The Health Care Social Marketplace is one of the most complex issues in contemporary civilization. As a health care professional (dentist), I have daily exposure to most every aspect of the Health Care issue, from providing care, to dealing with insurance, to getting the most out of rationed government programs, to helping patients get the most out of their limited health care resources. This has given me some insight to the complexity of the various perspectives of Health Care coverage. I have also used my background in computer modeling to develop a computer model to explore the various aspects of different ways to finance a universal Health Care Social Marketplace for a broad spectrum of wage and family sizes from a variety of mixtures of managed care, single payer and Medical Savings Accounts.
As a foundation of understanding of the Health Care marketplace, one must start out with the basic reality that there are basically three ways of paying for anything, including health care.
You can prepay (via insurance or taxes & some sort of single payer government entitlement). Historically, all health care insurance coverage carried a prepaid core of catastrophic coverage. Over the years, most coverage has evolved to include coverage of primary, preventive and alternative care. The downside of prepaid coverage, is that it empowers the third party (insurance company or politician) that is holding your health care dollars to manage your health care. Whether or not they manage your health care for your or their best interests is the subject of considerable debate.
Postpay via a loan. If you have a house that has flood damage due to a 'catastrophic' flood, you can get a low interest loan to fix your home. A viable market for payment of many moderate health care problems and costs can be developed. Indeed, most health care providers historically have offered to bill patients for the cost of treatment that can't be funded otherwise. However, this has not been formally developed by the health care financial marketplace largely because government policies don't properly frame the marketplace to accept the risk of putting forward such financing systems.
There is also the reality that many catastrophic situations are not amenable to the PostPay process -- one cannot assume that everyone with a catastrophic health care problem will recover and be able to pay off the debt. Instead, health care financers rely upon prepaid catastrophic coverage for subscribers to insurance and government entitlements for those who haven't, with a loop hole that many are covered by neither. This intentional loop hole in the health care social marketplace is the source of much of the political demogaguery over health care costs. It is actively protected by politicians who exploit this loop hole to promote their own careers and power instead of promoting the general welfare of the nation.
The Health Care Social Marketplace is complicated by the fact that Health Care coverage is basically a collective effort where individuals come together to insure the collective against catastrophic health care problems through premiums and/or taxes. Another complication is due to the need to have a fully functional Health Care Social Marketplace to have means to promote access for those of limited resources. It has also evolved as a means to pay for the costs of primary (non-catastrophic) care via tax free dollars. Our current health care financing is almost entirely focused on collectives of prepaid employer based coverage and the twin collectives of Medicare and Medicaid.
Many of the surface problems with the health care financing market are directly related to the special tax preferences given to employer based coverage. When an employer pays for their employee's health care, individuals are excluded from shaping the health care marketplace to indiviudal needs and desires -- the employer, not individual, chooses the carrier and what is and is not covered. As a result, employer based managed care is allowed to operate outside of normal marketplace checks and balances. This is the reason for the unpopular 24 hour maternity stays, limits on breast xrays, etc, etc. These abherations to quality care would be self corrected by marketplace pressure if individuals had a say in the shape of the insurance marketplace. Instead, this has becomes the realm of self serving political micromanagement of the mud farmer.
Equalizing the deductibility of health care between individual and employer based care and promoting employee vouchers for health care coverage would go a long ways to correcting these distortions in the market place. However, such a change cannot by itself 'fix' the health care marketplace. To do this, individuals must be able to buy health care coverage on even par with employer-based groups. To fully level the playfield for individuals, it is also necessary to make some modest structural changes so catastrophic reinsurance is pooled to equalize the playfield. With such a system, carriers wouldn't have to fear insuring those with real health care problems and they could offer affordable individual coverage. Those with catastrophic health care needs would be insured in a common pool. There is also a need for individuals to have some means of shopping for health care to bring some competition back into the health care marketplace. Currently this function is being provided by managed care coercion of providers to accept a compensation system of one sort or another. While this provides a means of controlling the marketplace, the result is not necessarily the most cost effective or balanced means of reaching a balanced and functional marketplace.
