Beat Up on the Debt Ceiling

The media really beat on the Tea Party during the debt limit debate. The movement likely suffered a loss of political capital for very little gain.

The Tea Party got beat up because they let the left choose the issue. The debt limit was a crisis because the Pelosi/Reid Congress failed to raise the debt limit to match their spending.

The Pelosi/Reid Congress could have used their super majority to raise taxes or raise the debt limit. Pelosi/Reid chose to put our nation is a terrible spot hoping to gain political points by pushing our finances to the brink.

I hope that the budget fiasco made it clear to leaders of the Tea Party movement that they cannot simply let progressives define the battlefield and expect to win.

To restore American freedoms, the Tea Party needs to choose the issue.

The most powerful issue is Health Freedom.

The Health Freedom debate must start with fundamentals. It cannot start with the assumption that employer based insurance is health freedom.

Employer based health insurance was designed by progressives in decades past as part of the path to socialism. In the Carter administration, I attended lectures during which the professor put forward the notion that the first step to socialism was to convince Americans that group funding was the only way to pay for health care.

The professor instructed young activists to promote employer based health care.

I figured that if supporting group-funding of health care was the first step to socialism; then the first step to the restoration of liberty would be to promote self-funded health care.

While working in the insurance industry, I carefully deconstructed a group insurance pool and created a viable alternative to insurance called "The Medical Savings and Loan."

I developed the Medical Savings and Loan as a business model (not as a political platform).

However, I believe that this business model could play a vital role in the restoration movement.

The fact that the MS&L is important. It actually shows how the free market creates new businesses and new jobs.

BTW, the idea that austerity measures lead to prosperity is paradoxical until one realizes that government is, by nature, in a negative space.

Government, by nature, places constraints on the market. The argument for limiting government is a argument for limiting the constraints.

The argument for limited government is convoluted because it argues for a negative. Conservatives seek to place limits on the ability of the government to limit.

Adding the Medical Savings and Loan into the puzzle creates a mechanism in which one is arguing a positive.

My argument is that we should create the Medical Savings and Loan as an alternative to employer based insurance.

The Medical Savings and Loan, at this point, is simply a logical structure for self funded health care.

If the Tea Party argued for this new logical structure in conjuction with the argument for limited government, then they would have a complete system which shows why constraining government leads to prosperity.

Much as I would like to move on to different topics, I think I will continue to pound the drum for the Medical Savings and Loan through 2012.

A Progressive Scale?

Running the numbers for the Medical Savings and Loan is made even more complex because the numbers are based on income and not just medical expenses.

The idea behind the Medical Savings and Loan is that those who can self fund their medical care should pay for their care.

Let's say a person with ten million dollars in life time earnings has five million dollars in health care expenses.

In my opinion, that person should pay, out of pocket, the full five million dollars.

Insurance is regressive. It would have the millionaire pay the same health care premium as a middle class worker. Since the wealthy have better lawyers and demand better care, insurance transfers wealth from the working class to the wealthy class.

This is why the ruling class in both the Republican Party and Democratic Party give unwavering support for insurance.

The Medical Savings and Loan looks differently at the person who makes $500,000 life time earnings. One will see grants kick in after just a few thousand dollars in health care expenses.

The medical savings and loan is like the progressive tax system in that the rich are expected to pay substantially more than the poor.

The Medical Savings and Loan is a free market solution. It is about as close to a free market health care system as one can get. Progressivism proper refers to the progress toward socialism. It is interesting that the anti-market programs for funding health care all focus and power on the ruling elite to the cost of the people at large.

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Risk Profiles

RD brought up the discusion of risk profiles in a recent comment on my post about the difference between medical and auto insurance.

RD spoke quickly and was wrong. He claimed the difference between health and auto insurance was the risk profile. His claim was:

"the primary difference is the distribution within the dataset. Auto insurance costs having a fairly even distribution of costs through its dataset and a comparative marginal worst case cost cap, No insurance will pay to fix a car where the cost of fixing is higher then replacement."

The opposite is true. The distribution of claims with auto insurance is absolutely wild compared to health insurance. There is a large number of people who never have a claim against their auto insurance. A person driving a car through a crowd of pedestrians or causing a multicar pile up can rack up millions of dollars in liability in an instant.

Since everyone needs to spend money to maintain their health, there is less of a deviation in health expenses over one's life than with auto insurance.

There is often a great deal of variance per year throughout a person's life, however, the variance in medical expenses over a person's lifetime is not that great ... especially if we were to adopt preventive medicine.

The whole point of the Medical Savings and Loan is that, when you look at people from a whole life perspective, there is not as much variance in expenses as one would first suspect. When I did this experiment before, I discovered that there was a very nice bell curve with most people's life time health expenses sitting between reasonable figures like $300,000 to $600,000. With guidance, all but a few people could self fund their care.

This is not true of auto insurance where there is a wild difference in expenses. Each year only a fraction of people have claims. A small number of claims reach into the stratosphere.

The primary difference between health and auto liability insurance, as far as public policy is concerned, is that auto liability insurance is driven by the court system. Liability go through the court. If not for insurance, health care would be a matter of private contracts between patients and providers. Buying health insurance invites the court system and government into the care of one's health.

I know this for fact because, when I buy health care from my own pocket, I pay a bill negotiated with the doctor. When I use insurance I file a claim against a pool. Paying a bill is different from filing a legal claim. The first involves direct negotiation. The second is controlled by a court.

When I run a widow with an SUV full of orphans off the road, I am not involved in negotiation. I am involved in a court case. The amount paid gets decided by claims adjusters, appraisers and a judge with greater sympathy to widows and orphans than overweight computer dinks.

There is another substantial difference between health care and auto insurance. Auto insurance is about the liability of a single instance. Health insurance involves the whole series of things we do during our life to maintain our health.

I will write a second post on this matter in the near future.

But, What is Right for America?

