The second big change that I made to the Medical Savings and Loan is due to an article by Doctor Joe Jarvis on the role of charity in western medicine.
The goal of the Medical Savings and Loan is to help those that can self-fund their health care pay for their care.
There are many people who cannot self-fund their care. For these people, I was trying to forge a complex system of re-insurance.
Most re-insurance schemes work on a year to year basis. If your health care costs for a given year exceed a given amount, the re-insurance kicks in. This scheme does not work well for chronic condition.
The re-insurance scheme in the Medical Savings and Loan was based on lifetime earnings. My basic idea was to cap medical expenses as a percent of total income. If a person's medical expenses shot over a set percent of their income (say 30%) the re-insurance would kick in.
NOTE: I was hoping to use a progressive scale. For a minimum wage worker, the re-insurance would kick in at a low figure like 10% of income. For upper income people, the re-insurance might not kick in until expenses hit 40% or 50% of income.
The problem I faced, however, was that no matter how I structured the re-insurance scheme, the re-insurance scheme came to dominate and redefine the Medical Savings and Loan.
After reading Mr. Jarvis's article on charity, it dawned on me: Charity is a very good thing. Charity should play a prominent role in the delivery of health care.
Anyway, I decided to completely rip the re-insurance component out of the Medical Savings and Loan and replaced it with a system of grants and charities.
In the current version of the medical savings and loan, clients use a combination of savings and interest free loans to self-fund their care.
When a person has health care needs that exceed their ability to pay, the health care advocate would run about and find grants to supplement the patient's care.
The money for the grants would come from the same source as insurance. It would come from businesses, investments and personal income.
Let's say a company is currently paying $10M a year in health benefits. This company might put $2M into the charitable fund, then distribute $8M of the benefits into the Medical Savings and Loan. Such a system would be flush with cash.
Grants can work into the system at multiple levels. There's is likely to be a level of grants that kick in automatically (just as re-insurance kicks in automatically). A premature birth or other catastrophe is likely to trigger an automatic grant.
Some grants might have specific purposes. For example, a group advocating preventative medicine would give grants for a check up.
Since people with low incomes can't self-fund as much care as the rich, the grants would naturally be income sensitive. The grant system provides a system for redistributing income from the rich to poor.
People and companies are likely to put as much money into the grant system as they would re-insurance. As people guard their charitable spending better than insurance, it is likely that the money placed into a grant program would buy significantly more care than a pure re-insurance program.
The main benefit of moving from re-insurance to a grant system is that it breaks the illusion that health care is a right.
Insurance and re-insurance muddles health care into an intellectually dishonest mess where people fail to properly recognize sources of income and expenses.
The Medical Savings and Loan coupled with grants provides an intellectually honest system for funding care which properly accounts for the individual's contribution to their care. When a person's income falls short, it provides additional funds and recognizes those funds as charity.
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