Prepaid employer based financing of health care, the most popular form of private sector health care financing, puts some third party in control of managing ones health care dollars. While there are some advantages to prepaid managed care, namely the sharing of catastrophic risk and guidance for people who don't desire to make their own HEALTH CARE decisions, managed care is subject to various pressures and weaknesses common to any third party holding someone else's money -- the third party doesn't want to give it up without a good reason.
In general, there is a distinct advantage to health care coverage that is individually financed with a modest prepaid high deductible catastrophic coverage coupled with a savings plan equal to the deductible. This type of health care financing is generally known as MSA coverage or Medical Savings Accounts. MSAs have several advantages over other forms of coverage including portability, choice of providers, choice of treatment, and coverage during unemployment (if one has adequate savings in the MSA). It should be added that there are numerous variations of MSAs possible, particularly with vouchers replacing employer based coverage. However, MSAs are currently limited in format by overly restrictive federal legislation.
One of the common complaints about MSAs is that it is coverage for the healthy. Yes, MSAs benefit healthy people as they are able to save money for the inevitable future health care needs. However, MSAs can also provide a huge benefit to the sick. This is because the sick have full choice of providers and treatments up to the point of when the deductible has been paid from the MSA. After this point the catastrophic coverage picks up the cost of additional treatment. This leaves the sick person choosing an MSA with the same end result as any individual with prepaid managed care coverage -- namely all of their health care dollars are spent at the end of the year. However, unlike the freedom of choice found with MSAs, the person with managed care will have had to deal with the limited choices of providers and care that their managed care firm offers.
Finally, many of the problems of Health Care financing could be corrected if all providers of health care coverage were promoted (or mandated) to reinsure the catastrophic coverage that is part of all health care coverage in a common reinsurance pool. This would eliminate most of the problems of adverse selection and of portability between different carriers and different coverages (including Medicare and Medicaid). Reinsuring catastrophic coverage in a common pool would also provide a means for individuals to purchase affordable coverage. Carriers would not be overly concerned with an unhealthy person enrolling in their coverage as the catastrophic care would be paid for from a shared the pool of all carriers. Ideally Medicare and Medicaid would be part of such a system to prevent dumping of people from private coverage onto public programs for the sake of higher profits.
To some, the ideas presented above may appear to be surprizingly simple and straight forward. This is perhaps because this is a reasonably accurate diagnosis of the health care issue with some modest suggestions to correct its problems. As any health care professional knows, if you don't properly diagnose a problem, the treatment that you impose will continue to make the problem more and more complex while the patient (in this case health care financing) gets worse and worse. It should also be noted there are also many ways these ideas can be reasonably implemented and this could be done as a whole or incrementally.
The biggest problem in implementing any change will be dealing with the various intrenched political forces that would oppose change of the current system or its trends for various narcistic reasons. These powerful forces include businesses, unions, carriers, and those who desire some sort of single payer health care system. With appropriate marketing and persuasion about how a properly designed health care social marketplace will result in a more efficient and lower cost health care social marketplace for all, these powerful opposing forced may be overcome. Given the diverse and powerful self interest nature of the special interests involved in health care, one should not expect change in the right directions to happen overnight.
Note : The discussion and related links of this page are based upon the research using a 3D computer model of health care financing to model various designs for a universal health care social marketplace. The computer model uses a diverse population spectrum of 60 different wage groups and family sizes. It provides modeling of coverage for all including subsidies those of limited resources. It is dynamic in nature and can adjust for employer mandates, cigarette habits, taxes from many different points, and numerous other factors. It assumes that no outside financing is provided so that one can determine the true cost of Universal HEALTH CARE without hiding the cost by one means or another. Most every major aspect of financing HEALTH CARE is adjustable in the model from premium taxes, provider tax, employer mandates, MSAs in or out, MSA tax, etc.
If you wish, you can download this 500k Quattro Pro computer model. The model requires Corel's Quattro Pro to run. No programming expertise is necessary to operate the model. Poke a button to change the basic parameters of Health Care financing and watch the Health Care economy and average wages respond to your plan right before your eyes. No waiting weeks for the CBO to give you an answer about how your health care system might work. The model displays 3D perspectives of cost shifting, wages, and several other aspects of universal HC financing. Since it is a spreadsheet, all the formulas and notes are there for your inspection and enhancement. You may be surprised at what you might learn having a powerful universal health care financing model at your fingertips, even if you are not a programmer.