While watching Book TV, I learned that there's a new book produced by leading conservative think tanks titled "Why ObamaCare is Wrong for America" (buy at Overstock). The book is co-authored by leading scholars from the Galen Institute, The Public Policy Center, The American Enterprise Institute and Heritage Foundation.

The book talks in details about the many faults of ObamaCare and the corrupt process that created one of the worst monstrosity in legislative history.

The authors chimed in on Conservatives ways to force more people to buy insurance.

The book looks interesting and I ordered a copy (fortunately it in paperback & kindle).

I am upset at the direction of the Conservative movements. Yes, ObamaCare numbers among the worst pieces of law ever drafted by big government.

Rather than trying to figure out what is best for America, the Conservative think tanks are unified in criticizing one of the worst health care laws ever conceived to support extremely bad laws.

Rather than harping on the worst forms of health care to justify bad systems, I want to engage in a fundamental discussion about what is the best form of health care.

Such a discussion would not begin with the assumption that a group pool are the best way to fund individual consumption.

Such a debate would notice that using a group pool to fund individual consumption is inherently corrupt.

Such a discussion would discover that if we looked at each person as a whole being, we would find that a system with savings supplemented by grants and loans would do a more effective job at providing care.

All of the questions about pre-existing conditions, portability and regulation that cloud the current debate vanish.

Discussing the fundamentals of health care also shows why insurance leads directly to inequitible society with an untenable gap between rich and poor.

Yes, taking a half million dollars during the lifetime of every worker has the predictible effect of concentrating wealth in the hands of the few people who own banks and insurance companies.

The second people realize that insurance (group funding of individual consumption) is inherently flawed, the debate changes. It explains both the faults of the status quo, the faults of ObamaCare and the faults of socialized medicine.

Were conservatives to ever deviate from their formula of using the worse to justify the bad, we could start a real conversation about substantive free market health care reform.

Insurance is not free market reform. Insurance was created by progressives for the specific purpose of regulating health care costs. Insurance demands government intervention in every single health care transaction. We know this from the terminology. With insurance, a patient does not pay a doctor. A patient files a legal claim. This legal claim is regulated by the local courts.

Every single transaction for medical care is a lawsuit.

The reason for the unreasonable cost of health care in the status quo is that every single transaction is legal claim against a pool.

For the last three years I have been clamoring, to closed ears, to have a real meeting where people discussed real free market reform. I gave my plan the title "The Medical Savings and Loan."

The MS&L uses a whole life analysis of individuals to create a structured savings program. The MS&L supplements savings with loans and grants.

I am buying Why ObamaCare is Wrong for America, but leave open the challenge to conservative think tank to host a discussion about what is right for America. I contend that the system best in keeping with the classical liberal tradition of our nation's founders is a structured savings program like the Medical Savings and Loan.

Until Conservatives are willing to address real free market reform, the best they will be able to do is offer a bad system in place of a worse.

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Health v. Auto Liability Insurance

A disussion about health insurance invariably brings up a comparison with auto insurance which is required by law.

The primary difference between auto and health insurance is that auto insurance is for a liability that one incurs when driving a vehicle. Health insurance pays for personal consumption.

Being involved in an accident automatically involves the legal system. If I ran you down in the crosswalk and you suffer a broken leg; there would be a legal claim to determine your compensation.

You and I will have different ideas about just compensation for a broken leg. I think you'd heal up well if you put your leg on a pillow with an ice pack. You are likely to want a doctor's visit, and might throw extra costs in the mix just for spite.

The legal liability (not the risk) is the driving force behind the requirement of auto insurance.

Auto accidents, by their nature, involve courts.

Health insurance is a means for funding personal consumption. When one buys health insurance, one invites the legal system into personal health insurance. Health insurance works as follows: a person buys into a group pool. In times of need, the policyholder places a claim against the pool. An insurance claim is a legal action defined by the courts.

The big difference between health and auto insurance is that health insurance invites the courts into decisions about personal consumption. Auto insurance, on the other hand, covers liabilities in which courts are already involved.

There are some aspects of health insurance that involve liability. For example, workers' comp covers liabilities of an employer. If you suffer an injury during work, that injury is the legal responsibility of your employer. A restaurant that serves unsafe food is liable for food poisoning. A toy manufacturer is responsible for product liability, etc..

The difference between standard liability insurance for an automobile and health insurance is that liability insurance, by its nature, involves the legal system. Health insurance invites the court system into questions about personal consumption.

As I do not want court involvement in my health care, I have been working on developing a viable alternative to insurance.

Insurance is the proper way to fund liabilities that involve third parties and the courts. The system fails with personal consumption because it invites the courts and government into regulating personal consumption.

Savings Paradigm

The last post noted that the Medical Savings and Loan was a mathematical model I developed by analyzing real claim and premium data.

Insurance looks at the health care of a group for a year. The Medical Savings and Loan looks at each person as a whole entity and analyzes their lifetime medical expenses.

The first thing I discovered was that all but a fraction of people have reasonable health costs in relation to their income.

The second thing I realized is that if one followed the whole life approach to funding health care, a large number of people would have a sizeable amount of savings during their lives. A large number of people would have accounts well over a hundred grand in their 40s and 50s.

The figures are not unreasonable. I do not have accurate actuarial data at hand.

However, my observation is that, in the status quo, insurance companies and government takes well over a half million dollar ($500,000) from each worker for medical expenses.

My educated guess is that all but a tiny fraction of people will have under $300,000 in life time expenses.

The amount of money that the system takes from people is substantially higher than actual costs because so much of it is spirited away in the form of fraud, profit or just waste.

The goal of the Medical Savings and Loan is to give people direct control over that first $300,000 dollars.

The hardest part in structuring the program is finding a way to convince Americans, who've been trained to be consumers, that having a hundred grand in savings is par for the course.

The idea that people should have several hundred grand in savings looks absurd until one starts looking at the way the economy works.

