Part 2: How Idaho Care Works
The Foundation of Idaho Care
Is Health Care A Right?
Health care is not a right. I want to make that very clear from the start. The government can try to enshrine it in statutes or even the constitution, but an individual right is something that does not exist because of government. It’s something the People may have put in a document, to fence it off from the forces of government, but government doesn’t give us our freedom. It was already there even before government.
Health care is a service that has to be paid for, unlike a natural individual right. We may put it in our constitution to authorize certain elements of it, but it can easily be taken away like Prohibition was. The 18th Amendment to the U.S. Constitution first banned alcohol beverages and then the 20th Amendment returned the “right” to the People. A pure libertarian believes that its not government’s business to tell us what to eat, drink, or do, so long as it hurts no one else.
So, if Idaho decides to create a scheme to pool money for a “common good” then lets remember it’s just an authorized service; and it has to be paid for. Therefore, it must have elements included in it to not force people into it and individuals then must live with their choice to opt out.
Why Should We Consider A Publicly-Sponsored Health Care Scheme?
Notice how it’s called a “sponsored” scheme? It’s not a government system in the tradition of socialism. It’s designed to be market based, within a free choice framework.
Why a sponsored system? The first reason is that we’re compassionate people and we want others to receive medical care when their ill or injured; and we don’t want such costs to bankrupt an individual or family.
The second reason is the ever increasing costs of health care. Its to the point even the debt ridden Federal government cannot afford it.
The third reason is Obama Care or Affordable Care Act which by the way is an oxymoron. Obama care was designed by big government socialist and was designed to be a heavy handed, big government take over of an entire industry. Moreover, it will not improve the cost or the quality of health care because it piles tens of thousands of pages of regulation on our doctors and hospitals. It’s parallel to what we tried to do in Afghanistan (read the first installment). No matter how hard one tries, we cannot make people act contrary to human behavior. If we do that it’s called tyranny.
How We Currently Fund Health Care
At present we fund health care in three ways: (1) We pay for it ourselves (which is illegal with Obama Care); (2) We get health insurance individually or at work as a benefit; and (3) Government pays for it, either by Medicaid or via subsidies within Obama Care. The latter method of funding is often the most expensive of the three.
With Idaho Care, we’ll remove the need to get health care insurance from our employer or government. The idea is for you to own the pool of money and remove the third party between you and your health care provider. In this plan, you’ll want to shop around to get the best deal because you’re paying for it from your pool of money. Costs and quality will then respond to the health care market place.
Restoring Natural Human Behavior to Health Care
In Part 1, I explained why health care costs have skyrocketed. We’ve removed individual responsibility to shop for services and we removed the constraints of costs. In the current model, humans don’t care what it costs because someone else is paying for it. In fact, they cannot shop around for a better price because prices are not available. Like that would matter, because its very difficult for patients to negotiate a better deal hospitals only listen to the payer and that’s not you.
So, we need to develop a system that restores basic human behavior, choice, and price discernment to bring down health care costs.
If this plan were to get serious consideration, the medical and insurance establishments will scream the loudest because they’re fearful of a free-market system, one that lets the People make purchasing decisions. They’re scared they’ll make less money than they do in today’s crony health care system.
How Health Care Should Be Paid For
Health care is a service and it has millions of products and services. As I said earlier, it costs money to provide. The idea of insurance is to pool money and the risks to an insurable event, like we do for an auto accident. Since health care is expensive, we cannot pay for everything, but what we choose to pay for should be your decision, not government’s.
Health care is composed of two types of expenses: Health care maintenance, such as for colds, birth control, immunizations, and minor illnesses; and catastrophic events, such as a major injury from a rock climbing accident or cancer. With our homeowner’s insurance, we don’t expect our policy to pay for paint or carpet, but we do expect to have the home repaired after a hurricane.
Health insurance is no different. We have two expenses we have to prepare for.
Health Care Savings Accounts
With Idaho Care, we’ll use Health Care Savings Accounts (“HSAs”) to pool money we’ll use to pay cash for health care maintenance and catastrophic insurance from.
Because an unexpected catastrophic illness or accident can bankrupt a family or individual, it’s essential that the HSA account owner buy catastrophic insurance before they spend money for primary care. This also puts the accountability on the person and not the State of Idaho, since tax payers are often stuck paying the bill after catastrophic health care events.
With most insurance, the carriers try to exclude high risk individuals and only sign up low risk people. With Idaho Care, catastrophic insurance companies will be required to have a balanced risk pool of beneficiaries to avoid heavy tax penalties (which would be based on the cost to re balance the insurance fund). Without the penalty, insurers would try to game the system.
Idaho Care is designed for individual choice with no one but a parent, guardian, or an advocate able to make health care buying decisions; and no third party (businesses or government) will be allowed to purchase insurance. However, there is one exception: individuals and families can elect to form buying cooperatives or clubs, to negotiate group prices with local clinics or doctors. These cooperatives will be community based and would pool their maintenance funds for supplemental primary care for catastrophic insurance.
Publicly Available Pricing
For Idaho Care to work, people need to be able to shop for their health care. They need to be able to compare prices for health maintenance and for catastrophic care. Therefore, the plan would require health care providers (physicians, hospitals, etc.) to make their prices publicly available and accessible – online pricing would be required.
This is an essential component to ensure free and open competition exists, so the market will price the value of health care services and products.
To kick off Idaho Care, the statute would require any provider (hospital, clinic, etc) to price their services and supplies no higher than those allowed under Medicaid. This requirement would last one year and then fall off to let the market set the prices.
