Q. You say that your plan will cost even more than the ACA. How do you propose to pay for it?
A. Funding for the ACA is supposed to pay for coverage of most of the currently uninsured. For the moment we would leave funding as it is, knowing that it is probably inadequate. The reason is we really don’t know what our plan would cost. Instead of presenting some computer printouts and pretending we have real figures, we took a different tack. We already had a form of universal coverage before the ACA. It’s just that by comparison with the rest of the world it was very high cost inefficient system. Further it favored large companies over individuals and smaller entities, impeding labor mobility. Instead we designed a system to achieve the lowest cost to our economy. As a bonus we wanted the flexibility that would actually enhance economic growth. Catastrophic policies without any bells and whistles sold nationwide without having to cover preexisting conditions. Medical credit cards with little or no credit risk for providers. Huge reduction in third-party pay and the attendant costly paperwork. Every individual will have a financial incentive to find the best service and cost solution. People no longer locked in jobs for fear of losing their health insurance. This should give leverage to employees to get wage increases based on employers benefit savings and increase their mobility. If all these market incentives don’t reduce health care costs as a percentage of GDP, probably nothing would.
However, there is every reason to believe it would. Robert Samuelson in his Dec. 14th Washington Post column noted that the rise in health care costs had fallen. He ascribed this to either the bad economy or the rise of health savings accounts or other high deductible health plans. In the latter case people spending their own money are more frugal and discerning even though HSAs are only 20% of covered workers at present. If this number of people can have a positive affect, think of how Dave’s plan would affect costs. If we can just bring our health costs as a percentage of GDP more in line with the rest of the world the savings would ease any financing worries. While we spend 16 to 18% of GDP on health care even the next biggest spenders, such as Austria and Canada only devote 10 to 12%. Better still, this plan does it without stifling our world leading medical innovation with Government control, red tape and mandates. Let’s see what the costs actually would be under the plan and then fill in the gaps. This is the opposite of the way we usually do things when it comes to entitlements, but when have the estimated costs ever matched the actual? Basing a payment plan on faulty estimates is an exercise in self-deception. With this plan we give the market the widest latitude to lower prices. In any case, Congress seems intent on changing the funding for the ACA such as the Medical Device Tax anyway so it would be better to come up with new funding based on reality.
Q. With PBAs, medical credit cards and a mandatory 10% of wage contribution, won’t this be a heavy burden on the poor and the near poor? Some people have never had an account at a financial institution much less a credit card of any kind. Also won’t this discourage working?
A. We view it as a positive that everyone from birth would have an association with savings and credit. Given the average persons lack of financial knowledge and more importantly savings, anything we do in this area is bound to help. If we all have these accounts we can feel part of our economy and be aware of the realities of savings and personal finance. Too many are excluded in these areas to our detriment. As to the minimum 10% PBA deposit, everyone needs his skin in the game. Australia faced with low savings put in a similar wage set aside. Surprisingly there is no blood running the streets of Sydney. The result is that the average Australian is far better off in retirement. We can use the Earned Income Tax Credit as we now do to make work more attractive than unemployment. Anything we can do to bring people into the world of work, savings and personal responsibility is bound to have a positive effect on the country. Also we might make an adjustment to payroll taxes for the working poor. In any case, we need to have a separate discussion on how to make work more economic. We hope to tackle this in future posts.
Q. Aren’t you putting a lot on the IRS? Tax fraud and possible illegal political actions don’t inspire much confidence.
A. We share your concerns. That’s why we would put new over sight and rules for the IRS in our plan. It wouldn’t hurt that when we find any illegal actions, people go to jail. That would do wonders to restore confidence. In any case it should easier to keep one agency straight when everybody has an interest than a bunch of little known agencies. With knowledge of and access to the PBAs, restitution should be a lot easier. Over payments could be deducted in the future. That should be a big deterrent to fraud. Still, as we’ve said, a computer upgrade would be needed to bring everything together. At least all the data would be in one place making corrections easier and quicker.