It takes a great deal of capital for a society to provide quality jobs.

Most jobs that pay well require a great deal of capital. Walking through the mall, we find that a well stocked store will have several hundred grand in inventory per employee. Construction crews on the roadside drive rigs that cost several hundred thousand dollars. Our public school teachers work in buildings work in builds that cost millions to build on extremely valuable land.

Most high paying jobs require a half million dollars or more in capital.

Increasing the amount that each American save would create jobs.

As people are likely to get some interest on savings, increasing the amount of savings should help increase the overall income of American workers.

Of course, the inverse of the above statement is true.

The expectation that insurance would pay medical expenses decreases savings.

Since the appearance of insurance last century, there has been a steady increase in the gap between rich and poor. This is due primarily to decreased savings as Americans developed the attitude that the state or their insurance companies would care for them.

Switching from an insurance paradigm to the Medical Savings and Loan would reverse the growing gap between rich and poor.

Taking the savings of the people and putting it in insurance concentrates wealth.

It is this insurance paradigm that is systematically turning our nation from a free nation to a class nation with a distinctive owner class and vast slave population.

Reviving the savings paradigm would reverse this trend.

The money is there. The Medical Savings and Loan takes the money that goes into insurance and gives it back to the people.

Oddly, the biggest challenge to the program is convincing a people who've been trained in progressive schools to be consumers to be savers. It is difficult to convince people who expect to be cared for that having a hundred grand in a savings account for medical expenses is normal.

Insurance currently takes about $500,000 from each worker. The MS&L would let workers keep the first $300,000, and put $200,000 per worker in a grant program.

The challenge is to keep people from wasting their stash of cash.

The Medical Savings and Loan hinges on a new position called Health Care Advocate. This advocate is really a financial advisor whose primary job is to convince people trained to be caudled that having a few hundred grand is savings is normal.

If the plan worked, we would fully fund health care and counter some of the forces which have been artificially concentrating wealth.

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The Whole Life Model

The real difference between insurance and the Medical Savings and Loan is the mathematical model used to examine health care data.

Insurance examines the experience of a group for a year. The ruling class (state bureaucrats, underwriters, and insurance companies) allocate, plan and speculate on the group's health care needs for the year.

The Medical Savings and Loan sees each person as a whole being. This structure then works to provide individual people with the resources they need for the health concerns of themselves and their immediate family.

These different mathematical models lead to profoundly different conclusions. A society engaged in group analysis of medical expenses approaches health care with questions about the tools they need to give to the ruling class to provide for the health of the people.

A person engaged in whole life analysis asks questions about what we need to do to empower each person in making health care decisions.

ObamaCare is a three thousand page document in which every single word is about the needs of the bureaucracy. These horrid health care exchanges are all about an elite speculating on the care of the group.

I say that this model where we pretend that the ruling elite treat the health of a group is an absurdity.

The Medical Savings and Loan says that health is an attribute of a person. Health care refers to the actions taken throughout one's life to improve and maintain one's health.

Starting with the notion that each person is a real breathing individual, what do we need to do as a society to help assure that each person has the resources to maintain their health?

The Medical Savings and Loan is all about creating financial tools directly around the individual.

In all of these insurance companies, health exchanges and socialized medicine, elitists site around and talk about the tools they need to control the health of others.

The Medical Savings and Loan creates a new position called health care advocate. The advocate sits in a room with each member of the program to help build a savings and spending plan for that individual. The advocates work to secure grants for those with inadequate resources.

Everything becomes centered around the individual and the individual's health needs.

All the questions about pre-existing conditions and portability vanish. Pre-existing conditions and portability are questions about what to do when a person moves from one group to another.

The questions are nonsense in a program based on whole life analysis. People do not move out of one life into another. Every person has a whole life with a distinct start and end.

Starting a discussion about the Medical Savings and Loan is difficult because the discussion ultimate revolves around people being able to understand the distinctions between the group model and the whole life model.

Although we live in an age permeated by mathematical thought, it is surprisingly difficult to find people willing to discuss different mathematical models and how they affect our perspective of vital concerns like health care.

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HSA v. MS&L

A Health Savings Account (HSA) plus high deductible insurance is still an insurance product and is subject to all of the problems inherent in insurance.

The Medical Savings and Loan combines a Health Savings Account with a combination of loans and grants to create a completely different product.

The MS&L uses a completely different mathematical model from pooled insurance. Pooled insurance looks at health care expenses for a group in year increments.

The MS&L compares life time earnings with life time medical expenses on an individual basis.

The MS&L uses a completely different mathematical model than the HSA.

Using a different mathematical model creates a system where all but a few people are able to fully self-fund their care.

The HSA has several glaring flaws. The primary flaw is that people will make their health decisions based on the deductible, and not their needs. For example, people with an HSA are likely to skip preventative care because they have to pay for it out of pocket. Even worse, when a person has paid the deductible for the year, the patient might get unneeded care simply because it is free.

Care providers are keenly aware of the source of payment. A care provider in the HSA model might undercharge when the person is paying in cash, then overcharge when the patient is paying on insurance.

The HSA program is often used by low wage employers seeking to cut health care expenses. This program creates serious problems for low paid workers who simply do not have the money to pay the insurance deductible. Such people end up paying for care, but are completely cut out of the health care system.


The MS&L model uses a full life cyle analysis that compares life time medical expenses with life time income.

A system that looks at health expenses of an individual as whole gives people an incentive to invest in preventative care. Preventative care, by definition, decreases life time expenses and is a good investment.

The system removes the perverse incentives to over-consume health care when the insurance company is picking up the bill. Such waste increases life time expenses without benefit.

The MS&L program does include subsidies. However, the MS&L structure does so by comparing life time income to life time medical expenses.

This creates profound effects in the implementation of care. A person who is obscenely rich (like Bill Gates or Warren Buffet) would never see a subsidy for care (as happens with insurance).