You Own Your Idaho Care Account It’s an Asset
With this system, individuals would own their HSAs. The accounts would accumulate pools of money to pay for current and future medical care or plus-up insurance. They could supplement their accounts, without limit, to build up larger balances, which they could then use to pay for medical services or additional catastrophic or plus’up insurance. What is “plus’up” insurance? I’ll discuss this in the next section.
HSA owners could also donate a portion of their accounts to friends, relatives, or charities. When a person dies, the owner could will their account to family members, friends, or charities. The accounts could never be taken or taxed by the government unless there were no heirs.
Block Payment Insurance
Unlike today, where third parties negotiate the costs of health care, Idaho Care approved plans would prohibit line item health care insurance reimbursement. In our current system, government requires doctors to use 68,000 diagnostic codes and almost as many treatment codes to complete paperwork and receive reimbursement. If a medical provider makes a mistake, they can be heavily fined.
There are enormous amounts of regulations and policies to comply with before government and insurance carriers agree to pay for services. To comply, hospitals and medical providers must hire armies of clerks and staff members to document and fill out paperwork, which is a waste of time and money. The same money which could be used to provide better and less expensive patient-centered medical care.
With Idaho Care, this would all go away. Insurance companies will pay a set amount or block of money for an insurable event. For example, if you were diagnosed with a certain type of cancer, you’re HSA might receive a $50,000 block of money. This encourages the HSA owners to shop around for the best quality and price. If you don’t spend all of it, you are able to retain it in your HSA.
You could also buy plus-up insurance to supplement your HSA. For example, you might have a policy that pays block sums for certain events, such as childbirth, a broken bone, or some other expected event. One could also plus up their catastrophic care, to cover long term care or chronic diagnosis.
Expenses In Excess of Block Insurance Payments
What happens if an insured ran out of its medical event block money. Would they simply be left to die or suffer? Earlier, I stated that health care is expensive and it is a service that needs to be paid for. It is this constraint that makes the market prices self balance the need for care and costs.
As I said earlier, Idaho Care encourages cooperatives and charities to find creative ways to deal with unforeseen or unplanned medical events. However, the charity or cooperative would define the limits of care; and their decision about limits and coverage would be at the cooperative’s or charity’s discretion, not government. You would be in control.
Alternately or in addition, Idaho Care could fund an insurance fund for extraordinary health care expenses, above catastrophic insurance coverage. To keep government out of one’s health care decisions, the state could elect to sponsor a non-profit organization, cooperatives, or various charities who would evaluate a pressing need and then dispense state funded block grants to cover extraordinary healthcare expenses.
This provision is for all Idahoans and is above what health insurance provides today.
How Does One Qualify for the Plan?
Every Idahoan will be automatically enrolled in the plan, but anyone can opt out of the plan by signing an affidavit that explains the financial and health risks involved. Once outside the plan, Idaho will not provide any assistance, to include indigent care. Charities would still be able to help unenrolled individuals, if they choose.
By design, everyone will qualify for the same minimum account funding, no matter how much one earns. The State of Idaho would top off those accounts that don’t reach the required minimum.
For those that opt back in (after opting out), they would not be able to receive the Top Off Contribution until they’ve been enrolled for one year. This requirement is designed to discourage people from leaving Idaho Care.
For those that move out of Idaho, they will be able to voluntarily contribute to their HSA, but Idaho would not top off their account. If they returned, they’d be able to qualify for the Top Off Contribution after being enrolled for one year.
Would Medicare and Medicaid Go Away?
If the Federal government approved a waiver, those on Medicaid could join the plan. The goal is to have 100 percent participation because its designed to let market forces drive quality upward and prices to reasonable levels.
Medicare is a Federal system designed for senior citizens. This population of Idahoans could participate, but the Federal government would need to funnel Medicare dollars to Idaho to pay for their more expensive care. If an Idahoan joined Idaho Care at a young age, they may be able to fund their senior health care requirements with little help from the Federal government because they’d have a life time of savings to draw from.
One method to allow Medicare patients participation would be through Federal one time or annual block grants set at an amount sufficient to pay for their care and catastrophic events. Alternately, the Federal government could fund a Medicare’s HSA maintenance expenses and continue to insure catastrophic care.
What Could Idaho Care Look Like?
Watch Dr. Carson explain his version of a free-market approach to health care. It’s actually similar to the Idaho Care I’m proposing.
The Fleecing of America
In Part 1, I showed you a video of a surgery center in Oklahoma that delivers surgeries cheaper than it costs to pay the co insurance and deductibles of most health care plans. They don’t have to comply with the government bureaucracy’s and insurance carrier’s policies. They are able to innovate and deliver services with the best technology for lower costs. In all, they are able to provide excellent services and pay their surgeons well, while still charging anywhere from one quarter to one tenth the costs of facilities that take insurance and must comply to exist.
I know this plan may seem radical and almost unobtainable, but it only seems that way because we haven’t had a free market in health care since the start of the Progressive Era in the early part of the last century. We don’t know what a free-market centered health care system would cost or look like because few if any of us were alive when it was a truly free market.
One thing we know is this: our current system isn’t working and its benefiting a few big health care systems and insurance companies while fleecing the tax payers, employers, and all Americans.
What’s Ahead? Paying for Idaho Care (Part 3)
In the final installment, I’ll explain one method of paying for Idaho Care. Though their are a number of ways to fund the plan, I’ll provide an example to encourage discussion. Because it involves a method to pool money and spending, this may be the most contentious part of the Idaho Care scheme.