{"id":79,"date":"2016-09-27T22:10:00","date_gmt":"2016-09-28T03:10:00","guid":{"rendered":"http:\/\/obamacare-professor.com\/?p=79"},"modified":"2023-11-02T16:10:17","modified_gmt":"2023-11-02T21:10:17","slug":"executive-summary-of-a-new-vision-for-a-national-health-insurance-system","status":"publish","type":"post","link":"http:\/\/obamacare-professor.com\/?p=79","title":{"rendered":"Executive Summary of a new vision for a National Health Insurance system"},"content":{"rendered":"<p class=\"western\"><span style=\"font-size: xx-large;\"><b>Proposal for Post-Obamacare National Health Insurance System<\/b><\/span><\/p>\n<p class=\"western\"><span style=\"font-size: medium;\">Presented by Titus North to Representative Mike Doyle, September 19, 2017<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\">I. Rationale: Obamacare is a mixed bag and will ultimately need to be fundamentally overhauled or replaced.<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> A. Obamacare\u2019s benefits<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 1. Millions more people with insurance<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 2. Millions more with highly subsidized polices<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 3. End to pre-existing condition exclusions, rescissions, etc.<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> B. Obamacare drawbacks<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 1. Higher premiums and out-of-pocket costs for people with little or no subsidies<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 2. Failure to contain underlying costs<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 3. Feedback loop of premium hikes due to taxes on healthcare system (35% of Obamacare funding)<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 4. Move towards narrow networks.<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"><b>II. Why do we have rising costs?<\/b><\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> A. Hard to avoid factors<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 1. The aging of society<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 2. Increased use of advanced technology<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 3. Deterioration of public health due to lifestyles<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> B. Avoidable factors<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 1. Competition between companies based on underwriting(to be explained below)<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 2. Corporate dividends (in the neighborhood of 5% of premium revenues for private companies)<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 3. Advertising, inflated executive salaries (some fraction of 1%)<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"><b>III. Weaknesses of \u201cmarket solutions\u201d<\/b><\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> A. Markets for most goods and services encourage innovation and efficiency. <\/span><\/p>\n<ul>\n<li>\n<p class=\"western\"><span style=\"font-size: large;\">However, the core function of insurance is the distribution of risk according to probability (underwriting). Mathematical laws cannot be altered, and thus there is little room for innovation in the insurance industry. <\/span><\/p>\n<\/li>\n<\/ul>\n<p class=\"western\"><span style=\"font-size: large;\"> B. Insurance companies compete by chopping up the risk pool, which leads to a plethora of policies. This leads to:<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 1. Loss of economies of scale<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 2. Loss of bargaining power in setting prices<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 3. Massive redundancy in administration (plan design, regulatory approval work, actuarial work, etc.)<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"><b>IV. Drawbacks of \u201cMedicare for All\u201d<\/b><\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> A. Medicare is a largely pre-paid system for the elderly. How do we expand it to the younger people who do not have a history of paying into the system without undermining it for seniors? <\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> B. The massive transfer of resources required by HR678 from middle and upper class taxpayers to lower income people creates a powerful opposition. <\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> C. The idea of a transfer of wealth from the rich to the poor has been an obstacle to the establishment of a national health insurance system for 70 years now, although any system, including the pre-Obamacare system, is bound to include a certain amount of wealth redistribution. However, the idea of a transfer of wealth from middle-class working families to the Guatemalan or Somali peasantry is a complete nonstarter. <\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"><b>V. What roll do insurance companies play? <\/b><\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\">In Obamacare: In most locations, there are only one or two insurers. Big companies like UnitedHealthcare and Aetna have basically