One of the perversities of insurance is that the uber-rich (who expect premium care) end up subsidizing their premium care with the insurance dollars of the working class. The Medical Savings and Loan makes Warren Buffet pay every penny of his care.

Conversely, since the system compares life time earnings to life time medical expenses, people with abnormally low income would start getting subsidies at an earlier stage than people with similar conditions earning an average life time wage.

Imagine two people who have a $50,000 catastrophe. The first recovers and goes on to earn a healthy wage for the rest of his career. The second does not. The Medical Savings and Loan would pay for both patients with a loan. The person who recovers would pay back more of the loan than the person who did not recover. So the subsidy effectively factors in both the effects on earnings and cost of the procedure.

Imagine one person having a catastrophe that costs $20,000. Another has a catastrophe that costs an initial $5,000 and creates a chronic condition that costs $2,000 for the next ten years.

The HSA with a $5,000 deductible would supplement the first patient with a $15,000 check. The second person would have to pay the full $5,000 for the catastrophe, the $2,000 a year for the next ten years ($25,000). To add insult to injury the insurance company is likely to raise insurance premiums because the policy holder has a pre-existing condition.

The HSA makes life worse for the person with the more expensive medical condition.

The Medical Savings and Loan looks at the life time earning of the policyholder. When it comes time to dishing out supplements, it would see that the person with a catastrophic condition followed by a chronic condition had higher medical expenses than the person who just had a catastrophic condition and recovered.

The Medical Savings and Loan uses a different mathematical model than pooled insurance.

Using a mathematical model that considers each person as a complete whole, the Medical Savings and Loan creates a paradigm where the majority of people self fund their health care and the supplements are given only to those with abnormally high medical costs or abnormally low income.

This is a completely different approach to funding health care that deserves exploration.

The HSA + high deductible insurance is still insurance. It is still ruled by the flawed thought process behind insurance. The Medical Savings and Loan is a complete break from insurance. It creates a viable structure in which people can fully self fund their care.

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An Inclusive Free Market

The free market is the most inclusive socio-economic system yet developed.

The secret to making the free market work is for people to see themselves as owners, and not just workers.

Sadly, the political left and right have been working on a paradigm where there is a professional centralized class of owners ... with everyone else reduced to wage labor.

This model is absurd in a day when machines are systematically reducing the value of wage labor.

The two most important things that people own are their minds and their bodies.

Both socialized medicine and insurance are a direct assault on the notion that people own their bodies. In both systems, your physical body is not your property. Your body is part of a pool.

The Medical Savings and Loan is a structured savings program that is a bit like insurance in that it provides funds for emergency care; however it shifts the paradigm from group funded care to self funded care.

The Medical Savings and Loan has the same amount of money currently spent on insurance. However, the structure re-establishes the idea that people own their own body and are the primary agent charged with the care of they body they own.

The program uses a system of health care advocates to challenge healthy people with the need to save and engage in preventative medicine. The advocates then help people manage resources when they need care.

By teaching people to treat their body as thing that they own helps re-establish the concepts at the heart of the free market system that our founders established.

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The MSL & Medicare

People are discussing entitlements. So, I thought I'd chime in on the Medical Savings and Loan and Entitlements.

Employer based insurance is dependent on Medicare.

Employer based insurance attempts to fund health care in a pay-as-you go manner. An actuary will calculate the expected medical costs for a group for a year. The actuary adds a hefty profit then charges a premium to employers based on this calculation.

The idea is that people will pay for their health care from their income.

Employer based insurance has the obviously flaw that, when people stop having income, they have no way to pay the pay as you go premium.

Employer based insurance is 100% dependent on there being a big government entitlement to catch people at retirement. If not for the entitlement, workers would notice that their health plan leaves them destitute and rise up against both their employer and insurer.

Historically, health insurance developed in conjunction with entitlements because health insurance is dependent on government entitlements.

Pay as you go insurance was developed by progressive businessmen in concert with progressive politicians. People never would have accepted insurance if not for the entitlements.

The converse is not true. Medicare is not dependent on insurance. The government can easily flank and roll up an insurance system without making that big of an impact on the lives of the people.

People's lives might actually improve because they would feel less obliged to a given employer ... feeling obliged to the state.

Socialist progressives have always seen insurance as a step in the progression from a free society to a socialist.

Conservatives are idiots for thinking insurance is a market oriented approach to health care. Insurance is an anti-market creation of the progressives. Insurance is dependent on big government. Without Medicare and government entitlements, pay-go insurance would implode because workers stop having income when they retire.

While insurance is dependent on entitlements, the Medical Savings and Loan is neutral on the issue. The goal of the Medical Savings and Loan is to help individuals self-fund their health care. The existence of entitlements reduces the amount of money that people need to save for health care.

In a world where medicare exists, members of the medical savings and loan would not need to save as much as one where it did not exist.

In a case where medicare becomes financially insolvent, the medical savings and loan provides a structured mechanism for gradually switching from a pay go back to a savings funded insurance system.

The mathematics of this is really interesting. The MS&L treats Medicare as a supplement to health care. The system I created has signalling mechanisms. If Medicare is insolvent, the MS&L would trigger signals that would tell people that they needed to save more for retirement.

The signalling mechanisms of the MS&L is a different post.

This post is about insurance. I've mentioned in previous posts that insurance is dependent on government regulation to present health care as a regular product for actuarial calculations. With insurance, every medical expense is a legal claim against a pool of money.

Health insurance is totally dependent on the government. If a product is totally dependent on the government, is it a free market solution?


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Booked a Room

I booked a room at the Extended Stay Hotel in Phoenix.

I've been in a funk for the last few days. I learned about the Tucson shooting seconds after publishing my last post about the decision to attend the Tea Party Summit in Phoenix.

