RD claimed to have run the numbers on the formula for the Medical Savings and Loan and found it lacking.
I found his statement odd because I have never published the formula for the Medical Savings and Loan. The current formula consists of three parts: savings accounts, a loan reserve and grants. In early version of the program, I called the grants catastrophic insurance or re-insurance.
I have not published a formula for the amount of money to put in each slot because the formula would be based on real world data, and is likely to change with economic forces ... just as insurance premiums change each year.
It would be fun to sit down with a team of actuaries and examine claims and income data to calculate the formulas. The actuarial analysis needed to gather the information and publish the formula would cost a pretty penny. (Actually one could start a program simply by overfunding the grants and loan components ... any excess put into the grants and loans eventually falls into the savings accounts.)
The first step I would take if I found anyone interested in the concept of the Medical Savings and Loan would be to gather data and start doing serious simulations of different formulas.
Considering that I am a pariah (a non-Mormon living in Utah) I can't procede in the way that I would like. Because I have absolutely no resources I can do nothing more than talk about the logical difference between funding health care with a savings program opposed to funding it with a Ponzi scheme.
Insurance is a theoretically stable ponzi scheme. A ponzi scheme lavishes benefits on the initial investors ... in the long run a Ponzi scheme pays off less than a real investment would have.
As we see with insurance, the first generation policy holders was lavished with benefits that went way beyond the premiums. The second generation of policyholders ends up struggling against massive premium increases each year. The third generation of policyholders is left holding a bag with a flawed product that costs more than the benefit received ... and the only way to maintain the scheme is to mandate participation.
Switching from a savings based paradigm for health care to a pay-go paradigm dramatically reduced the savings rate in the United States. The switch from a savings paradigm for health care to pay-go played a significant role in the reduction of our savings rate and in the massive debt built up by our nation.
Switching from a pay-go mechanism for health care back to a savings based system could help reverse the trend and might help our nation ease out from under its massive debt load.
Now, it is true that I cannot give you good figures on how the Medical Savings and Loan would affect savings without access to good income and medical expense data. Logically, switching from a pay-go to a savings plan would reverse the effect that occurred when we switched from savings based health care to a pay go scheme.