withdrawn. <\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\">In most Medicare for all proposals: Insurers completely out of the picture<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\">In Medicare supplement policies: Providers directly bill Medicare for about 80% of costs. The remainder goes through supplemental insurance companies, who assume risk. They are allowed to exclude people for health reasons. <\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\">In Medicare Advantage: Medicare makes monthly payments to insurance companies to cover most premium expense. Insurance companies design plan, assume risk, but cannot exclude people for most health reasons. <\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\">In Large self-funded group policies: The employer assumes the risk, funds the plan, pays the bills. Insurance companies only administer plans. They do no underwriting. <\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"><b>VI. Shape of the proposed National Health Insurance System<\/b><\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\">Divided into two parts, based on funding<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\">A. Part A: <\/span><\/p>\n<ul>\n<li>\n<p class=\"western\"><span style=\"font-size: large;\">Funded by excise taxes on unhealthy products based on the negative impact those products have on health care costs in America, and also on a small but broad value-added tax.<\/span><\/p>\n<\/li>\n<\/ul>\n<p class=\"western\"><span style=\"font-size: large;\">Includes:<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 1. A discount card that gives all Americans access to the prices that Medicare sets for providers (probably perhaps a certain percentage mark-up if necessary to make it palatable to the doctors and hospitals).<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 2. Preventative coverage<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 3. Catastrophic coverage<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\">B. Part B<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 1. Funded by premiums, likely with subsidies or tax credits available. <\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 2. The policies would be based on Medigap, with a limited number of plan choices all designed by the government.<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 3. Unlike Medigap, the plans would be underwritten by the government, but enrollment would be through companies, who would receive a commission. The government would write and cash all checks, but would not set up a new bureaucracy to handle enrollment and many other administrative functions.<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 4. There would be a single risk pool for all the plans.<\/span><\/p>\n<p class=\"western\"><span style=\"font-size: large;\"> 5. All would be guaranteed-issue, but people would pay a premium penalty for a period of time after re-enrollment for any gaps in coverage. <\/span><\/p>\n<p class=\"western\"><span style=\"font-size: medium;\"><b>Conclusion<\/b><\/span><\/p>\n<p class=\"western\"><span style=\"font-size: medium;\">Currently some 16% of the American GDP goes towards healthcare, which is more than double practically any other country. Even government spending on healthcare (Medicaid, Medicare, CHIP, VA, Indian Affairs, Tricare, etc.) is much greater than almost any country with nationalized health insurance. By moving to the national health insurance system described in this paper, the United States will realize enormous savings. <\/span><span style=\"font-size: medium;\">(<\/span><span style=\"color: #000080;\"><span lang=\"zxx\"><span style=\"text-decoration: underline;\"><a href=\"https:\/\/data.oecd.org\/healthres\/health-spending.htm\"><span style=\"font-size: medium;\">https:\/\/data.oecd.org\/healthres\/health-spending.htm<\/span><\/a><\/span><\/span><\/span><span style=\"font-size: medium;\">) <\/span><\/p>\n<p class=\"western\"><span style=\"font-size: medium;\">Even if we could just half-way close the gap between us and the number two country in terms of per capital spending on health care (Luxembourg), it would represent a savings to the economy of some $250bn per year. If we could achieve parity with countries like Japan, France, and Canada, we would cut our healthcare expenditures in half. <\/span><\/p>\n<p class=\"western\"><span style=\"font-size: medium;\">This national healthcare proposal would save enormous amounts of money through the following means: <\/span><\/p>\n<ul>\n<li>\n<p class=\"western\"><span style=\"font-size: medium;\">Eliminating unneeded or redundant work within insurance companies, provider offices, and state regulatory organs. <\/span><\/p>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<p class=\"western\"><span style=\"font-size: medium;\">Encouraging preventive care that reduces more costly future problems. <\/span><\/p>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<p class=\"western\"><span style=\"font-size: medium;\">Creating a giant risk pool that capitalizes on economies of scale, bargaining power vis a vis providers, and the elimination of administrative expenses by insurance companies and regulatory costs by government. <\/span><\/p>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<p class=\"western\"><span style=\"font-size: medium;\">Containing costs through reliance on the Medicare fee schedule and government negotiation of drug prices. <\/span><\/p>\n<\/li>\n<\/ul>\n<p class=\"western\"><span style=\"font-size: medium;\">It would meet the main objectives of healthcare access advocates by: <\/span><\/p>\n<ul>\n<li>\n<p class=\"western\"><span style=\"font-size: medium;\">Guaranteeing that everyone has preventative care, catastrophic coverage, and reasonable prices.