After writing the post, I did a Twitter search on "Tea Party Az." Although the police had not released information about the suspect, the real time search stream was filled with people trying to associate the shooting and the tea party.

It's telling that the anarchist shooter had an obsession with mind control. The game where people seek to associate their friends with positive images and enemies with negative ones is the most common form of political mind control. That so many people engaged in the practice was scary.

Anyway, I was excited to go to the Tea Party Summit because I've been hoping to get out of the toxic environment of Salt Lake.

This shooting means that Phoenix itself will be extremely ugly during the summit. Progressive protestors will be more vile than usual, and the MSM will pull every propagandist technique in the book to associate speakers at the meeting with the shooting.

But I am not going to Phoenix to talk to Phoenix. I am going there to see if there is any interest among the Tea Party leaders in the Medical Savings and Loan.

It is my belief that, for the Tea Party to succeed in its goal of restoring health care freedom, it must switch from the activist/agitation model to a discussion of ideas. The Medical Savings and Loan is a structure that allows for the open discussion of ideas related to financing health.

The Tea Party was correct in using the activist/agitation model in its effort to stop the passage of ObamaCare. After all, the progressives used this very model to build their supermajority. Obama was a Community Organizer weaned on Alinsky.

Using the weapons developed by progressives against progressives was an acceptable trick in the effort to stop ObamaCare.

The agitation model of discourse is not an adequate tool for restoring freedom. If the Tea Party continues on the activist path, it will become just another progressive group in the grub for base political power and will stop being a force for restoring liberty.

To restore liberty, the Tea Party must find higher ground.

The Medical Savings and Loan is higher ground. A debate that compared the Medical Savings and Loan to insurance would show that our health care woes are the result of attempts to use a group funding mechanism for individual consumption. Such a debate directly attacks the mandates of Obamacare and can serve as a basis for showing why these health exchanges are such a horrible idea.

The best, if not only, hope the Medical Savings and Loan has is for people in the Tea Party to take interest.

The activist/agitation model was developed by progressives. Progressivism is an extremely ugly and divisive way to undermine real discourse. Progressives developed other techniques such as framing and projection. When the Tea Party uses the activist/agitation model, it allows progressives to project the ugliness of their methodology onto their opponents.

Although it is fun to use the techniques of progressives against progressives, the technique ultimately fails because it allows progressive to project their techniques onto the opposition.

For the Tea Party to prevail, it must find a different path.

I booked a room at an Extended Stay Hotel to give myself time before and after the meeting to develop contacts with the hope that I can find someone in Arizona who wants to move in a positive direction.

From now to the Summit I will be working on ways to pay for the trip and on an outline for a Medical Savings and Loan Conference, as I think that might be the best way to introduce the idea.

My heart goes out to those hurt in the Tucson shooting and pity to those set on using the attacks in their agitation efforts. Anarchists kill to stop discourse.

I hope and pray that the Tea Party kicks its fascination with agitation and becomes an organization dedicated to the ideas of liberty and not simply the partisan grub for political power.

Tea Party Summit

I signed up for the Tea Party Summit in Phoenix. The summit runs February 25 through 27.

If there is any interest, I run my Medical Savings and Loan Conference just after this summit. Blog posts simply are not sufficient to communicate what the MS&L is.

I really hate the idea of self-publishing an unedited book, but I decided to write up a pamphlet so that I could have something to sell in Phoenix.

This is the section I just wrote:

I created the Medical Savings and Loan by reverse engineering an insurance company. As such, the program is best understood in contrast to insurance. When talking about the Medical Savings and Loan it is important to realize that the same amount of money going through health insurance will go through the Medical Savings and Loan.

Arguments for or against the plan should start with the realization that both programs have the same amount of money. It is a question of structure and how the structure affects the use of our health care resources.

Most people reject the Medical Savings and Loan outright based on the false assumption that it is under funded. It has the same amount of funds as insurance. If the program can achieve efficiencies, then it will be significantly over-funded.

The savings accounts, loans reserves and grants are tools that transition a group policy into individual accounts. The Health Care Advocate program takes the internal bureaucracy and externalizes it. The program takes the medical records that are currently owned by the insurance company and places them in the possession of the policyholder.

Since people are now making their health care decisions with their own money, they are likely to be more frugal in their consumption. Since they advocates work directly for the patient, they will no longer be working at cross purposes to the people. Since the paperwork is owned by the policyholders, the system should optimize the processing of paperwork to the policyholder's needs.

The idea is simple if someone could just catch on to the fact that I am reverse engineering an insurance company so that we align our health care resources to the needs of the people and not the needs as of the bureaucracy.

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HSA and Marketers

Have you ever seen those slick ads telling folks they can get a free scooter from the government?

Slick marketers have learned that when a third party is picking up the tab, people are likely to spend foolishly.

While discussing the differences between the Health Savings Accounts and the Medical Savings and Loan, I should mention that the HSA coupled with high deductible insurance preserves the perverse incentives of third party payments.

Marketers are attentive to who is paying the bill. As such, they market unnecessary medical expenses to people who are getting their care funded by the high deductible insurance.

Patients, of course, are attentive to their deductibles and plan their doctor visits to get as much free care as possible.

The medical savings and loan has all expenses being self funded by the patient ... eliminentating the perverse incentives.

Supplements to the MS&L come in the form of grants. The grant givers are likely to be highly atuned to nature of the spending. They are less likely to give grants to people who spend frivolously.

Marketers would take a different approach to people in the Medical Savings and Loan. The sick will do a better job guarding their money, while the healthy would end up with massive amounts of cash in their Health Savings Account. Businesses would compete developing products that help the sick get the most out of their money and concentrate frivolous marketing on the healthy ... probably in the form of preventative care and savings related products.

A study on how the Medical Savings and Loan differs from Health Savings Account would be a wonderful addition to research related to liberty and health care.

I would be happy to help anyone with such an academic study.

