Reimagining healthcare

The two biggest problems in American healthcare are the linkage with employment and the third party payer system. It is time to address them both. People are caught without insurance because insurance is linked to their job. If they lose their jobs they lose their insurance. Getting a new job means a new insurance policy which doesn’t cover pre-existing conditions. This happened because Lyndon Johnson thought that, increasingly, people would join a large employer straight out of school or college and stay with that employer for life. He was wrong. The trend has been in the opposite direction. People need portable insurance that they own themselves and can take from job to job. But the tax advantages of employer packages and the new mandate on employers of more than 50 people make that harder to achieve. A health insurance policy is tax deductible by an employer and not taxable income to the employee. Government actively encourages the wrong answer by both mandate and tax policy.

Costs are shooting out of control because almost no-one pays their own bills. Hospitals barely know how to handle things if people want to pay. They don’t even know what their procedures cost: they just have varying lists of prices for Medicare, Medicaid, or various insurance companies. No-one hesitates from the most useless and expensive procedures, because someone else – the taxpayer or an insurance company – is always picking up the bill. People spend vast quantities of health dollars in the last six months of their lives, extending not their lives, but their deaths.

In Singapore – with similar health outcomes to the US or Europe – people pay most bills from health savings accounts and have insurance only for catastrophic illness. The system costs 3.5% of GDP: half the level in Europe and a quarter that of the US.

The government needs imaginative solutions to extricate American healthcare from problems that the government has actively created. People should be given exit clauses that allow them to convert their employer plans to personal plans, and only these should get the tax benefit. Insurance should only be tax deductible if it has rising co-pays. Health savings accounts should be fully tax deductible, and government should even make matching contributions of the early payments. As the years pass, people will be increasingly paying for minor procedures and generic drugs from their health savings accounts. It will be some years before only catastrophic health needs are met from insurance or government, but there will be immediate restraint on the growth of other medical costs.

What, then, of people already on Medicare? They have their coverage, and believe it is already paid for. (They actually contributed about a third of the costs). Can they be expected to build up their own health savings when many are on limited incomes and their actual health costs are often high? If Medicare is to survive for all those presently in the scheme, plus those about to enter it, a large proportion of costs will still be met by taxpayers for many decades. Perhaps the taxpayer should endow health savings accounts for seniors, but allow the seniors to make their own choices about spending the money. This would have to be cheaper than the open-ended guarantee and would put immediate pressure on health inflation. Catastrophic care would continue to be met from Medicare as at present.


Quentin Langley is a Senior Lecturer in Marketing at the University of Bedfordshire Business School as well as a freelance columnist published in the UK and all parts of the US. He blogs on social media and crisis communications at brandjacknews.com

Comments

  1. There needs to be a streamlined connection between job and insurance policies. A person who loses his/her job should have the power to retain the benefits of the insurance.

  2. I am quite impressed to see the innovations that have already taken place in the healthcare industry.

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