loan makes individual people the focus of care.

Insurance underserves the people, because insurance is about caring for the pool and not caring for the people.

Simply changing the focus from the pool back to the individual solves most of the problems of the health care system.

For example it solves the problem of portability. With the MS&L I have a physical savings account with real money that I own. I might also have outstanding loans with real money that the MS&L hopes will be repaid. These accounts will follow individual through their career.

It solves the problem of health care records. With pooled insurance, health care records are owned by the pool. Moving between pools creates a discontinuity in the records.

The MS&L makes the individual the owner of the health care records. These records would then follow the individual along with the accounts.

The MS&L solves the problem of preventative medicine. The MS&L makes people directly responsible their life time medical expenses. As such it provides a vehicle that encourages people to spend money now to avoid long term expenses.

The MS&L also solves the problems of gaps in employment.

Insurance was premised on the false assumption that people would have a continuous stream of income throughout their lives. When people lose their job, their income vanishes along with their ability to pay the premium.

The medical savings and loan is premised on the realization that income is not constant and that people must save in times of plenty for times of need. The premium for the MS&L is set as a percent of income, not as a fixed dollar amount. When income drops to zero, the premium drops to zero. The policy holder could draw from expenses or take out a loan.

NOTE, the percent of income a policy holder pays into an account might need to increase with re-employment. The policy holder is never left without health care resources.

Finally the Medical Savings and Loan reduces problems with medical bankruptcy. Most loans are structured on the idea of adding the premium for the loan on top of the loan. As medical loans often co-incide with reduced earnings, this method does not work. The Medical Savings and Loan has people pay the premium to access loans upfront. Frontloading the premium allows for interest free loans with a higher default rate.

Individuals benefit from the Medical Savings and Loan. The structure also helps policymakers.

The goal of the MS&L is to create a structure where the majority of people self-finance their care. This lets the state and charitable organizations concentrate their efforts on those who simply are not able to fund their care.

From the perspective of public assistance, the medical savings and loan models does the following: The first thing the system does is separate those who can self finance care from those who cannot, reducing the gaming of the system.

For example, let's say a person shows up in the system with health needs and no insurance. The assistance community would lend money for the care and place the patient on a savings program. This creates a structure where the patient can receive care while contributing back as much as is feasible.

A compaint of the current system is that people are seeking primary care in expensive emergency rooms.

The Medical Savings and Loan allows us to keep the paradigm where none are turned away, but gives patients the option of taking out a loan to pay for really expensive emergency room care or taking out a smaller loan for primary care that does suit their needs.

The goal is to create a system where as many people as possible self-finance their care. For people who cannot, the MS&L creates a public assistence paradigm where that gives people the resources that they need while repaying what they can.

The Medical Savings and Loan effectively optimizes each of the pieces of the medical puzzle. By making people aware and responsible for their lifetime medical expenses, the MSL helps individuals optimize their health care dollars, and it helps the medical community optimize assistance dollars.

By optimizing each of the pieces of the health care puzzle, the medical savings and loan will provide better care to more people for less money than employer based health care or even the so called government run "universal care."

Those seeking to repeal Obamacare would be wise to promote the Medical Savings and Loan as the model for an free market, individually based model of health care that helps Americans self finance their care while providing a system of structured public assistance to those who lack the resouces to self finance care.

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