A conference on the Medical Savings and Loan could result in numerous academic papers, publications and even new businesses.

It would cost very little to host and would produce a world of good. All the conference needs is a group of people willing to spend a day or two talking about free market alternatives to group funded health care.

The Parasites Gather

On January 18th, a group called Utah Health Policy will hold a meeting on implementing Obamacare on January 10, 2011 at the University of Utah (and satellite locations across the state.

When I first read the announcement, I thought the public meeting would solicit ideas from the public on health policy.

Being an optimist a complete idiot, I actually started gathering information on the Medical Savings and Loan to bring to the meeting to see if I could find any interest in the concept.

On reading deeper into the site, my heart sank. I actually felt physically ill when I read the Myth v. Fact page of the project.

This group simply dismissed the Tea Party and the 2010 elections as myth.

I went to the tea parties, I spent a year closely following the anti-Obamacare movement. The Myth-v-Fact page completely mischaracterizes the tea party and utterly misinterprets the election. Using a myth-v-facts pages to spread myths is a classic Marxian style paradox, I imagine the web site creators are quite proud of themselves.

This biggest myth spread by the myth-v-fact page is the notion that insurance is the only way to fund health care. It is the way we fund health care today because government tax policy gives employer based insurance unfair advantage.

The current health care mess was created by the very progressives who are now stuffing Obamacare down our throat.

There is some truth to the myth page. For example Obamacare is not pure socialism, while participants in the tea party tend to call it socialism. Obamacare is not pure socialism. In pure socialism, the means of production are owned by the state.

A system national policy implemented through large politically connected firms might better be called "Fascism."

Obamacare is one of the many offshoots of the Marxian tradition and is counter to the free society created by the US founders.

The one part of the myth v. facts page that every patriot should read is the section on the role of states in Obamacare. This section points out that Obamacare is dependent on the states. It reads:

Health reform is designed to be a partnership between the state and federal governments, as it should be."

First off, this idea of states implementing the policies dictated by the Federal Government is not "the way it should be." The Utah Policy Project is essentially avocating the revival of the relation between the colonies and the king where the king dictates policy and the local governors implement the dictates.

This is precisely the structure that the US Founders rebelled against.

The US founders clearly created a federal government with limited powers. The federal and state governments operated in distinct realms.

Isn't it bizarre that a president who was supposed to be against colonialism is reorganizing the US government along the colonial structure?

Hope and Change appears to be a revival of the monarchy and the kings's court.

Instead of courtesans we now have a bizarre creature called a "stakeholder."

The system of stakeholders pulls together a group of likeminded courtesans into the king's court to influence and implement policy.

The stakeholder system is very simple: The intelligentsia would decide policy, then choose a selection of politically connected stakeholders who are sympathetic to the policy, then use the influence of the group to dictate policy.

I read through the list of participants involved in this Utah Policy Project. The primary stakeholders in the policy are the same big insurance firms, big hospitals, big HMOs, big government and big education that created the health care mess.

The King's Court stakeholder system cuts the people out of the equation.

So What Should We Do?

The groups pushing Obamacare in Utah are very powerful and very well organized.

Unless people who wish to preserve their health care freedom do something, Obamacare is as good as implemented in the Beehive State.

I suspect that similar efforts to the Utah Health Policy Project are taking on in every state of the nation.

If there is any interest in preserving health care freedom, patriots must act and must act now!

The best way of acting would be to create Health Care Freedom Conferences where people brainstormed on alternatives to Obamacare.

I would be happy to contribute my research on The Medical Savings and Loan to any such efforts.

The Medical Savings and Loan is a structured savings program that would allow people to self fund their health care, and would provide an alternative to insurance.

I do not have the resources or connections to organize a conference, but I can contribute ideas and help publicize an event. I would be happy to travel to a conference.

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The Medium is the Message

The other day, I came across an ad for a company that claimed to have the answered for the uninsured. The answer was a program that promised to deliver health care over the interet (for a modest subscription fee).

Subscription fees don't work for medical care. The reason is that people have different needs and will consume different resources.
A subscription service will need a large number of underserved chumps for each properly served patient.

The idea is absurd.

Medical care must take place in direct person to person contact.

For that matter, the idea that health care is about people directly helping other people was the founding principle of the Medical Savings and Loan.

I have no intension of creating a computer program that will deliver health care. I am seeking a way that empowers people to maximize their personal resources so that they get the most of their care.

Reading the web site intro for this internet scam drove the point of why I am failing to get out the message about the medical savings and loan.

People see web posts and articles, but they end up confusing the medium with the message.

The reality is that the Medical Savings and Loan is an organic method to help people self-fund health care.

As it is an organic approach to funding health care, the interface is not a computer. The interface of the system is human beings.

Yes, the program deconstructs an insurance company. However, the program did not start with the math. The program started by an examination of the claims adjusters.

For the most part, claims adjusters are wonderful people who really want to help people get the best care. The structure of insurance puts claims adjusters in an adversarial role to both the patient and doctor.

This adversarial role exists because the adjuster's job is to defend the insurance pool. If one changed the orientation of the system so that the people owned their own resources, then the adjuster's job is to defend the assets of the patient. The adjuster becomes an advocate for the patient.

Simply changing the orientation of health care funding solved a large number of problems.

Pretty much all of the major complaints about insurance and socialized medicine fall away when we change the orientation of the system from group funding to self funding.

Anyway, it was with the health care advocate in mind that I developed the medical savings and loan.

It was with this health care advocate in mind that I developed the rest of the medical savings and loan.

The math is compelling. If one deconstructs health care pools into individual accounts, one creates a structure that better serves the people needing care.

Any attempts to implement a program depends entirely on the people. The interface of the system is face to face contact.

Unlike insurance, the Medical Savings and Loan doesn't hold the money. People will have their own savings account in the financial institution of their choice. So, it is not an accounting program. It is the concept of structured savings to self-finance care.

