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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Thanks for the reference to my writing. What is missing from your proposal is any approach to the real problem in our health system: waste. Because of poor quality, we lose the equivalent of a TARP payment ($700 billion) annually. And because of inefficiency in health financing (inherent in the private health insurance business model) we lose another $400 billion per year. If we do not reclaim that $1 trillion per year, no amount of charity can possibly cover the health care expenses of the population. For documentation of these facts, please see multiple entries on the Utah Healthcare Initiative blog (www.utahpatientspac.blogspot.com). Information about what we can do about health system waste can be found by clicking on the executive summary on the UHI website (www.utahpatientspac.com).
The Medical Savings and Loan is not insurance.
With the medical savings and loan, all health care is a direct contract between patient and physician. There is not a third party in the transaction.
(NOTE, patients will have access to health care advocates. The advocate is employed separately by patiens. The advocate provides information and assistance to the patient. This advocate is not institutionalized as a direct part of the transaction. If the patient is incapacitated, the HCA will work as a buyer's agent)
The program eliminates the vast majority of waste in the system. Most importantly, it eliminates waste as a profit center. Insurance companies take a cut of total health care expenses, so they encourage waste.
The Medical Savings and Loan sells services to help people self-fund care. the MS&L must show cost benefits to survive.
Depending on how one defines waste, moving to a system of direct patient/doctor contracts could be said to eliminate all waste.
If one defined waste as anything not directly spent on a doctor, there would still be waste. When left to their own devices, people will use their devices for things like alternative medicine or expensive whole foods.
(NOTE 2: The lending function is open to fraud. A dishonest doctor might have people take out loans they don't intend to pay for services not rendered, etc.. The fraud is greatly reduced from insurance.)
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