Wednesday, September 22, 2010

Crossing State Lines

I decided to make another big change to the Medical Savings and Loan.

The Medical Savings and Loan does not currently exist. However, I decide that, from the get-go, the program can be sold across state lines and will be accepted anywhere physicians are permitted to take cash payments for care.

I believe quite strongly that health care resources should be owned and controlled locally. I don't see any advantage to selling the product across state lines.

I decided to make the leap from a local to a nationwide product to emphasize the difference between self-funded and risk-pool funded health care.

With self-funded care, people saving their money and spend it where they like. With insurance pools, people place their health care resources into an enormous pool, then place legal claims against the pool.

As insurance is driven by legal claims, the buyer must be in the same jurisdiction as the pool.

A Medical Savings and Loan consists of three primary components. These are:

  • Savings Accounts
  • Lending Accounts
  • and grants.

A person should be allowed to keep a savings account in the bank of their choosing, even if it is in a different state.

As for lending, groups with money to lend should be able to lend that money wherever they please.

The same is true with the grants. If a person or group has money to give away, then they should be able to grant that money as they see fit.

It is very likely that grants and loans will be highly targeted and available only within a given state. There may even be types of loans and grants that are regulated by the state. A good analogy is scholarships. Some scholarships work for all schools, others only work for in state schools.

Certain employees of the medical savings and loan may be regulated by the state. For example, the Health Care Advocates are essentially financial advisors. States tend to regulate financials advisors. Doctors tend to be highly regulated as well.

I am not sure how a doctor could do surgery with the doctor and patient in different location. Simple things like taking a pulse require people to be in the same general area.

Despite there is great advantage in buying care locally and that certain aspects of the program will be regulated locally, I feel comfortable declaring that Medical Savings and Loan a universal concept that can exist beyond state borders.

The difference between the medical savings and loan and insurance is that insurance is one massive legal construct that tries to be the end all of health care for a large group of people. With the insurance paradigm, every single transaction is a legal claim against a legal structure. As people become 100% dependent on a single point of failure, that point of failure requires substantial regulation.

The Medical Savings and Loan, on the other hand, is a collection of financial tools designed to help people self-fund their care. Just as people should diversify their retirement savings, the Medical Savings and Loan benefits from the involvement of many actors.

The biggest difference between the MS&L and insurance is that every insurance transaction is a legal claim. With the MS&L people negotiate with doctors and pay cash for service.

Hopefully, I will someday find entrepreneurs interested in starting an MS&L. I would love to see a Medical Savings and Loan a viable alternative to insurance. Since the program benefits from diversity, I will promise to actively seek to create a program with components that span state borders just to rub noses in the difference between self-funded and pooled health care.

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