The medical savings and loan is not a computer program. It is not a book, nor is it an accounting system. The medical savings and loan is about people working together face to face in a concerted effort to optimize their health care resources.

Anyway, I am stuck in a rut. As people tend to confuse the medium with the message, I fear that the only way to convey the program is within the same medium as the message ... face to face contact.

Face to face contact is very hard to pull off in a community where one is driven off as a pariah. Every day I eye the road and think about a direction to drive.

It is warm in Arizona, but I don't know anyone in Arizona.

Regardless, I am thinking of hitting the road after the holidays.

As for right now, I am adding internet coupons on an ecommerce site. Maybe, I could get some road money.

Mortgage Backed Insecurity

Patrick Byrne of Deep Capture repeats an interesting rumor. The rumor is that a sizeable portion of the loans in the toxic mortgage-backed-securities bundles that crashed in 2008 were actually fraudulent loans. The "paperwork errors" holding up foreclosures are tiny things like houses that don't exist or mortgages that don't have liens on titles.

Possibly some of the bad loans aren't just loans made to people who can't repay, but were fraudulent loans from the start.

The convolutions of mortgage backed securities, CDOs and credit default swaps make my eyes curl up in their sockets.

However, this much I know.

These bizarre derivatives all came from the insurance industry.

The idea behind a mortgage backed security is that centralized banks can manage risk by bundling large number of mortgages into packages that are then traded on the market.

Freddie Mac and Fannie Mae are GSEs (Government Sponsored Enterprises) that bundled, insured and served as an exchange.

The exchanges created a convoluted complex of derivatives such as CDOs and credit default swaps to facilitate the trade of the securities and promised the ability manage risk.

The exchange system for mortgages failed miserably.

I repeat that. The exchange system for mortgages failed.

The exchange system for mortgages failed.

The exchange system for mortgages failed.

The exchange system for mortgages failed.

The heart of ObamaCare, and other current approaches to health care reform replicate the failed centralized exchange system of the mortgage industry.

The system where traders sit in towers and speculate on the risks of others will simply replicate the failed mortgage system. It will be rife with fraud while those needing care will be spun off onto the public coffers.

The better approach to health care reform is to march in the opposite direction. Rather than created convoluted group pools in which the elite control health care, we should develop a system where people self-funded their care (with supplemental grants and loans).

Hmmm, I wonder if anyone has come up with such a thing.

I've watched the news, read the papers, hit the tea party web sites.

I haven't found any.

Hmmm. If only some would work on such a system, it would be great.

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Health Care and Diabetes

This just in The Number of Type Two Diabetes Cases is Soaring.

The primary cause of type two diabetes is Americans are failing to draw the connection between their diet and long term health cause.

A primary reason for our failure to draw this connection is that our health care system shields people from the consequences of their actions.

Type Two Diabetes is the one disease that the Medical Savings and Loan could really can really help reduce. This system asks that its policy holders self-fund their health care.

The system confronts policy holders on a regular basis with the consequences of lifestyle choices.

I have not been playing up the central character in the Medical Savings and Loan. The program creates a new position called the Health Care Advocate. The primary charge of the advocate is to educate participants on expected health care expenses.

It is a financial position, not a medical position, the advocate will use the language of money to explain basic things like if you get this preventive care, your health expenses will be like x. If you don't get preventive care, your expenses will look like y ... and you can't afford y.

I repeat, the HCA is a financial position, not a medical position.

The goal of the program is to engage participants in a multi-dimensional discussion of their health.

Insurance and these crazy health care exchanges treat people as if they live one dimensional lives (with speculators trading individual risks on the exchange).

The Medical Savings and Loan sees advantage of people owning their own risk as it forces people to take a multi-dimensional view of their health.

Here is an example of the type of financial questions I find beneficial. Share-A-Sale has a new advertiser called 360 Cooking. This company makes expensive stainless steel pots designed for a waterless cooking technique. These expensive pots have a multi-layered construction to evenly distribute heat. Their claim is that their design lets people cook with no oil and less water.

This increases the nutritional content of food and improves taste. They claim waterless cooking reduces energy consumption.

The company's claims may prove bogus. The pots are way outside my price range, and I am sure I could do "waterless" cooking with other pots.

However, I found that the expensives pots started an interesting line of inquiry. Could waterless cooking reduce my consumption of fat? Would it increase my consumption of veggies? What impact would such a decision have on my long term health?

Consulting a doctor about buying a pot would be ludicrous.

However, if we developed a system where people owned their own health care risk, then we would see people engaging in this type of decision making on a regular basis. It is through the repetition of this type of conversation that leads to quality life style choices.

By creating a system where people own their own risks and are directly confronted by these risks in a conversation with a health care advocate would create a paradigm where people engage in this type of discussion.

A system where traders speculate on people's health risk in a centralized exchange will result in conversations, but not conversations that help people.

Debt Per Taxpayer

The Debt Clock tells me the national debt per citizen is over $44,000. It is over $126,000,000 per taxpayer. Total debt per citizen is about four times that. It is $176,000. Current unfunded liabilities are over a million dollars per person.

Our savings are a scant $9,703 per citizen. This is barely twice the interest we pay on the debt which is about $4,600 per person.

A devaluation of the dollar and higher interest rates could easily throw our economy into a tail spin.

This sad situation is not the result of a moral default of the American people, but is a result of the stupid way we've structured our financial world.

In efforts to buy power, our political and business leaders structured our economic system so that we use pay-as-you go schemes supplemented by debt financing for necessities that should be financed through savings.

What I want to do with the Medical Savings and Loan is to take the massive premiums we are paying for pay-go insurance and place it into a structured savings program.

The current savings to debt ratio is $9K/$176K.

Insurance premiums are over $10,000 per year. A student coming out of college is likely to pay over a half million in insurance premiums and deductibles over a working career. The structured savings program would put over half of that money in the savings accounts with the other half going to grants and loan defaults.