<\/span><\/p>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<p class=\"western\"><span style=\"font-size: medium;\">Being affordable for middle- and lower-income people.<\/span><\/p>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<p class=\"western\"><span style=\"font-size: medium;\">Establishing lower prices for health care services that are <em>known in advance <\/em>(unlike the current system in which prices for major procedures are not known until the bill comes). <\/span><\/p>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<p class=\"western\"><span style=\"font-size: medium;\">Eliminating medical underwriting and pre-existing condition exclusions while containing moral hazard. <\/span><\/p>\n<\/li>\n<\/ul>\n<p class=\"western\"><span style=\"font-size: medium;\">It would address the concerns of fiscal conservatives by: <\/span><\/p>\n<ul>\n<li>\n<p class=\"western\"><span style=\"font-size: medium;\">Not<\/span><span style=\"font-size: medium;\"> establishing a large new bureaucracy<\/span><\/p>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<p class=\"western\"><span style=\"font-size: medium;\">Making sure that everyone, including low income people with poor life style choices, will be contributing to the system<\/span><\/p>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<p class=\"western\"><span style=\"font-size: medium;\">F<\/span><span style=\"font-size: medium;\">inancing the system through <\/span><span style=\"font-size: medium;\">earmarked <\/span><span style=\"font-size: medium;\">sales taxes and premiums with limited subsidies and tax write-offs, <\/span><span style=\"font-size: medium;\">thus reducing dependence on existing revenue sources<\/span><\/p>\n<\/li>\n<\/ul>\n<p class=\"western\"><span style=\"font-size: medium;\">It would address the concerns of social conservatives by: <\/span><\/p>\n<ul>\n<li>\n<p class=\"western\"><span style=\"font-size: medium;\">M<\/span><span style=\"font-size: medium;\">inimizing the <\/span><span style=\"font-size: medium;\">wealth<\/span><span style=\"font-size: medium;\"> redistribution aspect <\/span><span style=\"font-size: medium;\">of the health insurance system<\/span><span style=\"font-size: medium;\">. <\/span><\/p>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<p class=\"western\"><span style=\"font-size: medium;\">Encouraging personal responsibility and giving no one a free ride. <\/span><\/p>\n<\/li>\n<\/ul>\n<ul>\n<li>\n<p class=\"western\"><span style=\"font-size: medium;\">Not being accessible to undocumented aliens (although many providers may choose to charge them the Medicare negotiated price even without being enrolled in the system).&nbsp;<\/span><\/p>\n<\/li>\n<\/ul>\n<p class=\"western\"><span style=\"font-size: medium;\">This system was devised with economic and social rationality foremost in mind, with consideration given to political realities. It represents the best last chance to move to the kind of national health insurance systems that all other advanced economies have adopted. Without such a move, it is just a matter of time (and likely not a very long time) before the entire health care system falls apart. Such a collapse would have a devastating impact on the economy as a whole, on social cohesion, and even the integrity of the American state. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Proposal for Post-Obamacare National Health Insurance System Presented by Titus North to Representative Mike Doyle, September 19, 2017 I. Rationale: Obamacare is a mixed bag and will ultimately need to be fundamentally overhauled or replaced. A. Obamacare\u2019s benefits 1. Millions more people with insurance 2. Millions more with highly subsidized polices 3. End to pre-existing<\/p>\n<p class=\"more-link\"><a href=\"http:\/\/obamacare-professor.com\/?p=79\" class=\"themebutton2\">Read More<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[],"_links":{"self":[{"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=\/wp\/v2\/posts\/79"}],"collection":[{"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=79"}],"version-history":[{"count":6,"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=\/wp\/v2\/posts\/79\/revisions"}],"predecessor-version":[{"id":101,"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=\/wp\/v2\/posts\/79\/revisions\/101"}],"wp:attachment":[{"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=79"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=79"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/obamacare-professor.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=79"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}