As people tend to be healthy when they are younger and require medical attention when they are older, one would see a phenomena where a large number of people had a large amount of money in their medical savings account. If the system worked the average policy holder would have about $20K in savings with some people having upward to $100K in savings.

Were the entire US to switch to a Medical Savings and Loan paradigm (something which I am not demanding), we would see savings balloon and a more reasonable savings to debt ratio of $30K/$176K would emerge.

The Medical Savings and Loan is not totalitarian. It is not like silly health care exchange systems that must force everyone into a complex scheme for some perceived benefit. The Medical Savings and Loan simply provides financial tools that allows people who wish to self fund their care take a stab at the challenge.

People who switched to the MS&L for self-funding their care would increase their savings and decrease their personal contribution to the debt problem.

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Zarephath Health Center

Wow!

This is what I am looking for!

Zarephath Health Center is a faith based effort to provide health care to the poor and uninsured.

These are the people who would thrive with the Medical Savings and Loan.

I discovered the center through an article on Freedom Blogging. Doctor Alita Eck sees the Health Care Exchanges for corrupt fluff that they are. She gets right to bare knuckles of providing health care and explains that the best health care is a system with the doctors and administration focused directly on the patient.

This is what happens with the medical savings and loan!

If I could get the equations for the Medical Savings and Loan in front a pair of astute eyes like this; the system would pop.

The MS&L essentially takes the money that goes into insurance. It splits this money into a Savings and Loan component. This component empowers the people who can self-fund their care to self-fund their care. The system carves off a big chunk of cash to be distributed as grants. Anyone who takes a grant must agree to take part in the savings plan.

The people who self fund their care will spend their money on the care that best suits their needs.

When people cannot, the group administering the grants would be spending their resources in the best possible way.

(As mentioned earlier, a Medical Savings and loan with 10,000 policy holders would probably have about $800,000,000.00 for direct self-funded health care and $200,000,000.000 in grants over a ten year period. 10,000 * 10,000 * 10 = 1,000,000,000.)

I have more faith in a group Zarephath Health Center with a few hundred million bucks in grants than the Utah PAC with a totalitarian exchange and the unconstrained political power the Political Action Committe desires.

Unfortunately, the Zarephath Health Center is in New Jersey.

That's too far to travel.

What I need to start a Medical savings and Loan is a group of people who want to save the health care freedom (while cutting costs) and a network of faith based groups like Zarephath.

It would be so easy to start. The business model is ready. All I need is some victims people to launch the plan.

Should I Do Any Thing With the Medical Savings and Loan?

I started a poll: "Should I do anything with the Medical Savings and Loan?"

The goal of the project was to show that it is possible to fund health care in other ways than pooled insurance.

The Medical Savings and Loan simply breaks apart a group insurance pool into individual savings and lending accounts. Sam Granato said his insurance costs were $18,000 per employee per year. The MS&L would put half this amount in a savings account. A quarter in a loan reserve and the rest in a grant program. The loan reserve would go into the savings accounts if unused.

The system simply takes the money that goes into an insurance pool and gives the bulk of the money directly to the policy holder with the rest going into a combination of loan reserve and grant programs.

This mathematical model lets people directly contrast the merits of individual and pooled funding of health care.

People could take this model apply it directly to real world data and ask the question: Are people better off with pooled financing of health care or individual financing of health care?

My goal during the last two years was simply to find a group to discuss the model.

I failed to achieve my goal. Hundreds of letters, blog posts and tweets have received nothing but cold shoulders.

The Medical Savings and Loan is a real model. It is very easy to implement. I believe in the scientific method. It would be very easy to put together a Medical Savings and Loan program.

Health care financing is an interesting business because a program can underwrite itself. Lets say you had a group of 3000 policy holders paying $10,000 a year in premiums. Well, you have a starting point of $30,000,000.00 of yearly income.

The ideal experiment would have 10,000 victims policy holders. That would give a yearly base of $100,000,000.00. Over a ten year period, one would process a billion dollars through the program.

The administrative cost of the Medical Savings and Loan is significantly lower than insurance. Insurance companies have to have a big claims approval process, expensive actuaries and massive legal departments.

The Medical Savings and Loan puts the savings accounts in a local bank. Policy holders pay their medical expenses directly from their accounts. This eliminates the costly claims approval process.

Legal costs would be lower as well. Insurance companies have lawyers who sue doctors and defend against lawsuits from policy holders. The Medical Savings and Loan steps out of legal picture. Patients would still need to sue doctors, employers, etc.. The Medical Savings and Loan, itself, simply moves money between accounts.

The administrative cost of a Medical Savings and Loan would probably come out to around 1% of the premium. An experiment with 10,000 people over ten years would have about $10,000,000.00 to pay for the work of a half dozen middle class employee/owners. (The best corporate structure for the Medical Savings and Loan is the buyer's co-op with employee ownership).

Did anyone hear that? Administrative costs for The Medical Savings and Loan might be as low as one percent.

Assuming that people are more careful with their money than they are with other people's money, the Medical Savings and Loan could realize up to a twenty percent decrease in health care expenses than insurance.

It is unlikely that the medical savings and loan would cost more than insurance. So, it would be a good experiment for a company wanting to control its health care expenses.

Although my goal of the last two years was simply to find a group to simply discuss the idea ... a group that experimented with the idea just might find giving people direct control over their health care dollars is a fun experiment.

The Medical Savings and Loan would be a great paradigm for discussing health care. One can also use it as an experiment to compare pool funded health care with individually funded health care.

I have tried for two years to get anyone*, anywhere to discuss the idea. I have enough money to drive as far as Arizona, Colorado, Nevada, Idaho, or even Texas.

(*By anyone, I mean a group committed to sound rational thinking. It would be a waste time to discuss an idea with a group seeking to project false images on the idea.)

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